Cwk v. Ptk
Read the full judgment text of FCMC 11235/2010 on BabelCite. This Family Court judgment before Deputy District Judge R So.
Ancillary relief – Clean break – Financial needs – Asset identification – Bankruptcy – Matrimonial Proceedings and Property Ordinance – LKW v DD – Parra v Parra – Husband bankrupt – Wife earning capacity – Ontario Property proceeds paid to Children – Ancillary relief claims dismissed – Costs order
Legal issues: Identification of assets and financial resources · Financial needs of the parties · Clean break between the parties
Outcome: Ancillary relief claims dismissed; Clean break ordered; Ontario Property proceeds paid to Children.
Cited by 1 case · Cites 8 cases
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FCMC 11235/2010 [2018] HKFC 104 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO 11235 OF 2010 ________________________
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________________________ J U D G M E N T ________________________ 1.This is the trial of ancillary relief between the Petitioner husband (“Husband”) and the Respondent wife (“Wife”). Preliminaries 2.Parties have come a long way since the Petition was filed in 2010. There have been various applications and proceedings taken out by the parties (in these matrimonial proceedings and also in the District Court and the Court of First Instance) since the present proceedings were initiated. I am not going to go through each of them. I am only referring to the ones that are necessary to set out the background of the case and those that are relevant for this trial, which are set out in paragraphs 42 to 59 hereinbelow. 3.Ancillary relief trial was fixed to be heard on 11th January 2017 before Deputy District Judge I Wong (as he then was), with an estimation of 3 days. On the first day of the trial, the Husband applied to have a Ms LWW (“LWW”) to be his McKenzie friend, which was opposed by the Wife, and the application was refused. Because of the health reason of the Husband, the trial was vacated and adjourned to 8th February 2017 for a call over. Medical certificate of the Husband was provided to the Court later. 4.During the call over hearing on 8th February 2017, the Husband made the same application asking for court’s leave to allow LWW to be his McKenzie friend, which was opposed by the Wife. I made a ruling that LWW is not allowed to be the McKenzie friend. The Wife agreed to allow another friend of the Husband, if any, who is unrelated to the case, to be the McKenzie friend. 5.The Husband also informed the Court that there was the hearing for the appeal of revocation of legal aid for the Husband to be heard in May 2017, which meant the Husband might have to take out interlocutory application(s) as a result. 6.Therefore, on 8th February 2017, I adjourned the trial to 14th June 2017, with 3 days reserved. I also ordered that all interlocutory application(s), if any, to be taken out on or before 22nd May 2017. 7.By a letter dated 29th May 2017 from the Husband, he asked for the trial be adjourned for mainly 2 reasons: (a) pending the determination of whether legal aid would be granted to him; and (b) hope to apply to have the Wife’s mother, ie. CZM (“Wife’s Mother”), and the Wife’s brother, ie. PDF also known as PTF (“Wife’s Brother”) to be made the Respondents of the trial. 8.By another letter dated 6th June 2017 from the Husband, the Husband asked for adjourning the trial and enclosing with it a Chinese letter from the “HKU Legal Educational Services Centre” dated 6th June 2017 (“Chinese Letter from HKU”) in support for his application. 9.By consent, on 6th June 2017, the court granted leave for a Mr. YWY, a friend of the Husband who is unrelated to the present proceedings, to be the McKenzie friend of the Husband for the ancillary relief trial. 2 Applications before the ancillary relief trial 10.On the first day of the adjourned trial on 14th June 2017, the Husband made 2 applications:- (a) to adjourn the ancillary relief trial; and (b) to have the Wife’s Mother and the Wife’s Brother be added as party for the proceedings. 11.According to the Husband’s submissions, the 2 applications are inter-related. Without adding the Wife’s Mother and the Wife’s Brother as party, there is no use to proceed with the ancillary relief trial fairly. The Husband confirmed that the same application had been made before, but was refused by the Court. 12.The Husband further explained the reason to take out the applications is the need to determine the ownership of the 2 companies now in the names of the Wife’s Mother and the Wife’s Brother respectively, ie. K Limited (“K Limited”) and SFTF Limited (“SFTF Limited”). 13.For the basis of asking for adjournment, the Husband submitted an English letter dated 31st May 2017 addressed to the Director of Legal Aid, written by a Principal Lecturer of the Clinical Legal Education Programme of the Faculty of Law of the University of Hong Kong, who provided free legal advice under the Free Legal Advice Scheme under the Duty Lawyer Scheme on the HKU Campus (“English Letter from HKU”) in support. 14.The Husband further informed the Court that despite the day before the adjourned trial, the Husband was informed that his appeal for revocation of legal aid for the Husband was dismissed, the Husband had got a pro bono Counsel outside Court who could address the Court should the Court allowed. The Husband further added that in the interest of justice and fairness, the trial should be adjourned so that he could get legal representation. 15.Counsel for the Wife, Mr Chan, opposed the Husband’s applications for the following main reasons:- (a) there is no proper application and undue delay; (b) there is no locus of the Husband in applying for adding party, with reference to the Order dated 8th December 2015. 16.I accepted Mr Chan’s submissions that there is no proper application and there is undue delay. With reference to my Order dated 8th February 2017, I ordered that all interlocutory application(s), if any, should be taken out on or before 22nd May 2017. The applications made by the Husband are either by way of letter (explained in paragraphs 7 to 8 hereinabove) or orally at the trial, without any proper summons taken out. 17.Leaving aside the technicality of whether proper application had been made, though it has to be stressed that the strict compliance of court order is not to be undermined, there is undue delay for the Husband to take out his applications, which is not justified in the principle of fairness and justice to the parties. 18.The Court’s attention was drawn to the following facts :-
19.I am of the view that sufficient time had been given to the Husband to get legal representation, and there will be undue delay if the trial has to be further adjourned for that reason. 20.Regarding the locus of the Husband, it is necessary for the Court to refer to some factual background of the case, which is summarised in paragraphs 42 to 59 hereinbelow. 21.As the Husband was adjudged bankrupt on 18th July 2013 under HCB 7058/2012 and he is still a bankrupt at this trial, all his assets are vested in the Official Receiver (“OR”). Without the OR’s approval to commence ancillary relief proceedings, the Husband does not have the locus to continue. 22.In this regard, the Husband submitted that according to his understanding, it seemed that the OR had somehow given some sort of approval, but for reasons he did not understand, his then legal team did not obtain the approval. Upon clarification, the Husband agreed that OR had given approval subject to conditions, but because the Husband’s then legal team, who had instructions from the Husband, did not agree to those conditions, approval from OR was not obtained. 23.The Court was informed that these submissions had been made to the Court earlier, which formed the basis of the ruling in the Orders dated 8th December 2015 (refer to paragraphs 58 and 59 hereinbelow). 24.I have also considered the content of the Chinese Letter from HKU and the English Letter from HKU, which the Husband relied on in his present applications. 25.I notice that there was much analysis regarding the factual background and merits of the case, but the very core issue is not addressed, ie. whether there is any change of circumstances as the Husband is still a bankrupt, all the interest of his assets vested in OR and there is no approval from OR to proceed with the Husband’s application. The Husband also confirmed with the Court that he had not provided all the relevant documents of this case for the HKU’s consideration. 26.I notice that all along, it was the Husband’s stance that he has 99% ownership of K Limited and SFTF Limited. Even if the Husband seemed to try to change his stance to say that it was in fact the Wife who has the beneficial ownership of the shares of K Limited and SFTF Limited, and therefore the beneficial ownership of shares of K Limited and SFTF Limited should be considered during this ancillary relief trial, it does not assist the Husband any further. 27.Looking at the summons taken out by the Husband dated 25th March 2015 when he was legally represented and the Order from the Court dated 8th December 2015 (refers to paragraphs 55 to 59 hereinbelow), it is not open or available for the Petitioner to argue in these present proceedings :- (a) that the Petitioner is the beneficial owner of 99% of the issued shares of and in both K Limited SFTF Limited; and (b) that the value of the same should be considered as matrimonial assets. 28.The Orders dated 8th December 2015 had not been appealed, which means they stand and are binding. 29.Having considered the Husband’s submissions, including the content of the Chinese Letter from HKU and the English Letter from HKU, I am not of the view that there is any change of circumstances which enables the Husband to re-open the issue about the beneficial ownership of the shares of K Limited and SFTF Limited. 30.Even if I am wrong on the law on the locus point, I notice that the stance of Husband in disputing the ownership of the shares of K Limited and SFTF Limited had been raised on at last the following occasions :-
31.I am aware of the fact that the case HCA 1645/2009 was not determined by the Court after trial, as the case was dismissed with the Husband’s failure to provide security for costs. But with the background of the case, dispute regarding ownership of K Limited and SFTF Limited had been raised on numerous occasions and with application made, which was dismissed. I am of the view that no further adjournment of the trial should be allowed for the Husband to make the same application again. 32.With the reasons aforesaid, I dismiss the 2 applications made by the Husband, with costs be to the Wife in any event, with counsel certificate. 33.After the 2 applications made by the Husband were dismissed, the trial proceeded. Background 34.The Husband was born on 14th November 1961. He was 55 years old at the commencement of the trial. 35.The Wife was born on 15th January 1963. She was 54 years old at the commencement of the trial. 36.The parties were married on 18th October 1990 in Ontario, Canada. 2 children were born out of the wedlock, namely the elder daughter who was born in 1995 (“Daughter”) and the younger son who was born in 1997 (“Son”), who are now 22 and 20 years old respectively at the commencement of the trial (collectively referred to as “Children”), and are studying at university in the United Kingdom. 37.K Limited was set up in 1992. SFTF Limited was set up in about 1994. 38.According to the Husband, since the set up of K Limited, he had been operating K Limited for about 17 years. It is the Husband’s stance that he is the beneficial owner of the 99% shares of K Limited and SFTF Limited. The Husband said that K Limited was in fact set up by him, with the Husband’s family supporting him by lending him money. The Husband alleged that there was forgery of signature in transfer documents, leading to the transfer of 99% shareholding of K Limited and SFTF Limited to the Wife’s Mother and the Wife’s Brother respectively, who hold the said shares on trust for the Husband. 39.The Wife holds 1% shareholding of both K Limited and SFTF Limited. The Wife’s Mother holds 99% shareholding of K Limited and the Wife’s Brother holds 99% shareholding of SFTF Limited. According to the Wife, she started working at K Limited since about mid 1992 and she was a director of K Limited from 13th May 1992 to 1st October 1992, from 18th March 1994 to 15th June 2009, and has been its director since 25th June 2009 to present. It is the Wife’s position that the Husband worked for K Limited as an employee from May 1992 to June 2009, and he has never been a director of and has never had any beneficial interest in K Limited. 40.According to the Wife, she had also become a director of SFTF Limited, which is a family owned timber trading and processing company since mid 1994. It is the Wife’s position that the Husband was never an employee or a director of and has never had any beneficial interest in SFTF Limited. 41.It is agreed that since about December 2008, the parties have started separation. It is not in dispute that the Husband has not made any financial contribution to the family or the Children since the separation in 2008. 42.On 24th June 2009, the Husband, together with his brother CPK (“Husband’s Brother”), issued the proceedings HCA 1465/2009 against the Wife’s Mother and the Wife’s Brother, claiming that the Husband is the beneficial owner of 99% shares in K Limited and SFTF Limited, and that the Husband’s Brother held the said 99% shares as his nominee. The Husband also made allegations of fraud and conspiracy in connection with the transfer of shares in K Limited and SFTF Limited from the Husband’s Brother to the Wife’s Mother and the Wife’s Brother. 43.The Husband petitioned for divorce on 26th August 2010 on the ground of unreasonable behaviour. 44.The former solicitors acting for the Husband filed Form A on 26th August 2010 and filed Amended Form A on 21st October 2010. Solicitors for the Wife filed Form A on 23rd November 2010. 45.On 15th March 2011, when the Daughter and the Son were 16 and 13 years old respectively, Her Honour Judge Chu (as she then was) ordered by consent that the custody, care and control of the Children be granted to the Wife, with defined access be granted to the Husband. 46.On 30th March 2011, the Petition was amended from “unreasonable behavior” to “one-year separation with consent”. 47.Decree Nisi was granted on 12th May 2011. 48.On 19th August 2011, the Husband was convicted of contempt of Court under DCMP 947/2011 due to his making of a false statement in his witness statement verified by a statement of truth filed under DCCJ 3854/2009, which is a civil claim issued by K Limited against various third parties (with the Husband being the 3rd Defendant in the case) for recovery of the outstanding payments to its timber products sold and delivered. The Husband was sentenced to 6 months’ imprisonment on 19th August 2011. The Court further ordered that the Petitioner should bear K Limited’s costs under DCMP 947/2011 to be taxed on an indemnity basis. 49.K Limited was subsequently awarded costs in the sum of HK$1,158,353.99 under taxation of the costs order dated 19th August 2011 made under DCMP 947/2011. Since the Petitioner failed to pay the awarded costs to K Limited upon demand, a Bankruptcy Petition was subsequently issued against him under HCB 7058/2012. 50.On 18th July 2013, the Husband was adjudged bankrupt by the Order dated 18th July 2013 made under HCB 7058/2012. 51.During the marriage, an apartment in Ontario, Canada was bought under the joint names of the parties (“Ontario Property”). By the joint application by the parties, it was ordered on 13th May 2014 that the entire net sale proceeds, after deducting the outstanding mortgage loan and other incidental costs of sale, be paid into Court pending the outcome of the financial relief proceedings. 52.On 22nd December 2014, a sum of CAD$91,122.88 was paid by the Bank of Montreal into Court and the amount remains with the Court pending the determination of the financial relief proceedings. 53.On 25th August 2014, the Husband made an application by way of summons taken out by himself for an order that :- (a) the 2 cases, ie. HCA 1645/2009 and HCA 965/2010 (which is a High Court Action taken out by K Limited against the Husband to recover vacant possession of House 3x of Hong Lok Yuen, which was the accommodation provided by K Limited to the Wife and her family during the marriage of the parties), be brought into the present matrimonial proceedings; (b) to stay the execution of the case HCA 965/2010, in which Master Lo of the Court of First Instance had ordered on 31st March 2014 that the Husband do deliver up vacant possession of House 3x, until the determination of all these 3 cases. 54.The Husband’s summons was heard on 23rd December 2014. It was ordered on that day that leave be granted to the Husband to withdraw his application filed on 25th August 2014, with costs of the application be to the Wife. 55.On 25th March 2015, when the Husband was legally represented again, he took out an application by way of summons asking for an order, inter alia, that “(i) the Respondent’s mother CZM and (ii) the Respondent’s younger brother PDF (also known as PTF) be joined as parties to these proceedings for the Court’s determination on the issues of the respective beneficial interests of the shareholdings of and in (a) K Limited and (b) SFTF Limited;”. 56.On the same day, ie. 25th March 2015, the Wife also took out an application by way of summons asking for determination or order, inter alia, of “whether it remains open and/or available for the Petitioner to argue in these present proceedings that he is the beneficial owner of 99% of the issued shares of and in both K Limited and SFTF Limited (which are registered in the names of the Respondent’s mother (CZM) and the Respondent’s brother (PDF also known as PTF) respectively) and that the value of the same should be considered as matrimonial assets, notwithstanding the dismissal of all claims in HCA 1465/2009, a High Court Action brought by the Petitioner and his brother against inter alia the Respondent, and in which both the Petitioner and the Respondent were parties;”. 57.The 2 Summons taken out by the Husband and the Wife respectively were heard on 15th April 2015, adjourned to 29th May 2015, then adjourned again to 28th October 2015 and was finally disposed of on 8th December 2015, when both the Husband and Wife was represented by Counsel respectively. 58.By the order dated 8th December 2015, regarding the Husband’s summons filed on 25th March 2015, it was ordered that the Husband’s said summons be dismissed, with costs be to the Wife. 59.By the order also dated 8th December 2015, regarding the Wife’s summons filed on 25th March 2015, it was ordered, inter alia, that “Without prejudice to the change in circumstances and arguments regarding the res judicata principle, the matters they stand, it is not open or available for the Petitioner to argue in these present proceedings that the Petitioner is the beneficial owner of 99% of the issued shares of and in both K Limited and SFTF Limited (which are registered in the names of the Respondent’s mother (CZM) and the Respondent’s brother (PDF also known as PTF) respectively) and that the value of the same should be considered as matrimonial assets, notwithstanding the dismissal of all claims in HCA 1465/2009, a High Court Action brought by the Petitioner and his brother against inter alia the Respondent, and in which both the Petitioner and the Respondent were parties.”. Open Proposal of the Husband 60.After clarification, the Husband confirmed his open proposal before trial, as follows:- (a) He agreed that all net sale proceeds of the Ontario Property be paid to the Children directly by instalments, to be shared equally between the Children; and (b) he asked the Wife to pay him periodical payment of HK$80,000 per month. 61.During the trial, in addition to the above, the Husband also asked for half share of the 1% share of K Limited and SFTF Limited which the Wife is holding. Open Proposal of the Wife 62.In the Wife’s written open proposal before the trial, the Wife asked for (a) all net sale proceeds of the Ontario Property which was paid into Court on 22nd December 2014 with interest thereon be paid to the Wife for the benefit of the Children; (b) both parties’ ancillary relief claims against each other be dismissed; and (c) there be no order as to costs. 63.During the hearing, the Wife clarified and agreed that the net sale proceeds of the Ontario Property be paid to the Children directly by instalments, to be shared equally between the Children. The legal principles 64.In deciding on ancillary relief claims between the parties to the marriage, the court is required by section 7(1) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 to have regard to the conduct of the parties and all the circumstances of the case including the following matters :-
65.In the case of LKW v DD [2010] 13 HKCFAR 537, the Court of Final Appeal has provided 4 principles as to how section 7 shall be approached, which are stated as follows :-
66.The Court of Final Appeal has further laid down the following 5 steps as to how the Court should exercise the discretion when considering section 7 as follows :-
Issues 67.During the opening submissions and after clarification from parties about their open proposals, the parties have agreed that the net sale proceeds of the Ontario Property which had been paid into Court shall be paid out to the Children direct, which will no longer be an issue to be determined by the Court. 68.According to Mr Chan, the only issue for the Court’s determination is whether there should be clean break between the parties, which the Husband disagreed. According to the Husband, he mentioned the following issues for the Court’s determination, namely (i) whether the Wife had concealed money and non-disclosure of assets; (ii) the income source of the Wife; and (iii) the expenses and financial needs of the Wife. 69.After hearing parties’ submissions and evidence of the case, I have identified the following to be issues in dispute for the Court’s determination, as follows :-
Step 1: The identification of the parties’ assets and financial resources 70.The first step for the ancillary relief trial is to ascertain the parties’ assets and financial resources calculated as at the date of the hearing. In particular, the Court must have regard to “the income, earning capacity, property and other financial resources” which each of the parties “has or is likely to have in the foreseeable future”, as stated in s. 7(1)(a) of Cap. 192. (i) The parties’ assets 71.Because of the long history of the case, the parties have each filed 3 Form Es over the years, in 2011, 2014 and 2015 respectively (hereinafter referred to as the “Husband’s 1st/2nd/3rd Form E” and the “Wife’s 1st/2nd/3rd Form E” respectively). Pursuant to the Order dated 2nd February 2016, the parties have respectively filed the affirmation regarding the matters in s.7 of Cap. 192 for the ancillary relief trial. During the trial, the parties have respectively adopted these documents as evidence in chief and have been asked to provide updates of their financial circumstances, if any. 72.Leaving aside the net sale proceeds of the Ontario Property, which the parties have agreed to be given to the Children, the parties’ latest assets and liabilities are stated in their respective 3rd Form E, which is summarised below :-
73.I notice that in the Husband’s 3rd Form E, there is a sum of HK$200,000 owed to him. As stated in Part 2.9 therein, it was allegedly the sum owed to the Husband by K Limited, being the counterclaim in the case DCCJ 3220/2009. As there is no evidence that the Husband has received or is likely to recover the said sum, I am of the view that the sum is not to be included in the above table of assets and liabilities. 74.For the item of “shares”, it is the value of the Wife’s shareholding in K Limited and SFTF Limited. According to the Wife’s 3rd Form E, she has 1% shareholding in K Limited and SFTF Limited respectively, which amounted to HK$13,805 and loss of HK$18,704 respectively. 75.I notice that the amounts of HK$13,805 and loss of HK$18,704 were taken from the respective audited financial statements of the 2 companies for the year ended 31st March 2015, which the Wife had disclosed as attached documents to her 3rd Form E. By setting off the 2 amounts of HK$13,805 and loss of HK$18,704, there is a loss of HK$4,899. (ii) The parties’ income and financial resources 76.The Husband was 55 years old at the commencement of the trial. According to him, he set up K Limited and SFTF Limited in 1992 and 1994 respectively, which the Wife did not agree. It is the Wife’s evidence that the Husband had been working at K Limited for about 17 years, but he does not have any beneficial ownership of K Limited and SFTF Limited. 77.According to the Husband, since the establishment of K Limited and SFTF Limited, he had all along been involved in the daily operation and business development of the 2 companies before he was ousted in around 2008. After that, the Husband had been working at a company called HKT Limited, which is in the timber industry. 78.It is put to the Husband that he has been and still is the beneficial owner of HKT Limited (“HKT Limited”), as it was shown in the Husband’s 1st Form E that he has 50% shareholding of HKT Limited, and he had been drawing HK$15,000 per month from the company as income. After the Husband was adjudged bankrupt on 18th July 2013, according to the Husband, HKT Limited ceased operation in 2013. The Husband agreed having received HK$15,000 per month from HKT Limited at the material times, but denied still having the beneficial ownership of the company now. 79.It is the Husband’s stance that he had become unemployed from 2013 to April 2015. 80.After that, it is the Husband’s evidence that he has been working at a company called EO Limited (“EO Limited”), with LWW being the sole shareholder. EO Limited was set up to do business in the timber industry. LWW, being an accountant in a shipping company, did not attend to the work, and was not involved in any daily operation of or looking for business opportunities for EO Limited at all. 81.It is the Husband who is responsible for the daily operation for EO Limited, including finding business for the company and negotiating price of the products when doing business. During cross-examination when asked about the business of EO Limited, the Husband could explain the approximate number of carts of timber products and the estimated price or costs of each cart. He also explained that the business last year was about 1 million and the business was generally alright. When asked further about the business, the Husband said that he did not know about the size of business, as he did not calculate, and he could not tell whether there was profit or not. The Husband stressed that it was LWW’s business. 82.It was put to the Husband that EO Limited was actually his business, disguised to be the business of LWW as the Husband has become a bankrupt. The Husband denied the allegation. The Husband explained that he was not paid any salary at all as LWW has helped him a lot throughout the years. It is shown in the documents that LWW bought the private car of the Husband, KK 8123, on 12th August 2016 in the sum of HK$5,000. 83.The Husband further explained that LWW knew about the circumstances and financial situation of the Husband, and therefore suggested LWW providing capital and the Husband doing business using his connection and experience. The Husband further explained that he worked free of charge without being paid salary in order to repay what Ms LWW has done for him. 84.In the Husband’s own evidence during cross-examination, he agreed that he is very experienced in the timber industry. 85.Apart from helping the Husband by setting up the EO Limited, LWW also provided a car for the Husband to drive, with LWW paying for expenses of the car including gasoline, parking expenses, insurance and registration fees. 86.From the evidence before me, leaving aside whether HKT Limited and EO Limited are beneficially owned by the Husband, it is not in dispute that the Husband has many years of experience in the timber industry. His years of experience, connection and the know-how to do business in the timber industry is not in dispute. Even taking the Husband’s case that he has no beneficial ownership of EO Limited, it cannot be denied that the work he is now performing at EO Limited is valuable and income generating at least. Whether or not the Husband chooses not to receive salary, for whatever reason, the fact remains that should he choose to get himself employed, there is no difficulty that he can get a job with a decent salary to support himself in the foreseeable future. 87.As stated in the Husband’s 1st From E, when he was working at HKT Limited, he received a monthly sum of HK$15,000. In the Husband’s 3rd Form E, he also explains that “he is currently living with the unstable financial assistance from relatives and friends”. 88.Therefore, I am of the view that the Husband has earning capacity of at least HK$15,000 per month. 89.About the Wife, she was 54 years old at the commencement of the trial. When the Wife came to Hong Kong at the age of about 16 and after finishing her study, she worked at a travel company. She later stopped working at the travel company and started working at K Limited and SFTF Limited, which she could not remember exactly which year. 90.The Wife disagreed to the Husband’s allegation that when she was pregnant with her Daughter, the Husband asked her to stop working at the travel company and to follow the Husband in doing business. The Wife’s involvement in K Limited and SFTF Limited is summarised in paragraphs 39 to 40 hereinabove. 91.During examination-in-chief, the Wife clarified that her income now is the same as in her 3rd Form E, ie. HK$35,000 per month, and she has been provided with accommodation free of charge, which is a property rented and provided by K Limited. 92.About the Wife’ financial resources, I notice that the Wife has always been provided with accommodation by K Limited, dated back many years ago during the marriage of the parties. During the marriage, K Limited had provided House 3x of Hong Lok Yuen to the Wife for her family at all material times. 93.Although the Wife stated in her 3rd Form E that when she left K Limited, the provision of the accommodation will terminate, from the evidence, I do not see any evidence that the Wife is leaving K Limited in any foreseeable future. I am of the view that the Wife would be provided with accommodation in the foreseeable future, which forms part of her income source that the court will consider. 94.I am of the view that the Wife has earning capacity in the foreseeable future, continue earning a salary of HK$35,000 per month and shall continue be provided with accommodation by K Limited. 95.It is also noted that, according to the Wife, K Limited and SFTF Limited are companies of her Mother and Brother. It is the Wife’s stance, as explained in Part 5.5 of her 3rd Form E, that she has been borrowing from her employer, K Limited and also from her family members and friends to meet her financial needs throughout the years, as the Husband had not been paying anything for the family since 2008, and the Wife also had to pay for legal fees for all the proceedings between the parties throughout the years. (iii) whether the Wife had concealed any money or assets that should be added back 96.During the trial, the Husband cross-examined the Wife in the following areas, suggesting that there are concealed money and non-disclosed assets of the Wife that the Court should take into account, apart from the information provided by the Wife in her Form Es :-
97.The Husband suspected that the Wife has other income other than HK$35,000 per month, as he pointed out that with only 1% shareholding in K Limited, the Wife is provided with accommodation and as shown in the Wife’s 3rd Form E, HK$691,515 had been lent to the Wife by way of loan by K Limited throughout the years. 98.The Wife denied the allegation that she has other income other than HK$35,000 per month. I have considered the background of the case. As K Limited and SFTF Limited belong to the Wife’s Mother and Brother, and she herself being one of the shareholders, it is not surprising that the Wife could get loan from K Limited, which she had admitted in her Form E. During cross-examination, the Wife explained that for the loan from K Limited in the sum of HK$691,515, she had repaid some, and when she has the ability, she will repay the whole sum. I am of the view that these loans are soft loans lent to the Wife. 99.I also notice that it is not in dispute that at all material times throughout the marriage, the Wife had been provided with accommodation from K Limited. I accept that apart from the monthly salary of HK$35,000, the Wife is also provided with free accommodation by K Limited. I am of the view that the Husband has not made out his case that the Wife has other income. 100.Regarding the private car, ie the Benz that the Wife bought in 2007, the Wife explained that it was sold many years ago and the Wife could not remember where the money was spent. The Husband without providing further information or basis to suspect that the Wife still owns the private car, and with the background that the Husband has not been providing any financial support to the family and the Children since 2008, I accept the Wife’s answer that she genuinely could not remember where the money was spent and the private car was sold many years ago, and possibly might have spent on the family or the Children. I am of the view that there is no non-disclosure of the private car or the value of the sale of it. 101.Regarding the $100,000 that the Husband alleged his family had transferred to the Wife upon the Wife’s request, the Wife explained that she had not received any money from the Husband’s family. During cross examination, the Husband produced Exhibit P1, a copy document of requisition for foreign remittance of the Bank of Montreal to the name of the Wife from PC, a brother of the Husband (“PC”), in the sum of CAD$14,000 dated 4th May 1992. The Husband also produced Exhibit P2, a copy statement of account of PC of the Bank of Montreal, showing that a sum of CAD$14,000 had been debited from the account on 4th May 1992. 102.The Husband also showed the Wife a copy document Exhibit “CWK-2” attached to his affirmation, purported to be a hand written letter by way of a fax dated 23rd April 1992 with the letter head of K Limited from the Wife to the Husband’s brother, with Chinese words: “14 May下午銀行已通知我你們的匯款已到，也救了我們燃眉之急” (on 14 May afternoon, the bank had already informed me your remitted money had arrived, which had saved our urgent needs) and “若方便請將十萬元轉到我的戶口，資料如下：a/c no. 031- 383-1-xxxxxxx PTK” (If convenient, please transfer $100,000 to my account, as really in need of money, information as follows: a/c no. 031- 383-1-xxxxxxx PTK). 103.The Wife answered that she could not remember having received money as suggested. She produced a document marked as Exhibit R1, a copy bank passbook record of the same account of 031-383-1-xxxxxxx from 23 April 1992 to 14 August 1992, showing that there is no receipt of the amount as suggested by the Husband. 104.The Husband further explained that the request of transfer of money was for the use of the company, with the letter head of K Limited clearly showed and suggested that the Husband’s family had assisted in the K Limited, and therefore also showing that the Husband, but not the Wife’s Mother, has beneficial ownership in K Limited. 105.Regarding the suggestion of $100,000 transferred to the Wife, I notice that from the evidence before the Court, whether the amount was transferred, that allegedly happened in 1992, more than 20 years ago. Besides, according to the Wife, she started being a director of K Limited in 1992. The money, if transferred as alleged, might well be for the use of K Limited. From the evidence, the Court is not of the view that the $100,000 should be added back. The Court has to further point out that the beneficial ownership of K Limited should not be issue to be determined by the Court for this trial. 106.Regarding the golf club membership, the Wife explained that she started having the membership about 10 to 20 years ago. As it could not be sold, that is the reason why she still has the membership now. The Wife estimated that the current value of the membership is about one hundred odds thousand Hong Kong dollars. I notice that the value of the golf club membership had been disclosed in all the 3 Form Es of the Wife. The estimated value of the golf club membership in the amount of HK$150,000 had been included in the table of assets and liabilities of the Wife (refer to paragraph 72 hereinabove). I am of the view that there is no non-disclosure of the Wife in this regard. 107.Regarding the Rolex watch, the Husband only put his case that the Wife had taken his watch as the Wife “had taken the whole safe in the house”, which the Wife had denied. He who alleges must prove. As there is no further evidence in support, I am not convinced that the Husband has made out his case that the Wife had taken his Rolex watch. 108.Regarding the allegation that the Wife has failed to disclose a piece of land in the mainland that she bought in 2006 and the Wife had concealed about 5 million dollars, during cross-examination, the Husband relied on and showed to the Wife a copy agreement in Chinese (“Agreement”) (one of the pages in Exhibit “CWK-4”). The Wife answered that she had no recollection of signing the Agreement and she did not buy the land in the mainland as alleged. She also pointed out that the Agreement the Husband showed to her was not a buy and sell agreement of land. 109.I have considered the questions put to the Wife, her answer and the evidence. The documents put to the Wife include the Agreement, with the Husband, the Wife and the Wife’s 2 brothers being the parties signing it in 2006, agreeing to the extent that the Wife and her 2 brothers authorising the Husband to buy a piece of land in the mainland. Attached with the Agreement are some pages of typed or handwritten tables and figures, with some tables showing a sum of about 5 million odds dollars being half of “稅費統記表” (tax record table) and remaining amount of “分配表” (distribution table). 110.Without putting any further questions to the Wife about the alleged purchase of land and the alleged 5 million odds the Wife had concealed, the documents allegedly proving that the Wife had concealed 5 million odds simply does not make any sense. Also considering that the nature and terms of the Agreement, and without further evidence and questions put to the Wife, I am not convinced that the Husband has made out his case that the Wife has not fully disclosed the landed property or the Wife has concealed the sum of 5 million odds dollars. 111.From the evidence, the Court is not convinced that the Wife had concealed money as alleged. (iv) Other matters of cross-examination 112.The Husband also cross-examined the Wife along the line of questioning including whether it was the Husband who was the true owner of K Limited and SFTF Limited (eg. questioning that the W’s family has not been in the timber business and it was the H who set up the companies, alleging that the Wife had asked the Husband’s family to give her $100,000 to do business for K Limited, questioning how the Wife’s Mother and the Wife’s Brother got the 99% shareholding of K Limited and SFTF Limited, the rationale of the Wife only holding 1% shareholding of K Limited and yet K Limited would provide her with free accommodation etc). 113.Pursuant to the Orders dated 8th December 2015 (refer to paragraphs 58 and 59 hereinabove), it is not open to the Husband to argue the beneficial ownership of K Limited and SFTF Limited and to have the value of the same be included as matrimonial assets. Therefore, I will put no weight to the matters not relevant to my consideration for issues to be determined in this ancillary relief trial. 114.To conclude for this part about the parties’ assets and financial resources, the only valuable matrimonial asset is the net sale proceeds of the Ontario Property, which the parties had agreed to be given to and divided between the Children. Considering the cross-examination, the evidence and submissions, I do not form the view that the Wife had concealed any money or non-disclosure of any assets as alleged that should be added back. Other than the net sale proceeds, I am of the view that the parties’ assets and liabilities are as stated in their respective 3rd Form E, which I have summarized in paragraph 72 above. Step 2: Assessing the parties’ financial needs 115.In this section, the Court will consider the parties’ expenses and financial needs. 116.Regarding the expenses of the Husband, it is shown in his 3rd Form E that his total monthly expenses is HK$6,233 (with breakdown of HK$4,483 for Part 4.1 and HK$1,750 for Part 4.2). Out of the total monthly expenses, the expenses for rent or accommodation had not be included. 117.According to the Husband, the address in Tuen Mun he stated in his 3rd Form E (“Tuen Mun Property”) is the property owned by the wife of the Husband’s Brother. The Husband’s Brother is now living in Canada. The Husband is now living at the Tuen Mun Property, together with some relatives of the wife of the Husband’s Brother and sometimes the relatives and friends of the Husband’s Brother also lived there. 118.As stated in Part 5.5 of the Husband’s 3rd Form E, the Tuen Mun Property is only a temporary place to stay and he may need to rent another place for living in future. During cross-examination, the Husband was asked whether he has started living at the Tuen Mun Property since after vacant possession of House 3x of Hong Lok Yuen was obtained from him by the Order dated 31st March 2014 under HCA 965/2010. The Husband did not agree. He said since he moved out from House 3x of Hong Lok Yuen, he had been living everywhere and also at his friend’s home. 119.I accept that at least from the date the Husband’s 3rd Form E was filed on 22nd October 2015 to date, the Husband has been living at the Yuen Mun Property, which he does not have to pay any rent. 120.I notice that Part 4.4 of the Husband’s 3rd Form E is blank, which meant there was no anticipated substantial changes in the expenses as stated in Part 4 of Form E in the foreseeable future. Therefore, I accept that at least in the foreseeable future, there are no anticipated substantial changes in the expenses of accommodation. 121.As stated in the Husband’s 3rd Form E, as he had been adjudged bankrupt on 18th July 2013 and he had become unemployed from 2013 to April 2015, he is currently living with the unstable financial assistance from relatives and friends. 122.About the health of the Husband, as stated in Part 5.5 of the Husband’s 3rd Form E, he “is suffering from back pain and his working capacity is not as good as he was when K Limited and SFTF Limited were set up. The Petitioner also got high blood pressure, high blood glocuse and high cholesterol”. Apart from what had been stated therein, there is no documentary evidence in support about any health problems, which the Court should consider in relation to financial needs in that regard. 123.I notice that there is liability of the Husband in the sum of HK$1,158,353 as stated in the Husband’s 3rd Form E due to his inability to pay the taxed legal costs in that sum in the action DCMP 947/2011. It is noted that that was the basis the Husband was adjudged bankrupt and all the assets and liabilities of the Husband has been vested in the OR since his bankruptcy. 124.Regarding the expenses of the Wife and the Children, it is shown in her 3rd Form E that her total monthly expenses is HK$89,442 (with breakdown of HK$12,351 for Part 4.1, HK$9,150 for Part 4.2 and HK$28,891 for Part 4.3). 125.At the commencement of this trial, the Children are aged 22 and 20, and are studying in the UK. I notice that the Children will be graduating in due course, which means the Wife’s expenses on Children will be reduced substantially. But before that, I accept that the Wife will continue to be the one supporting the Children financially. 126.In Part 4.4 of the Wife’s 3rd Form E, she indicated that when she leaves the employment of K Limited, there is the substantial change in rental expenses of about HK$20,000 per month. 127.Regarding the liabilities of the Wife, she had provided a breakdown of loans owned to K Limited, her relatives and friends in various sums. It is the Wife’s evidence that had it not been for the Husband to initiate so many proceedings against the Wife, she would not have incurred that much legal costs. Besides, the Husband has not been paying anything for the family or the Children since 2008 and the Wife had to borrow money to make up with the shortfall of family expenses. 128.Apart from some questions the Husband asked about the loan from K Limited, the other liabilities had not been challenged. Equally, there is no evidence from the Wife about when these loans have to be repaid. The Court is prepared to accept that these loans are soft loans from relatives and friends. Though not with strict terms of repayment, the Wife is obliged to repay, which I am of the view that after the Children have finished full time education, the financial pressure from the Wife would be relieved and she would then be able to repay those loans. Consideration of other factors 129.Before going further to consider how to decide the outcome, it is necessary for the court to consider the conduct of the parties and all circumstances of the case including all the matters as stated in s. 7(1) of Cap. 192, including the standard of living enjoyed by the family before the breakdown of the marriage, the age of each party to the marriage and the duration of the marriage, any physical or mental disability of either or the parties and the contributions made by each of the parties to the welfare of the family. (a) Standard of living 130.From the information provided in the Husband’s and the Wife’s respective Form Es, I accept that during marriage, the parties and the family have enjoyed an average or slightly more than average standard of living. (b) Age of the parties and the duration of the marriage 131.The Husband and the Wife are 55 and 54 years old respectively at the commencement of the trial. They were married in 1990 and separated in 2008, and 2 Children were born in the wedlock. This is a long marriage of 18 years. It should also be noted that there is separation and separate finance between the parties since 2008. (c) Any physical or mental disability 132.Both the Husband and Wife had expressed their concern and worry about their physical and psychological health, which may affect their work and future earning capacity. With the parties now at their mid 50s and with the impact of divorce, it is understandable that their mood and emotion is affected, and their health is not as good as before. However, without providing any documentary proof and after having considered their evidence, the Court is not of the view that there is any physical or mental disability affecting their earning capacity. (d) Contributions made by each party to the welfare of the family 133.Before the marriage breakdown, I am of the view that both the Husband and the Wife had worked and had contributed to the family. After 2008, it is not in dispute that the Husband had no longer contributed to the family or to the Children. It was a time when the Children were studying at international school for the secondary level and later on pursue their university studies in the UK, with significant sum of school fees required (amounts are stated in the Wife’s Form Es). (e) Conduct of the parties 134.Both the Husband and the Wife had made allegations against each other, including allegation of extra-marital relationships. The Husband suggested that the Wife had an affair with a Mr. HWS, that the shareholding of K Limited and SFTF Limited was transferred to the Wife’s Mother and the Wife’s Brother without the Husband’s consent, that the Husband had been ousted from the business of K Limited and SFTF Limited and that the Wife had diverted the business of K Limited to other companies etc. 135.On the other hand, the Wife also alleged that the Husband had developed an extra-marital affair with another woman in the mainland dated back in about 2006, that the Husband had set up his own factory in the mainland and had borrowed money from the Wife’s family members but did not make any repayment, that there was a domestic violence incident on about 9th December 2008, that the Husband had made unfounded allegation against the Wife to the Immigration Department and that the Husband had initiated different proceedings intending to distress the Wife and to revenge as the Wife and her relatives had eventually stopped lending money to the Husband to start his own factory in the mainland etc. 136.I have considered the allegations made by the Husband and the Wife, the evidence and documents, the background of the case and the parties’ submissions. I have to reiterate the 4th principle stated in the case LKW v DD (supra) which is applicable when the court is considering matters about conduct and contribution, as follows :-
137.It is well established legal principle that “conduct” is only relevant to financial provision if it is “obvious and gross”. The court should refrain from permitting parties to indulge in a post mortem of their marriage and to find guilt and blame. 138.Having considered the Husband’s allegation about the Wife’s conduct and the legal principles, I understand that according to the Husband, there is grave unfairness about he being ousted from K Limited and SFTF Limited and that he disputes about the beneficial ownership of K Limited and SFTF Limited. However, as explained earlier which I am not going to repeat here, this issue is not to be re-opened. Deciding the outcome 139.After Step 1 and Step 2, if surplus assets would remain after the parties’ needs have been catered for, the next step in the exercise should generally be for the Court to apply the sharing principle to the parties’ total assets. 140.Regarding the parties’ financial needs, as analysed above, I am of the view that both the Husband and the Wife have earning capacity to support their own living and expenses in the foreseeable future. 141.For the present case, regarding the parties’ respective financial situation, which I have summarised in the table in paragraph 72 hereinabove, there are no net assets of the parties to be divided. In fact, the only valuable asset for this case is the net sale proceeds of the Ontario Property, which the parties have agreed to be distributed to and to be shared equally between the 2 Children. 142.Therefore, the Court has to consider what orders to make other than the Ontario Property in these circumstances. 143.According to the Husband, he asked for periodical payments of HK$80,000 from the Wife as ancillary relief. 144.I have considered the evidence of the case. Regarding the Form Es of the Husband, I summarise his monthly expenses in his three Form Es in 2011, 2014 and 2015, as follows :-
145.I do not see any evidence or documentary support that the Husband has been using HK$80,000 or any amount near that figure. There is simply no basis for the Husband to ask for that amount as periodical payment from the Wife. 146.During the trial, the Husband also asked for half share of the 1% shareholding of K Limited and SFTF Limited that the Wife is now holding. I am of the view that it is not practical at all, as the companies belong to the Wife’s Mother and Brother respectively. Given the dispute of the parties in the past, it is not practical to order transfer of shares. 147.Considering the value of the shareholding of K Limited and SFTF Limited, I have considered that in paragraphs 74 and 75 hereinabove. It is noted that (a) there is no expert report about the value of the 2 companies; (b) the value of the 2 companies is not issue in dispute; (c) the value as stated by the Wife in her 3rd Form E was taken from the audited financial statements attached to her 3rd Form E (which amounted to HK$13,085 for K Limited and loss of HK$18,704 for SFTF Limited, and by setting off the 2 amounts, it is a loss of HK$4,899 in total); (d) it is not allowed for the Husband now to re-open and say that he has beneficial ownership of the 2 companies. 148.Therefore, I do not agree there should be transfer of the half share of the 1% shareholding of the Wife or the value of the same to the Husband. 149.Regarding the Wife’s stance, Mr. Chan asked the Court to consider ordering clean break for this case. The main reason being there is long separation since 2008 and parties have separate finance since then. Besides, the Husband has not been paying anything for the family or the Children since 2008. 150.Since the parties separated in 2008, they have separate finance since then. There have been no application for maintenance pending suit, which indicates that the parties could manage their own income and expenses all along (either by their own and/or get financial support from their family and friends), and which also shows that there have been separate finance throughout the years. 151.As explained and analysed earlier, I accept that both the Husband and the Wife have earning capacity to support their own living and expenses in the foreseeable future. 152.Given the parties’ background and age, with both Children almost finishing tertiary education, and with the parties with separate finance since 2008, and also having considered all circumstances of the case as a whole, including conduct, behaviour and contribution of the parties, I am of the view that it is an appropriate case and it is fair and just to order clean break between the parties. Costs 153.Generally, costs should follow the event. Considering the parties’ open proposal, the Husband has failed to make out his case after trial. The Wife should be awarded costs for the trial from 14th June 2017 to 16th June 2017, with Counsel certificate. 154.Regarding all costs reserved, in the present case, both the Husband and the Wife filed Form A, applying for ancillary relief in the first place. I have to emphasise that costs should be in the discretion of the Court. From the background of this case, I notice that there is a long history with both the Husband and the Wife having initiated different proceedings and applications, which ended in the committal and bankruptcy of the Husband, together with other reasons, causing the case to have undesirably prolonged before reaching this ancillary relief trial. Besides, I have considered the parties’ open proposal in relation to costs reserved. I also notice that it comes to trial that the parties have agreed to have the net sale proceeds of the Ontario Property to be given to their Children, to be divided equally. 155.With reasons aforesaid and having considered all the relevant circumstances of the case, I am of the view that a fair ruling on the matter of all costs reserved is there be no order as to costs. These are costs orders nisi, which are to be made absolute within 14 days. Orders 156.Based on the reasons explained hereinabove, I make the following orders:
157.I am satisfied that there are no children of the family to whom section 18 of Cap. 192 applies and I accordingly make a declaration to that effect.
The Petitioner acts in person, accompanied by his McKenzie friend Mr Jeremy Chan, counsel, instructed by Messrs. K. C. Ho & Fong, for the Respondent | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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