Nsk v. Krw
Read the full judgment text of FCMC 7594/2015 on BabelCite. This Family Court judgment was delivered on 2 April 2019 before Her Honour Judge Sharon D. Melloy.
Matrimonial Proceedings and Property Ordinance – Section 17 – Ancillary Relief – Trusts – Capital Division – Maintenance – Costs – Setting aside dispositions – Intention to defeat claim – Matrimonial pot – Sharing principle – Non-disclosure – Conduct – Lump sum – Periodical payments – No order as to costs – Wife successful in s.17 application but unsuccessful overall – Husband credible – Assets identified including shares and properties – 50:50 split of non-share assets – Maintenance HK$100,000 per month
Legal issues: Setting aside dispositions under s.17 · Identification and valuation of assets · Division of assets and maintenance · Costs order
Outcome: Trusts set aside; lump sum and maintenance ordered; no order as to costs
Cites 1 case
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FCMC 7594 / 2015 [2019] HKFC 89 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO 7594 OF 2015 ----------------------------
---------------------------- Coram: Her Honour Judge Sharon D. Melloy in Chambers (Not open to public) Dates of Hearing: 17 – 20 and 23 July and 26 – 28 September 2018 Written closing arguments submitted: 23 and 26 October 2018 Written closing replies submitted: 19 November 2018 Date of Judgment: 2 April 2019 ----------------------- J U D G M E N T ----------------------- Introduction 1.This is a judgment to determine, firstly a Notice of Application issued by the Petitioner wife dated the 29 July 2016 to set aside a number of dispositions relating to three family trusts and secondly, after that matter has been decided, to determine the issue of final ancillary relief. 2.This case brings into sharp focus the difficulties caused when parties act in person and perhaps do not, as a consequence, fully understanding the litigation process. In this case each party makes significant allegations against the other with respect to disclosure. Each accuses the other of material non disclosure and each maintains that the other has hidden assets. 3.The wife makes many many allegations against the husband, some of which have absolutely no basis in fact or have very little if any substance, whereas others are of a little more import. It is though a difficult and time consuming task to sift through this myriad of allegations in order to determine what is substantive and what is not. In addition, the wife has not complied with her own duty to make full and frank disclosure and as at the time of trial had not provided copies of bank and credit card statements as agreed. (Initially the parties had agreed that disclosure would go back to 2011 – although this was not infact fully complied with by either side). Other difficulties include the fact that the wife seeks to rely on documents that have been improperly obtained. This was first raised substantively at the maintenance pending suit hearing on the 27 May 2016 when the wife’s then lawyers withdrew her affirmation in Reply dated the 20 May 2016 because it had exhibited a contract of employment from the husband, which had allegedly been obtained by the wife by dubious means. Notwithstanding this the wife then sought to reintroduce this document under cover of one of her six affirmations filed on the 17 July 2017. For the avoidance of doubt this affirmation shall be expunged from the court file and the court will not refer to contract of employment exhibited to it. 4.Similarly, the wife filed a huge affirmation dated the 2 January 2018 initially without leave. This document exhibits hundreds of documents, some of which had been exhibited before. The document also includes a running commentary from the wife, which is more in the way of submissions and should not form the basis of affidavit evidence in any event. In addition, there are a number of e-mails exhibited seemingly from the husband to his new partner, which can only have been obtained illegally. For the avoidance of doubt I do not intend to rely on these e-mails. Further, there is a typed up document headed “Attachments” which on the face of it seems to be written in the same sort of language as a company report. The husband took great exception to the inclusion of this document during the trial and said that it was a false document. The wife said she had the original at home and I gave her the opportunity to produce it. She was unable to do so. Consequently, the only inference that can be drawn is that the husband was correct and that the wife had knowingly produced a false document to the court possibly with a view to deliberately misleading it. 5.The husband for his part also maintains that the wife has undisclosed assets in Malaysia. He also sought to produce evidence at the trial from a private detective, which he said went to support his case in this respect. For the avoidance of doubt and as indicated during the trial, the court does not intend to attach any weight to this evidence either. 6.In addition, neither party has produced valuations, agreed or otherwise of the three properties in dispute in Malaysia and the further three properties allegedly beneficially owned in part by the husband in China. Further and perhaps more importantly, the shares which are the subject of the section 17 application have not been valued by a Single Joint Expert, or at all, although both parties make reference to various share pricings. 7.There are also issues with respect to the position of the adult daughter, who I will refer to as KE. She provided an affidavit on behalf of the mother and also gave oral evidence in court, but she has not been joined as a party to the proceedings, notwithstanding the fact that on the face of it she is the legal joint owner of two of the properties in Malaysia and the sole owner of a further property in Hong Kong. KE is 27 years old and is currently studying full time. 8.It is then against this background that the court seeks to determine the issues currently before it. The Notice of Application 9.In the wife’s Notice of Application dated the 29 July 2016 she seeks to set aside the following dispositions:
10.It is of note that neither party has made a formal application in relation to the property held by the daughter in Hong Kong – i.e. the L property. Background to the marriage 11.By all accounts this was a long, but not a particularly happy marriage. It seems that the parties met in 1988 and married on the XX December 1992, in Hong Kong. The wife is Malaysian and the husband is German. It is the husband’s second marriage and the wife’s first. The parties only daughter, KE, was born on the XX October 1991. 12.Prior to the marriage the wife worked as Cabin Crew for a well-known airline in Hong Kong, whereas the husband has always been a businessman. Although the wife worked for a short while at the beginning of the marriage, for one of HH’s wholly owned subsidiaries, and later for a hotel on the Gold Coast, she has mainly been a full time mother and housewife. The husband was responsible for maintaining the wife and daughter and he paid for all household expenditure and all of the daughter’s expenses including her educational costs. He also provided the wife with a monthly allowance. He says, and this does not appear to be disputed, that in so far as the assets are concerned these were largely kept separate. He says that he believed that the wife had some savings when they married but he did not know what these where and likewise the wife did not know about his financial affairs. They did not hold any assets jointly. 13.In or about 2007 the husband began a relationship with another woman from Mainland China and he had a child with her on the XX October 2011. For a while he maintained two households, only telling the wife and KE of the existence of his son and new partner, in February 2015 after he had been (wrongly) diagnosed with terminal prostate cancer. It seems by that stage that the parties were largely living separate lives with the wife spending increasing amounts of time in Malaysia and the husband in China. The wife issued proceedings for divorce shortly thereafter. 14.It is of note that the wife is now aged 53 and the husband has just turned 70 years of age. The husband continues to work as the Chief Executive Office of a small US publicly listed company. The wife is not currently working. The litigation 15.On the 16 June 2015, the wife issued a petition based on mild unreasonable behaviour particulars. She was legally represented at the time. Although the husband initially indicated his intention to defend the proceedings, no Answer was ever filed and the matter consequently proceeded on an undefended basis. The decree nisi was pronounced on the 28 October 2015 and a section 18 declaration was granted on the same date. Notwithstanding this the wife has never filed an application for a decree absolute. The husband issued a Form 5 on the 29 November 2018, but it was subsequently explained to him, that as the Respondent it was necessary for him to apply for a decree absolute on summons. To date this issue remains in abeyance. The parties do however need to resolve this point as final orders for capital can only be made after the decree absolute has been pronounced. 16.On the 11 January 2016 the wife issued a summons for maintenance pending suit and asked that any order be backdated to August 2015. Shortly thereafter, on the 21 January 2016 interim interim maintenance was ordered at HK$10,000 per month. The husband continued to pay for the wife’s rent and for all of her other general monthly outgoings. On the 28 February 2017, at the maintenance pending suit hearing, it was agreed, inter alia, that the husband would continue to pay for the wife’s rent at HK$50,000 (now HK$55,000) per month and utility costs, plus her car expenses and all medical bills together with an additional HK$30,000 per month as maintenance pending suit. It is the husband’s case that this totals approximately HK$100,000 per month. The wife originally sought HK$120,200 per month plus provision for her legal costs. 17.The parties have attempted mediation on several occasions, but without success. There have been two rounds of questionnaires. Updated Form E’s were filed prior to or at the trial. 18.The matter eventually came on for trial in July 2018 and then went part heard until September 2018. On the first day of trial it became clear that the wife’s affidavit dated the 2 January 2018 did not appear to have been properly reproduced as a court bundle. The husband complained in a letter to the court dated the 3 July 2018 as follows:
19.On the first day of trial I raised this with the wife and explained that the court bundle needed to be an exact replica of the affidavit that she had filed in court. She asked for time to do this and the case was adjourned to the following day. I was led to believe that the matter had been satisfactorily resolved. However, on review it seemed that this was far from the case.
Additionally:
20.Consequently, it has proved difficult to work with the affirmation that was reproduced in the court bundle. Where issues have arisen with respect to this affirmation I have referred back to the original that was filed at court. Discussion 21.I must now turn to consider the issues, the law and the parties evidence as set out in their affirmations, including the affirmations previously filed with respect to the wife’s maintenance pending suit application and as given orally by them during the hearing. For the avoidance of doubt, in so far as the matters set out in this judgment differ from the evidence of the husband or wife, that is because I have preferred the evidence of one of the party’s over the other or it is because I do not find the evidence given credible, or because I consider that the documents produced confirmed my findings of fact. Setting aside dispositions The law - generally 22.Section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 states as follows:
23.Therefore, if I am satisfied that the husband set up the three trusts, referred to in paragraph 9 above, with the intention of defeating the wife’s claim for ancillary relief, then I may set those trusts aside. I accept that I need to look at the actual intention of the husband at the time that the dispositions were made. I also accept that it must be clear that there was an intention to defeat the wife’s claim for ancillary relief, although it may not be the only or even the dominant intention of the husband given that “It is enough if it played a substantial part in his intentions as a whole”. (See Kemmis v Kemmis [1998] 1 WLR 1307). 24.In addition, reference should be made to the rebuttable presumption found in section 17(3) Matrimonial Proceedings and Property Ordinance, Cap 192, referred to above. This states that if the dispositions were made less than three years before the s.17 application was made, as here, then there is a rebuttable presumption that it was done with the intention of defeating the wife’s claim for ancillary relief. In this instance the dates of the dispositions are the 30 October 2013, 1 September 2015 and the 27 June 2014 and the application was made on the 29 July 2016. Thus the burden is on the husband to show that he did not make these dispositions with the intent of defeating the wife’s claim for ancillary relief. The burden does not rest on the wife. The section 17 application 25.In this instance there is no dispute that the husband set up the three trusts as alleged. He said that he did so in order to provide financial security for both of his children and in order to secure his long term employment. He has repeatedly said that his intention was not to defeat the wife’s claim for ancillary relief. 26.The husband explained the situation thus in his affirmation dated the 26 January 2017:
27.The husband set up the first trust on the 30 October 2013, when his son KR was about 2 years old. The husband said that he made an irrevocable declaration of trust in favour of his son and arranged for 245,770 restricted shares from the company to be held on trust for him. These shares were held in one share certificate and were to be vested in a BVI company. However, the husband ran into some difficulty in this respect, which he explained as follows:
28.This led to the husband setting up a second trust for his son – the so called cash trust, on the 27 June 2014. It is not clear how much money is currently held in the trust bank accounts with Standard Chartered Bank, but according to the husband he initially deposited Euro 260,000, which he had received from pensions and other insurances, when he turned 65 years of age. This amounts to approximately HK$2.3 million. Consequently, I accept that there is at least that amount in the bank account. 29.It is the husband’s case, that in order to be fair, he then set up a third trust in favour of his adult daughter, KE for the exact same number of shares, although these are not restricted shares. This trust is dated the 1 September 2015 i.e. just two and a half months after the divorce petition was issued. It is the husband’s case that KE uses the dividends from these shares to pay for her post graduate legal studies in Australia. He says that funds from here were also used to pay for the completion of the L property, the small Hong Kong property that is held in the daughter’s sole name. 30.The wife argues in her affirmation dated the 26 July 2016 as follows:
Discussion 31.Bearing all of the above in mind and although I accept that the husband’s primary purpose in setting up the trusts for his son was to provide some financial security for him and by implication the husband’s new partner also, it is also clear that by so doing he took steps to significantly undermine the wife’s claim for ancillary relief. The same can also be said with respect to the third trust in favour of KE. 32.The daughter’s position in this respect was somewhat unclear. It seems that she initially supported her mother, but then seemingly changed her mind. The husband produced a letter from her dated the 18 September 2016, which stated as follows:
33.In the witness box she said, inter alia, that the funds for the purchase of L came from the father directly and not from the trust. It is not clear on what basis she said that. She also said that the father made her sign the letter set out above, because he did not wish to pay for her school fees (i.e. the fees for her jurist doctorate). She also rather strangely denied the existence of the trust at all – although this does go to support the notion that the husband continued to ultimately control them and that they may have been sham instruments in any event. It was not clear whether or not she supported her mother’s application to revoke the trust or not. 34.In any event, although I accept that the husband had very believable reasons for setting up both trusts for his son (i.e. the trust holding the restricted shares dated the 30 October 2013 and the cash trust dated the 27 June 2014) and that his intent to make things equal between the two siblings was also commendable (i.e. the main reason for setting up the trust for his daughter dated the 1 September 2015), it also follows that by so doing he significantly undermined the wife’s claim for ancillary relief. I don’t believe that this was his main intention, but I do accept that it must have formed a substantial part of his intention overall. 35.I also accept that he has very cogent reasons for wishing to maintain control of his voting rights with respect to the shares i.e. in order to secure his employment, maintain shareholder confidence and to uphold the informal agreement that he has with the other two main shareholders with respect to the shares. However, this also goes to the question of whether or not these are genuine trust instruments or whether in fact the husband continues to control every aspect of the shareholding as if he were the owner of them in any event. 36.Bearing all of this in mind I shall make the order that the wife seeks. Consequently, there shall be an order in terms of paragraphs 1, 2 and 3 of the Notice of Application dated the 29 July 2016. The issue of costs shall be dealt with, in the round, at the end of the judgment. Thus the value of the shares and the value of the cash held in the third trust shall prima facie be included in the “matrimonial pot”. The law on Ancillary Relief 37.The relevant law is not in dispute. The Court of Final Appeal’s decision in LKW v DD (FACV no 16 of 2008) 13 HKCFA 537 sets out the approach that the lower courts must take when determining issues relating to final ancillary relief. 38.Mr Justice Ribeiro PJ reiterates that there are four underlying principles that must guide ancillary relief proceedings namely fairness, the absence of discrimination, the upholding of the concept of the yardstick of equality and the rejection of a need for a minute retrospective investigation of the parties’ finances. The last point is of particular relevance in the context of this case. At paragraph 69 of the judgment Mr Justice Ribeiro says as follows:
With respect I agree. 39.There are many issues in dispute in this case some of which are unlikely to have any bearing on the final outcome. Consequently, the court does not intend to go into each and every one of them, but will attempt to concentrate on those that appear to be the most relevant to the outcome. 40.In addition Mr Justice Ribeiro identifies a five step approach to be adopted in all ancillary relief trials, which if I may I will summarize as follows:-
41.The section 7 factors (s. 7 Matrimonial Property and Proceedings Ordinance, Cap 192) are largely dealt with within this general framework. They are: -
Reference will be made to the relevant sections when discussing each of the issues in turn. 42.When discussing pre-marital or non-marital assets Mr Justice Ribeiro added that
Each party’s open proposals The wife’s open proposals 43.The wife ultimately set out her open written proposals prior to trial as follows:
The husband’s open proposals 44.The husband for his part proposed as follows:
Discussion 45.I now need to go through the protocol as prescribed in LKW v DD. Consideration will also be given to the section 7 factors as part and parcel of that exercise. The issues then are as follows: The issues An identification of the assets What are they assets? And what value should be attributed to those assets? An assessment of the parties’ financial needs Whether or not the sharing principle should be adopted? In the event that this is a sharing case how should the assets be notionally divided at this stage? Whether or not there is a good reason to depart from an equal division of the assets? Deciding the outcome Further how much maintenance should the husband pay for the wife going forward? How much maintenance should he pay for KE, if anything at all? What order should be made for costs? What should be the final order? An identification of the assets What are they assets? And what value should be attributed to those assets? 46.The biggest difficulty in this case relates to the computation of the “matrimonial pot”. As indicated above there is no valuation of the company shares, nor of the properties in Malaysia (or indeed China). The wife bases her open offer on a number of assumptions and includes a significant number of “add backs”. These assumptions/add backs will be dealt with when discussing the different categories of assets as set out below. 47.In his closing the husband took a broader approach and divided the assets according to whether or not they came under the wife and the daughter on one side or the husband and son on the other. Unusually for an asset schedule, this document also included some income and/or maintenance payments. For ease of reference this is also set out below.
The assets in “matrimonial pot” 48.The law is quite straightforward in this respect. Unfortunately, its application can be less so. In LKW v DD Mr Justice Ribeiro explained it thus: -
With this in mind I will now turn to what should and should not be regarded as being in the so called “matrimonial pot”. HH shares 49.As indicated above, the husband is the founder and CEO of a small US publicly listed company known as HH. It is the husband’s case that there are 14 companies in the HH group. In addition, there are two companies that the husband set up in relation to the trusts for the son, referred to above and a further company known as RD Ltd which was involved in the investment of real estate in China. Thus on the husband’s case there are 17 companies in total. On the wife’s case there are 18 companies. 50.The husband is paid through one of the subsidiary companies known as NPMM Ltd. He has an income of just over HK$240,000 per month inclusive of a housing allowance, which is currently utilized by the wife and double pay. In addition, he receives a small pension from Germany of approximately HK$4,000 per month. He will also continue to receive dividend payments from HH going forward, together with other dividends from his other small shareholdings. 51.The wife made several outlandish claims with respect to the husband’s shareholding in HH and maintained in particular that the husband held 44% of the shares. I accept that there is no truth in this assertion. It is clear that the husband holds 16.2 % of the shares i.e. 614,067 shares in total. This is clear from the HH’s Annual Reports, two of which were produced for the trial (2014 and 215). It is the husband’s case that it is imperative that he retain voting rights with respect to all of these shares and that they cannot realistically be sold at this time. I accept what he says in this respect. 52.The difficulty, however, now that the trusts holding the children’s shares have been set aside, is that nowhere are these shares valued. The husband says that the “restricted founder shares” – originally held on trust for the son, are insider shares and can only be sold under very restrictive terms in the open market. It is not therefore clear what their value might be and how this might be different from the rest of the shares. 53.I have though taken judicial notice of the fact that as at the first day of trial, on the 17 July 2018, the share price for HH closed at US$4.37 per share and that on the first day of the adjournment – i.e. on the 26 September 2018, it had gone up slightly and closed at US$4.40 per share. I accept that the share value is likely to fluctuate considerably from time to time and that there have been occasions when the share price has dropped to below US$1 per share. In the husband’s affidavit of the 7 March 2016 he comments on this inter alia as follows:
54.Taking all of the above into account and bearing in mind the fact that I am charged with valuing the shares as at the beginning of the trial, it seems to me that the starting point must be to value the non-restricted shares according to their share value as at the first day of trial i.e. 368,297 (245,770 + 122,527 = 368,297 shares) x US$4.37 = US$1,609,458 (or say HK$12,553,770). 55.If all of the shares were valued at this rate, then the maximum value for all of the shares as at the first day of trial would be US$2,683,473 (i.e. 614,067 x US$4.37 = US$2,683,473 (or say HK$20,931,089). 56.The actual value on that day, is likely to be somewhere in between these two figures. I also accept that this is by way of an indication only, bearing in mind the fact that there is no official valuation available in relation to the same. 57.For the avoidance of doubt the wife’s suggestion that the shares should be valued at US$10 per share each is not accepted. Other shares 58.I accept the value provided for the husband’s other small shareholdings. In his opening proposal he put the value as HK$86,200. This figure is included in the schedule. The cash trust for KR 59.According to the husband he originally deposited Euro260,000 (or approximately HK$2.3 million) into a Standard Chartered bank account, to be held on trust for his son in case anything was to happen to him. No evidence has been produced in relation to this fund, although the husband did refer to the sum of HK$3.2 million in his closing submission as set out in paragraph 47 above. Given that this trust has been set aside, this sum shall also be included in the “matrimonial pot”. I accept that there is no disclosure in relation to this bank account, so that a more definitive figure other than this is not possible. Properties 60.There are similar difficulties with respect to the properties in dispute. The L Property 61.It seems that in or about September 2016, over a year after the wife issued divorce proceedings the husband assisted KE in purchasing a small flat in Hong Kong called L. It is not clear what the purchase price was and information about this property is very scant. As indicated above, neither party has issued any application to set this transaction aside and KE has not been joined as a party to the proceedings. The wife exhibited a copy of a letter from the husband’s solicitors dated the 5 September 2016, to an affidavit dated the 9 December 2016. In that letter the husband asks for permission to use HK$3,166,445 of family funds in order to enable the daughter to complete on this purchase. It is the husband’s case that when the wife refused this request, and that as a consequence of that refusal, funds were taken from KE’s trust to enable this purchase to proceed. In contrast it is the wife’s case that the husband did infact use family funds. She now asks that those funds be returned to the family pot, without making any related application with respect to the purchase of the property. It is of note that no primary evidence has been produced by either party with respect to this matter. For example, no bank accounts have been produced showing where the funds were ultimately transferred from. 62.It is the husband’s case that since the purchase of the property he has been paying the daughter an additional HK$6,000 per month so that she is able to discharge the mortgage. (He also pays her a further HK$15,000 per month as a general monthly allowance). 63.Given that neither party has made any formal application in relation to this property, I do not intend to take this matter any further. The property shall continue to be held by KE. It is a matter for her what she decides to do with this property. In such circumstances the deposit monies shall not be returned to the “matrimonial pot”, notwithstanding the fact that the trust has been set aside. Malaysian properties 64.Despite several court orders no formal valuations were produced with respect to the Malaysian properties. Prima facie it is the husband’s case that all of the properties were purchased with matrimonial funds and that he is entitled to a 50% share of those properties. Later he suggested that instead account should be taken of the fact that the wife is beneficially entitled to 100 % share of the value of all three properties. He estimated their total value at approximately HK$6 million. The wife gave an estimated value for the first property only, as she accepted that she owned this property in its entirety. She maintained that the remaining two properties were 100% beneficially owned by KE. BU 65.This property was purchased in August 1995 and appears to be 100% owned by the wife. She values it at HK$2.4 million. No formal valuation was produced in this respect, but the husband does not appear to be seriously challenging the value in any event. It was purchased during the marriage and the husband maintains that at some point he arranged for the mortgage to be paid off. Subsequently it seems that the wife may have used it in order to guarantee the mortgage on a subsequent purchase (i.e. the Sohia property). This property shall be included in the “matrimonial pot”. Astana 66.This is an apartment and it was purchased on the 27 November 2012. It is the wife’s case that although she holds this property jointly with the daughter KE, that KE owns the property wholly and beneficially 100%. It is the husband’s case that he provided 100% of the purchase price and that this is a matrimonial property and that as such it should be included in the “matrimonial pot”. There is no formal valuation of this property, although the wife originally valued it at HK$1.8 million in her first Form E dated the 4 September 2015. There is no updated information. Notwithstanding that the husband does not seriously challenge this value. 67.It is trite but worth repeating, that from a legal perspective he who alleges must prove. In this instance it is the wife’s case with respect to both this property and the Sophia property referred to below, that despite the fact that she and KE are joint legal owners of the property, that KE owns this property wholly and beneficially herself. There was no evidence produced to support this bare assertion. Consequently, on the 6 June 2017 the court ordered inter alia as follows:
68.The wife then attached a copy of a statement from KE to her second affidavit dated the 17 July 2017. It was a very short statement and said as follows:
69.It is of note that this was not a sworn document. Two further orders followed. On the 13 September 2017 I gave the daughter an extension of time to file an affidavit pursuant to the court order referred to above. On the 25 September 2017 she filed an affidavit in exactly the same terms as the statement. It was simply a bare assertion and took the matter no further forward. 70.Consequently, on the 9 January 2018 a further order was made as follows:
71.Subsequently KE filed a further affirmation in which she said that she was attaching a mortgage account for the second property – Sophia. She did not produce anything at all in relation to Astana. The document produced allegedly in relation to Sophia was one page only. It did not refer to any mortgage repayments and is wholly unfit for purpose as a result. 72.In such circumstances the wife has been given every opportunity to prove her case with respect to Astana, but has clearly not come up to proof in that respect. 73.It is also noted that the wife has largely been a full time mother and housewife and the daughter has, apart from a short period in the workforce, been a student. In such circumstances I tend to accept the husband’s assertions in this respect namely that that Astana was purchased with family funds primarily in order to provide the wife with a base in KL and as a 21st birthday present for KE. He says that the wife lives there when she is in KL as she is now nervous about staying in BU following a break in. 74.In such circumstances I can see no reason to depart from the stated legal ownership of Astana. The wife has not been able to prove that KE owns the property beneficially and legally 100%. The husband concedes that it was purchased in part for KE. Consequently, a 50% share or HK$900,000 of its estimated value shall be included in the “matrimonial pot”, being the wife’s 50% share of the same. Sophia 75.A second apartment was purchase in the joint names of the wife and KE in June 2014. Again although it is jointly held by the wife and KE, it is the wife’s case that it is wholly and beneficially owned by KE and that she is responsible for the mortgage repayments. As with Astana no documentary evidence was produced to support this assertion. The wife originally estimated its value at HK$1,560,000 and on the face of the documents there is currently an outstanding mortgage on it. The original purchase price was RM780,000 and the original mortgage was for RM568,000. It is not clear who is currently paying for the mortgage or how the mortgage is paid. 76.In any event there is unlikely to be very much equity in this property. I do though accept, as with Astana, that the wife has not been able to prove that it is held legally and beneficially 100% by KE. I will therefore, include 50% of its estimated net value in the “matrimonial pot”. The husband estimates its net value as HK$400,000. I will therefore include 50% of its value or HK$200,000 in the “matrimonial pot”. Other Hong Kong properties 77.In addition to the L property the wife also makes completely unfounded allegations with respect to a property in TW, where the husband resides with his new partner and son. There is no evidence to support the suggestion made by the wife, that this is somehow beneficially or legally owned by either the husband or his new partner. The husband rents this property and he has exhibited a copy of the tenancy agreement in that respect. Shenzhen properties Mw 78.The wife makes a similar allegation with respect to a property in Shenzhen known as Mw. I accept that these are company quarters and have in the past been provided to the husband on a rent free basis. There is no evidence to support the wife’s contention that the husband owns this property either legally and/or beneficially. G Mn 79.The circumstances surrounding alleged property investment in China, through a company set up by the husband and known as RD Ltd, is a little more problematic. In this instance the husband only attaches a draft affidavit from a Mr A, who did not subsequently give oral evidence at the trial. Consequently, it is not possible to attach any weigh to what Mr A allegedly says. Mr A is also a Director of HH. The wife is suspicious about these transactions and maintains that these properties should form part of the “matrimonial pot”. In particular, she is suspicious of the husband’s new partner’s role with respect to them. There is though no hard evidence to support the wife’s contentions in this respect. Consequently, I do not intend to add anything into the “matrimonial pot” in this regard. Bank accounts Wife’s bank accounts 80.The wife says that she only has one bank account in Hong Kong and no bank account in her sole name in Malaysia. She refers to one joint account with KE only. The difficulty is that despite a number of court orders the wife has never disclosed anything other than a very small number of bank statements with respect to these two accounts. The statements that she has produced only show a minimal amount of money in them. The updated Form E showed an aggregate figure of HK$32,000. 81.It is the husbands case that he wife has significant and undisclosed assets in Malaysia. In particular, he maintains that she should have somewhere between HK$5 – 8 million in cash reserves and he also suggests that she has invested in her brother’s company. 82.Given the fact that the wife has not disclosed copies of her bank statements as ordered, I think it is more likely than not that she has some undisclosed assets. I cannot though comment on the amount or on the suggestion that she has invested in her brother’s business, which is at best a rather speculative suggestion and amounts to little more than a bare allegation on the husband’s part. I am though of the view that it is unlikely that the wife has vast undisclosed assets as has been alleged by the husband. Husband’s bank accounts 83.In addition to the monies held in the Standard Chartered Bank account the husband also says that as at the date of the trial he had just under HK$7 million in cash assets (i.e. HK$5,623,187.24 + HK$1,169,166.02 = HK$6,792,353.26). Husband’s MPF account 84.As at the 23 May 2018 there was also HK$1,197,272 in the husband’s MPF account. Other assets Gold Coast Membership 85.In addition, there is a Club membership at the Gold Coast Club valued at HK$178,000. Insurances 86.Again the wife makes a number of largely unsubstantiated allegations with respect to a number of insurance policies, including a key life insurance policy that was taken out by HH. (Preferred care insurance policy no xxxxx126). I accept that this is common practice within publicly listed companies and big corporates generally. This is not something that has a monetary value that can be attributed to the “matrimonial pot”. There was also a Lifestyle Protection Policy, with KE as the beneficiary plus some accident insurance. Again these insurances do not appear to have a monetary value that can now be attributed to the “matrimonial pot”. Other miscellaneous and personal items 87.There are other items including two cars of minimal value and furniture in Malaysia and Hong Kong. Other alleged undisclosed assets 88.For the avoidance of doubt, and as indicated above, I do not intend to attach any weight to the production of private e-mails between the husband and his partner where reference is made to the sum of HK$12 million. The wife uses this as a basis for a request for an add back of the same amount. This is not accepted. 89.Further the wife has alleged that the husband has undisclosed assets in Germany. Again this is a highly speculative accusation that has very little substance to it. I accept that the husband receives a German pension in the sum of Euro530 per month (or say HK$4,000 per month). He also received some other funds when he turned 65 years. These formed the basis of the cash assets in the trust fund originally set up for his son. I tend to accept what he says in this respect. 90.During the trial it became clear that shortly before the petition was issued in May 2015, the wife removed two sums of HK$500,000 each from her bank account. It was her evidence that she gave those sums to KE – who took the money in cash. In addition, the sum of HK$90,000 was paid out as a house cheque. She said that she gave this money to her mother. It is not clear where those funds went, but I accept that they should be added back into the “matrimonial pot” and should be notionally attributed as belonging to the wife. I do not accept the argument that these should be regarded as belonging to KE notwithstanding the fact that the husband had given some funds to the wife earlier on in the marriage as a safety net, to be used for the daughter’s educational expenses in the event that something unforeseen occurred. 91.In addition, the husband says that he has previously transferred funds to the wife, to a bank in Malaysia and during the trial he produced evidence of doing the same again more recently. This is further evidence to support the notion that the wife has other undisclosed Malaysian bank accounts and probably some undisclosed assets as discussed in paragraph 80 - 82 above. Schedule of assets 92.Bearing all of the above in mind and doing the best that I can in the circumstances, it seems to me that the schedule of assets in the “matrimonial pot” is as follows:
Conclusion 93.In conclusion therefore, if one takes the shares out of the equation, there is approximately HK$11,195,825 in the husband’s name and HK$4,632,090 in the wife’s name. This totals HK$15,827,915 – or say HK$15,830,000 rounded up. In addition, I have accepted as set out above, that the wife may have some undisclosed assets. I also accept that the husband may have more than HK$3.2 million held in the Standard Chartered bank account. Generally, though I found the husband to be credible and I do not believe that he has other undisclosed assets as alleged by the wife. It is of note that the value of the HH shares may increase the size of the matrimonial pot significantly. An assessment of the parties’ financial needs 94.In considering this stage reference will also be made to the following section 7 factors:
95.The husband is currently 70 years old. He has said that he hopes to continue working for another 5 years – but there is no absolute guarantee in this respect. Thus he has an earning capacity of sorts – but it is limited by time. As indicated above the husband currently earns just over HK$240,000 per month inclusive of a housing allowance (currently used by the wife) plus his small German pension and other dividend payments. 96.The wife for her part is only 53 years of age, but she has been out of the workforce for a considerable period of time. Thus although she also has an earning capacity of sorts, it is unclear how much she could realistically earn going forward. The wife has property in which she can live in Malaysia. Both parties currently rent in Hong Kong. The husband has no property in which he can live with his new partner and son either in Hong Kong or elsewhere. 97.Thus in broad terms both parties need somewhere to live and sufficient money to live on. I also accept that the husband needs to make reasonable financial provision for his young son and partner. In so far as KE is concerned it does not seem to me that the husband should be obliged to make any further financial provision for her unless he chooses to do so. KE is 27 years old. She is a graduate and a qualified accountant. She has chosen to go back to University in order to take a post graduate law degree. She has a half share in two properties in Malaysia and she is the sole owner of a property in Hong Kong. She will need to make whatever financial arrangements for herself that she deems appropriate in the circumstances, including taking out loans to fund her studies. She may also need to work part time. 98.As indicated above, this is a reasonably long marriage of some 23 years, which produced one child, who is now an adult. Whether or not the sharing principle should be adopted? In the event that this is a sharing case how should the assets be notionally divided at this stage? 99.I accept that prima facie the sharing principle should be adopted, although as indicated above there are difficulties with assessing what is actually in the “matrimonial pot”. I also accept that on the face of it, it is not possible for the husband to immediately sell the shares. Consequently, I intend to make a notional capital division as follows:
100.There is approximately HK$15,830,000 in the pot, if one does not include the shares – or HK$7,915,000 each. Of that the wife already holds 4,632,090. Thus on the face of it the husband needs at this stage to pay the wife an equalisation amount of HK$3,282,910. Whether or not there is a good reason to depart from an equal division of the assets? 101.Notwithstanding the arguments raised by both sides with respect to possible non-disclosed assets, it does not seem to me that there is a good reason to depart from an equal division of assets in this case. I am not convinced that there is a pot of gold at the end of this particular rainbow. In particular, although I accept that the wife may have other undisclosed bank accounts I am not convinced that she has hidden assets of the magnitude suggested by the husband. As indicated above I basically found the husband credible and I do not believe that he has additional undisclosed assets as claimed by the wife. 102.The husband also raised some argument early on with respect to the fact that he had brought more assets into the marriage than the wife and that account should be taken of this. In that respect reference should be made to paragraph 42 above. Although what the husband says may be true, the fact remains that the financial situation has changed during the course of the marriage and that this is a long marriage. Consequently, there shall be no departure from the yardstick of equality on that premise. Deciding the outcome 103.In deciding the outcome reference will also be made to the remaining section 7 factors as follows:
104.Much has been said about the standard of living enjoyed by the parties before the breakdown of the marriage. It seems to me, however, that the parties enjoyed a comfortable middle classed lifestyle with ex patriate over tones. They lived in nice accommodation and the daughter attended a good international school. They travelled on occasion and the wife returned to Malaysia regularly. But they did not belong to high end Clubs nor did they spend excessively on restaurants, clothes or other items. 105.On the face of it neither party has any mental or physical disabilities, save that the husband is a little hard of hearing and he has some age related health concerns. 106.I accept that both parties made a valuable contribution to the marriage both in terms of finances and in raising their daughter, who was their main focus. 107.In so far as other benefits are concerned, it is of note that the wife is concerned about medical insurance. It seems to me though that she will need to make her own arrangements for this from the financial resources that will be available to her. These will be similar to the financial resources that will be open to the husband. Similarly he will also need to make his own arrangements for medical insurance for himself and his partner and son. How much maintenance should the husband pay for the wife going forward? How much maintenance should he pay for KE, if anything at all? 108.The husband has said on several occasions that it is important that he retains the ability to control HH’s shareholding as that is the key to him maintaining his earning capacity going forward. He has offered to continue to pay the wife HK$30,000 per month. It is not clear whether or not he was willing to continue to undertake to pay for her accommodation etc. On the premise that the husband will continue to earn approximately HK$240,000 per month plus the pension and other dividend amounts, I shall order that he pay maintenance to the wife of HK$100,000 per month. This will enable the wife to continue to enjoy the same standard of living in Hong Kong in the short to medium term. He shall be released from his previous undertakings as set out in the court order dated the 28 February 2017 to pay for the wife’s rent, utilities and car and medical expenses in Hong Kong. The wife will therefore be responsible for all of her own expenses going forward. I will not order that the husband pay maintenance for KE. She is now an adult with her own financial resources and it is a matter for her how she should fund her studies going forward. If the father continues to support her financially then this will be on a voluntary basis. What order should be made for costs? 109.The wife seeks an order for costs. In particular, she seeks her actual legal costs of approximately HK$900,000. The husband for his part suggests that there should be no order as to costs. 110.Although the wife was successful in her s.17 application, it is clear that she has not been successful overall. Her litigation conduct has also been appalling. She refused to comply with court orders, she sought to rely on improperly obtained documents, she seemingly manufactured other documents, she filed affidavits without seeking leave and when leave had been given she did not faithfully reproduce the latest affidavit in the court bundle for trial. Consequently, much more time was spent on this litigation than was merited. 111.However, given the husband’s stance on this and the fact that for the majority of the time the parties represented themselves, I shall make an order nisi to be made absolute in 14 days time that there shall be no order as to costs. In doing so it is of note that the husband was also responsible for his own legal fees at the beginning of the litigation. What should be the final order? 112.There shall be a final order as follows:
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Cases cited in this judgment
Further hearings and rulings under FCMC 7594/2015