Cww v. Wyf
Read the full judgment text of FCMC 16805/2016 on BabelCite. This Family Court judgment was delivered on 25 May 2020 before Deputy District Judge R So.
Matrimonial Causes – Ancillary Relief – Division of Assets – Full and Frank Disclosure – Separate Finance – Inheritance – Departure from Equal Sharing – District Court – CWW v WYF – Long marriage of 27 years – Dispute over landed properties and financial resources – Court finds no agreement of separate finance – Husband failed full and frank disclosure regarding assets and income – Inheritance source of Wife's assets acknowledged but importance diminished over long marriage – Departure from equal sharing justified due to non-disclosure – Final division 60% Wife, 40% Husband – Wife ordered to pay Husband lump sum of HK$4 million – No order as to costs.
Legal issues: Agreement of separate finance · Full and frank disclosure · Departure from equal sharing · Final division of assets
Outcome: Wife ordered to pay Husband lump sum of HK$4 million; Claims dismissed upon compliance.
Cites 3 cases
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FCMC 16805/2016 [2020] HKFC 113 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO 16805 OF 2016 ________________________
________________________ Before: Deputy District Judge R So in Chambers (Not open to public) Dates of Hearing: 18 to 20 April and 22 June 2018 Date of Judgment: 25 May 2020 ________________________ J U D G M E N T (ANCILLARY RELIEF) ________________________ 1.This is the trial of the Petitioner Husband (“Husband”)’s claim against the Respondent Wife (“Wife”) for ancillary relief for himself after a failed Financial Dispute Resolution hearing. 2.The parties were married in 1985 and separated in 2013. Two children were born in the wedlock. This is a long marriage of about 27 years. 3.The major disputes of this case include how the landed properties should be distributed and whether there has been separation of finance between the parties since about 1993 which justifies the departure from the equal sharing principle. 4.A list of the landed properties involved in this case is summarised in paragraph 25 below. Background and salient facts of the case 5.The Husband was born in 1958. At the time of the trial, he was 59 years old. He had been working mainly in the watch industry. 6.The Wife was born in 1966. At the time of the trial, she was 51 years old. She has been working mainly in the area of accounting. 7.The parties were married in December 1985 in Hong Kong. Two sons were born in 1987 and 1990 respectively, who were 30 (“Elder Son”) and 27 years old (“Younger Son”) at the time of the trial (collectively “Children”). Both sons have finished university education and both are now financially independent. 8.After the parties were married in 1985, they jointly bought a wooden house in Diamond Hill as their matrimonial home. Their Elder Son was born in 1987. The Wife’s father passed away in 1987. 9.In 1988, the parties were notified that their wooden house was about to be demolished and they were assigned to live at a flat in Shan King Estate, a rented public housing (“Shan King Property”). The parties moved into the Shan King Property in early 1989. In 1990, their Younger Son was born. 10.In order for the Wife’s mother to take care of the Wife and the Children when the Wife gave birth to her Younger Son, the Wife’s mother purchased a property at Siu On Court (“Siu On Court Property”) in 1990 for the whole family to live together. The purchase price of Siu On Court Property was paid in full by the Wife’s mother, but it was registered in the joint names of the Wife and her younger sister. The Husband does not dispute that Siu On Court Property is held on trust for the Wife’s mother. 11.According to the Wife, from 1988 to 1993, she had received a total sum of HK$703,000 from her mother, being the estate from her deceased father, and she had used the money she received for investments and purchasing properties. 12.Since about 1991, the Husband started working in the mainland during weekdays, and generally came back to Hong Kong during weekends. When the Husband was working in the mainland, the Wife was the one taking care of the family and the Children in Hong Kong, while working at the same time. 13.In 1993, according to the Wife, the parties separated and the Husband moved out from the matrimonial home. A deed of separation was signed between the parties dated 11 March 1993. 14.In late 1994, the parties reconciled and the Husband returned living together with the Wife and the Children. It is the Wife’s case that the parties have agreement of separate finance, which the Husband disagreed. 15.In 2003, the property of Aegean Coast in Tuen Mun (“Aegean Coast Property”) was purchased in the sole name of the Wife at the price of about HK$1.868 million, which became the matrimonial home of the parties. When the Aegean Coast Property was purchased, the carpark space no. 97 was also purchased together (“Carpark Space No. 97”) 16.In 2010, a property at Nerine Cove in Tuen Mun (“Nerine Cove Property”) was purchased under the sole name of the Wife at the price of about HK$2.4 million. This property has been rented out to earn rental income. 17.In 2010, the Shan King Property was purchased from the Housing Authority under the sole name of the Husband. 18.In about April or May 2013, the parties started separation. Since about May 2015, the Wife and the Children have been living at the Aegean Coast Property and the Husband has moved and started living at the Shan King Property when he is in Hong Kong. 19.In about August 2013, a property at Century Gateway in Tuen Mun (“Century Gateway Property”) was purchased in the sole name of the Elder Son. The Husband disputed the beneficial interest and sought declaratory relief that the Elder Son was holding on trust the beneficial interest for the Husband and the Wife. After trial, it was ruled by the Court that the Husband’s application failed. 20.The Husband petitioned for divorce on 8th November 2013 on the ground of unreasonable behavior of the Wife, which was defended by the Wife. The parties subsequently agreed that the Husband withdrew the petition for divorce and issued a fresh petition based on one-year separation with consent from both parties to divorce. 21.About end of 2013, the Hoi Tak Property was sold and by the Order dated 15 January 2014, the sum of HK$1,541,082.2 had been paid into Court. 22.On 29 December 2016, the Husband filed a fresh petition for divorce on the ground of separation for more than one year with consent. 23.Decree Nisi was granted on 27 June 2017 and Decree Absolute was granted on 15 September 2017. 24.By consent of the parties, it was ordered on 20 September 2017 that the sum paid into Court (being net sale proceeds of the Hoi Tak Property) be paid out in equal shares to the parties, which shall be deducted from the parties’ respective shares from the final entitlements to family assets. 25.The landed properties involved in this case are summarised as follows :
The Husband’s case and his Open Proposal 26.The Husband gave evidence in Court and had called his friend, a Mr. Xu (“Mr. Xu”) to be his witness, giving evidence in relation to the debt still owed to Mr. Xu in the sum of RMB350,000 for the purchase of the Century Gateway Property. 27.The Husband relied on his Form E and Updated Form E, his 4th Affirmation and 5th Affirmation and his Answer to the Wife’s Questionnaire as evidence in chief. 28.The Husband was 59 years old at the time of the trial. He was born in the mainland and had education up to Form 2 in the mainland. He started working as a farmer since the age of 16. In about 1978 or 1979, he came to Hong Kong. 29.After coming to Hong Kong, the Husband had all along been working in the watch industry. Initially, he was employed in a factory making case of the watches. Since about 1991, he was employed by a company in Hong Kong, with a watch making factory in the mainland and he started working in the mainland. 30.In about 2000, the Husband became one of the shareholders of a limited company (“SG Limited”), holding shareholding of 10.71%. He also worked and earned a monthly salary of HK$50,000, and from about July 2012 reduced to HK$30,000 until 28 February 2015. 31.It is the Husband’s case that the business of the SG Limited was not doing well since about 2008, and the business ceased at the end of 2014. One of the boss of SG Limited (“Mr. Yeung”) started another company and factory, and had asked the Husband to help. The Husband had worked in another company of Mr. Yeung for 2 months until 30 April 2015, earning a monthly salary of HK$30,000, and then his employment was terminated. According to the Husband, he has not worked since 30 April 2015. 32.It is the Husband’s case that during the marriage, each party had substantial financial contribution to the family, including the paying of money directly from him or transferring from SG Limited. His contribution to the family only ceased after the parties had a heated argument around mid 2013. It is the Husband’s case that as this is a long marriage of 27 years, there should be equal division of assets. 33.In the Husband’s Open Proposal, he asked for equal division of all family assets. Mr. Chau, Counsel for the Husband, submitted that according to the Husband’s calculation, the total assets of the family amounted to about HK$14,888,866. 34.By equal division between the parties, each should get HK$7,444,433 (ie. HK$14,888,866 / 2). By deducting the amount of the Shan King Property which is in the Husband’s sole name and the assets of the Husband (including bank balance, stock, insurance, MPF and car, and after deducting the debt he owed to Mr. Xu) in the total sum of HK$1,395,097, the Husband asked for the sum of HK$6,049,336 (ie. HK$7,444,433 – HK$1,395,097), rounded up to HK$6 million, from the Wife. The Wife’s case and her Open Proposal 35.The Wife gave evidence in Court and she did not call any other witness. 36.The Wife relied on her Form E and Updated Form E, her Affirmation and her Answer to the Husband’s Questionnaire as evidence in chief. 37.The Wife was 51 years old at the time of the trial. She was born in the mainland and came to Hong Kong in about 1979. She had education up to Form 3. She had worked as an electronic worker and a worker in a clothing manufacturing factory. 38.When the Wife was working, she also studied part-time. She studied subjects like English, accounting, management and human resources, and also factory management. In 1995, she studied the subject of using computer. 39.In about 1994, the Wife started working as an accounting clerk. In about 1996, she had changed her job to another company, also working as an accounting clerk. When giving evidence in Court, the Wife explained that in 2000, her boss started another company and she was assigned to work in the newly formed company (ie. her present employer) as an accounting manager, responsible for all accounting and human resources matters. The Wife clarified that the accounting matters she is responsible for are accounts receivable, not the aspect of accounting and auditing. 40.In the Wife’s Affirmation, she explained that as business was not well, her present employer terminated her employment in April 2015 and re-employed her in October 2015 as an accounting clerk. She had worries about her future employment. 41.As shown in the Wife’s Updated Form E, she is earning a monthly salary of about HK$29,213 (including basic salary of HK$24,700, double pay of HK$1,263 and bonus of HK$3,250 in average). 42.It is the Wife’s case that since about end of 1994, when the parties reconciled and got back together, they had agreed that the finance of the parties should be separate and therefore, she disagrees that there should be equal division of assets with the Husband. 43.She is of the view as there is separate finance with the Husband since 1993 or 1994, there has been no involvement and no contribution from the Husband in the properties she bought in her sole name since then, and therefore the Husband should not be entitled to equal sharing. 44.The Wife further alleges that the Husband had not disclosed fully and frankly, and therefore adverse inference should be drawn against him and that justifies the departure from equal division of assets. 45.Therefore, the Wife did not accept the Husband’s Open Proposal. In her Open Proposal, Mr. Tam, Counsel for the Wife, offered that each of the parties keeps the property or properties in his or her sole name (see paragraph 25 above for the list of landed properties). In addition, a lump sum of HK$2 million was to be given by the Wife to the Husband as full and final settlement. The legal principles 46.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 (“MPPO”) to have regard to the conduct of the parties and all the circumstances of the case including the following matters :-
47.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 :-
48.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 of MPPO as follows :-
49.Both Counsel have confirmed that the legal principles as stated in LKW v DD (supra) are not in dispute. However, Mr. Tam, acting for the Wife, asked the Court to consider and to rule on whether there is agreement of separate finance of the parties before applying the different steps of LKW v DD (supra). 50.With respect, I cannot agree with the approach submitted by Mr. Tam. I am of the view that the legal principles, especially the steps to be taken, as stated in LKW v DD are applicable, even with the factual scenario of this case regarding the dispute of whether is separate finance of the parties. 51.Considering evidence of the case and submissions of the parties, I am of the view that the dispute of whether there is agreement of separate finance should best be dealt with at Step 4 when the Court considers whether there should be reasons to depart from the equal sharing principle and at Step 5 when deciding the outcome. Issues 52.Both the Husband and the Wife asked for a clean break in this case. They are of the view that surplus assets would remain after the parties’ needs have been catered for. 53.The parties have also identified and agreed the joint issues, as follows :-
54.After consideration of the evidence and submissions, I am of the view that the following are issues for the Court’s determination :-
Analysis of evidence Step 1: The identification of the assets 55.Pursuant to paragraph 71 of LKW v DD, the first step is to “ascertain the financial resources of each of the parties calculated as at the date of the hearing. In particular, under section 7(1)(a), 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’. The object will of course be to compute the net financial resources, taking account of all material liabilities. At this stage, the court need not attempt to distinguish between matrimonial and non-matrimonial property, that being an exercise best undertaken (if necessary) when considering distribution of the assets.” 56.At this stage, as the court needs not attempt to distinguish between matrimonial and non-matrimonial property, I’ll list out the assets of the parties. As the Husband does not dispute that Siu On Court Property is held on trust for the Wife’s mother, it will not be included for consideration. 57.The total value of the landed properties is HK$14,172,647 (HK$7,180,000 + HK$1,240,000 + HK$1,060,000 + HK$4,692,647), with breakdown as follows :-
58.Other assets of the parties, with the value taken from the information in the Updated Form E, are as follows (the items in dispute are marked with an asterisk) :-
59.Under Step 1, three areas will be looked into :-
(A) Financial resources of the Husband 60.Background of the Husband has been summarised in paragraphs 28 to 32 above. 61.There is only one landed property in the Husband’s name, ie. the Shan King Property. According to the Husband, he has ceased working since about April 2015 at the age of 56, when his employment was terminated. When the Husband gave evidence in Court, he explained that he had no income and he relied on his saving or assistance from his relatives (which could be his financial resources). He further explained that he could not work as his health is not good, but there are no supporting documents in that regard. 62.The main dispute of the Wife is that she is of the view that the Husband had not fully and frankly disclosed his financial resources, which includes value of SG Limited and other related companies, non-disclosed rental income, non-disclosed insurance policy, other non-disclosed debts and non-disclosed debts recoverable. Therefore, the Court is entitled to draw adverse inference against the Husband and depart from the equal sharing principle. I will consider each of these sub-issues in turn. Value of SG Limited and other related companies 63.It is the Wife’s case that the Husband has hidden assets, including the value of SG Limited and other related companies, which the Husband denies. 64.As submitted by Mr. Tam, the hidden assets of the Husband include the following :-
65.Regarding the SG Limited and the SG factory in the mainland, as stated in the Husband’s Form E, the value of SG Limited was stated to be around HK$200,000, which is the same as stated in the Husband’s Updated Form E. However, in the Husband’s Updated Form E, he added that as the company had ceased business in 2014, possibly no money will be distributed to the shareholders. In the Husband’s 4th Affirmation, it was also stated in paragraph 7 therein that “The Business of [SG Limited] was ceased at the end of 2014…… Notwithstanding I have a 10.71% of the shareholding in [SG Limited], I am given to understand that there is nothing left behind in this company for distribution to its shareholders.” 66.Mr. Tam submitted that the combination effect of the wordings as stated in the Husband’s Form E, Updated Form E and his 4th Affirmation is that SG Limited “is a business no more”. However, upon cross-examination and being shown the latest annual return of SG Limited dated 7 Nov 2017, the Husband clarified that the one which ceased business is the SG factory in the mainland, not the SG Limited in Hong Kong. 67.Mr. Tam further submitted that the Husband had failed to provide audited accounts and other more updated documents of SG Limited regardless of repeated demands by way of letter for full and frank disclosure, and the reports and financial statements, the balance sheet and the profit and loss accounts requested were only disclosed to the Wife in March 2015. Mr Tam submitted that the Husband had adopted a “wait and see approach” and is clearly in breach of the positive duty to disclosure. 68.Regarding A Limited, it is stated in the Husband’s Form E that he held 5% shareholding of it, with estimated value of about HK$100,000. It is the Husband’s case that in 1998, he used RMB50,000 to join the company. He sold the company in 2014 to a Mr. Chow, a friend whom he has known for 26 years, and had obtained HK$120,000. He produced a copy cheque dated 1 December 2014 and a receipt signed by him and Mr. Chow. 69.Mr. Tam submitted that the Wife could not find any corresponding deposit entry in the Husband’s bank statement provided from 1 December 2014 to 9 November 2016, but this was not put to the Husband during cross-examination. Mr. Tam further pointed out that the said receipt and cheque were disclosed to the Wife in March 2015. 70.Regarding GL Limited, it is a subsidiary of SG Limited. As shown in the Annual Return of 2017, on 9 August 2016, SG Limited had sold its 255,000 shares of GL Limited to Mr. Chow. Mr. Tam submitted that as the paid up capital of GL Limited in 2013 is as high as HK$1,250,000, it is more probable than not that SG Limited would have some sizable capital gain generated from the recent shares transfer. 71.Mr. Tam also pointed out that from the bank statement of SG Limited, the bank balance had dropped from HK$4,969,531.81 on 31 March 2011 to HK$541,210.55 on 29 September 2012. From the reports and financial statements for the year ended 31 March 2013, it is noted that there was more than HK$7 million due from connected parties of SG Limited, but none of which is the Husband. Mr. Tam submitted that the Husband simply said that SG Limited was not performing good, but he could not substantiate his belief, which he learnt from the majority shareholder. I accept that this is a fair comment, as there are no updated financial statements of SG Limited provided by the Husband. 72.Regarding the Limited Company in Dong Guan, with reference to a document of transfer of shares produced, it is the Husband’s case that his 17% shares of the Limited Company in Dong Guan had been transferred on 30 March 2013 with consideration of RMB600,000. According to the Husband’s evidence under cross-examination, the amount was received in the form of cash, but there is no documentary proof. 73.Mr. Tam submitted that with the approach taken by the Husband, he is clearly in breach of the duty of full and frank disclosure. Mr. Tam submitted in his Closing Submissions, with reference to the case H v W and Others, unrep, HCMC 6/2008, that “if the court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms”. 74.As a result, funds hidden should be “added back” as the total assets of the Husband, as submitted by Mr. Tam in paragraphs 54 to 56 of his Closing Submissions :-
75.There is no expert evidence on the value of the SG Limited or any related companies. Parties, both with counsel representing, had previously confirmed with the Court that the case was ready for trial without expert evidence on the value of the SG Limited or any companies involved. Therefore, with respect, the Court is not prepared to rule on the value of SG Limited or other companies as submitted by Mr. Tam. 76.However, when considering the financial resources of the Husband, I will consider the evidence and submissions, and consider especially if there is full and frank disclosure in the subsequent paragraphs. 77.In relation to the duty to full and frank disclosure, it is trite to repeat the importance and duty for full and frank disclosure of one’s financial means in any ancillary relief proceedings. This duty is absolute and continuing. As explained in paragraph 73 of LKW v DD (supra) :-
78.Mr. Tam has drawn my attention to the case of H v W and Others (Supra), which I agree with the legal principles stated therein. 79.However, I have to stress and add that, while not undermining the importance of the duty for full and frank disclosure, it has to be done and considered in a reasonable, practicable and manageable scope. Whether there is no full and frank disclosure has to be view in context, considering the background of the case and of the parties, and also the evidence as a whole. 80.Having considered the submissions of the parties and all the evidence, I have the following views :-
81.Having considered the submissions and evidence, the disclosure of the Husband in relation to the companies are not satisfactory, especially in relation to which SG (whether SG Limited in Hong Kong or the SG factory in the mainland) had ceased operation and the reasons of failure to provide the most updated financial reports of SG Limited. I will further consider the issue of disclosure in subsequent paragraphs. Rental income 82.The Wife is of the view that the Husband has non-disclosed rental income. When the Husband was cross-examined about some entries in his bank statements, there were repeated deposits of HK$5,500 into the Husband’s HSBC account after he has become unemployed in the months of October, November and December of 2015, February, March, April, May, June, October and November of 2016 (a total of 10 months of a total of HK$55,000). 83.The Husband initially said that the HK$5,500 entry was rental income of the Shan King Property. But after being warned of his right against self-incrimination (as the Shan King Property was purchased under the Tenants Purchase Scheme and any leasing would require payment of land premium), the Husband withdrew and chose not to answer. 84.The Husband had declared in his Updated Form E that he had no other income. Mr. Tam submitted that the Husband had not been disclosing fully and frankly, and asked the Court to draw adverse inference. 85.After considering evidence and submissions, it is clearly shown in the Husband’s banks statements that there were regular deposits of the same sum for 10 months. On balance of probabilities, I accept that they are income of the Husband, be it rental income or income from other sources. Clearly, the Husband has not disclosed fully and frankly about this income of HK$5,500 per month. Insurance policy 86.During cross-examination, when the Husband was asked about an entry of HK$127,859.30 on 15 June 2015, he said that is was the money he took back from an insurance policy, which was not disclosed in the Husband’s Form E or Updated Form E. 87.The Husband explained that he only remembered the existence of this insurance policy after he was questioned by the Wife on 28 February 2014. 88.Mr. Tam submitted that there is no reason for the Husband not to disclose this insurance policy in his Updated Form E after he remembered the existence of this insurance policy in February 2014. Under cross-examination, the Husband confirmed that the insurance policy not disclosed is still in effect, but there is no disclosure about the details and value of the policy. Mr. Tam is of the view that there is no full and frank disclosure of the Husband in this regard, which I agree. Other debts 89.During cross-examination of the Husband’s HSBC account, it is the Husband’s case that the entry of HK$50,000 dated 24 October 2015 and the entry of HK$157,855 on 6 March 2016 were loans borrowed from his friends in the mainland. However, upon being cross-examined, the Husband could not explain why he remembered to put down the RMB300,000 owed to Mr. Xu, but not these other debts as alleged. 90.I have reservation of the Husband’s evidence. As these alleged debts are not disclosed before, I am not taking these sums into calculation of the total matrimonial assets. Debts recoverable 91.In relation to the Husband’s bank account in the mainland, he had been cross-examined extensively about various amounts deposited to his bank account every month. From July 2015 to November 2016, there is a total sum ranging from twenty thousand something to seventy thousand something per month of total deposits, cumulating to a total sum of HK$834,706.90 over that period of time. 92.During cross-examination, the Husband explained that some of the monies were repayments from friends who had bought electronic and cosmetic products through him, while others were repayments of loans previously advanced by him to his friends, including former colleagues. 93.Mr. Tam submitted that these explanations are not credible and in any event, with the amounts of repayments the Husband had received, it undoubtedly shows that the Husband had not disclosed such debts recoverable in his Updated Form E, which means there is no full and frank disclosure. 94.I have considered the submissions and evidence, I agree with Mr. Chau’s submissions that as shown in the relevant bank statements, there were deposits and withdrawals in the accounts over the relevant period of time. The withdrawals and deposits as shown in the Husband’s bank accounts were of no regular amounts. In particular, for the mainland bank account, the deposits were made by various people. 95.The Husband further explained why he had lent money to others. When he was working in the mainland, a lot of workers from the mainland factory of his company would borrow money from him, when they are in need or when they need to take money back to their homeland, and the workers would repay the Husband afterwards. 96.After consideration of the evidence as a whole and on balance of probabilities, the explanation of the Husband in this regard is not unreasonable and I accept that the deposits are unlikely to be non-disclosed stable income. 97.But Mr. Tam had accurately pointed out that if the Husband’s evidence is accepted, that means there are debts recoverable not disclosed in the Husband’s Form E and Updated Form E. From the Husband’s oral evidence, he said there were about RMB 10,000 to RMB 20,000 (by about 7 to 8 people) still owing him money. 98.It should be noted that there are no written records and the amounts of alleged debts repayable are simply based on the Husband’s memory, which I have reservation about the accuracy of the Husband’s evidence. Whether there is full and frank disclosure by the Husband 99.In considering whether there is full and frank disclosure of the Husband, I have to consider the overall credibility of the Husband’s evidence regarding his financial resources, as well as his background, educational level and past work experience. 100.I have considered the type of work the Husband had been doing and his training at work. He had been working in a watch case factory in the mainland for almost 20 years during weekdays. With his shareholding of only 10.71% in the SG Limited, I accept that he may not be in a position to make decisions in the company, such as why no legal action had been brought for the winding up of the company, if there is no actual operation in Hong Kong. 101.The Husband had explained that he was not the one responsible for the business and finance of the SG Limited, therefore he only knew that the company had not been doing well since about 2008, but he could not produce more supporting documents in that regard than he had already done so. He also explained that he had pursued after the majority shareholders about the company and he had attended the office of SG Limited in Hong Kong. However, nobody could be found at the office. The Husband had not explained further what other reasonable steps he had taken to try to contact the shareholders or secretary or any staff to try to obtain the company documents. 102.After careful consideration of the evidence as a whole, I can understand the difficulties and limitations faced by the Husband being a minority shareholder in a limited company. 103.However, at the same time, I have not lost sight of the ability and experience of the Husband. He had been working at SG Limited since about 1991, not only being one of the shareholders since about 2000, but also receiving a monthly salary. According to the Husband, when he was receiving monthly salary of HK$50,000 per month, he was in a position to instruct SG Limited to pay him HK$20,000, with HK$29,000 to be paid by transferring to the HSBC Account of the Wife. Apart from being a shareholder in SG Limited, the Husband also invested in another company, namely the A Limited as early as in 1998. I have reservation as to whether the Husband is not such a sophisticated person as submitted by Mr. Chau. 104.With the analysis above, with the Husband having legal representation all along, I am of the view that the disclosure of the Husband is unsatisfactory, in the following aspects :-
105.With reasons aforesaid and considering the evidence of the Husband as a whole, I accept that there is no full and frank disclosure of the Husband’s financial resources in the above aspects. 106.Without full and frank disclosure from the Husband, I cannot be sure of the total value of assets and the actual financial resources of the Husband, in order to consider distributing the family assets fairly. 107.The next question is what step should the Court take. Mr. Tam submitted, with reference to the case of H v W and Others (supra), paragraph 48 therein, that “If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms”, so that the “non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told”. Mr. Tam invited the Court to use the multiplier of 2 times of the non-disclosed assets (the submissions of Mr. Tam referred to in paragraph 74 above) 108.While agreeing to the legal principles as stated in H v W and Others (Supra), I have to point out that “concluding that the non-discloser must have assets of at least twice what the claimant is seeking should not be used as the sole metric of quantification”. Having considered the facts of the present proceedings, which is factually distinguishable from that case, in terms of assets involved, the scope of the non-disclosed assets and the background of the parties, I am of the view that it is not appropriate in this case to add back a value to the total family assets. 109.It is not in dispute that in relation to the lack of full and frank disclosure of the Husband, the Court is entitled to draw adverse inference. What adverse inference to draw, if any, and the impact of the lack of full and frank disclosure is to be considered further in Step 4 and Step 5 in the subsequent paragraphs. (B) Financial resources of the Wife 110.Background of the Wife has been summarised in paragraphs 37 to 44 above. 111.At this stage, as there is no need to distinguish between the matrimonial or non-matrimonial assets, all assets under the Wife’s sole name will be considered (except the Siu On Court Property, which the Husband has confirmed that he does not dispute that it is held on trust for the Wife’s mother), including the Aegean Coast Property, the Carpark Space No. 97 and Nerine Cove Property. 112.The source of purchasing these properties, whether from the money from the Wife’s mother, being inheritance from her father or not, will be further considered in subsequent paragraphs in Step 4. 113.The Wife has been working as an accounting clerk and accounting manager, earning a monthly salary of about HK$29,213 per month in average. According to the Wife, her employment may be terminated anytime, if the business of her company is not doing well. 114.I accept that the Wife has earning capacity, but I also observe that she is about 8 years younger than the Husband and I accept that she will soon retire. 115.It is not in dispute that the Wife has been earning rental income from the Nerine Cove Property, in the monthly sum of about HK$12,300. 116.The Wife is now living with her Children at the Aegean Coast Property. Under cross-examination, she agreed that the Elder Son and the Younger Son is now paying her HK$2,000 and HK$3,000 per month respectively as contribution to the family. 117.From the evidence before me, I accept that the Children will continue paying monthly sums to the Wife, which will be one of her financial resources. (C) Total matrimonial assets 118.For the total matrimonial assets, I will further consider the value of the car and the debts of the Husband. Value of the car 119.It is the Husband’s case that the car is of estimated current value of HK$50,000, which the Wife disagreed. 120.As stated in the Husband’s Form E, the car was purchased with HK$500,000, and he estimated that the value in January 2014 was HK$100,000, which was further reduced to HK$50,000 in 2016. The reason is that the car had been crashed for 2 times and there was water seepage into the car, which will further reduce the estimated value of the car. 121.Considering the original price minus annual depreciation of HK$20,000 for 8 years, and also minus HK$15,000 repairing fees, Mr. Tam submitted that the estimated value of the car should be HK$325,000. 122.There is no expert evidence of the value of the car and no supporting documents provided by the Husband about the conditions of the car as alleged. With the car purchased in the sum of HK$500,000 bought about 8 years ago, it is for the Husband to prove that the car only worth about HK$50,000. 123.Without any documentary proof provided by the Husband proving his case and considering the Wife’s dispute as to the estimated value, I am of the view the estimated value of the Wife in the sum of HK$325,000 is not unreasonable. Debt of the Husband 124.According to the Husband, there is the debt owed to Mr. Xu in the remaining sum of RMB 350,000. The Husband had called Mr. Xu to give evidence in Court. 125.Mr. Xu adopted his witness statement and was cross-examined. His evidence was that in about 2012, he, together with the parties had viewed a “示範單位”(demonstration of decorated flat) of the Century Gateway. Later in October or November of the same year, the Husband asked Mr. Xu to lend him money to purchase the Century Gateway Property for the completion date in January 2013. Mr. Xu remembered that he lent cash of RMB300,000 to the Husband. As he did not have more cash to lend to the Husband, Mr. Xu had asked his wife to wire transfer the remaining RMB350,000 to the Husband, and he had produced documents of transfer for the sum of RMB350,000 and a signed document dated 14 January 2013 acknowledging the borrowing of the said RMB650,000. Later on, the Husband had repaid RMB300,000, and therefore, only RMB350,000 remains outstanding. 126.Mr. Xu further explained that he had known the Husband for many years and he could allow the Husband more time for repayment. 127.I have considered Mr. Xu’s evidence, especially his explanation under cross-examination. His answers are clear and direct and his evidence was not shaken under cross-examination. I accept him to be a truthful witness and I accept the entirety of his evidence. Therefore, I rule that there is debt of the Husband in the sum of RMB350,000. 128.With the analysis above, the total matrimonial assets include landed properties in the total sum of HK$14,172,647 (details referred to in paragraph 57 above). Other assets of the parties, with reference to paragraph 58 above and with my analysis above about the value of the car, are in the sum of HK$440,097 (HK$165,097 + HK$275,000) for the Husband and HK$561,121 for the Wife. 129.Therefore, the total value of the matrimonial assets is HK$15,173,865 (HK$14,172,647 + HK$440,097 + HK$561,121). In addition, I have considered that the sales proceeds of Hoi Tak Property had been divided equally between the parties (which should have been reflected in their financial situation) and I will take that into consideration when deciding outcome of the case. Step 2: Financial needs of the parties 130.Both parties have agreed that this is not a need case and the financial needs of the parties are not in dispute. The financial needs of the parties are stated in their respective Updated Form E. 131.Regarding the Husband, he was 59 years old at the time of the trial, and has been unemployed since early 2015 and he is now retired. He is now residing at the Shan King Property. 132.Regarding the Wife, she was 51 years old at the time of the trial and she has been working, earning a monthly salary of HK$29,213. She has been living with her Children at the Aegean Coast Property. As the Nerine Cove Property had been rented out, she receives a monthly rental of HK$12,300 per month. Step 3 : Deciding to apply the sharing principle and Step 4 : Considering whether there are good reasons for departing from equal division 133.As both parties have agreed that there is surplus of assets after considering the parties’ needs and both parties have agreed that the Court should apply the sharing principle, there is no dispute about Step 3 and I will now consider Step 4 of whether there are good reasons for departing from equal division. 134.Any such departure means increasing or reducing one party’s share and correspondingly reducing or increasing the share of the other. The question is whether the balance ought to be shifted from a point of equality to some other point in the circumstances of the case. 135.Under this Step 4, there are the following sub-issues to consider :-
136.There are also other circumstances that I have considered, as stated in s. 7(1)(c) to (f) of MPPO, which are not in dispute and I am not going to repeat here. 137.Before considering each of the sub-issues, I have reminded myself the legal principles as stated in paragraphs 90 to 98 of LKW v DD (supra) in relation to assets independently acquired and unilateral assets, which are summarised below :-
Whether there is agreement of separate finance of the parties 138.It is the Wife’s case that there is separate finance of the parties since about 1993, when the parties separated and then later got together again in late 1994 when there was agreement between the parties that they should be financially independent from each other. Therefore, the landed properties that were purchased after 1993 should be ring-fenced. 139.The Husband disagreed. There is no written post-nuptial agreement between the parties. In March 1993, there was a separation agreement signed between the parties. If the Wife was to protect herself, she would have signed another written agreement with the Husband. 140.From the Wife’s evidence, she was unable to particularise when and under what circumstances such an agreement of separate finance was reached. 141.It is not in dispute that at all material times, the Wife had been responsible for handling the Husband’s tax matters. During cross examination, the Wife admitted that since the time the parties had started to pay tax, they had been reporting to the Inland Revenue Department for joint assessment. In other words, the parties had chosen to join their tax matters together and to obtain the tax benefits under joint assessment. 142.In particular, after the alleged separation of finance since 1994, a number of landed properties had been purchased under the sole name of the Wife for renting purpose. The Wife did not deny that property tax was payable for the rental income of the landed properties. If it had been agreed that the finance of the parties should be separated, the Wife, with her accounting background, could have chosen to have the tax liabilities be assessed separately. 143.More importantly, I have reservation of the credibility of the Wife’s evidence in relation to the money she received from the Husband every month, in particular, her evidence in relation to the direct deposits into her HSBC account (“HSBC Account”). 144.The Wife had stated clearly in her Affirmation the amount of money she received from the Husband during the marriage: from 1985 to 1991, HK$1,000 per month; from 1991 to 1993, HK$4,000 per month; from 1993 to 1994, HK$2,000 per month; from 2006 to 2008, HK$6,000 per month; from 2008 to 2013, HK$10,000 per month. 145.This is denied by the Husband. He had replied in his 5th Affirmation that after getting married, he had been paying about 80% of his income to the Wife for family expenses. His salary had been reduced from HK$50,000 to HK$30,000 in about July 2012. When he was receiving a monthly income of HK$50,000, the Husband explained that he had been transferring HK$29,000 per month direct to the Wife’s HSBC Account, and his company would transfer HK$20,000 into his account, with the remaining HK$1,000 for MPF. 146.The Husband had provided some records of payments made by SG Limited by direct transfer to the Wife’s HSBC Account, showing that there is monthly payment of HK$29,000 from 28 January 2011 to about 1 August 2012. The Husband further explained that he was only able to obtain these records, as he had to contact his former boss to obtain those records. 147.Mr. Chau pointed out that during cross-examination, the Wife explained that she used to use this HSBC Account to receive rental income of the Hoi Tak Property. The balance of this HSBC Account had been reduced to zero when the Wife filed her Form E and was later on closed. The Wife also tried to explain that the HSBC Account was closed because the Hoi Tak Property had been sold. However, she also had been receiving rental income of Nerine Cove Property, which is a property that the Wife is still holding. 148.During cross-examination, when the Wife was asked about this issue, she admitted having received HK$29,000 per month as shown in the records. Mr. Chau emphasised that it was only when the Wife was cross-examined, she sought to explain that at the material times the Husband had asked the Wife to lend her HSBC Account to receive money paid by his customers, which was an explanation that had never been availed in any of the Wife’s affirmation evidence. 149.Mr. Chau pointed out that the Wife did not ask for leave to reply to this point raised by the Husband, which is important and essential. Mr. Tam submitted that the Wife’s evidence of how much money she received from the Husband had been stated clearly in her Affirmation already and there was no such need to reply. 150.Having considered the evidence as a whole and the submissions, the amount the Husband had been paying for the family is relevant for the Court’s consideration, as it is the Wife’s case that the Husband did not have much financial contribution. The documents attached to the Husband’s 5th Affirmation raises doubts of the accuracy of the Wife’s version of evidence. Even if the Wife had chosen not to reply by seeking leave to file a supplemental affirmation to reply, she could have cross-examined the Husband on this issue during trial and put her case to him. However, the Wife’s case had not been put to the Husband. 151.Considering the Wife’s explanation during cross-examination, it is her case that the money she received by direct deposit from SG Limited was helping the Husband to receive money paid by his customers. She explained that she had to make sure that money had been deposited into her HSBC Account and then she would withdraw the month to the Husband. The Wife explained that she did not have any queries at all as to why the amount of money deposited into her HSBC Account was constantly HK$29,000. 152.Having considered the Wife’s evidence as a whole, on balance of probabilities, I do not accept that Wife’s evidence in this regard. With the Wife’s background in relation to accounting work, lending her bank account to the Husband for payment from the customers of his limited company should have raised much queries. Coupled with the regular payment and the same amount to be paid each month, I accept that the amount of HK$29,000 per month had been deposited into the Wife’s HSBC Account for family expenses. 153.Considering all the evidence as a whole, I do not accept that there was agreement of separate finance of the parties. Having considered the case ARAV v VP [2011] 3 HKLRD 759 cited by Mr. Tam in relation to separate finance and the legal principles therein, I am not convinced that there is any implied agreement of separate finance between the parties. The source of assets in the Wife’s sole name 154.It is the Wife’s case that during the period from 1988 to 1993, she had received money from her mother, being the estate from her deceased father for the Wife to make investment. Therefore, the source of the properties bought in the Wife’s sole name was from the inheritance from her deceased father. It is the Wife’s case that because of the source and also because of her own effort in investing and purchasing the properties, which eventually turn out to be profitable and increase in value, it was solely based on her own effort, without the Husband contributing financially or putting in any effort at all. 155.The Husband disputed the Wife’s allegation. According to the Husband, the Wife had not told him about having received money from her mother. 156.From the evidence produced by the Wife, on balance of probabilities, I accept that during the relevant period of time (ie. from 1988 to 1993), there was a total amount of HK$703,000 deposited to her account, which were transferred from the Wife’s mother, being inheritance from her father, and the Wife had subsequently used to invest and purchase properties. 157.In fact, whether or not the source of purchasing the properties in issue was from inheritance or not is a relevant consideration, but the importance of the source of the assets will diminish over time. In the present case, this is a long marriage of 27 years. 158.This is especially the case for the matrimonial home, which should generally be viewed as a prime example of a capital family asset. Contribution to the welfare of the family 159.It is the Wife’s case that the Husband had not contributed much to the welfare of the family, and therefore it justifies a departure from equal division. 160.According to the Wife, since about 1991, the Husband had started working in the mainland during weekdays and back to Hong Kong only during weekends. During the time the Husband was working in the mainland, the Wife has always been the one taking care of the family and the Children on one hand, and working and earning on the other hand. 161.The Wife further explains that the Husband has only been paying very little each month for the family. In relation to the financial contribution to the family, I refer to the analysis in paragraphs 143 to 152 above. I have accepted that the Husband had been paying financial contribution to the family more than what the Wife had alleged. 162.I agree that the contribution of the Wife cannot be undermined, especially the hard work of a working mother, taking care of 2 children after work, and especially when the Husband was working in the mainland during weekdays. However, I have to point out that it was a matter of fact of the lifestyle of the couple and the family. The Husband had been absent in the life of the family in Hong Kong during weekdays because of work in the mainland, earning a living for himself and for the family. 163.In relation to the amount of financial contribution to the family, I have to stress that there is no hard and fast rule of how much financial contribution each month to the family is sufficient and reasonable. The contribution to the welfare of the family is not directly and solely linked with how much financial contribution each party is making. 164.Having considered the evidence of the case, I am of the view that both parties have contributed to the welfare of the family. Conduct of the parties 165.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 :-
166.It is well established legal principle that “conduct” was only relevant to financial provision if it was “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. 167.I do not see any conduct during marriage so obvious and gross that would affect the consideration, including the division of assets, in the ancillary relief proceedings. 168.However, the Court should also consider all the circumstances of the case. As analysed above, as I am of the view that there is no full and frank disclosure of the Husband (details referred to in paragraphs 104 to 105 above), the Court could not ascertain the accurate value of the total matrimonial assets, and therefore I am of the view that it justifies the departure from equal division. Step 5: Deciding the outcome 169.With the analysis above, I remind myself to step back and look at the overall impact of the factors found to be relevant and to check on the fairness of the outcome. 170.Having considered the evidence, submissions and all the circumstances of the case, with the lack of full and frank disclosure of the Husband, I am of the view that departure from equal sharing is justified. 171.Without full and frank disclosure, adverse inference is drawn that the Husband is having much more assets than he has presented his case. The Court cannot ascertain the true value of the total matrimonial assets for a fair division of assets between the parties. In that regard, I am of the view that the Wife is justified to have a larger share of the total matrimonial assets. 172.In view of the nature and value of the assets, the scope of non-disclosure, all the circumstances of the case, all the evidence as a whole and the parties’ submissions, I am of the view that it is fair to have a division of assets of about 60% to the Wife and about 40% to the Husband. 173.In view of my analysis that the value of the total matrimonial assets is HK$15,173,865, the Husband sharing about 40% will amount to about HK$6,069,546. I have considered the value of the assets now in the Husband’s possession of HK$1,680,097 (ie. HK$1,240,000 of Shan King Property + HK$440,097 of other assets), and also the net sale proceeds of Hoi Tak Property which the parties have already shared equally, the share the Husband should get will be rounded up to HK$4,000,000. 174.Considering the assets now under the respective names of the parties, I am of the view that while the parties are keeping the properties now under their respective names, the Wife should give to the Husband a lump sum of HK$4,000,000. Conclusion 175.Based on the reasons explained hereinabove, I make the following orders:
Costs 176.Generally, costs should follow the event. In the present case, the Husband has to come to court to apply for ancillary relief. However, having considered the parties’ respective open proposal, circumstances of the case, and in particular the court’s finding that there is the lack of full and frank disclosure of the Husband, I am of the view that it is fair to order no order as to costs for all ancillary matters, including all costs reserved. This is a costs order nisi, which shall be made absolute within 14 days from this order.
Mr Enzo WH Chow, counsel, instructed by Messrs. Rowland Chow, Chan & Co., for the Petitioner Mr Foster Yim, counsel, instructed by Messrs. Tung & Associates, for the Respondent | |||||||||||||||||||||||||||||||||||||||||