Ebs v. Ntc, D

FCMC 2128 / 2013

[2020] HKFC 242

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 2128 OF 2013

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J U D G M E N T
(Ancillary Relief)

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Introduction

1.This judgment follows a three-day trial to determine the issue of final ancillary relief. The case concerns the appropriate division of assets and financial provision for the parties only child, in a highly emotive and drawn out piece of litigation. It should be noted from the outset that the court does not intend to discuss in detail in this judgment some of the more contentious aspects of this litigation, which were ultimately resolved either before the commencement of the trial, or during the trial itself. For example, it is noted that the wife ultimately accepted that she was the beneficial owner of a number of assets held in her sole name including a residential property in Singapore and a UBS bank account and that both of these assets, together with a Beijing bank account, form part of the so called “matrimonial pot”.

2.It is also accepted that there are no hidden assets and in particular that the wife did not receive an additional pay out from her last employer, N, in either April or May 2009. Thus, in broad terms the court is concerned with dividing a “matrimonial pot” in excess of HK$190 million. It is common ground that the wife is not seeking maintenance, but there is significant disparity between the parties over the appropriate financial arrangements for B, who will be XX years old on XXXXXXXX. It is also accepted that given the history of the litigation that whatever the outcome there is likely to be an issue with respect to litigation costs and to that end (and as indicated during the trial) it is the intention of the court to reserve the issue of costs for argument. Further directions in this respect will be given at the end of the judgment.  

Background to the marriage

3.By both parties account this was an unconventional, volatile and difficult relationship which included frequent periods of separation. Initially the Petitioner husband described this as a very short marriage. Ultimately, however, he accepted that this was in reality a marriage of a reasonable length; the wife refers to it as being a marriage of 10 and a half years. It would be fair to state that there appear to be significant and unresolved emotional issues on both sides and it is of note that B is now estranged from his father.

4.The parties met in about 2003 when they were both working for a well-known investment bank and in October 2004 they moved in together. They married in Singapore on the 11 XXXXXX 2007. The wife, who is now nearly 52 years of age is Singaporean and the husband, who is now aged 50, is American. They separated shortly thereafter, reconciled and B was born on the XXXXXXXXXXX. They separated again in April 2009 and did not live together as man and wife on a permanent basis from that time onwards, although they continued, on occasion, to hold themselves out as being married. For example, they would sometimes go to church as a family and they would otherwise spend time together. It is of note that each parties’ interpretation of this rather strange state of affairs is significantly different from the other. On the wife’s case the parties ultimately separated in late 2016/ early 2017 and as indicated above she says that this is a marriage of more than 10 years in length. The husband seems to accept this and confirmed during the trial that he is no longer arguing that this was a short marriage.

5.On the 20 February 2013, the husband issued divorce proceedings. On the 19 April 2013 these proceedings were stayed for a year and were only reinstituted in late 2016. The focus then shifted to B and on the 15 November 2017 the parties entered into a consent summons for joint custody of B, with care and control to the wife and reasonable/defined access to the husband. Access was a significant issue at that time. The parties also undertook to each continue to provide for B until there was “an alternative arrangement and agreement made”. Unfortunately, the husband has had no contact at all with B since about May 2018. Again, and putting this as neutrally as possible, both sides give a different explanation for this. The decree nisi was pronounced on the 6 June 2017.

6.During the course of the litigation the parties have filed numerous Form E’s. As indicated above the wife’s initial stance in relation to certain assets held in her sole name i.e. the property in Singapore and the UBS account, was that these assets were beneficially held by her parents. This position was challenged by the husband leading initially to directions being given for a preliminary issues hearing. This was resolved on the 29 November 2018 when the following order was made by consent:

AND UPON the joint application of the Petitioner and the 1^st, 2^nd and 3^rd Respondents by way of consent summons dated 29 November 2018:

A.    AND UPON the Petitioner, 1^st, 2^nd and 3^rd Respondents agreeing that the preliminary issue proceedings in relation to the determination as to the beneficial interest ownership.  source of funds or funding in respect of the following property and assets percentage(s) or proportions (if any) of: - (I) the Singapore property at Singapore; and (II) the UBS AG (Singapore) account no. XXX.  Be dismissed.

B.     AND UPON the Petitioner and the 1^st, 2^nd and 3^rd Respondents acknowledging and agreeing that the 1^st Respondent is entitled to make submissions regarding the source and origin of the funds, and whether the assets are in her view matrimonial assets or non-matrimonial assets.  but that no one other than the 1^st Respondent has a beneficial interest in and ownership of the said property and UBS funds so that no preliminary issue as to ownership or beneficial interest is raised.

IT IS HEREBY BY CONSENT ORDERED that:

1. Such preliminary issue proceedings be dismissed; and

2. Costs be reserved to the ancillary relief hearing.

7.The wife revisited her position on these assets in the witness box. Ultimately however she confirmed that she now reluctantly accepted that from a legal perspective she was the sole legal and beneficial owner of both of these assets.

The law on Ancillary Relief

8.It is accepted that this court’s approach to ancillary relief is governed by the leading Hong Kong judgment from the Court of Final Appeal, namely LKW v DD (FACV no 16 of 2008) 13 HKCFA 537.  

9.In that judgment Mr Justice Ribeiro PJ states that there are four underlying principles that should 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 party’s finances.

10.In addition, he identifies a five-step approach to be adopted in all ancillary relief trials, which if I may I will summarize as follows:-

1)   The identification of the assets

2)   An assessment of the parties’ financial needs

3)   Whether or not the sharing principle should be adopted?

4)   Whether or not there is a good reason to depart from an equal division of the assets?

5)   Deciding the outcome

11.The s. 7 factors (section 7 Matrimonial Property and Proceedings Ordinance, Cap 192) are largely dealt with within this general framework. These are set out below:

(1)  It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

The issues

12.The issues that the court is now asked to determine can be identified as follows:

a) For the avoidance of doubt what assets should be included in the matrimonial pot for distribution and what value should be attributed to those assets?

b) What does each party “need”?

c) Should this case be regarded as a “needs based case” or should the sharing principle be applied?

d) In the event that this is a sharing case how should the assets be divided? Should the yardstick of equality be departed from and if so on what basis? In the context of that question should any monies be “added back” for back payment of B’s maintenance? Further, looking forward, should any funds be ring fenced or put aside in a trust or otherwise for some or all of B’s future expenses? And how should the potential US Capital Gains Tax liability on the Hong Kong property be dealt with?

e) Overall, what is an appropriate notional division of assets in the circumstances?

f) How much maintenance should the husband pay to the wife for B going forward?

g) What should the final order be?

These issues will also need to be addressed within the framework identified by Mr Justice Ribeiro PJ in LKW v DD.

Open Proposals

The husband’s open proposals

13.The husband sets out his revised open proposals in his closing submission as follows:

26. On the basis of the summary above, the net assets of the parties (excluding W’s legal fees, and B’s assets) are HK$193,053,417. Therefore, H’s share (i.e. 50%) would be HK$96,526,709 (net of liabilities). Given that H has current liabilities of HK$417,074, this would mean he should retain and receive assets worth ~HK$96,943,783. Therefore, H would propose:

i) H should retain the assets already in his name worth HK$4,873,384, together with the FMH, which is worth HK$79,020,220 (subject to assessment of CGT);

ii) An Order that W vacate the FMH within 60days;

iii) An Order for the transfer of the joint assets to H worth HK$8,002,122;

iv) An Order that W pay H a lump sum of HK$5,048,057 within 60 days;

v) An Order that if H’s CGT costs for the sale of the FMH increases from the original rate of 23.8% due to changes in US tax laws which will affect the final sale proceeds of the FMH, these increased costs be equally shared between H and W;

vi) An Order that W pay HK$6,038,040 into Court within 60 days, to be paid to H if H’s CGT costs for the sale of the FMH increases from the original rate of 23.8% due to changes in US tax laws which will affect the final sale proceeds of the FMH and the FMH is sold within 12 months of the date of the Order. The sum of HK$6,038,040 shall be repaid to W if H’s CGT costs for the sale of the FMH does not increase from the origin rate of 23.8% for us tax year 2021, or if the FMH is not sold within 12 months front the date of the Order;

vii) Penal Notice be endorsed; and

viii)Liberty to apply.

B’s Maintenance

27. For the reasons set out above and in opening submissions, W has inflated B’s expenses and there is no basis for a lump sum payment. She has excluded H from B’s life and chosen not to involve him in major decisions about B’s extra-curriculars.

28. H submits that B’s current expenses (excluding holidays with parents, presents and entertainment) should be assessed as follows:

i)	School fees (paid by H):	HK$15,375
ii)	Extra tuition fees:	HK$2,000
iii)	School books and stationery:	HK$500
iv)	Transport to school (paid by H):	HK$1,143
v)	Medical/dental:	HK$2,000
vi)	Extra-curricular activities:	HK$10,000
vii)	Clothing/shoes:	HK$2,000
viii)	Insurance premia (to be paid by H):	HK$2,250
ix)	Lunches and pocket money:	HK$800
x)	Other transport:	HK$500
xi)	Uniform:	HK$200
xii)	Others (toys, books, sporting equipment):	HK$4,000
	B’s child expenses	HK$40,768

29. It is submitted that this is a very generous assessment, in excess of reasonable provision. However, it reflects the parties’ joint wish to provide generously for B.

30. As to general expenses, W has singularly failed to present a reasonable plan for her future living arrangements. She has at various times insisted she would move into a similarly large apartment and at others appeared to accept she should move into more reasonable accommodation. In any event, H submits that B’s share of general expenses generously assessed will be at most HK$36,000 when W vacates the FMH.

31. This would bring B’s total maintenance costs to ~HK$76,768. H submits that this is a very generous provision for B’s expenses in excess of the actual standard of living of the family before the breakdown of the marriage.

32. H’s proposal is that he will undertake to pay B’s education costs (HK$15,375 plus HK$1,143 and likely to increase), medical/dental insurance (HK$2,250), and the agreed reasonable extracurricular activities (estimated to be HK$10,000) and he will pay a further child maintenance payment to W of HK$35,000/m (once W vacates the FMH). H further invites the Court to order that H pay HK$15,000/m prior to B and W leaving the FMH.

33. Under H’s proposal, he would be paying HK$28,768 in direct expenses and HK$35,000 in maintenance, for a total of HK$63,768. This is a minimum figure. H is likely to buy B his share of toys and equipment for his ECs, as they are able to spend more time together. Furthermore, this arrangement would automatically cover increase in his school/university fees or reasonable extra-curriculars without the need for further litigation/orders. It would immediately provide a reasonable amount for rent after B leaves the FMH. This reflects H’s commitment to his son and his responsibilities.

34. H’s proposal is based on a 50%-50% split of the parties’ assets. If W is to receive a greater share of the marital assets, H submits that she should pay half of B’s expenses and H’s child maintenance payments should be reduced accordingly.

Conclusion

35. The Husband respectfully asks the Court to make an Order in line with his proposal at paragraphs 26 and 32 above.

The wife’s open proposals

14.The wife’s open proposals remain as set out in her opening submission provided to the court prior to trial dated the 26 August 2020:

RESPONDENT (WIFE’S) OPENING PROPOSAL

1. The Respondent Wife’s Open Proposal is for a resolution through a clean break achieved by a 60/40 split of all assets; (that 60/40 division being in favour of the Respondent) with the Bel Air and Singapore Properties sold at market value plus a lump sum of HK$16 million for their son B’s expenses (inclusive of education and other expenses: see §299 of the Respondent’s 3^rd Narrative Affidavit dated 13 February 2020) with no maintenance for the Respondent.

2. The 60/40 split in favour of the Respondent is based on the sale of the Bel Air Property and Singapore Property at open market value.

3. With respect to the Petitioner Husband’s tax issue(s) / contention with respect to the Bel Air Property, for the purpose of this Open Proposal only, the Respondent Wife proposes that the Petitioner’s alleged tax liability be offset by the taxable losses he has incurred in his recent Charles Schwab investments and the tax deductible(s) available to him.

4. As an alternative, W proposes the following clean break solution:-

W provides H a sum of HK$42M within 3 months;

H transfers to W the legal title of the Bel Air property - H can keep any US tax benefit that may be available to him;

W retains the Singapore Property;

W will be responsible for all expenses of B henceforth;

No maintenance from H to W;

Each party retains the remaining bank account assets in their respective names; and

All other assets and liabilities lie where they fall.

The identification of the assets

For the avoidance of doubt what assets should be included in the matrimonial pot for distribution and what value should be attributed to those assets?

15.The husband helpfully attached an updated schedule of assets to his closing submission, which was provided to the court in soft copy and has been amended slightly as set out below:

This schedule is now largely agreed. Thus, there are just over HK$192 million in the “matrimonial pot”. It is of note that as the assets currently stand there is almost a 50:50 split in any event. The main outstanding issues relate to the treatment of a potential capital gains tax liability in the United States on the Bel Air property and how B’s expenses should be treated.

What does each party “need”?

16.In broad terms each party needs somewhere to live and sufficient money to live on. In addition, suitable provision needs to be made for B’s needs i.e. in particular provision for his future education costs. The husband also needs liquid capital in order to invest in his next venture. The wife also needs to retain sufficient capital in order to continue to receive a passive income, given that this is how she has funded herself over the last 10 years or so and it is anticipated that this is how she will fund herself going forward.

Should this be regarded as a “needs based case” or should the sharing principle be applied?

17.There are significant assets in this case and it is accepted that prima facie this must be a ‘sharing case” in that both parties “needs,” as set out above, can be met from an appropriate share of the asset base. Reference may be made to paragraphs 80 - 82 of LKW v DD (FACV no 16 of 2008) 13 HKCFA 537, where the correct approach with respect to the “sharing principle” is identified as follows:-

E.4 Step 3: Deciding to apply the sharing principle

80. If surplus assets would remain after the parties’ needs have been catered for, the next step in the exercise should generally be for the court to apply the sharing principle to the parties’ total assets, leaving the “needs” question previously considered to be dealt with under that principle (as pointed out by Sir Mark Potter P in Charman v Charman (No 4) cited above). In other words, the court should not make an immediate allocation but should return to “needs” for them to be dealt with alongside all other material factors in the processes described below as Steps 4 and 5.

In the event that this is a sharing case how should the assets be divided? Should the yardstick of equality be departed from and if so on what basis? In the context of that question should any monies be “added back” for back payment of B’s maintenance?

The law on add backs

18.The law on “add backs” is well established.

If one or both of the parties have by their dealings with the assets enjoyed by the family severely depreciated or destroyed those assets, this is a matter to which the court might properly have regard… in the award that is made. It might be appropriate to add back the value of the asset lost or diminished in value to the balance sheet of the defaulter’s assets. (Rayden 18^th edition, para 16.80)

19.It was a little unclear from both the papers and the evidence given at trial, as to the wife’s case on “add backs”, but it seemed initially that she might be making a case along those lines. For example, in her Form E’s dated the 10 February and 18 August 2020 she states that there should be a division of assets after the repayment/reimbursement of costs and expenses for both herself and B. She added that:

6.1 … By an Order dated 19 April 2013. the Petitioner undertook to pay or reimburse the reasonable cost and expenses of B and myself. The total estimated expenses for B only (half of the current general expenses and the full children’s expenses) from 19 April 2013 to 8 September 2020 ( 90 months) are about HK$9,200,000 ((58,200¸2+73,014.7) × 90 months = 9,190,323), and most of the sum remains due and payable and I had to pay them. The Court is respectfully invited to take the Petitioner’s failure to pay or reimburse the reasonable expenses of B and myself into account in the division of assets.

20.However, the wife never came up to proof on this aspect of her case referring only in very general terms to certain expenses that she said the husband had not paid or had been late in paying, such as certain utility bills (that the husband said had not been sent to him in any event).

21.Further, it is accepted that the husband has continued to provide financially for the wife and B by inter alia paying for the mortgage repayments and all other related expense on the Bel Air property together with B’s school fees, even during his current period of unemployment. Similarly, the wife, in accordance with the undertaking given by her on the 15 November 2017, has also continued to meet her own expenses otherwise and B’s remaining expenses. It is not accepted therefore that the wife has made out a case for any sum to be “added back” to the matrimonial pot.

Further, looking forward, should any funds be ring fenced or put aside in a trust or otherwise for some or all of B’s future expenses?

22.The wife’s case is that the sum of HK$16 million should be ring fenced and paid to her for B’s future expenses and that this should be paid in addition to a 60% share of the assets. The husband’s case is that he will be able to pay a reasonable sum for B’s maintenance going forward from his anticipated income. He is also concerned that if he does not do so that he will be completely removed from B’s life by the wife going forward. The wife for her part argues that the father is an absentee father in any event and that there is a risk that he will not maintain B once he has left the jurisdiction. The husband counters this by pointing out that although he will not be based in Hong Kong, that he intends to return frequently and that part of his business plan centres on Asia.

23.Given the size of the asset pool I did enquire of the husband at the end of his evidence, whether or not he was willing to consider the possibility of establishing some form of trust fund, possibly for educational purposes only for B. He said that he was open to this possibility.

24.The wife sets out her case for the sum of HK$16 million in her narrative affidavit dated the 14 February 2020. To that end it is of note that B currently attends the XXXXXXXXXXXXXXXXXX, but that it is anticipated that he may go to either the Hong Kong International School or the Chinese International School for Senior/High school. Boarding school, possibly in the United States, is also another option. With this in mind the wife argues as follows:

293. My estimate for B’s HKIS fees with the levy is as follows:-

a) Family Debenture - $3 million

b) Year 7 - $600,000 (tuition)+$165,600 (tutoring) = $765,600

c) Year 8 - $600,000 (tuition)+$165,600 (tutoring) = $765,600

d) Year 9 - $600,000 (tuition)+$165,600 (tutoring) = $765,600

e) Year 10 - $600,000 (tuition)+$276,000 (tutoring) = $876,000

f) Year 11 - $600,000 (tuition)+$276,000 (tutoring) = $876,000

g) Year 12 - $600,000 (tuition)+$360,000 (tutoring) = $960,000

h) Year 13 - $600,000 (tuition)+$360,000 (tutoring) = $960,000

ESTIMATED TOTAL = $8,968,800

294. The alternative to HKIS would be CIS, which has an annual capital levy policy of HK$28,000, subject to change. 7 years’ worth of levy totals up to $196,000.

295. My estimate for B’s CIS fees with the levy is as follows:-

a) Year 7 - $500,000 (tuition)+$165,600 (tutoring) = $665,600

b) Year 8 - $500,000 (tuition)+$165,600 (tutoring) = $665,600

c) Year 9 - $500,000 (tuition)+$165,600 (tutoring) = $665,600

d) Year 10 - $500,000 (tuition)+$276,000 (tutoring) = $776,000

e) Year 11 - $500,000 (tuition)+$276,000 (tutoring) = $776,000

f) Year 12 - $500,000 (tuition)+$360,000 (tutoring) = $860,000

g) Year 13 - $500,000 (tuition)+$360,000 (tutoring) = $860,000

ESTIMATED TOTAL = $5,464,800

296. Secondary education in the US. I have a close friend (whose name I shall not disclose as requested) who was for many years on the Board of Trustees of Milton Academy in Massachusetts, USA, and has told me that a spot for B at Milton Academy can almost be guaranteed should B be interested to attend. This could be the alternative to HKIS or CIS, but it really depends on what B wants and whether he is admitted into the international schools in Hong Kong. The cost of attending a private boarding school in the US is unlikely to be any cheaper than what I have outlined above. In fact, it is likely to be even more costly financially.

297. University education in the US. Using Columbia University and New York University as reference points, the estimate cost of attendance is US$81,455 and US$76,612 respectively. For the sake of completeness. there is now produced and shown to me a copy of the estimated cost of attendance at Columbia University and New York University marked Exhibit “NTCD-32”. Based on our standards of living, I would expect B to have a monthly allowance of US$3,000 - US$4,000, averaging an allowance of US$48,000 per year. Of course, I would expect B to fly back home 3 to 4 times a year for Christmas, Easter, and Summer, wherever home may be. This of course does not include B pursuing a Master’s degree or even a Doctorate degree. I estimate the annual cost to be under US$150,000, approximately HK$1 million to HK$1.2 million, and according to my friends, this is a relatively conservative estimate. For 4 years of undergraduate studies, it would therefore cost around HK$5 million.

298. A quick assessment would suggest that B’s educational expenses from Year 7 at HKIS until his first undergraduate degree in the US would cost around HK$14 million.

299. Two years of Master’s in the US costs approximately HK$2 – 3 million, taking the estimated total to HK$16 to 17 million. This is, of course, a conservative estimate without accounting for a lot of expenses which B may have as he grows up and becomes an adult.

25.A couple of points arise from this. Firstly, I agree with the husband in that I do not accept that B will necessarily need such extensive tutoring on an ongoing basis as is identified in paragraphs 293 - 295. He is a bright and able student and he is doing very well academically. Consequently, I shall not include tuition in any proposed calculation. Further, any financial provision for children, whether it is maintenance or a lump sum/trust fund, is meant to be until they cease their full-time education, which is generally understood to be until they complete their first undergraduate degree. Thus, I also do not accept that funds should be put to one side at this stage for B to complete his Master’s degree. If he decides to go down this route, then this is something that he will need to discuss with his parents at the appropriate time. Consequently, a more reasonable financial estimate might look something like this:

HKIS

a) Family Debenture - $3 million

b) Year 7 - $600,000 (tuition)

c) Year 8 - $600,000 (tuition)

d) Year 9 - $600,000 (tuition)

e) Year 10 - $600,000 (tuition)

f) Year 11 - $600,000 (tuition)

g) Year 12 - $600,000 (tuition)

h) Year 13 - $600,000 (tuition)

ESTIMATED TOTAL = $7,200,000

CIS

a) Annual capital levy – HK$28,000 x 7 = HK$196,000

b) Year 7 - $500,000 (tuition

c) Year 8 - $500,000 (tuition)

c) Year 9 - $500,000 (tuition)

d) Year 10 - $500,000 (tuition)

e) Year 11 - $500,000 (tuition)

f) Year 12 - $500,000 (tuition)

g) Year 13 - $500,000 (tuition)

ESTIMATED TOTAL = $3,696,000

26.The parties hold approximately HK$8 million in their joint bank accounts. This is about US$1 million. It is my intention to put this money to one side either to be held in court, or if the parties can agree, in a separately administered educational trust fund, to cover B’s school fees and any requisite annual capital levy or debenture whilst B is studying at Senior/High school, in either Hong Kong or overseas, plus his anticipated college fees for his undergraduate degree at university. To that end it is of note that the family debenture would be returned at the end of the period of study, if he attends HKIS. Further and for the avoidance of doubt, this fund is not meant to cover his living costs.

How should the potential US Capital Gains Tax liability on the Hong Kong property be dealt with?

What weight should be attached to the Single Joint Expert’s Report?

27.Ms. Nilar Chan was the Singe Joint Expert. She provided a helpful report dated the 8 April 2020 and was wholly credible in the witness box. She also held her ground despite some rather clumsy attempts to undermine her. I accept that considerable weight should be attached to her report and to her oral testimony. In summary, Mr Marwah for the husband summarized the tax position in his closing as follows:

(2) What is the likely US tax treatment of the sale or transfer of the FMH?

H contended (and the Single Joint Expert/SJE confirmed) that the US tax applicable is 20% for Capital Gains Tax (CGT) and 3.8% for Net Investment Income Tax (NIIT) on H’s net capital gain. H accepted W’s assertion that this could be offset by any capital losses and he produced statements from his CS account (Exhibit P2) showing he had made a capital loss as of 8 September 2020 of US$707,653.46. W appeared to argue (without evidence) that CGT/NIIT could be avoided altogether by transfer to W or by ‘gift’ to B. This suggestion is ludicrous for the reasons given by Ms Chan: (1) gifts beyond the annual limit of US$l0,000 are subject to gift tax of 40%. (2) The Court cannot order a ‘gift’ between the parties or to B in any event. Finally, payments to W are taxable since section 1041(d) of the US tax code explicitly excludes ‘non-resident alien’ spouses from the general rule and Ms Chan had already explained that W is a non-resident alien. H also argued that there is a risk that the sale would be subject to a higher CGT, depending upon the outcome of the US 2020 elections. However, the latter point appears to be moot given that both parties agree that they should take the risk/benefit of the sale of the FMH. Therefore, the likely US tax treatment upon the sale of the FMH (or its transfer to W) is as set out in the attached draft calculation (see Annex 2)

The calculation stated as follows:

Annex 2 - Calculation of CGT of Former Matrimonial Home

Annex 2 - Calculation of CGT of Former Matrimonial Home
Description	Amount
Sale Proceeds	HKD 100,500,000.00
Net Capital Gain	HKD 68,822,150.00
IRC Section 121 Exclusion	-HKD 1,950,000.00
Charles Schwab 2020 Capital loss offset	-HKD 5,514,600.00
Net Capital Gain (Offset & exclusion)	HKD 61,357,550.00
Low CGT of 23.8%	HKD 14,603,096.90
High CGT of 43.4%	HKD 26,629,176.70
Difference between low and high CGT	HKD 12,026,079.80
Outstanding Mortgage	-HKD 5,846,683.00
Selling Expenses	-HKD 1,030,000.00
Final Sale Proceeds (Low CGT) (including mortgage)	HKD 79,020,220.10
Final Sale Proceeds (High CGT) (including mortgage)	HKD 66,994,140.30

28.The husband’s concern, and one that he expressed in the witness box by reference to the Democratic Party’s election manifesto, is that now that Joe Biden is President elect, there is a strong possibility that the parties may need to pay a higher rate for Capital Gains Tax on the sale of the Bel Air property. I accept that this is reasonably foreseeable and that monies will need to be put to one side in order to meet that eventuality and that this should not simply fall on the husband’s shoulders.

Overall, what is an appropriate notional division of assets in the circumstances?

29.Notionally then, if one puts the monies in the joint bank account to one side for B’s trust fund and each side retains the assets otherwise in their sole names, save for the potential increase in the Capital Gain tax due on the sale of Bel Air, the asset schedule will be as follows:

Assets held by H

12. The following assets are held in H’s name:

i)	Net value of FMH
	(assuming current CGT):	HK$79,020,220
ii)	HSBC HK Premier 602-XXXXX-888:	HK$112,013
iii)	Bank of America checking	HK$181
iv)	Coinbase account:	HK$30
v)	Charles Schwab account:	HK$3,235,348
vi)	XXX Vested Cash Scheme
	(net of est. tax):	HK$361,497
viii)	Nomura Pension (current value):	HK$l, 164,317
	H’s assets (total)	HK$83,893,604

Assets held by W

13. The following assets are held in W’s name:

i)	Singapore (SG House)	HK$35,830,400
ii)	HSBC Beijing Savings 406-XXXXXX
	(HK$6,719,241 of which belongs to
	H representing his share of proceedings
	of the parties’ Beijing joint property):	HK$13,438,482
iii)	HSBC HK Savings 602-XXXXXX-888:	HK$2,864,594
iv)	BEA Savings 015-255-XXXXXX-4
	(~HK$700,000 representing the
	proceedings of the
	parties’ Macau joint property):	HK$1,756,699
v)	Charles Schwab account:	HK$10,115,311
vi)	UBS AG Singapore:	HK$35,792,196
vii)	JPMorgan Funds:	HK$1,976,824
viii)	Manulife Global Select
	MPF Scheme:	HK$290,463
	W’s assets (total)	HK$102,064,969

30.Of these funds I accept that the funds held in the HSBC Beijing Savings account and the BEA savings account should also be split equally between the parties, as these accounts hold funds from the sale of previously owned matrimonial assets and clearly form part of the marital acquest. Thus, just over HK$15 million (HK$15,195,181) should be shared between the parties – or say approximately HK$7.5 million each.

31.Thus there will be just over HK$91 million on the husband’s side of the equation (HK$91,393,604) and just over HK$94.3 million on the wife’s side of the equation (HK$94,369,788) as follows:

H’s proposed assets:

i)	Net value of FMH
	(assuming current CGT):	HK$79,020,220
ii)	HSBC HK Premier 602-XXXXXX-888:	HK$112,013
iii)	Bank of America checking	HK$181
iv)	Coinbase account:	HK$30
v)	Charles Schwab account:	HK$3,235,348
vi)	XXX Vested Cash Scheme
	(net of est. tax):	HK$361,497
viii)	Nomura Pension (current value):	HK$1,164,317
ix)	HSBC Beijing Savings 406-XXXXXX
	and BEA Savings 015-255-XXXXXX-4
	Half share	HK$7,500,000
	H’s assets (total)	HK$91,393,604

W’s proposed assets

i)	Singapore (SG House)	HK$35,830,400
ii)	HSBC HK Savings
	602-XXXXXX-888	HK$2,864,594
iii)	HSBC Beijing Savings 406-XXXXX
	and BEA Savings 015-255-XXXXx-4	HK$7,500,000
	Half share
iv)	Charles Schwab account:	HK$10,115,311
vi)	UBS AG Singapore:	HK$35,792,196
vii)	JPMorgan Funds:	HK$1,976,824
viii)	Manulife Global Select
	MPF Scheme:	HK$290,463
	W’s assets (total)	HK$94,369,788

32.In so far as liabilities are concerned, I am inclined to leave them as they stand. They are not very high. The husband has liabilities of just over HK$400,000 and depending on the wife’s actual cost for the arbitration proceedings in Singapore her liabilities are said to be in the region of just over HK$1 million. This further reduces the potential disparity between the parties in the event that the court was to approach this on a 50:50 basis. It also seems to me, and as indicated above, that it is reasonable to put the issue of legal costs to one side for the moment.

The section 7 factors

33.Turing next to the s 7 factors for guidance and in particular in the context of this discussion to sub sections a), b) c), and d):

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

The husband’s earning capacity and other financial resources

34.The husband was an investment banker with a well-known investment bank rising to the position of Managing Director. Unfortunately, he was made redundant in March 2017. Since then he has relied on the liquid capital that is held in his sole name and in particular the funds in his Charles Schwab account. But given that most of his assets are tied up in the Bel Air property, things have been quite tight for him financially and he has recently been living in part with his sister and her family in the United States. In so far as the future is concerned, he said as follows in his narrative affidavit of the 18 February 2020:

55. My confidence has returned and I am looking forward to my future endeavour, where previously I had simply lost all sense of hope. After 25 years in the investment banking and asset management industry. I have a strong desire to change course to a more sustainable and less volatile financial future. I have recently registered a real estate investment company based in XXXXXX. XXXX named XXX XXXXX XXX (XXX XXX ) on 8 January 2020 with the Secretary of State of XXXXXX. However, the business has yet to be launched because of the significant start-up costs required. I intend for the business to keep my presence in Asia, whilst spending most of my time in the United States. I am a member of the XXXX XXX XXXXXXXXXXX XXXXXX and have already spent months attending real estate investment conferences in the XXXXXXXXXXXXXXX areas. I have also completed real estate investment courses, investor’s launch pads, etc. and have already met with local wholesalers and real estate finance companies. Nearly all of my wealth over 25 years of employment has come from reinvesting my banking compensation back into real estate, including the Former Matrimonial Home, the Bel-Air Property, Beijing Property and Macau Properties, which came from both rental income and asset appreciation. I have also met with venture capital, private equity investors and real estate syndication attorneys both in Asia and the USA, with the possibility of launching a real estate fund in 2021 raising capital from Asian based investors.

56. I have capital from friends and family members who are ready to commit. However, without access to liquid capital, the business will not “get off the ground” for many years. There is now shown and produced to me marked Exhibit “EBS3-13” a copy of the XXX XXX Operating Agreement, Articles of Association and Employment Identification Number.

57. Given my clear plan and hope for my own financial independence, it is very important to retain a large amount of liquid capital in order to ensure that my business will thrive. The less capital I retain, the less confident and less ability I have to continue to properly provide for B, his further education, and the less ability I have to generate sustainable income. I believe that my business plan, based on an equal division of assets as addressed in my open offer, would allow me to generate post-USA tax income of approximately US$200,000 – US$250,000 per year, [i.e. HK$1,580,000 – HK$1,950,000] based on my retained capital and future business investments.

35.On the one hand the wife is skeptical about this and on the other she says that the husband is very able, with good contacts both professionally and in the sporting world. Although nothing is certain in this life, there is nothing to suggest, especially given the husband’s track record, that this new venture will not be a success. If it is not, he will still hopefully have retained some of the assets and he will also have a reasonable earning capacity otherwise.

The wife’s earning capacity and other financial resources

36.The wife has not worked in a paid capacity since she had B. Previously, she also had a very successful career and was the Regional Head of Sales of an Equity Sales Department for a Japanese bank. It is not disputed that whereas the husband has paid for the mortgage and other outgoings on the Bel Air property together with B’s school fees, that the wife has been responsible for her own and the other family expenses. She does this from her considerable passive income and in particular from her own Charles Schwab account and the UBS account which holds in the region of HK$45 million.

37.The wife says that it would be very difficult for her to return to work in the financial field and in any event, she does not wish to do so. This is accepted. She is now over 50 years of age and she has been out of the workforce for over 10 years. I have no doubt that she could retrain and work in some other capacity if she wished to do so. I also accept that if the UBS and Charles Schwab accounts remain intact that she may have no need to, as she will have sufficient funds to support herself and to contribute towards B’s maintenance going forward. In addition, she owns the Singaporean property. She says that she is inclined to sell it given that it has been an unmitigated disaster since the beginning. If she does, she will have other funds available to buy another property either in Singapore or in Hong Kong or elsewhere. Or the net proceeds of sale could simply increase her already significant liquid asset portfolio.

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

38.The wife says that she is largely responsible for every facet of B’s life and that the husband is to all intents and purposes an absentee father. She is concerned about meeting B’s needs going forward, including his and her own housing needs. She also says that she has other obligations and financial responsibilities with respect to her parents. This is accepted. However, those obligations do not take priority over her financial responsibilities to her son.

39.The husband also needs to provide a home for himself and to fund his new business venture. He also accepts that he has an ongoing financial obligation towards B, which he wishes to retain.

40.Generally speaking it seems to the court that the parties will have no difficulty in meeting their financial needs, obligations and responsibilities from their own share of the asset pool, although they may both need to each cut their clothe accordingly.

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

41.The wife and B enjoy a high standard of living by virtue of the fact that they have lived in the Bel Air property, which is a high end apartment of over 3,000 square foot. In contrast the husband has found himself in straightened financial circumstances and currently does not have a home of his own and has been living with his sister and her family in the States. Prior to Covid, the wife also travelled frequently, going to Singapore 3 or 4 times per annum with B to see her family and going on other holidays otherwise, including regular skiing trips with B. Similarly, the husband also travelled frequently in the past. The wife says that the parties originally connected over their love of sport and both are talented sportspeople. Similarly, B swims, plays tennis and recently got onto the XXXX XXXXXXX XXXX for the Hong Kong XXX XX XXXX team.

42.It is trite but worth repeating at this point that generally speaking it is not possible, following a divorce, for both party’s standard of living to be maintained. Although the asset pool in this case is large, this maxim also holds true here. In this instance it will not be possible for the wife and B to continue to live in such a large apartment. Choices will also need to be made with respect to their life style including the affordability of some of the extra-curricular activities chosen for B.

(d) the age of each party to the marriage and the duration of the marriage;

43.This point has been discussed above and will not be repeated again here.

(e) any physical or mental disability of either of the parties to the marriage;

44.Thankfully this is not in issue.

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

45.I accept that both parties have each made a full contribution to the marriage in different ways. The wife has been a full time and devoted mother to B and she has also contributed to the family financially. The husband has also continued to make a full financial contribution notwithstanding the difficulties caused by these proceedings and his current unemployment. In particular, the husband has enabled the wife and B to live in the Bel Air property for a considerable period of time, notwithstanding the rather unusual nature of their marital relationship.

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

46.This is not really an issue. Both parties have small pensions, but these are of little import in the grand scheme of things.

Bearing the above in mind should the yardstick of equality be departed from and if so on what basis?

47.In considering this next stage of the exercise I am assisted by the following extract from LKW v DD, when Mr Justice Ribeiro says as follows: -

E.5 Step 4: considering whether there are good reasons for departing from equal division

83. The fourth step therefore involves considering whether good reasons exist for departing from the principle of equal division. Any such departure means increasing or reducing one party’s share and correspondingly reducing or increasing the share of the other. The question for the court is whether the balance ought to be shifted from a point of equality to some other point in the circumstances of the case. This is necessarily a complex question which raises a range of separate issues.

84. What then are potentially good reasons for such a departure? The answer is to be found in the terms of section 7 and the implicit objective of a fair distribution of the assets. Any of the matters listed in paragraphs (a) to (g) of section 7(1) may provide an appropriate reason, as may the “conduct of the parties” and “all the circumstances” referred to in section 7(1). The catch-all category of “all the circumstances” makes relevant any matter which bears on the fairness of the financial outcome in a matrimonial context.

85. It is important to stress that while such factors, individually or cumulatively, are potentially capable of resulting in a departure from an equal division, a finding that one or more of those factors are engaged does not necessarily mean that a departure must occur. The weight to be given to such factors is in the court’s discretion to be exercised in Step 5 as described in Section E.6 below. It cannot be over-emphasised that the matter is fact-specific and discretionary. The sharing principle must not be mechanistically applied.

All of the circumstances of the case

The matrimonial home

48.The facts in this case are very unique. The parties remained married, but were not in a marital relationship for a considerable period of time. They also had a child together. They were each successful in their own right and each contributed financially to the “matrimonial pot”. Generally speaking, the matrimonial home is regarded as being different from other assets in the “matrimonial pot” and to that end reference may be made to the leading English case of Miller v Miller, McFarlane v McFarlane [2006] UKHL 24. In that case Lord Nicholls of Birkenhead, when discussing the concepts of matrimonial and non-matrimonial property said as follows:

23. …A complication rears its head at this point. I have referred to the financial fruits of the marriage partnership. In some countries the law draws a sharp distinction between assets acquired during a marriage and other assets. In Scotland, for instance, one of the statutorily prescribed principles is that the parties should share the value of the "matrimonial property" equally or in such proportions as special circumstances may justify. Matrimonial property means the matrimonial home plus property acquired *634 during the marriage otherwise than by gift or inheritance: Family Law (Scotland) Act 1985, sections 9 and 10. In England and Wales the Matrimonial Causes Act 1973 draws no such distinction. By section 25(2)(a) the court is bidden to have regard, quite generally, to the property and financial resources each of the parties to the marriage has or is likely to have in the foreseeable future.

22. This does not mean that, when exercising his discretion, a judge in this country must treat all property in the same way. The statute requires the court to have regard to all the circumstances of the case. One of the circumstances is that there is a real difference, a difference of source, between (1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the marital acquest but more usually the matrimonial property, and (2) other property. The former is the financial product of the parties' common endeavour, the latter is not. The parties' matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. As already noted, in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.

23. The matter stands differently regarding property ("non-matrimonial property") the parties bring with them into the marriage or acquire by inheritance or gift during the marriage. Then the duration of the marriage will be highly relevant. The position regarding non-matrimonial property was summarised in the White case [2001] 1 AC 596 , 610:

"Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property."

24. In the case of a short marriage fairness may well require that the claimant should not be entitled to a share of the other's non-matrimonial property. The source of the asset may be a good reason for departing from equality. This reflects the instinctive feeling that parties will generally have less call upon each other on the breakdown of a short marriage.

25. With longer marriages the position is not so straightforward. Non-matrimonial property represents a contribution made to the marriage by one of the parties. Sometimes, as the years pass, the weight fairly to be attributed to this contribution will diminish, sometimes it will not. After many years of marriage the continuing weight to be attributed to modest savings introduced by one party at the outset of the marriage may well be different from the weight attributable to a valuable heirloom intended to be retained in specie. Some of the matters to be taken into account in this regard were mentioned in the above citation from the White case. To this non-exhaustive list should be added, as a relevant matter, the way the parties organised their financial affairs.

49.In this instance the wife made it clear that she regarded her own assets as belonging to her but that she also expected to receive a share of matrimonial home and to that end she refers to an “agreement”.

257. E’s [the husband’s] contribution to our family welfare was primarily if not nearly exclusively financial. He worked at XXX as Managing Director since August 1999 until the earlier parts of 2017. He has had a very general remuneration package, in addition to significant bonuses, share awards, and an American Express supplementary card. He used to fund and pay for our family expenses by giving me an American Express or Visa supplementary card, which he had cancelled since around 2017. This was the agreed arrangement because E and I (as mentioned) had an agreement that all my savings would be mine since I had to stay home and care for B (“Agreement”). Instead of paying from my own saving E would simply settle the household expenses with the supplementary credit cards he gave me.

258. The Agreement - that I was to keep all of my savings and that E will pay for all other expenses such as on the FMH, holidays, meals etc – was critical and paramount to why I chose to become a housewife. It is important to first consider our respective financial earnings. My annual total income as Regional Head of N from April 2008 to March 2009 was HK$22,840,789. For the same period, E’s annual total income for the same period was HK$3,410,978. My annual income in tax year 2008/9 was nearly 7 times that of E’s. In other words, E would have had to work for nearly 7 years to make the amount I earned in a year. The only reason I agreed to ‘retire’ from work and become a full time housewife is the assurance E had given me: everything I have earned will be mine, and E will share his income and salary with us (B and I). It was on this understanding that I gave up such a financially lucrative job for a life which is arguably even more demanding emotionally and physically than when I was a banker. I sacrificed so much of my financial freedom and lucrative financial rewards. Had I remained in the industry and not become a stay-home mother, my savings would have easily doubled if not tripled.

50.The husband says there was no such agreement, but in any event it seems to me that in the circumstances of this particular case that is would be completely inequitable to allow the wife to retain all of the assets in her sole name and to provide her with a share of the Bel Air property in addition. This is especially given the fact that the down payment for the Bel Air property came from the husband’s inheritance from his grandparents and his own savings. To that extent I accept that there was clearly an argument here that could have been made, but wasn’t, with respect to pre-marital or non-matrimonial property. Similarly, I also accept that although the wife purchased the Singapore property after the parties married that again this property was purchased with her own funds and with no contribution from the husband. The UBS account is also made up of funds accumulated by her during her career in finance.

51.Thus, it is my intention to make an order with respect to the division of assets which gives the wife slightly more than 50% of the asset base in recognition of this and in order to ensure that she retains significant funds in her main income producing accounts. This will ensure that she has sufficient money to maintain herself and to contribute more or less equally towards B’s costs going forward, outside of the educational fund. In addition, funds accumulated during the party’s relationship by their investment in real estate and held in the HSBC Beijing Savings account 406-XXXXXX and BEA Savings 015-255-XXXXXXX-4 shall be split equally between them as they are clearly funds that were accumulated during the party’s relationship. The husband shall also retain the Bel Air property notwithstanding its marital home status.

52.In addition, I shall order that the wife deposit funds into court in order to pay for her half share of the potential increase in capital gains tax liability in the event that this becomes necessary. These funds shall be returned to her if there is no increase in CGT or shall be returned in part if the calculation proves to be less than anticipated. It follows that the husband’s potential tax liability shall also be off set against any tax losses that he has recently incurred as identified in paragraph 27(2) above.

Final division of assets

53.Consequently, the final division of assets shall look like this:

i) Monies held for B/Educational Trust fund – HK$8,002,122

ii) Assets held by the wife – HK$94,369,788

iii) Assets held by the husband – HK$91,393,604

54.Ultimately, this means that the wife will leave the marriage with approximately 48.7 % of the matrimonial pot and the husband will retain 47.2 %. The remainder will be held for B’s future educational needs. It seems to me that this slight deviation away from the yardstick of equality is fair and reasonable in the circumstances of this particular case.

How much maintenance should the husband pay to the wife for B going forward?

55.The husband says that the wife has inflated B’s expenses, and has produced a comparative document at annex 3 of his counsel’s closing, which shows the wife’s claim for B rising from HK$81,600 per month in 2017 to HK$131,215 per month for B just before the trial. It is of note that these estimates do not include a rental component. This analysis is reproduced below.

Annex 3 – W’s alleged general and child expenses

Current Monthly Expenses	20/1/2017 [P1/109]	14/6/2018 [P1/249]	25/1/2019 [P2/352]	19/7/2019 [P2/450]	10/2/2020 [P3/552]	18/8/2020 [P4/934]
General total	33,000	34,000	37,000	36,000	58,200	58,200
Utilities	3,000	-	-	-	-	-
Management fees	10,500	-	-	-	-	-
Food	8,000	15,000	15,000	15,000	29,200	29,200
Household expenses	4,000	10,000	10,000	10,000	15,000	15,000
Car expenses	3,000	3,000	3,000	3,000	6,000	6,000
Insurance premia	-	-	-	-	-	-
Domestic helper	4,500	3,000	6,000	5,000	5,000	5,000
Others (TV, telephone, internet)	-	3,000	3,000	3,000	3,000	3,000
Children total	48,600	47,500	54,500	55,615	73,015	73,015
School fees	8,000	-	-	-	-	-
Extra tuition fees	2,000	2,000	2,000	2,000	2,000	2,000
School books and stationary	500	500	2,500	500	500	500
Transport to school	3,500	-	-	-	-	-
Medical / Dental	2,000	3,500	3,500	3,500	3,500	3,500
Extra-curricular activities	12,000	12,000	12,000	12,000	24,400	24,400
Entertainment / presents	-	3,000	3,000	3,000	3,000	3,000
Holiday	15,000	20,000	25,000	20,000	20,000	20,000
Clothing / shoes	2,000	2,000	2,000	2,000	2,000	2,000
Insurance premia	-	-	-	8,115	8,115	8,115
Lunches and pocket money	400	800	800	800	800	800
Other transport	-	500	500	500	500	500
Toys books sporting equipment	3,000	3,000	3,000	3,000	8,000	8,000
Uniform	200	200	200	200	200	200
Total	81,600	81,500	91,500	91,615	131,215	131,215

56.In this instance I am approaching the issue of B’s maintenance on the premise that the parties will each have a good income and similar financial resources otherwise. I have estimated the wife’s future general expenses as follows going forward:

General

Item
Rent	80,000
Mortgage Instalments	N/A
Utilities	6,000
Food	20,000
Household expenses	10,000
Car expenses	6,000
Insurance premia	N/A
Domestic helper(s)	5,000
Others (T.V, telephone and internet)	3,000
Total monthly household expenses	130,000

57.In broad terms therefore, it is anticipated that the wife will have general expenses of approximately HK$130,000 per month. In coming to this estimate, I have included a rental component of HK$80,000 per month, which seems reasonable, although it is accepted that this will of necessity lead to a reduction in the wife’s current standard of living. It is also of note that the wife will be able to increase the rental component from her own financial resources, should she wish to do so. She may also wish to buy a property. In so far as the other outgoings are concerned, I do not accept that the estimate of HK$29,000 per month for food, for one adult and one child, to be reasonable. I have permitted HK$20,000 per month which seems to be very generous in any event. I have also allowed for a domestic helper, although I am told that the wife does not currently employ a full time domestic helper. The other expenses have either been allowed in full or have been reduced slightly. The husband shall be responsible for his half share of B’s expenses in the sum of HK$32,500 per month, with effect from the wife moving out of the Bel Air property with B (i.e. HK$130,000 divided by 2 = HK$65,000. B’s share of the general expenses will be HK$65,000 per month of which each parent shall be responsible for half or HK$32,500 per month each).

58.In so far as B’s actual expenses are concerned it is of note that in her affidavit evidence the wife says that in order for B to continue to ski at a competitive level, she will need an additional HK$50,000 per month. With respect this is plainly outside the realms of what might be considered reasonable and shall not be entertained. It is a matter for the wife if she wishes to pay for this from her own resources. The husband has offered HK$10,000 per month being his share of the cost for ECA’s otherwise, but asks that he provide this by way of undertaking. Given the current highly conflict nature of these proceedings, it does not seem to me to be sensible to expect the parties to be able to discuss the issue of ECA’s on an ongoing basis going forward. Consequently, an estimate for ECA’s has been included in the schedule of B’s actual expenses. School fees will also be covered by the educational fund. In total, then I will allow an additional HK$20,000 per month as follows, being the husband’s half share of B’s actual expenses:

School fees	N/A
Extra tuition fees	2,000
School books and stationary	500
Transport to school	(1,143)
Medical / Dental	2,000
Extra-curricular activities	20,000
Entertainment / presents	5,000
Holiday	5,000
Clothing / shoes	2,000
Insurance premia	(2,250)
Lunches and pocket money	800
Other transport	500
Toys books sporting equipment	2,000
Uniform	200
Total	40,000

In doing so I acknowledge that the husband will also undertake to continue to pay for the transport to school and other insurance premia. In total then I shall order that the husband do pay periodical payments for B in the sum of HK$52,500 per month once the wife and B have moved out of Bel Air and HK$15,000 per month in the meantime. In doing so I have also included a figure for holidays, entertainment/presents and toys books etc, even though it is hoped that in time that the husband will also be paying for B to go on holiday and other trips with him and that he will also buy B other presents and gifts. In part the inclusion of a reasonably small figure for these items is in recognition of the current situation that exists between father and son.

Costs

59.As I indicated at the beginning of the trial and indeed at the beginning of this judgement, I accept that there may be significant issues here with respect to costs. Consequently, costs shall be reserved and adjourned in the first instance to a call over on the 11 March 2021 at 9:30 am. Both parties are requested to provide an updated Form H on that occasion with a clear indication of what has been paid to date and what remains outstanding.

What should the final order be?

The order

60.Bearing in mind the findings made above, an order shall be made as follows:

UPON the Petitioner husband undertaking to continue to pay for the school bus and to continue to pay for insurance premia otherwise as set out in paragraph 13, (28) (iv) and (viii) above.

IT IS ORDERED THAT

1. There shall be a settlement of funds in that the sum of approximately HK$8 million held in the parties’ joint bank accounts with HSBC HKD Savings Account no 062-XXXXXX-292 and HK Premier account no 602-XXXXX-888 shall be paid into court by the wife (as she has the control of these accounts) within the next 14 days. In the event that the parties wish to set up an independent educational trust fund for B, then a joint application may be made to the court for the release of the funds for that purpose. Alternatively, applications may be made to court to pay for the school fees and other related costs as set out in paragraph 25 above, for B on a termly basis (i.e. the school fees, debenture, annual capital levy and university tuition fees).

2. The wife shall pay the husband a lump sum of HK$7.5 million within the next 14 days. It is further directed that the HSBC Beijing Savings account 406-XXXXXX and BEA Savings account 015-255-XXXXXX-4 shall then be closed.

3. It is further ordered that the wife shall pay into court a further sum of HK$6 million, such sum to be paid within the next 14 days. This sum, or part thereof shall be released by the court to the husband in the event that there is an increased US Capital Gains tax liability payable on the sale of the Bel Air property. In the event that this is not the case, or the sum is less than the amount estimated, then this sum or part thereof shall be returned to the wife.

4. The parties shall each retain all other assets and liabilities held in their sole names.

5. The husband do pay to the wife periodical payments for the child of the family, B, in the sum of HK$52,500 per month, the first payment to be made on the 1^st day of the month following the wife and B moving out of the Bel Air property and thereafter to be paid on the 1^st day of each succeeding month until B’s 18^th birthday or cessation of full time education, whichever is the later or until further order. In the interim the husband do pay the wife periodical payments for B in the sum of HK$15,000 per month as a contribution towards B’s expenses, with effect from the 1 December 2020 until the commencement of the payment of HK$52,500 per month referred to above.

6. The division of capital as set out above shall be in full and final settlement of each party’s claims for all forms of ancillary relief.

7. There shall be liberty to apply on an urgent basis.

8. It is further directed that the wife and B shall vacate the Bel Air property within the next 60 days.

9. Costs shall be reserved for argument and shall in the first instance be adjourned for further directions on the 11 March 2021.

10. Both parties do personally attend that hearing.

11. A s.18 declaration to issue.

Mr. Azan Marwah instructed by Withers for the Petitioner

Mr Giles Surman and Mr Abel Lam instructed by Lily Fenn & Partners for the Respondent