Yqcdg v. Ymml
Read the full judgment text of FCMC 17035/2012 on BabelCite. This Family Court judgment was delivered on 23 July 2021 before Judge S Lo.
Matrimonial causes – Ancillary relief – Matrimonial Property and Procedure Ordinance s.7 – Division of assets – Stanley Property – Sharing principle – Departure from equal division – Statute barred debts – Implied term – Valuation of property – Costs – H entitled to 66% of sale proceeds of Stanley Property after deducting net liabilities – W to bear 70% of costs from 13 January 2018
Legal issues: Validity of Writ of Subpoena in Family Court Ancillary Relief Proceedings · Statute Barred Debts and Implied Terms in Loan Agreements · Valuation of KL Property · Departure from Equal Division of Assets · Costs Allocation
Outcome: Ancillary relief granted; Stanley Property to be sold; H entitled to 66% of net proceeds; W entitled to 34%.
Cites 2 cases
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FCMC 17035/2012 [2021] HKFC 132 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 17035 OF 2012 ----------------------------
---------------------------- Coram : His Honour Judge S Lo in Chambers (Not Open to Public) Dates of Trial: 21, 22 and 29 April 2021 Date of Judgment : 23 July 2021 ----------------------- J U D G M E N T ( Ancillary relief ) ----------------------- Introduction 1.This is the trial of the parties’ claims for ancillary reliefs against the other. 2.The divorce petition was commenced by the petitioner (“H”) on 16 November 2012 and the petition was amended on 12 July 2012 and re-amended on 7 September 2015, in which H sought an order for sale of a property together with one carparking space situated at Stanley Main Street, Hong Kong as defined therein (“Stanley Property”) with the division of its sale proceeds between the parties. 3.The respondent (“W”) has not filed an acknowledgement of service. 4.The parties have no child of the family. 5.Decree nisi was granted on 28 August 2013 which was made absolute on 15 October 2013. 6.H filed a Form 25 on 7 September 2015. 7.Originally, the trial pertaining to ancillary relief came before Deputy Judge AN Tse Ching (as she then was) on 18 January 2017, with W being absent. Judgment was granted on the same day (“Judgment”). 8.W then applied for appointment of a guardian ad litem (“the W’s Guardian”) on ground of her psychiatric conditions. An order was made in terms of the W’s application with other directions on 1 June 2017. 9.After appointment of the W’s Guardian, W applied to set aside the Judgment. The application was consented to by H and an order was made on 12 January 2018 to such effect with other directions. 10.W filed a Form 25 on 29 June 2018. 11.H was later diagnosed to be suffering from Major Depressive Disorder and his psychiatric conditions worsened. Pursuant to an order dated 16 April 2020, a next friend for H (“the H’s Next Friend”) was appointed for the purpose of these proceedings. 12.Pursuant to the order dated 14 October 2020, the trial of the parties’ ancillary relief claims was fixed and commenced on 21 April 2021. Writ of Subpeona against H 13.By way of the affidavit of the W’s Guardian, W applied for a writ of subpoena requiring H to attend the trial. Consequently, leave to issue subpoena was granted by the court on 11 March 2021. 14.The H’s Next Friend then applied to set aside the writ of subpoena issued by W. Such application was heard before me on the first day of the trial and was allowed by me with costs against W. 15.In brief, I consider that in a case begun by petition in the family court, the proper way to require the parties or other deponents of the affidavits to attend the trial for cross examination by the other side is to make an application under Order 38 rule 2(3) RHC as discussed in the Privy Council case Tay Bok Choon v Tahansan Sdn. Bhd. [1987] 1 WLR 413. It is wrong in law for W to issue a writ of subpoena requiring H to attend the trial for ancillary relief since H cannot be W’s witness. 16.More importantly, I am of the view that for a writ of subpoena successfully served on the witness, if he/she refuses to attend the hearing as required, he/she may be cited for contempt of court whilst for an order made under Order 38 rule 2(3) RHC and if the person who is properly served with the order refuses to attend the hearing as required, the consequence is not the same because according to Order 38 rule 2(3), the affidavit made by this person shall not be used as evidence without leave of the court, rather than citing him/her for contempt of court. 17.I would remind the parties’ legal representatives to give proper legal advice to their clients before applying for the writ of subpoena in the family court. Background 18.The parties were married on 14 August 1987 and were separated in April 2001. The marriage lasts for about 13 years. They have no children. 19.H was born in December 1952 in Hong Kong and is now 68 years of age. He studied law in the UK, and has been practicing as a barrister-at-law in Hong Kong since about 1983. 20.W is a Malaysian national and now 67 years old. The parties met in the UK while they were both studying there. W then came to Hong Kong to marry H in 1987. W was a qualified barrister as well. After marriage, W entered into employment for a short period of time, from 1987 to 1988. She has not worked since. She is still suffering from Delusional Disorder and Psychotic Disorder. Parties’ open offers 21.According to the letter from H’s solicitors dated 8 April 2021, out of the sale proceeds of the Stanley Property, H offered that W do receive a sum of money, calculated in the manner as follows: (The sale proceeds - $5,900,00) X 50% - $835,000 22.The figure of $5,900,000 represents the net current liabilities of H and $835,000 represents half sum of the market value of a property owned by W in Kuala Lumpur, Malaysia (“KL Property”) based on the valuation report dated 25 May 2016, which was filed pursuant to the order dated 3 March 2016. 23.According to the letter from W’s solicitors dated 15 April 2021, W offered another formulation as follows:
24.According to the said letter, the figure of $663,733 represents half sum of the market value of the KL Property valued by GE Tan of chartered surveyors as per report dated 22 March 2021. The relevant legal principles and approach 25.The Court's jurisdiction in making an order for sale is founded on section 6(l)(e) of the Matrimonial Property and Procedure Ordinance (“MPPO”), which provides:
26.The factors to be taken into account by the Court in the exercise of its powers under section 6 are set out in section 7 of theMPPO:
27.In LKW v DD (2010) 13 HKCFAR 537, after considering the line of English authorities of White v White [2001] 1 AC 596; Miller vMiller and McFarlene v McFarlene [2006] 2 AC 618, the Court of Final Appeal (“CFA”) has given a detailed discussion on how a Hong Kong court should approach the issue of ancillary relief. A brief summary is as follows:
Step 1: Identifying assets (as well as liabilities) 28.The parties’ latest positions as far as assets and liabilities are concerned have been set out in the updated Form Es, and are summarized below. Joint Asset 29.There is only one piece of joint asset, viz., money (if any) in a joint HSBC current account. The account has all along been for the exclusive use of W and H claims no interest in any money therein. I accept the submission of Mr Lam for H that this piece of joint asset may simply be ignored in the proceedings herein. H’s assets 30.The assets under H’s name are:
31.The Stanley Property was purchased by H in his sole name without mortgage in April 1984 (ie, more than 3 years before marriage), from money given to H by his late mother. This property had been used as the parties’ matrimonial home since marriage. After the parties’ separation in April 2001, W has been in sole occupation of the Stanley Property. The carparking space has been rented out to a third party, and the rental income therefrom has been kept and utilized solely by W. H, on the other hand, has been shouldering various expenses such as management fees, rates and Government rent. 32.The monies in the bank accounts and other assets are mostly what have remained from the HK$5 million (approximately) that H received from the legacy of his late father, Mr Patrick Yu (“late Mr Yu”) passed away in Jan 2019. H said that the remaining of H’s share of the legacy has been used to pay off part of his debts and other expenses. 33.The assets and liabilities of the estate of the late Mr Yu are set out in the relevant Letters of Administration including the property in Bowen Road. The final accounts of the estate of the late Mr Yu dated 19 June 2020 has also been produced revealing, inter alia, that:
34.Mr Chan for W argued that in the late Mr Yu's Will of Aug 2008, there is a reference to an SS Yu Trust, the income of which was supposed to support Mrs Yu Fung Yok Kin, Lucia (“late Mrs Yu”) at the rate of $100,000 per month, if she survived him. Although the late Mrs Yu died in Oct 2016 and did not survive the late Mr Yu, who died in Jan 2019. Mr Chan submitted that as H did not attend the trial for cross examination, W is in effect deprived of any chance to ascertain whether H has access to hidden income from the said Trust. 35.As discussed above, the proper way to require the parties to attend the trial for cross examination by the other side is to make an application under Order 38 rule 2(3) RHC and it was W who fails to make such an application. W herself or her lawyers shall be blamed but not H. Further, I cannot accept Mr Chan’s speculation as to H’s hidden income from the said Trust which is made without any evidential basis. 36.Regarding H’s entitlement to the estate of the late Mrs Yu who passed away on 15 October 2016, her probate has been duly disclosed and shown that the assets in her estate were nominal. In this regard, I disagree with the criticism made by Mr Chan for W for H’s waiver of his share in his late mother’s estate. 37.The other assets of H are not in dispute. Excluding the value of the Stanley Property, I therefore accept the figure of HK$2,156,903 as the value of H’s assets. H’s liabilities 38.H claims his total liabilities, consisting mainly of loans from friends, relatives and chamber-mates, amounting to about HK$8,070,139. Details of the loans (as at 8 June 2020) have been provided in the H’s Next Friend’s 2nd Affidavit with the relevant exhibits, which are summarized as follows:
39.The H’s Next Friend gave the following evidence in chief, after leave was granted by the Court to update H’s debt position:
40.Mr Chan for W did not argue that such debts do not in fact exist but contended that some of them are statute barred for more than the statutory period of 6 years for contract under section 4(1) of Limitation Ordinance (Cap 347), whether for ancillary relief purposes or not. These debts or loans are set out below:
41.Section 4 of Cap 347 states:
42.Mr Lam for H relied on §39-267 of Chitty on Contracts, 33rd Edition, Vol. II, which states:
43.Mr Lam argued that given the nature of the personal loans from H’s friends, relatives and chamber-mates, it is inconceivable that the debts were “repayable at once without any previous demand”. An implication must be drawn that there was an implied term of the loan agreements that they are repayable on demand. Since no demand for repayment has yet been made by any of the creditors, the debts have not yet become due. 44.Mr Chan for W submitted that this has never been H's evidence. On the contrary, from the very inception of H's 1st Form E of 30 July 2013, H has claimed that he was already indebted to a member of his former chambers (meaning YC Mok). It also transpired that YC Mok's right of action to recover the total loans of $1,387,000 was partially paid off in the sum of $181,000, when Patrick Yu's chambers came to an end, which would have been before H joined Fraternity Chambers in May 2010. Mr Chan also argued that apart the H’s Next Friend, H and all other creditors chose not to attend the trial for giving oral testimony. 45.It is not uncommon in the ancillary relief claims that the parties made a lot of allegations that during the marriage or before the trial of the ancillary relief claims, they had borrowed very substantial amount of money from their friends and relatives for some reasons. In most of the cases, the court has to decide whether these loans are genuine or not. However, in the present case, the court has only to decide whether there was an implied term of the loan agreements in question that they are repayable on demand as argued by H. It is not in dispute that there is no written or oral evidence whether from H himself or from his friends, relatives and chamber-mates (save the H’s next friend) if there exists any express term in all these loan agreements as to the time for repayment. As said in §39-267 of Chitty on Contracts, it is open to the parties to fix a time for repayment, or to agree that the loan will only be repayable on demand. 46.In my view, before the court will infer an implied term, H has to adduce some evidence that in the first place, there is no express term in all these loan agreements as to the time for repayment, in particular loans of YC Mok, Cheung Ho Fai Derek, Chan Hon Keung Robert and James Eric Fung which were incurred from 2005 to 2010 already over 6 years from the date of H’s affidavit filed 26 October 2016. There is no reason why H failed to mention in any of his Form Es nor in his affidavit filed 26 October 2016 that there is no express term in these loan agreements as to the time for repayment. Although H and the H’s Next Friend should be well aware of the challenge of such loans by W, they fail to mention any evidence about the express term, not to say the implied term, in all Form Es and affidavits filed. The court is simply unable to rule if there is no express term in these loan agreements as to the time for repayment. 47.As a result, I doubt very much as to how the court will automatically accept the legal submission by Mr Lam for H without hearing any evidence, written or oral, whether from H himself or from his friends, relatives and chamber-mates concerning the existence of the alleged implied term. It is not a well settled case for implied term as stated in §39-267 of Chitty on Contracts. 48.In case H’s friends, relatives and chamber-mates did commence legal actions against H after this judgment, I consider that in the absence of H’s evidence, it is arguable for H as to whether the legal submission by Mr Lam concerning the alleged implied terms is binding on him. I have no idea whether the instruction as to the alleged implied terms was indeed given by the H’s Next Friend or by H himself. It is possible for H who is now suffering from Major Depressive Disorder to deny his agreement to the alleged implied terms in the future if he has not given any evidence in this regard. 49.Furthermore, H still fails to settle the loans of YC Mok, Cheung Ho Fai Derek, Chan Hon Keung Robert, Oei Wai Chi Grace Fung and James Eric Fung whilst he is now maintaining about HK$2 million in his bank account. There is no reason for H not to pay off part of these loans before the trial. 50.In the circumstances, I am not satisfied that on the balance of probabilities, H has discharged the burden to prove the existence of the alleged implied terms. I hence reject to accept the loans of YC Mok, Cheung Ho Fai Derek, Chan Hon Keung Robert, Oei Wai Chi Grace Fung and James Eric Fung as H’s liabilities for the purpose of the ancillary reliefs proceedings. Loan due to the H’s Next Friend 51.Since 2010, H is practicing as a barrister in Fraternity Chambers, of which the H’s Next Friend is the chambers head. Various loans were incurred by H to the H’s Next Friend, partly for the chambers expenses and partly for H’s personal loans since October 2011. On 18 April 2019, a sum of $1 million was repaid by H and thus, the loan amount was reduced from $5,712,989 to $4,712,989. As a further sum of $2 million was repaid on 18 August 2020, the outstanding amount due to the H’s Next Friend is currently $2,712,989. 52.Mr Chan for W argued that the 2 repayments on 18 April 2019, and 18 August 2020 were made to pay off the most recent debts due to the H’s Next Friend. 53.Mr Lam for H submitted that as between H and the H’s Next Friend, where a “running account” is maintained, the Rule in Clayton’s Case applies. It is assumed that the money first withdrawn from an account is drawn against the contribution of the party whose money was first deposited. This is sometimes called the “first-in-first-out” rule. A fortiori, the converse should also be true - money paid into an account in debit is assumed to be used to set off the earliest debt. Relying on Snell’s Equity, 34th Edition, §30-059; Devaynes v Noble, Clayton’s Case (1816) 1 Mer. 572; and Essilor Manufacturing (Thailand) Co. Ltd. v. G. Doulatram & Sons (HK) Ltd. & Others [2020] HKCFI 2489, §70, Mr Lam said that monies repaid by H to the H’s Next Friend should therefore have been used to set off the earliest debt, not the latest. 54.I accept Mr Lam’s submission in this regard and am of the view that the Rule in Clayton’s Case is applicable. Further I find that if that is the intention between H as borrower and the H’s Next Friend as lender, I can see no reason why the court has to interfere. Bearing in mind that the H’s Next Friend had given his oral testimony at the trial and confirmed $2,712,989 due to him, Mr Chan has the opportunity to cross examine him on this issue if W disagreed but Mr Chan failed to do so. Accordingly, I reject Mr Chan’s submission and accept $2,712,989 as the outstanding amount due to the H’s Next Friend. H’s net liability 55.To conclude, as W does not challenge the other liabilities of H as alleged, I find that the total amount of H’s liabilities is $5,097,790.4 (being $8,104,135.60 - $1,206,344.60 - $100,000 - $1,000,000 - $500,000 - $200,000). After deducting $2,156,903 as the value of H’s assets, he has the net liability in the sum of $2,940,887.4 (being $5,097,790.4 - $2,156,903) excluding the value of the Stanley Property agreed at $29,350,000. W’s assets 56.As evident from W’s updated Form E dated 24 March 2021, the assets under her name are:
KL Property 57.H said that the KL Property was purchased sometime in the 1990s, from money provided by H to W, in the sum of about HK$450,000. W has all along had the full use and enjoyed the full benefit of the KL Property since acquisition. H further says that the KL Property has been rented out from time to time throughout the past 20 years, the rental income therefrom being at W’s sole disposal. 58.H’s evidence in this regard is not challenged by W. 59.On 10 March 2021, the Court ordered by consent, inter alia, that “The parties do try to agree upon the current value of [the KL Property]; failing agreement within 14 days [i.e., on or before 24 March 2021], the value of the property as stated in the valuation report dated 25 May 2016 shall be adopted as its current value for the purpose of these proceedings.” 60.According to the valuation reported dated 25 May 2016, the value of the KL Property was RM880,000. 61.On 24 March 2021, W’s solicitors sent to H’s solicitors a new valuation report of GE Tan, chartered surveyors dated 22 March 2021, in which the value of the KL Property was stated to be RM700,000 as at 16 March 2021. Not having sufficient time or means to consider or verify the contents of the new valuation report, H’s solicitors rejected W’s new valuation figure, and holds W to the agreed default value of RM880,000. 62.Mr Lam for H submitted that H is under no obligation to accept the new valuation figure, and that by virtue of the aforesaid consent order dated 10 March 2021, the value of RM880,000, which is equivalent to HK$1,672,000 using an exchange rate of RM1:HK$1.9, shall be adopted as the current value of the KL Property. 63.Mr Chan for W argued that H has not indicated why this estimated value of RM700,000 is objectionable, notwithstanding that the valuation is a "formal valuation" of GE Tan, chartered surveyors. 64.In my view, the new valuation report of GE Tan, chartered surveyors dated 22 March 2021 must be rejected. According to Order 38 rule 36 (1) RHC, except with the leave of the court or where all parties agree, no expert evidence may be adduced at the trial. No leave was granted to W to adduce this report. Besides, I note that this report has not contained a declaration in compliance with Order 38 rule 37C RHC. 65.Further pursuant to para 20(2) of PD 5.2, a party who obtains expert evidence before obtaining leave does so at his own risk as to costs, except where he obtained the evidence in compliance with a pre-action protocol. There is no reason why before engaging GE Tan, chartered surveyors, to prepare the new valuation report, W’s solicitors could not try to agree upon the current value of the KL Property with H’s solicitors. If no agreement can be reached, W could then suggest to engage GE Tan, chartered surveyors, to prepare the report. But W failed to do so. In the circumstances, I accept Mr Lam’s submission and adopt the value of RM880,000, which is equivalent to HK$1,672,000, as the current value of the KL Property. W’s share on her late father’s estate 66.Mr Lam for H submitted that W has hidden assets in Malaysia not disclosed in her updated Form E. Based on the grant of probate of Yeo Ben Poh deceased (W’s late father), W is entitled to a one-third share in two houses in Petaling Jaya, Malaysia (together “the Legacy Houses”). 67.According to what appears to be a schedule of assets of the grant of probate of the late Mr Yeo, the total value of the Legacy Houses was RM1,600,000, which is equivalent to HK$3,040,000, adopting an exchange rate of RM1:HK$1.9. W’s 1/3 share in the Legacy Houses was therefore worth about HK$1,013,000. In the absence of updating valuation, Mr Lam for H invited the court to adopt that value as the current value of W’s share of the Legacy Houses. 68.Mr Chan for W relied on the unsworn draft affirmation of W being the exhibit “CHH-1” attached to the affidavit of the W’s Guardian filed on 27 June 2020 and contended that W’s 2 brothers are presently occupying the Legacy Houses and refuse to dispose of them. Further in exchange for her giving up her share, she got instead get the bulk of her late father's traded securities. For this reason, Mr Chan argued that W's share of the Legacy Houses should not be taken into account. 69.Under cross-examination, the W’s Guardian explained that it was difficult to get information from W due to her psychological situation, and that she was highly uncooperative. Mr Lam invited the court to put no weight on the contents of the W’s draft affirmation, and to disregard it altogether. 70.Mr Chan for W simply failed to explain on what legal basis the contents of the unsworn draft affirmation of W could be properly adduced as evidence at the trial. In my view, the contents of this unsworn affirmation of W must be entirely rejected. It is not fair to H to be deprived of the opportunity to cross examine W at the trial if this unsworn affirmation is adduced as evidence. Further, the W’s Guardian who proclaims as a qualified accountant specialized in matrimonial cases should have included the Legacy Houses in W’s updated Form E despite the uncooperative attitude of W. Accordingly, I accept HK$1,013,000 as the current value of W’s share of the Legacy Houses as submitted by Mr Lam. W’s Jewellery 71.Mr Chan for W submitted that W's jewellery of an estimated $50,000 should not be treated as her assets, because they have sentimental value, given W's delusional thinking that she can still salvage the marriage, will never be sold to convert into cash. 72.Similarly, I do not understand based on what evidence given by W, Mr Chan made this submission given that W did not give oral testimony at the trial and her unsworn affirmation has been disregarded. I reject Mr Chan’s submission and will treat $50,000 as the current value of her jewellery. 73.To conclude, I find that the value of the total assets of W is $6,127,681 (ie $3,442,681 + $1,672,000 + $1,013,000). W’s liabilities 74.Parties agreed that W’s remaining liability is $8,998. W’s net assets 75.The net value of W’s assets is $6,118,683 (being $6,127,681 - $8,998). Step 2: Assessing the parties’ financial needs 76.As stated in H’s latest Form E, his current total monthly expenses are $62,515, inclusive of a monthly rent of $26,000 but exclusive of the chambers contribution that he has to make (currently $17,000 per month). He said that he would also need to repay the huge debts that are still outstanding. 77.As stated in H’s Form E filed in Dec 2016, practicing as a barrister, H had taken up only 2 cases during the period from 2008 to 2011, and none thereafter until 2015. In the two calendar years of 2015 and 2016, H’s total fee income was $800,000. Since then, according to his updated Form E, he took on only one case in Dec 2019, earning $50,000 in fee. H said that he has been practicing at a loss. The amount of loss for the 12 months prior to 1 March 2021 was $409,018 based on his updated Form E. 78.Mr Lam for H submitted that there is no way in which H’s financial needs may be met without realizing the Stanley Property. 79.According to W’s latest Form E, her total monthly expenses are in the total sum of $44,500, which exceeds the monthly expenses of H after the latter’s rental expense is taken into account. 80.In §3.6 of her latest Form E, W disclosed income from rental of the carparking space of the Stanley Property (in the sum of $3,500 per month), as well as other interest and dividend income. Total disclosed income amounts to roughly $11,000 per month, which should not be sufficient to cover her expenses. W is however practically debt-free. Mr Lam for H submitted that W has other sources of undisclosed income, including rental income from the KL Property. 81.In the circumstances, if the Stanley Property is realized and the net proceeds thereof distributed to the parties, I consider that their financial needs could be met, at least for a very substantial period of time. Step 3: Applying the sharing principle 82.Since surplus assets would remain after the parties' needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties' total assets, with a yardstick of equal division as part of that principle. However, both parties argued that there are good reasons for departing from an equal division in favour of them. Step 4: Considering whether there are good reasons for departing from equal division 83.Mr Lam for H submitted that, in the present case, there are five good reasons for departing from equal division in favour of H. In the closing submission, H requests to be given a 60% interests in both the Stanley Property and the KL Property. 84.First of all, the Stanley Property was purchased by H without mortgage in April 1984 (i.e., more than 3 years before marriage), from money given to H by his late mother. Due to the relatively long marriage, and since the Stanley Property was used as the matrimonial home, H accepted not to ask this Court to exclude the Stanley Property from distribution. Instead, H invited the Court to take a “telescoped approach”, and submitted that the source of the property is one of the relevant factors potentially capable of giving rise to a good reason for departing from equal division. I accept H’s submission in this regard but I also agree with Mr Chan’s submission that the importance of this factor will diminish over time, especially for a long marriage. 85.Secondly, after the parties’ separation in April 2001, W has been in sole occupation of the Stanley Property, rent free, for 20 years. The carparking space has been rented out to a third party, and the rental income therefrom kept and utilized solely by W. H, on one hand, has been shouldering its various expenses such as management fees, rates and Government rent and on the other hand, paying the monthly rent of H’s current residence in Happy Valley, of an area of about 700 ft2, for $26,000 per month. The Stanley Property is of a saleable area of 1,510 ft2. Mr Lam for H assumed that its rental value over the years has been $54,000 per month, W would have benefited to the sum of almost $13 million ($54,000 x 12 x 20) out of her occupation of the Stanley Property, excluding benefits from her occupation or renting out of the car parking space thereof. 86.In my view, although the Stanley Property was purchased by H more than 3 years before marriage without any financial contribution by W, the parties resided therein together as the matrimonial home during the marriage for over 13 years. I disagree with Mr Lam’s submission that it is not fair for W to solely occupy the Stanley Property which is larger in size than the apartment occupied by H currently. I consider that since the Stanley Property is regarded by the parties as their matrimonial home during the marriage, W shall be entitled to continue to stay there until there is a court order requiring her to move out. Further, there is no evidence before me that H is prevented by W to live in the Stanley Property. In view of the size of the Stanley Property, the parties shall be able to live in separate rooms. 87.Although W is receiving the rental income of the carparking whilst H is responsible for paying the management fees, rates and Government rent, it seems to me that there is no complaint made by H for W’s receipt of car park rental and his payment of the incidental expenses for many years. Strictly, speaking, H is entitled to request the tenant of the car park to pay rent to him instead of W. As it is undisputed that H was maintaining W during the marriage, such rental can be regarded as part of the maintenance paid by H to W. I consider that it is not a good reason for departing from equal division in favour of H. 88.Thirdly, Mr Lam for H submitted that the KL Property was purchased sometime in the 1990s, from money provided by H to W, in the sum of about $450,000. W has all along had the full use and enjoyed the full benefit of the KL Property since acquisition. H further says that the KL Property has been rented out from time to time throughout the past 20 years, the rental income therefrom being at W’s sole disposal. 89.For the KL Property, I also consider that it is the consensus between the parties as to its rental income received by W during marriage and receivable by her after separation, which shall be regarded as part of the maintenance paid by H to W. Similar to the Stanley Property, I accept that the source of this property is one of the relevant factors potentially capable of giving rise to a good reason for departing from equal division in favour of H. 90.Fourthly, Mr Lam said that the parties met in the UK while they were both studying there. W then came to Hong Kong to marry H in 1987. W was apparently a qualified barrister as well. After marriage, W entered into employment for a short period of time, from 1987 to 1988. She has not worked since. There were no children to look after. Mr Chan for W contended that W’s care of the Stanley Property in the interest of the family welfare falls within the scope of section 7(1)(f) contribution. Mr Lam for H submitted that she had contributed very little to the welfare of the family. 91.With respect, I do not fully understand what exactly the contribution is contended by Mr Chan. There is indeed no evidence at all from W as to her contribution. I find that W had contributed very little to the welfare of the family as she had not made any financial contribution to the family all along and did not have any child of the family to look after. On the other hand, I accept that H had financially supported the whole family during the marriage and he has greater contribution to the family than W. 92.Lastly, Mr Lam for H submitted that W has hidden assets, in particular her 1/3 share in the Legacy Houses that she has failed to disclose in her updated Form E. Adverse inference should be drawn against her. 93.In my view, W’s 1/3 share in the Legacy Houses has been taken into account in Step 1 above. It is not necessary to draw adverse inference against her in Step 4. However, according to W’s updated Form E dated 24 March 2021, she is maintaining various bank accounts for the total sum over $1 million with stocks of value over $2.2 million. I doubt very much as to how she would have these assets over $3.2 million if she has not been working since marriage and after separation. In this regard, I consider that she has not made full and frank with disclosure of "other financial resources" within the meaning of section 7(1)(a) of MMPO. 94.On the other hand, Mr Chan for W contended that the following are good reasons for departing from equal division in favour of W:
95.In the closing submission, W asked that the adjustment ought to be made at 60:40 for W and H respectively. 96.As to H’s conduct for incurring unnecessary debts alleged by W, H replied in his affirmation of 26 October 2016 that he was finding it increasingly difficult to work efficiently and effectively and further said:
97.Mr Justice Ribeiro PJ said in para 104 of LKW’s case that:
98.As H has been practicing as a barrister-at-law in Hong Kong for over 38 years since about 1983, I can understand that it is extremely uneasy for him to give up his practice entirely despite his chronic mental condition. I do not consider that his conduct for incurring his chambers fees amounts to “obvious and gross” misconduct which it would in the opinion of the court be inequitable to disregard. 99.Regarding W’s complaint of H’s failure to make full and frank disclosure of some of his tax returns and bank statements, Mr Lam for H pointed out that on 16 April 2020, the Court ordered, inter alia, that “the Petitioner to file and serve his Answer to the Respondent’s 2nd Questionnaire on or before 8th June 2020; if the Petitioner objects to any of the Respondent’s 2nd Questionnaire, the Respondent shall apply by way of Summons by 15th June 2020 for the Court’s determination”. 100.H filed and served his Answer to W’s 2nd Questionnaire on 8 June 2020 but W did not make any application for discovery to the Court to compel H to produce the said tax returns and bank statements. I accept that it is not fair for W to accuse H of his failure to make full and frank disclosure. 101.In respect of the parties’ earning capacity, I agree that H’s earning capacity is higher than that of W. It is one of the factors as per section 7 that I need to take into account. Step 5: Deciding the Outcome 102.In this final step, I have to step back and look at the overall impact of the factors found to be relevant with a view achieving a fair financial outcome in a matrimonial context. 103.Undoubtedly, it is a long marriage for about 13 years. Although W has received high education, she has been financially relied on H and not working during the marriage and after separation. She is now 67 and suffering from Delusional Disorder and Psychotic Disorder. Hence, I accept that she has almost no earning capacity. According to W’s latest Form E, her total monthly expenses are in the total sum of $44,500 but she fails to explain her current assets of value over $3.2 million. As said above, I have to draw the adverse inference against her that W must have other sources of undisclosed income than the rental income from the KL Property and the car park rental of the Stanley Property. 104.In view of H’s age of 68 and suffering from Major Depressive Disorder, I accept that he is only able to maintain a very limited practice as a barrister in the foreseeable future. His earning is not sufficient to pay off his personal expenses and chambers fees. The financial needs of H cannot be met without sale of the Stanley Property. 105.As discussed above, I find that H’s contribution to the family is higher than that of W. I also disagree with the submission of Mr Chan for W that H comes from a wealthy family as both of his parents had already passed away and this court has already taken into account of his interest upon succession. 106.In the supplemental submission of Mr Chan for W, he suddenly argued that H had no need for loans of about $6.75 million to sustain his living for around $6.39 million over the period from November 2011 to date. Mr Chan never raised this issue in his both opening and closing. H has explained that he borrowed $2 million from Mr Martin Lee SC in March 2019 together with part of his share in his late father’s estate in June 2020 to pay off part of his debts. I am satisfied with his explanation and in my view, this kind of minute retrospective investigation shall be rejected based on the fourth principle as laid down in LKW’s case. 107.In the closing submission, H basically requests to be given a 60% interests in both the Stanley Property and the KL Property. However, Mr Lam has not proposed that this court shall make an order for sale of the KL Property. Even if this court has the power to make this order, I find that it is difficult to enforce such an order practically as the KL Property is situate out of the Hong Kong jurisdiction. Mr Lam suggests a quite complicated calculation for the division of the sale proceeds the Stanley Property. In my view, as it is a discretionary exercise under section 7, the court shall try to avoid using such a complicated calculation. 108.Having carefully considered and balanced all relevant factors in section 7 and having found that there are good reasons for departing from equal division in favour of H, I exercise my discretion that H shall be entitled to 66% of the sales proceeds of the Stanley Property. If it could be sold at the agreed market price of $29,350,000, H will be entitled to $19,371,000 and W’s share is $9,979,000 (incidental expenses to the sale not yet counted). After settling H’s net liability for $2,940,887.4[2], he will have the assets of net value of $16,430,112.6 (ie $19,371,000 - $2,940,887.4) whilst W will have $16,097,683 (ie $9,979,000 + $6,118,683) after adding her existing assets for $6,118,683[3]. In other words, H will have slightly more than half of the entire family pot. If the Stanley Property can be sold higher than $29,350,000, which I believe so, H will have a bit more in term of the actual amount and percentage. The respective sums of about $16 million shall be more than sufficient to meet the financial needs of both parties. 109.Save making the proposed adjustment at 60:40 for W and H, Mr Chan for W did not make any submission as to how this court shall make the relevant orders in relation to the sale of the Stanley Property and did not make any comments on the proposed order of H. Needless to say, W’s proposal is unreasonable and must be rejected. Order 110.In the circumstances, I adopt the order proposed by Mr Lam with some modifications and now make an order that:
Costs 111.Mr Lam for H asked that the costs of these proceedings, including the wasted costs of the trial before Deputy Judge AN Tse Ching (as she then was) on 18 January 2017, as well as all costs reserved, shall be paid by W to H, to be taxed if not agreed, on a party and party basis with certificate for counsel. 112.It seems to me that the Judgment made by Deputy Judge AN Tse Ching (as she then was) on 18 January 2017 was set aside by consent of H probably due to the appointment of the W’s Guardian on the ground of her psychiatric conditions. I therefore tend to think that W may not be mentally capable to make any legal decision at the material time and thus, there shall be no order as to costs up to and inclusive of the date of the consent order made on 12 January 2018. 113.As to the costs incurred thereafter, I consider that as a whole, H shall be regarded as the winner of these ancillary relief proceedings except for the time-bar issue relating to H’s liabilities due to the 5 creditors. I exercise my discretion that W shall bear 70% of all costs incurred on and after 13 January 2018 with certificate for one counsel. This costs order nisi be made absolute unless any of the parties apply to vary by summons within 14 days. 114.Last but not least, I thank counsel for their assistance.
Mr Simon Lam and Mr Matthew Mok instructed by Godwin Chan & Co. for the Petitioner Mr Maurice Chan instructed by Fung, Wong, Ng & Lam LLP for the Respondent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||