Lotm v. Csm

FCMC 15805/2018

[2022] HKFC 64

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 15805 OF 2018

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Coram : Her Honour Judge Grace Chan in Chambers (not open to public)

Date of hearing :  14 – 16 December 2021

Date of petitioner’s written closing submission :  12 January 2022

Date of respondent’s written closing submission :  21 January 2022

Date of both parties’ written reply closing submission :  4 February 2022

Date of judgment :  24 March 2022

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JUDGMENT

(Ancillary relief; government pension; inherited property)

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Introduction

1.In this trial, the court is tasked to determine the cross applications for ancillary relief of the parties following the end of their roughly 20-year’s long of childless marriage. The major disputes concern the composition of their assets that are available for sharing, their financial resources and needs.

2.The petitioner (“wife”) was born in 1960 and is now 61 years old. She used to be a clerk working in the government and has retired since February 2021. On her retirement, she did not commute any lump sum pension but chose to receive a larger monthly pension of about $28,363 per month.

3.The respondent (“husband”) was also born in 1960 and aged 61. He had worked as a tour guide for over 30 years. Prior to 2004, he worked mainly for European tours with clients coming from Hong Kong. After 2004, his clientele became the Chinese Mainlanders. He claims that he has become unemployed since 31 July 2017, and has been relying on public assistance of about $4,305 since May 2020.

4.The parties got married in 1997, but separated on 1 November 2016. The wife filed her petition for divorce in December 2018. Decree nisi was granted in May 2020. I have no idea why she has not proceeded to apply for decree absolute, since a declaration pursuant to section 18(1) of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) is already made. I urge her legal team to follow up on this without delay.

5.There are 3 witnesses in this trial, including the parties themselves and the wife’s elder brother.

Applicable Law

6.The law relating to the distribution of family assets in ancillary relief matters is set out in section 7 of the MPPO, which states:

“ (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.”

7.The Court of Final Appeal in its landmark judgment of LKW v DD [2010] 13 HKCFAR 537 has enunciated 4 guiding principles as to how the said section 7 should be approached, namely (i) objective of fairness, (ii) rejection of sex or role discrimination, (iii) yardstick of equal division, and (iv) rejection of minute retrospective investigation.

8.It has further laid down the following steps in approaching the said section 7:

(1)  to ascertain the financial resources of each of the parties calculated as at the date of the hearing;

(2)  to assess the financial needs of the parties, generously interpreted;

(3)  to apply the sharing principle to the parties’ total assets (if surplus assets would remain after the parties’ needs have been catered for);

(4)  to consider whether there is/are good reasons for departing from the principle of equal division;

(5)  to decide the outcome.

The parties’ respective case & open proposal

9.Put in a nutshell, the wife says that the assets for sharing are mainly the former matrimonial home, the husband’s 1/3 interest in a private flat in Sunway Garden at King’s Road (“Sunway Garden”) which is inherited by him under the intestacy law following the death of his late mother in 2012, and his unexplained withdrawals from his bank accounts, including the BOC account in China (“BOC/China Account”), in the total sum of RMB410,836 between January 2018 and November 2020 (but in the written submission of her counsel, this sum is revised to $573,200), but should not include her notionally-commuted 50% lump sum pension ($2,382,520), and 2 sums of $200,000 and $488,263 credited into her account on 13 July 2018 and 20 July 2020 respectively, which were subsequently given to the elder brother in the total sum of $690,000. Further, the husband should repay her $226,808, being 50% of the monthly mortgage repayment that she had paid for the matrimonial home between 2009 and 2014. According to her, the total assets of the parties are worth $8,348,621 (revised to $8,791,833 in her closing submission).

10.She advances that her expenditure needs require that she should continue to live in the matrimonial home and spend $27,400 per month, which her monthly government pension of $28,363 is just sufficient to cover. The husband has earning capacity and/or financial contributions from his sister or girl-friend (“Madam Ko”). He is able to live in Sunway Garden free of charge. His needs are thus well catered for.

11.In her opening submission, she offers to pay the husband a lump sum of $600,000 on a clean break basis and on the basis that each party shall retain his/her own assets (which means that she is to keep the matrimonial home), as she proffers that there should be a departure from the equal sharing principle due to his physical and oral abusive conduct of the husband, and his non-contribution to the family expenses and mortgage repayment of the matrimonial home, such that she should keep 60% of the total assets of the parties. This is increased to $1 million at the beginning of the trial, which is not accepted by the husband. However, in her closing submission and through her counsel, Mr Eric Leung, she submits that she no longer argues that there should be a departure from equal sharing of the assets, but says that the lump sum payment to be paid by her to him should be reduced to $878,000, to be paid by 2 instalments of $439,000 each by re-mortgaging the matrimonial home which should be kept by her.

12.On the other hand, the husband argues that the main assets for sharing in this case are the matrimonial home, 50% of the wife’s notional lump sum pension (ie $2,382,520) and a total sum of $690,000 that she has transferred to her elder brother shortly before she filed her petition for divorce. He says that his inheritance of 1/3 interest in Sunway Garden is a unilateral asset which should not be shared by her. On the withdrawals of and/or credits into his bank accounts, in particularly the BOC/China Account, he adamantly says that there has been double counting by the wife, and that the moneys were from Madam Ko partly for buying parallel goods for her and partly as loans to him for his daily expenses. In his view, the total assets for sharing are worth about $6,353,735.

13.Originally, his written open offer that the wife should pay him $2.5 million while she may continue to keep the matrimonial home and her pension. This is revised, through Mr Hugo Chan of counsel in his oral opening submission, to $2 million. In his written closing submission, he advances that the wife should pay him equalization money of $3,140,930.

The Deed of Separation & the matrimonial home

14.Before I start to identify the assets of the parties under the 1^st step of LKW, it may be helpful to give a clearer overall picture by mentioning a Deed of Separation signed by the parties on 24 April 2009 (“Separation Deed”) and the arrangement concerning the matrimonial home.

15.The matrimonial home, which is a home ownership flat in Tseung Kwan O, was purchased in 1999 in the joint names of the parties. The wife does not dispute that the husband gave up his public housing unit in order for them to purchase the matrimonial home. There is no dispute that the parties signed the Separation Deed in April 2009. About 5 months later on 21 September 2009, the husband transferred his interest in the matrimonial home to the wife. This means that as at this trial, the wife is the sole legal owner of the matrimonial home.

16.The Separation Deed was drafted by a firm of solicitors instructed by the wife. In gist, it says that the parties separated from each other in 2009. It provides that each party may retain his/her own assets and bear their respective liabilities. However, it is totally silent on how to deal with the matrimonial home which was then still in their joint names.

17.The original position of the wife as reflected in her affirmation dated 3 November 2021 on section 7 of the MMPO (“section 7 affirmation”) is that the Separation Deed and the subsequent agreement that the husband should transfer all his interest in the matrimonial home to her represent a full and final settlement of the parties on their financial arrangement.[1] At the beginning of this trial, Mr Eric Leung for the wife informs the court that she accepts that the Separation Deed is “not” in a full and final settlement of their ancillary relief, and that she will not ask the court to adopt the terms therein. However, she still insists to pursue her stance that the husband should reimburse her half of the mortgage repayment paid by her from 2009 to 2014.

18.I think Mr Leung has made a reasonable and fair concession, for it is obvious that the Separation Deed has not fulfilled the conditions set out in Radmacher v Granatino [2010] UKSC 42, [2011] 1 AC 534, which was confirmed by our Court of Final Appeal in SPH v SA (formerly known as SA) [2014] 3 HKLRD 497; (2014) 17 HKCFAR 364 to be the applicable legal principles in Hong Kong. At the very least, it is not mentioned in the Separation Deed that material disclosure was made.

19.Further, I accept the husband’s explanation as to the circumstances that the Separation Deed was signed and the transfer of his half share in the matrimonial home to the wife was made. He said that during the marriage, the wife was skeptical that he had extra-marital affairs whenever he went overseas to work as a tour guide. They had quarrels, like any other couples, from time to time. Then, in 2009, they had a major dispute and the wife was very angry. She requested him to sign the Separation Deed. He agreed to sign it because it did not mention about what assets the parties each had, such as the matrimonial home. A few months later in August 2009, the wife suspected that he had an affair again. And on her request, he transferred his half interest in the matrimonial home to her in order to appease her. After that was done, their relationship improved greatly. Not only did they continue to live together as husband and wife in the matrimonial home, they also went overseas for holidays 2 or 3 times a year.

20.The husband does not barely assert the above. He is able to produce photos (posted at his Facebook) showing that the parties together had extensive tours to various countries in Europe, Japan, Thailand, Maldives and Malaysia between 2010 and 2015. They smiled and posed intimately in many of these photos, such as hugging, snuggling and/or with their heads close to each other. The wife is unable to deny that during these tours, they stayed in the same room and slept together in the same bed. In fact, she accepts that some of these tours were only attended by the parties themselves without any other third party, eg the trip to Koh Samui, Thailand in 2010. On her own oral evidence, she concedes that these tours were all arranged by the husband who paid for the hotels and air tickets of some of the tours.

21.It is thus clear to me that what is alleged in the wife’s section 7 affirmation and the Separation Deed as to the date of separation is in stark contradiction with the concession made by her in her oral evidence, which in turn impedes her credibility in this trial. The undeniable fact is that the parties did not live separately in 2009 or earlier but continued with their marriage life until 1 November 2016, which is the date of separation pleaded by the wife herself in the petition (and agreed by the husband). The Separation Deed is therefore not accurate and true. In such circumstances, it is not correct, nor fair, to hold the parties to it. I will not place any weight on the Separation Deed.

Identification of the parties’ assets

22.Under the 1^st step of LKW, the court is to ascertain the financial resources and assets of the parties, before going to the next step of determining their needs. However, in this case, some of the financial resources/assets of the parties are said to be closely linked to their needs, such that the analysis below on the identification of assets may touch on the findings of their respective needs (as the case may be).

23.The issues here broadly cover the following:

(1)  Whether 50% of the wife’s notional lump sum pension payment should be out into the pot? This issue is directly interplayed with the wife’s needs.

(2)  Whether 2 sums of $200,000 and $488,263 credited into the wife’s Hang Seng Bank account respectively on 13 July 2018 and 20 July 2020 belong beneficially to her brother?

(3)  Whether the husband should repay the wife 50% of the mortgage repayment of the matrimonial home?

(4)  Whether the husband’s 1/3 interest in Sunway Garden should be treated as a unilateral asset which should not be shared by the wife?

(5)  Whether the husband’s various withdrawals from his bank accounts, including the BOC/China Account, between January 2018 and November 2020 and net to the sum of $573,200, were unexplained or unaccounted for, and thus should be added back into the pool for sharing?

(6)  the parties’ liabilities and debts;

The wife’s government pension & her needs

(i)  The parties’ respective case

24.The wife worked as a clerk in the government since 1981. She retired on 24 February 2021. Before her retirement, her income was $42,545 per month. On her retirement, she has not opted to commute part of her pension to any lump sum, as she claims that she needs her entire monthly pension of $28,363 to meet the expenses of herself and her parents standing at $27,400 per month. There is no dispute that had she chosen to commute 50% lump sum pension, she would have received $2,382,520 and a monthly pension of $14,181 during her lifetime.

25.The husband says that she has exaggerated her/her parents’ expenses, in order to support her excuse that she could not opt for 50% lump sum pension payment, so as to defeat his entitlement to share her lump sum pension. In his closing submission, he seems to adopt an alternative stance. He argues that the court should add back her 50% lump sum pension of $2,382,520 into the family pot for sharing, but if the court is of the view that her housing needs should be catered for (in the event that the matrimonial home is to be sold), he accepts that the lump sum pension to be added back into the pot is zero.

(ii)  Applicable legal principles

26.There is no doubt that in modern times, the provident fund or pension is an important, and in many cases, a substantial asset, of a party.

27.Where a party or both parties still have some years to go before their retirement, suggesting that their provident fund or pension is not yet realizable in the near future, the court is likely to acknowledge the illiquidity nature of such assets, and to allow certain discount be made to the present face value of these assets (See: SSLT v SMFC [2019] HKFLR 458; LWS v WST, FCMC 5380/2019 [2021] HKFC 164).

28.However, in this case, the parties are already in their 60s and the wife has already retired as at the trial, and thus the question of the illiquidity nature of the provident fund/pension does not engage.

29.Mr Eric Leung for the wife submits that the legal principles applicable to pensions can be summarized into 6 points as follows:

(1)  pensions acquired during the marriage are considered matrimonial property, and divided in the same way as other matrimonial property. The pension should be valued as at the date of trial, but not the date of separation (See: LCSA v AP, FCMC 2295/2014, date of judgment 18 April 2019, at paras 99-113);

(2)  Whether a party chooses to commute part of the pension or not is a choice for them alone (See: L v P [2006] HKFLR 189 at para 23);

(3)  It may be possible theoretically to aggregate the value of pensions with that of other assets and distribute the resultant total value between the parties, such as where the parties had pensions in payment of approximately equal value, and/or where the value of the pensions was small in comparison with other assets, but not where the pension of one party represented a much larger percentage of their assets compared to the other, or where their pension was far more valuable than the other’s (See: Martin-Dye v Martin-Dye [2006] 4 ELL 779, [2006] 1 WLR 3448] at paras 84-85 );

(4)  Pensions in payment were best considered to be “other financial resources” and were “no more than whole-life income stream akin to an annuity” (Martin-Dye v Martin-Dye (supra) at para 61);

(5)  The length of the marriage (and period of cohabitation, if any) is a consideration in treatment of pensions, and whether a pension sharing order is appropriate (See: Y v McG [2012] NI Master 2);

(6)  While contribution (and source) is important, needs should come first (See: W v H (divorce financial remedies) [2020] EWFC B10 at para 60).

30.Mr Chan for the husband does not dispute the above legal principles.

31.I accept that the above legal principles are generally applicable to government pensions subject to the following 2 caveats.

32.First, it is imperative to point out that the loss of chance of a party of acquiring any benefit, such as a pension, upon dissolution of a marriage is one of the factors to be taken into account under section 7(1)(g) of the MPPO:

“(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.”

33.Therefore, it will be oversimplified to say that a party may decide at his/her own choice whether to commute any part of the lump sum pension or not, for this may lead to the undesirable and unfair situation that a party with the benefit of a pension may self-engineer not to opt for any lump sum pension which in turn will reduce the size of the pot available for sharing. The case of L v P (supra), being a case from the Family Court, is, with respect, not binding on me.

34.Upon my own research, I cannot find any direct authority from our higher courts directly on this point. But I think the case of YXK v LKC, CACV 306/2006, date of judgment 12 December 2007, though concerns an appeal relating to judgment summons, may throw some light on the relevant considerations that the court should take into account in a situation where a party purportedly makes his/her choice to deal with his/her own government pension.

35.There, the husband was a government servant. He settled with the wife on her ancillary relief by way of a consent order dated 25 October 2000, under which he was to pay her (i) a lump sum payment of $1.05 million partly by way of monthly instalments of $6,500 each month to be paid from 2013 (ie upon his normal retirement) out of his monthly pension; and (ii) on his retirement, 40% of his lump sum pension commuted to 50% of his total pension. However, he later decided to retire early in August 2003 at the age of about 50, which was 10 years earlier than his normal retirement age. On his retirement, he received 50% lump sum pension of $486,945, of which he gave the wife 40% (ie $194,778). One month after he received his lump sum pension, he withdrew $410,000 from his bank account. Since then, he stopped making any monthly instalmenets to the wife who decided to take out a judgment summons. However, her application was dismissed by the Family Court. The presiding judge was of the view that there was no concrete evidence to show that the husband should not have retired early, and that his monthly pension ($2,898) was insufficient to pay the monthly instalments ($6,500).

36.The wife lodged an appeal to this decision. In allowing her appeal, the Court of Appeal (Tang VP, Yuen JA, Lam J) held, inter alia, that the presiding judge had pre-maturely dismissed the wife’s judgment summons because he failed to consider the husband’s “motive” in retiring early and his actual financial situation upon his retirement (See: §21-22 of the judgment).

37.In my view, the same approach and consideration adopted by the Court of Appeal in YXK v LKC (supra) should apply equally to this case or cases of similar argument concerning government pension. The court should examine the “motive” of not opting for any or any part of a lump sum pension. From another perspective, the court, in discharging its quasi-inquisitorial function, has a duty to find out why a party does not, or will not, opt for any lump sum pension, and to decide if the reason(s) provided are acceptable by the court, with the ultimate aim to achieve overall fairness between the parties under dissolution of their marriage.

38.Second, the English authorities cited by Mr Leung must be viewed with care, because they concern the consideration or making of a “pension sharing order” which does not feature in our local legislation. [2] Besides, it is not sure if the pension scheme referred to in these English cases is similar to the government pension system of Hong Kong. The court is not provided with sufficient information on how comparable the pension systems of the 2 jurisdictions.

(iii)  Discussion

39.The wife explains in her section 7 affirmation that she did not opt for 50% lump sum pension payment, because if she did so, she would have only monthly pension of $14,181 per month, which is far from sufficient to cover the living expenses of herself and her parents at the total sum of $27,400 per month. She says that her brothers are unable to provide financial assistance to the parents, because her elder brother has retired and does not have income, whereas her younger brother has long term illness and unstable income. She reveals for the first time in this trial that she has an elder sister in Canada, but that she is unable to support the parents, either. The burden of financially supporting the parents thus falls on her.

40.The monthly expenses of the wife and her parents proffered by her at different stages of the litigation are set out in the below table:

	1st Form E    (dated    27/6/2019)	2nd Form E    (dated    5/7/2021)	Section 7    affirmation    (dated 3/11/2021)
General
Utilities	$1,725	$1,480	$1,264
Management fee	$771	$771	$771
Food	$3,000	$3,000	$3,000
Miscellaneous	$1,010	$1,000	$500
Sub-total (I):	$6,506	$6,251	$5,535
Personal
Meal out	$4,000	$2,000	$2,000
Transport	$1,000	$1,000	$1,000
Clothing/shoes	$2,000	$1,000	$500
Personal grooming	$1,500	$1,000	$500
Insurance	$1,667	$2,134	$2,134
Entertainment/presents	$500	$500	---
Holidays	$1,000	$1,000	$1,000
Medical/dental	$600	$1,000	$1,000
Tax	$127	$373	$373
Contribution to   parents	$20,000	$14,000	$8,000
Maid to take care parents	---	$5,200	$5,200
Mobile plan of parents	---	$216	$158
Sub-total (II):	$32,394	$29,423	$21,865
GRAND-TOTAL   (I) + (II):	$38,900	$35,674	$27,400

41.I would bluntly say that I do not believe in the wife’s explanation of not opting for 50% lump sum pension payment and her parents’ expenses for the major reasons set out in the following.

42.First, her section 7 affirmation stated above is in contradiction with her oral evidence in court. In the witness box, she says that her brothers pay some expenses of the parents by taking the parents out for meals or taking them to medical examination/follow-up, which accounts for about 20% of their living expenses. She also reveals for the first time in the trial that her brothers paid for part of the renovation expenses of the parents’ home. It is thus not true for her to say in her section 7 affirmation that she is the only one shouldering her parents’ expenses.

43.Second, her claimed explanation that her 2 brothers lack the financial resources to support the parents does not sit well at all with her allegation that since this litigation, her brothers have the financial means to provide loans to cover her legal costs. According to her, the elder brother has loaned her about $81,000 whereas the younger brother about $45,000 for such purpose.

44.Yet, it is pertinent to point out that this loan allegation is in direct contradiction with the oral evidence of her elder brother. He denies in the witness box that he has not borrowed any money to the wife to cover her legal costs.

45.Third, in her tax returns, she only claims the tax deduction allowances for supporting her mother, but not her father. It is confirmed by her and the elder brother that the tax deduction allowances of their father has all along been claimed by the elder brother. Her elder brother says in the witness box that he pays about $10,000 per year to the parents, but quickly changes to say it is around $5,000 per year only. However, this does not sit well with the tax deduction allowances of $50,00 enjoyed by him.

46.In my view, it should be more likely than not that the elder brother is paying about $50,000 each year for the benefit of their father, for if not, it would suggest that he may have committed a criminal offence of false declaration in his tax returns.

47.Fourth, she claims that she has to obtain bank loan of $200,000 and credit card loan of $300,000 from Hang Seng Bank since this litigation to pay for her legal costs and the renovation expenses of her parents’ home. The total monthly repayment is about $14,150 per month ($8,700 + $5,450). However, the loan repayment is not reflected in any of her documents or Form Es as her expenses.

48.If the monthly repayment of $14,150 is added to her total monthly expenses of $27,400 (as claimed in her section 7 affirmation), her total expenses would become $41,550 a month, which her monthly pension of $28,363 is obviously unable to cover. She needs an additional of $13,187 per month in order to meet her ends. When asked by the court how to make up such arrears, she is not able to give any concrete explanation. When pressed for an answer, she conveniently changes her evidence to say that the expenses in her section 7 affirmation are applicable only when she eats at home. But now she spends literally minimal on herself and eats with her parents at their home. She then shifts her evidence, yet again, to say that her actual expenses now are merely $19,100 with breakdowns as follows:

Items	Amount
Utilities and rates	$1,264
Management fee	$771
Her insurance	$2,134
Her tax	$373
Her T/E	$200
Her medical expenses	$1,000
Contribution to parents	$8,000
Maid	$5,200
Parents’ mobile plan	$158
TOTAL:	$19,100

49.Yet, even if (just assuming) that her actual expenses are $19,100, her monthly pension of $28,363 is still insufficient to cover her claimed expenses of $19,100 and repayment of loans in the sum of $14,150, totalling $33,250 per month. When asked by the court, she is again unable to provide any or any acceptable explanation.

50.Fifth, the wife is asked to give the breakdown of her parents’ expenses while in the witness box. She says these are about $15,050 per month, including maid’s expenses of $5,200.

51.Upon the enquiry of the court, she reveals that her father is a retired government servant (a workman) who is receiving a monthly pension close to $2,000 each month (一「千」到抆). And each parent is receiving old age allowances of about $3,700 - $3,800 each month. For the purpose of this judgment, the court will take a broad brush figure of $1,900 as her father’s monthly pension and $3,700 as the monthly old age allowances of each parent. Hence, the total income of the parents is about $9,300 per month which means that they only need about $5,750 ($15,050 - $9,300) to have their ends met.

52.According to the wife, she is the one responsible to manage the finances of her parents. I do not accept her explanation that the income of the parents will not be applied to cover their own expenses, leaving the wife to shoulder all the burden to support them. This explanation is illogical and self-serving. In my view, it is reasonable for the parents to use their pension/old age allowances to support their own living, to be supplemented by contribution from their children if needs be. Further, I doubt what other expenses that the parents may need to pay on their own other than their daily living expenses, given their advanced age. Her father is now 89 and her mother 85 years old, and that they both have mobility problem. I do not believe her allegation that her father uses some of his monthly pension on gambling.

53.Thus, I would make the following findings/conclusion:

(1)  I do not believe that the wife is the only person who financially supports her parents. I find that at least her elder brother contributes about $50,000 to their father each year (ie about $4,166 per month).

(2)  the expenses of the parents are about $15,050 per month, which are or should be covered partly by their old age allowances, partly by the father’s pension, and partly by the contribution from the wife and the elder brother. Her reasonable contribution should thus be $1,584 only ($15,050 - $9,300 - $4,166).

(3)  she has exaggerated her own expenses, such as her travelling expenses of $1,000, which she says in court is about $200 per month only. Taking into account her own claim that she lived “a dull and simple life” during marriage (結婚後,本人生活平淡樸實), which is indicative of the living standard during the marriage, and that she eats with her parents at their home most of the time, I am of the view that her reasonable expenses (excluding her housing needs) should be around $10,000 all inclusive. Hence, her total reasonable expenses, including her contribution to her parents, should be about $11,584. I shall round it up to $12,000.

(4)  she now lives in the matrimonial home free of rent. In case that the matrimonial home is to be sold, the court needs to take into account her housing needs. She says that she would rent a flat close to her parents’ home in Tsueng Kwan O and the rental is about $10,000 odd. Having considered the aforesaid living standard claimed in the wife during the marriage, I am of the view that if the matrimonial home is to be sold, the wife should be housed in a rented home ownership flat in Tsueng Kwan O area. The parties have not adduced any expert evidence on the reasonable rental level in Tsueng Kwan O area. Doing the best I can, I will take a broad brush figure of about $15,000 per month (inclusive of management fee and rates) to cater for her housing needs. Thus, if the matrimonial home is going to be sold, her reasonable monthly expenses, including rental, would be about $27,000.

(5)  looking at all the matters in the round, although the wife’s reason for not commuting any part of her pension to a lump sum payment due to her alleged needs to financially support her parents solely by her is not accepted by the court, I find that that her housing needs, upon the sale of the matrimonial home, is an important factor that should be given due weight. She should be allowed to receive a higher monthly pension of $28,363 to satisfy her expenditure requirement way forward. That is to say, I am prepared to accept her pension in payment as her “other financial resources” rather than her asset.

(6)  in passing, I would add that had I found (just assuming) that a part of the wife’s pension should have been commuted for lump sum payment, the court would still need to take into account the fact that she had worked for about 40 years in the government, whereas the marriage lasted for about 19 years up to their separation. In such circumstances, it would be fair for the court to make a pro rata adjustment by roughly putting about 48% of the 50% lump sum pension payment of the wife into the family pot, ie $2,382,520 x 48% = $1,143,609.

Whether $688,263 belongs to the wife’s elder brother

54.There were 2 sums of moneys, ie $200,000 and $488,263.05 (totalling $688,263.05) credited into the wife’s Hang Seng Bank (“Account #888”), which were subsequently withdrawn by her in the round-up sums of $690,000. She claims that these were the moneys holding on trust for her elder brother from time to time since 1997. On his instructions, she withdrew these moneys and returned to him like these:

(1)   a sum of $200,000 was credited into Account #888 on 13 July 2018. Then, it was withdrawn by 4 sums and returned to the elder brother, namely $50,000 by ATM transfer and $10,000 by ATM cash withdrawal on 17 July 2018; $20,000 and $120,000 cash withdrawal on 18 July 2018;

(2)   a sum of $488,263.05 was paid into Account #888 on 20 July 2018. The wife withdrew a round-up sum of $490,000 on 23 July 2018.

55.The husband, however, says that these moneys were the wife’s own assets dissipated by her in order to defeat his entitlement to share the same. He advocates that the sums should be put back into the pot for sharing.

56.Mr Chan, counsel for the husband, points out that the wife has not provided any documentary proof that her elder brother parked his money with her, nor has she provided documents to show that the bank account which received some of the money transferred by her out of her account belonged to the brother. Mr Chan also points out the inconsistency of the wife’s reply to the husband’s questionnaire.[3] In that reply, she says that the sum of $200,000 was credited into Account #888 from her elder brother, while the true fact is that it was credited from an account with account holder name “Hang Seng XXX Co”. Mr Chan also raises his doubt as to why the wife withdrew the money by different modes, eg some by bank transfer, but some others by ATM withdrawal. He points out that it is illogical for her to transfer $490,000 to her elder brother if the money credited into Account #888 is merely $488, 263.05.

57.The wife explained that in the early years, her elder brother gave money to her from time to time for her safe-keeping for 2 reasons, namely to save up for the future education for his sons, and for avoiding any dispute with his wife over money, as his wife had lost a lot of money over stock speculation. She then kept the money for the elder brother and later with his consent invested the money into insurances with investment elements offered by the bank.

58.The elder brother gives evidence in this trial. He explains that he worked as an aircraft repair technician and had the habit of saving up his overtime allowances in his locker, which many of his colleagues did the same. Then came 1997 when the old Kai Tak Airport had to close and moved to the new airport in Chek Lap Kwok. So, he decided to park the money that he had kept in his locker all along with the wife, ie her sister, as he trusted her very much. He did not wish to give it to his wife, as his wife was not good at financial management and was not aware that he got these “private” moneys.

59.I remind myself of the close relationship between the wife and her elder brother when considering their credibility. Despite Mr Chan’s submission, I hold the overall view that the evidence of the wife and the elder brother on this topic is worthwhile to believe. Their oral evidence basically corroborates with each other on major points. The elder brother is able to give instant and spontaneous responses to the questions put to him. His evidence is logical and makes sense. He is not shaken during cross-examination. Hence, I am persuaded by their evidence. I conclude and find that the sums of $200,000 and $488,263.05 belong to the elder brother. I reject the husband’s argument that the money was dissipated by the wife. That the wife had rounded up the 2^nd sum of $488,263.05 to $490,000 to pay back to the elder brother is not considered phenomenal, and is too trivial an amount that would have any significant bearing on the overall result of this trial.

Sharing of half of mortgage repayment

60.The wife says in her section 7 affirmation that since the matrimonial home was transferred into her sole name in 2009, she had been solely responsible for repayment of its mortgage loan (then outstanding at about $453,616) up to the time when the mortgage was fully redeemed in 2014, without any contribution from the husband. Thus, her counsel submits that if the husband wishes to share equally the value of the matrimonial home, it is just fair that he should be made responsible for half of $453,616 (ie $226,808) out of his ledger.

61.The husband says in the witness box that he used to pay the wife household expenses, usually in RMB or Euro, in the average sum of $20,000 per month. He was a tour guide specialising in European tours for about 30 years. Before 2012, he based in Hong Kong and earned about $20,000 - $30,000 per month. Since 2012, he went over to Beijing to take Chinese Mainlanders for European tours. He earned commission from guests for taking them to different shops/outlets shopping in Europe. At his heyday, he was able to earn $60,000 - $70,000 per month. However, since 2015, he took on fewer and fewer guests, and finally from 31 July 2017, he became unemployed.

62.In my view, the following points can be taken.

63.First, Mr Leung for the wife argues that the above oral evidence of the husband, claimed for the first time during the trial but without any supporting evidence, was made up by him, because on affirmation, he “did not dispute that he did not pay part of the mortgage loan between April 2009 to 2014”. With respect to Mr Leung, this may not be a very fair comment. Notably, the respective section 7 affirmations of the parties were filed and served on the same day of 26 November 2021. The husband could not have anticipated what the wife would allege about the mortgage repayments when he prepared his own section 7 affirmation.

64.Second, having considered all evidence and his demeanour in the witness box. I believe that the husband did pay household expenses to the wife during their marriage, though he may have exaggerated the amount of household expenses paid over the years. At the very least, he made contribution to the family by giving up his public housing unit for purchasing the matrimonial home under the home ownership scheme. He arranged and took the wife for many overseas trips around the world from 2010 to 2015. On the wife’s own oral evidence, he contributed to the expenses of these overseas trips. Above all, it cannot be denied that the wife made joint tax returns even after 2009, as a result of which she was only required to pay salaries tax as low as $127 only.

65.Third, on the wife’s own case, the parties did not separate from each other until 1 November 2016. But she now asks that the husband should share out the mortgage repayment made by her dated back to as early as 7 years before their separation, or 9 years before she filed her petition for divorce. In my view, this approach should not be encouraged and should be rejected.

66.In LKW, Riberio PJ explained that the court should be vigilant in rejecting any minute retrospective investigations of the parties’ failed marriage with the view to lauding their own contribution and denigrating that of the other party (See: §62-69 of the judgment).

67.For the matters aforesaid, I conclude that I will reject the wife’s claim that the husband should share half of the mortgage repayment of the matrimonial home.

Sunway Garden

68.The late mother of the husband died in 2012, intestate. She had 3 children, namely the husband and his 2 sisters, Ha and Kwan. Her estate comprises of Sunway Garden only. So far, letters of administration has not been applied for.

69.At one stage during the trial, the husband says that during an argument with his late mother years ago, he had told her that he did not want anything from her. He also says that although his late mother did not make a will, she had orally said that she intended to leave Sunway Garden to his sister, Ha. However, through his counsel, his final position is that he accepts he is one of the three equal beneficiaries to Sunway Garden under the intestacy law. His 1/3 interest is worth about $2,683,333.33.

70.The central dispute about Sunway Garden is whether it is a non-matrimonial property that should be carved out from sharing by the parties. However, there is no need for the court to determine if an asset is matrimonial or non-matrimonial in nature under step 1 of LKW; that being an exercise best undertaken when considering distribution of assets (See: LKW at §71).

Husband’s ICBC and BOC/China Accounts

71.The husband discloses in his 1^st Form E that he holds an ICBC/HKD account, an ICBC/FX account and an ICBC/RMB account. He also has the BOC/China Account that he did not disclose at first. The wife found it out later and raised questions about it in her questionnaires. He finally disclosed the related bank records in his reply dated 4 January 2021.

72.The wife says that the bank records of ICBC accounts and BOC/China Account reveal that the husband had regular deposits from Madam Ko, his current girl-friend, in the total sum of RMB901,200 (equivalent to $1,081,440)[4] within 35 months from January 2018 to November 2020 as follows:

Period	ICBC accounts	BOC/China Account
8/2018 - 5/2019	RMB190,200[5]	N/A
1/2018 - 12/2018	N/A	RMB308,000
3/2019 - 11/2020	N/A	RMB403,000
	RMB190,200 (equivalent to $228,240)[6]	RMB771,000 (equivalent to $853,200)

73.On her behalf, Mr Leung points out in his closing submission that these deposits were almost correspondingly withdrawn by the husband in the same amount. However, according to his own Form Es and oral evidence, he only needs $8,000 per month, or $280,000 for 35 months, to cover his expenditure. He claims that some of the withdrawals from the BOC/China Account were actually deposited back into his ICBC accounts by way of cash and thus there was “double counting”. However, Mr Leung argues that even taking the husband’s unproven claim to the highest, only the total deposits into and subsequent withdrawals from his ICBC accounts between August 2018 and May 2019 in the total sum of RMB190,200 (equivalent to $228,240) at [72] may have been double counted, which means that there is $573200 ($1,081,440 - $280,000 - $228,240) still unaccounted for by the husband. This sum should thus be added back into the family pot for sharing.

74.Upon due consideration, I have the following view/findings.

75.First, I have duly looked up and cross-checked the bank records of the ICBC accounts and BOC/China Account for the periods set out in the table of [72], save that the bank records of the ICBC/RMB account from mid-September 2019 onwards are not available in this trial for consideration. The general and overall observation is that within days after Madam Ko made RMB deposits into the BOC/China Account, cash would be withdrawn from the same account. The withdrawal pattern was that several times of cash withdrawals, usually in the sum of RMB3,000 or RMB5,000 each, were made on the same day. Then usually within days after these cash withdrawals from the BOC/China Account were made, there were corresponding cash deposits into the ICBC/RMB account, save that such deposits were in lump sums and no longer broken down into smaller amount of RMB3,000 or RMB5,000 each. The deposits were then transferred into the ICBC/HKD account for defraying expenditure of different purposes.

76.The above observation lends support to the husband’s oral evidence that after Madam Ko transferred moneys into his BOC/China Account, he would withdraw cash from the same account in China and bring the cash back to Hong Kong for depositing into the ICBC/RMB account first and then transfer the RMB into the ICBC/HKD account for spending. I thus accept his explanation on this point.

77.I find that the cash withdrawals from the BOC/China Account and cash deposits into the ICBC/RMB accounts during the period from January 2018 to mid-May 2019 generally corresponded to each other. These were the same sums of moneys, which the wife should not have double counted.

78.Second, as observed above, after the husband brought the RMB cash from China and deposited into the ICBC/RMB account, the same was subsequently transferred into his ICBC/HKD account for use. The wife is not able to pinpoint any withdrawals from the ICBC/HKD account that are dubious or amount to “wanton”, “reckless” or “extravagant” spending, such that the sums should be added back (See: MKKWH v RKSH [2013] HKFLR 540 at §1-17).

79.Third, on my own observation, I take note that the aforesaid pattern of withdrawing/depositing the RMB given by Madam Ko had stopped since mid-May 2019, despite that she continued to deposit moneys into the BOC/China account from time to time, sometimes in thousands and other times in RMB20,000 or RMB30,000 (totalling RMB238,000 from mid-May 2019 to 20 December 2020).[7] Then, several major cash withdrawals were correspondingly made by the husband from the BOC/China Account, ie on 5 September 2019, 27 September 2019 and 25 October 2019, each in the same pattern of 4 times of cash withdrawals of RMB5,000 each and made on the same days. Unlike what he had done previously, the husband had not deposited these 3 major rounds of cash withdrawals, in the total sum of RMB60,000, into the ICBC/RMB account. Yet, no specific questions were asked to the husband as to the whereabouts of these RMB60,000 in this trial. There is hence no sufficient basis for the court to “add back” these moneys.

80.It can be seen from the bank records that the remaining of RMB178,000 (RMB238,000 – RMB60,000) was kept in the BOC/China Account and used from time to time for defraying the normal expenditure of the husband, such as spending at Mannings, Wellcome.

81.Due to the above observation/findings, I reject the wife’s submission and refuse to add back the moneys suggested by her under the husband’s ledger.

The parties’ debts or liabilities

82.In his updated Form E, the husband says that he has liabilities in the total sum of $501,281.92, comprising mainly of loans from his sister, Kwan, in the sum of $300,000, and from Madam Ko in the sum of $200,000, to cover his litigation costs of this case. It is his latest position that these are his own personal debts that need not be taken into account in this ancillary relief trial. The remaining $1,000 or so is his credit card bills that is too trivial and thus can be disregarded of.

83.The wife says in her updated Form E that she has the following liabilities:

(1)  Hang Seng Bank cash loan of $200,000 advanced to her in 2020 for funding her litigation of this case, and the outstanding sum as at her updated Form E is $61,273 (“HSB Cash Loan”). But she says in the trial that this loan will be fully paid up by the following month, which means that this loan will be fully paid up by the date of this judgment;

(2)  Hang Seng Bank credit card loan in the sum of $300,000 taken out by her in September 2020 for the purpose of paying her legal costs and the renovation expenses of her parents’ flat (“HSB Credit Card Loan”);

(3)  Total loans from her elder brother in the sum of $181,000, namely $100,000 for renovation of the matrimonial home years ago, and $81,000 advanced to her recently to pay her legal costs;

(4)  A loan of $45,000 from her younger brother to fund her litigation;

(5)  A loan of $58,825 from her mother to pay the down payment for the purchase of the matrimonial home (“Downpayment Loan”).

84.In his opening submission, Mr Leung for the wife confirms that she will not contend that the sum of $100,000 from her elder brother (for renovation of the matrimonial home) is a continuing liability. Upon clarification from the court, Mr Leung further confirms that the wife is not seeking the husband to share her loans from the elder and younger brothers for her legal costs, as she does not wish to share the husband’s legal costs. That said, however, she will argue that the HSB Cash Loan, HSB Credit Card Loan and the Downpayment Loan are family debts that should be shared out by the husband.

85.In my view, it is illogical for the wife to adopt a different stance to the HSB Cash Loan and HSB Credit Card (in so far as the loans were said to be used for her own litigation costs), as opposed to the brothers’ loans. If she wants the husband to share her litigation costs, then due to the equality principle, the husband’s legal costs should receive the same treatment.

86.It is unreasonable and not fair for the wife to ask the husband to share the renovation costs of her parents’ flat incurred some 4 years after their separation.

87.As to the Downpayment Loan, it is supported by documentary evidence that the downpayment of the matrimonial home was paid by the wife’s mother. Her bank account record is produced. However, I do not believe that the Downpayment Loan would still be outstanding as at this trial. Importantly, the matrimonial home was purchased in 1999. It is difficult to envisage and accept that the wife would allow the Downpayment Loan to hang over her head for 22 years without payment. In the alternative, the Downpayment Loan is likely to be a soft loan from her mother; there is no evidence that her mother has ever demanded repayment of the same in the last 22 years.

88.Therefore, the parties’ alleged debts and liabilities will not be taken into account in assessing their overall financial resources.

Summary of their assets & liabilities

89.Due to the matters set out above, I come to the conclusion that the parties’ assets (down to dollars only) are summarised below:

	Wife	Husband
Matrimonial home	$5,600,000	---
Sunway Garden (1/3 interest)	---	$2,683,333
Cash at banks	$23,457	$17,990
MPF/lump sum pension	---	$17,948
Total:	$5,623,457	$2,719,271

The wife’s financial means & reasonable needs

90.I have already made an analysis on the wife’s financial means and expenditure earlier in this judgment at [39] to [53]. I have made findings that her expenditure needs, including her housing needs if the matrimonial home is to be sold, are $27,000 per month. Her monthly pension of $28,363 is sufficient to cover her needs way forward, not to mention that it is common knowledge that such monthly pension will be adjusted annually in accordance with the pay adjustment of the civil servants of similar income.

The husband’s financial means & reasonable needs

91.The husband’s background is set out at [3] above. He will be 62 years old by April 2022. He says that he has ceased to work as a tour guide or at all since 30 July 2017, and has been on CSSA of about $4,300 each month since May 2020.

92.There seems to have no dispute that his monthly personal expenditure, as reflected from his 2 Form Es dated 3 October 2019 and 17 May 2021 respectively, is about $8,000 per month. He does not have any general expenditure, as he has been living at Sunway Garden free of charge since 2019. In the closing submission, his counsel accepts that he will be able to live in Sunway Garden in the years to come.

93.The wife takes issue as to the husband’s earning capacity and financial means. On one hand, she produces documents, such as a certification letter of employment dated 27 May 2017 from China International Travel Service Limited; some photos showing that he still travelled overseas to Europe or Thailand in August and September 2017; and his AE credit card statements showing that even in July 2018, he bought goods and took meals in France, to discredit the husband’s allegation that he has been unemployed since 30 July 2017. She argues that he may continue to work as a tour guide if he wants to. On the other hand, she refers to the deposits transferred by Madam Ko into the husband’s bank accounts (See: [72] above), and says that he is financially supported by Madam Ko who on average gives him $20,000 - $30,000 per month.

94.Upon due consideration, I am of the view that it is more likely than not that the husband still worked as a tour guide in 2017 and 2018. However, as at the trial, he is already at the retiring age of 61. The hard strike of the Coivd-19 pandemic on the travel industry needs no elaboration. It is yet to know at this stage when the pandemic will be over. I thus conclude that given his age, it is unlikely that when the pandemic is over, he would be able to pick up the job of a tour guide again in order to have any meaningful income way forward. It is also unlikely that he would be able to change his scope of work from the travel industry to other fields of work, given that his work experience all these years are limited to that of being a tour guide.

95.As to the deposits from Madam Ko, the husband first says in his reply dated 30 July 2020 to the wife’s questionnaire that these were loans from her to cover his daily expenses. However, in oral evidence, he first changes to say that “half” of these deposits were for him to assist her to buy parallel goods, and half as loans to him. Yet, he later changes his oral evidence again by saying that “most” of these deposits were used to buy parallel goods for her. It is obvious to me that his evidence on the purpose of these deposits is inconsistent and shifting, and thus unconvincing. He fails to offer any acceptable explanation as to why he could not have mentioned about his assistance to buy parallel goods for Madam Ko in his aforesaid reply to the wife’s questionnaire, if this piece of evidence bears any truth.

96.On the other hand, I do not believe that the deposits from Madam Ko are loans to him that need to be repaid. He has not suggested that Madam Ko ever demands for repayment of these alleged loans. Further, in my view, were these bona fide loans that needs to be repaid, he would not have allowed himself to adopt a lifestyle that is totally inconsistent with his means. Conceded by him, before travel restriction was imposed due to the Covid-19 pandemic, he made monthly trips to Guangzhou where he stayed at hotels costing $750 to $1,783 per night, in addition to going out to drinks and karaokes which cost over RMB500. He even treated his friends to the hotel rooms. Despite he cannot travel to China now, he still continues to pay about $1,000 per year to maintain his plan for VPN (virtual private network) service in China merely because some of his Hong Kong friends staying in China are using his account to enjoy the VPN service.

97.Importantly, when the court asks the husband in the trial if Madam Ko is still his girl-friend as at the trial, he confirms in the positive and then, too readily and without prompting, volunteers to say that she “is no longer helping [him] now” (但佢現在無幫我啦). This is merely his bare oral assertion. Despite that his updated Form E (dated 17 May 2021) requires that he should have disclosed his bank records at least up to the date of that Form E, he has chosen to disclose the records of the BOC/China Account (into which the deposits from Madam Ko were paid) up to December 2020 only. And according to the disclosed bank records, Madam Ko had been making regular deposits into this account, the last deposit being made on 2 November 2020.

98.Considering all evidence in its totality, I am of the view that Madam Ko has been providing financial assistance to the husband and that it is more likely than not that she has not stopped such financial assistance. Further or in the alternative, it is the husband’s own evidence that his sister(s) make(s) financial contribution to him by settling his credit card bills and/or paying the fees of his health club. All these are regarded as his financial means, which is sufficient to satisfy his personal needs of $8,000 per month way forward.

Deciding to apply the sharing principle

99.It is clear from the above analysis that the parties would be sufficient financial means to meet their own expenses, and accordingly there are surplus assets available for distribution. The law is clear that unless there are good reasons for departure, the court should adopt the equal sharing principle as a yardstick to achieve a fair financial outcome for the parties.

Inheritance to be excluded from the sharing principle?

100.The wife no longer pursues in the trial that she would argue on the “conduct” of the husband as a reason for departure from the equality principle. I thus will not go into details of her allegations on such conduct.

101.The only issue under this topic relates to the 1/3 interest in Sunway Garden, being an inheritance to the husband from his late mother under the intestacy law.

(i)  The parties’ respective argument

102.On behalf of the husband, Mr Chan submits that Sunway Garden is a “non-matrimonial property” and that there is “no evidence” whatsoever that it is the “fruits of the parties’ endeavours during their marriage”. Hence, although it is not quarantined from the sharing principle, it would only be shared to the extent of satisfying the needs of the parties. Mr Chan goes on to submit that the wife has her monthly pension of $28,363 to satisfy all her needs, whereas the the husband, now on CSSA of about $4,300 per month only, has the housing needs to live in Sunway Garden. It is thus clear that Sunway Garden needs not and should not be shared.

103.Mr Leung for the wife obviously does not agree. He argues that the “long duration of marriage should trump all the other factors”. Counsel refers me to Miller v McFarlane [2006] 2 AC 618:

“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 organized their financial affairs.”

(ii)  Applicable legal principles

104.I venture to summarise the relevant legal principles in the following way.

105.As a starting point, Riberio PJ explained in LKW at §87 and §89 that the “source” of an asset may provide a reason for excluding it from the sharing principle on the basis it is not an item of matrimonial property. The existing case law identifies 2 classes of assets as possible candidates for exclusion on the basis of source:

(1)  property acquired during the marriage by one of the parties from a source wholly external to the marriage, such as by gift or inheritance;

(2)  assets derived from a business or an investment conducted solely by one party.

106.Whether an asset independently acquired, such as an inheritance, should be excluded from sharing is very much a matter within the discretion of the judge to be exercised by taking into account “all the circumstances” of the particular case (See: LKW at §91). There is no hard and fast rule.

107.However, an important factor that should be taken into account is the duration of the marriage. In Miller v Miller [2006] 2 AC 618, Lord Nicholls explained in this way:

“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…

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 the 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.

26. Accordingly, where it becomes necessary to distinguish matrimonial property from non-matrimonial property the court may do so with the degree of particularity or generality appropriate in the case. The judge will then give to the contribution made by one party’s non-matrimonial property the weight he considers just. He will do so with such generality or particularity as he considers appropriate in the circumstances of the case.”

108.Hence, where it is a short marriage, the court may be more inclined to regard an asset independently acquired, such as an inheritance, as “excludable non-matrimonial property”. However, after a long marriage, it is more unlikely that such an asset will be excluded from the sharing principle, as “the importance of the source of the assets will diminish over time” and “as the family’s personal and financial interdependence grows, it becomes harder and harder to disentangle what came from where” (See: LKW at §91-§92 & §108-109; Miller v McFarlane at §148).

109.In PW v PPTW (Ancillary relief; non-matrimonial property) [2015] HKFLR 213, the Court of Appeal at §58 cited Robson v Robson [2011] 1 FLR 751 and the guidance given by Ward LJ on how to approach inherited wealth, which is worth to repeat below:

“43. How then does the court approach the ‘big money’ case where the wealth is inherited? At the risk of over-simplification, I would proffer this guidance:

(1)Concentrate on s 25 of the Matrimonial Causes Act 1973 as amended because this imposes a duty on the court to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of 18; and then requires that regard must be had to the specific matters listed in s 25(2). Confusion will be avoided if resort is had to the precise language of the statute, not any judicial gloss placed upon the words, for example by the introduction of ‘reasonable requirements’ nor, dare I say it, upon need always having to be ‘generously interpreted’.

(2)The statute does not list those factors in any hierarchical order or in order of importance. The weight to be given to each factor depends on the particular facts and circumstances of each case, but where it is relevant that factor (or circumstance of the case) must be placed in the scales and given its due weight.

(3)In that way flexibility is built into the exercise of discretion and flexibility is necessary to find the right answer to suit the circumstances of the case.

(4)Like every exercise of judicial discretion, the objective must be to reach a just result and justice is attained when the result is fair as between the parties.

(5)Need, compensation and sharing will always inform and will usually guide the search for fairness.

(6)Since inherited wealth forms part of the property and financial resources which a party has, it must be taken into account pursuant to subs 2(a)[8] .

(7)But so must the other relevant factors. The fact that wealth is inherited and not earned justifies it being treated differently from wealth accruing as the so-called ‘marital acquest’ from the joint efforts (often by one in the work place and the other at home). It is not only the source of the wealth which is relevant but the nature of the inheritance. Thus the ancestral castle may (note that I say ‘may’ not ‘must’) deserve different treatment from a farm inherited from the party’s father who had acquired it in his lifetime, just as a valuable heirloom intended to be retained in specie is of a different character from an inherited portfolio of stocks and shares. The nature and source of the asset may well be a good reason for departing from equality within the sharing principle.

(8)The duration of the marriage and the duration of the time the wealth had been enjoyed by the parties will also be relevant. So too their standard of living and the extent to which it has been afforded by and enhanced by drawing down on the added wealth. The way the property was preserved, enhanced or depleted are factors to take into account. Where property is acquired before the marriage or when inherited property is acquired during the marriage, thus coming from a source external to the marriage, then it may be said that the spouse to whom it is given should in fairness be allowed to keep it. On the other hand, the more and the longer that wealth has been enjoyed, the less fair it is that it should be ringfenced and excluded from distribution in such a way as to render it unavailable to meet the claimant’s financial needs generated by the relationship.

(9)It does not add much to exhort judges to be ‘cautious’ and not to invade the inherited property ‘unnecessarily’ for the circumstances of the case may often starkly call for such an approach. The fact is that no formula and no resort to percentages will provide the right answer. Weighing the various factors and striking the balance of fairness is, after all, an art not a science”. (my emphasis added)

(iii)  Discussion

110.The parties were married in 1997 and separated in 2016. No doubt, this is a long marriage of almost 20 years. Yet, it has to be borne in mind that the husband inherited Sunway Garden in 2012, which is about 4 years before their separation. They have never conducted their marriage in Sunway Garden.

111.The husband says in his oral evidence that after the demise of his mother, Sunway Garden has been left there until 2019 when he moved in. The children of his sister(s) also come to stay in Sunway Garden from time to time. All these are not disputed by the wife. Moreover, she has not suggested that either party has ever contributed to the purchase or maintenance of Sunway Garden. She has not claimed that there is any wealth or income generated from Sunway Garden which was enjoyed by the parties and/or applied to their family expenditure during their marriage. In other words, there has not been any mingling of Sunway Garden with the parties’ other family assets or financial resources.

112.The wife has the benefit of a steady government monthly pension of $28,363 per month that is sufficient to cater for her future needs, including her accommodation need, generously interpreted and assessed by this court, having regard to the living standard proffered by the wife herself during marriage, to be around $27,000 per month. In other words, she does not need to receive any value of Sunway Garden in order to meet her needs.

113.On the other hand, the husband needs a roof above his head to stay and live in Sunway Garden. In fact, this is also the submission of the wife, as can be seen at her closing submission.[9]

114.Upon balancing all the above factors and in all the circumstances of this case, I am of the view that the husband’s 1/3 interest in Sunway Garden is a unilateral asset which should be ring-fenced by him and excluded from sharing. Mr Leung’s submission on this issue is not accepted.

Deciding on the result

115.This is a childless marriage of almost 20 years up to their separation in 2016. Both parties are over their 60s. The wife has her monthly government pension to cater for her needs, whereas the husband can stay in Sunway Garden free of charge and has contribution from his girl-friend and/or his sister(s) to support his future needs.

116.The husband inherits 1/3 interest in Sunway Garden from his late mother 4 years before the separation of the parties. It is found by the court that it is a unilateral asset which is obtained by the husband without any joint efforts of the parties and/or which does not generate any income that were enjoyed by the parties during their marriage. It should therefore be excluded from the sharing principle.

117.The rest of the parties’ assets set out in the table at [89] should be shared equally. The evidence is clear that neither party has sufficient asset to buy out each other’s share in the matrimonial home. Thus, it has to be sold, and the net sale proceeds to be distributed as to 51% to the wife and 49% to the husband, having taken into account that they are to retain their own cash at banks and MPF.

118.There should then be a clean break between the parties upon the sale and sharing of sale proceeds of the matrimonial home.

Costs

119.The major dispute of the parties in this trial relate to the composition of their assets in the pot. It is obvious from the above determination that neither party has won all the issues that he/she has insisted.

120.Looking at the amount of the award given in this judgment, neither party can be considered as the overall winner of the case, either.

121.Hence, I conclude that it is fair for me to make an order that there shall be no order as to costs of the ancillary relief matters including all costs reserved. For the records, however, I certify the attendance of counsel. This is a nisi order which shall be made absolute within 14 days.

Order

122.Due to the matters set out aforesaid, I will make the following order:

(1)  The matrimonial home shall be sold at no less than $5.6 million, or at market price agreed by both parties, within 3 months upon the grant of decree absolute;

(2)  Upon deducting all necessary expenses (including the estate agency fee, conveyancing legal fee, management fee, government rates and rent and utilities of the matrimonial home from the date immediately after the wife vacates therefrom up to the date of completion of the sale), the net sale proceeds shall be apportioned and shared between the parties in the ratio of 51% to the wife and 49% to the husband;

(3)  Subject to the above clauses (1) to (2), each party shall keep the assets now under their respective names;

(4)  Upon compliance of the above clauses (1) to (2), all other ancillary relief claims between the parties do stand dismissed;

(5)  there be a nisi order that no order as to costs of the ancillary relief matters including all costs reserved, with certificate for counsel. This nisi order shall be made absolute within 14 days;

(6)  There be liberty to apply in respect of the implementation of this order.

123.This court order shall be drawn up by the wife’s solicitors for approval.

124.Lastly, I remind the parties that they should co-operate in complying with property sale order given in this judgment, in order to avoid any future application for enforcement which may result in adverse costs order being made against the party in default.

Mr Eric Leung instructed by Mandy Wan & Co for the petitioner (wife)

Mr Hugo Chan instructed by Tam Pun & Yipp for the respondent (husband)