Fwy v. Tycy and Another
Read the full judgment text of FCMC 9932/2018 on BabelCite. This Family Court judgment was delivered on 4 April 2022 before His Honour Judge I Wong.
Matrimonial Causes – Ancillary Relief – Third Party Interest – Beneficial Ownership – Common Intention Constructive Trust – Matrimonial Assets – Division of Assets – Costs – Stamp Duty Fraud – 1st Property held jointly beneficially by Husband, Wife and Mother in equal shares. 2nd Property held beneficially by Husband and Wife equally. Mother's claim dismissed. Assets divided 40% Husband, 60% Wife after son's provision. No order as to costs. Referral to Department of Justice.
Legal issues: Ownership of 1st Property · Ownership of 2nd Property · Division of Matrimonial Assets · Costs
Outcome: 1st Property sold, 1/3 to Mother, 2/3 split 40% Husband / 60% Wife. 2nd Property sold, $864,000 for son, balance split 40% Husband / 60% Wife. Husband pays Wife lump sum $273,800. Husband pays son periodical payments $5,300/month. Costs: No order.
Cited by 3 cases · Cites 9 cases
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FCMC 9932/2018 [2022] HKFC 67 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 9932 OF 2018 ----------------------------
---------------------------- Coram: His Honour Judge I Wong in Chambers (Not Open to Public) Dates of Hearing: 3, 8, 9 & 10 June and 19 August 2021 Date of the 2nd Respondent’s Closing Submissions: 23 September 2021 Date of the 1st Respondent’s Closing Submissions: 24 September 2021 Date of the Petitioner’s Closing Submissions: 24 November 2021 Date of Judgment: 4 April 2022 __________________ J U D G M E N T ( Third Party Interest and Ancillary Relief ) __________________ Introduction 1.This judgment deals with the ancillary relief upon the divorce of the petitioner husband and the 1st respondent wife. 2.The 2nd respondent is the mother of the petitioner. She is involved in these proceedings because she claims to have half of the beneficial interest in 2 landed properties, each currently registered in the sole name of the husband or the wife. These 2 landed properties essentially constitute the entire matrimonial pot; so at trial the issue of ownership became the main battlefield. 3.For the ease of reference, in this judgment, I shall refer to the petitioner as “the husband”, the 1st respondent “the wife” and the 2nd respondent “the mother”. Background 4.The husband and the wife are both 39 years old, the wife being a few months older. They were married in May 2009 in Hong Kong and gave birth to a son in December 2011. He is now 10 years old and is the only child of the family. 5.The husband is a blasting engineer and the wife used to work as an accounting clerk. Shortly after the birth of the son, she became a full-time housewife. 6.Sadly, the marriage did not last long. On 6 August 2018, the husband petitioned for divorce on the ground of 2 years’ separation. He was legally represented at that time. The husband pleaded in his petition that the parties were separated from each other as from February 2012. As it transpired from the evidence at trial, it is clear that the parties only separated from each other at a much later date. According to the wife, they separated in 2018. Be that as it may, the petition was uncontested and the decree nisi was granted on 25 January 2019. 7.Earlier, on 29 October 2018, by consent, the custody of the son has been granted to the husband and the wife jointly, with care and control to the wife and reasonable access to the husband. There is also a consent order that the husband is to pay $3,000 and $14,500 per month for the interim maintenance of the wife and the son respectively. 8.By an order dated 15 January 2020, the mother was joined as a party to the ancillary relief proceeding. The 2 Properties 9.As said, 2 properties are involved, both located in Shatin where the husband and the mother used to be living for many years before his marriage. The facts below should not be in dispute. 10.The 1st Property is a small flat, purchased in early 2009 for being used as the matrimonial home for the husband and the wife. It was purchased for $1,300,000 and the deed of assignment was dated on 2 April 2009 (about one month before the marriage) with the husband, the wife and the mother registered as its joint owners. The purchase was made possible with a mortgage finance of $650,000. 11.It is common ground that:
12.According to the Formal Agreement for Sale and Purchase of 20 February 2009, the Provisional Agreement was signed on 7 February 2009. All the parties agreed that it was signed at the estate agent’s office but, as will be seen below, they diverge on what happened there. 13.As was always the intention of all of them, the 1st Property became the matrimonial home of the husband and the wife upon their marriage in May 2009. At all times, the mother continued to live in a public housing unit owned by her under the Tenants Purchase Scheme at the same locality. 14.At this juncture, it is worthy to note that the parties simply had their marriage registered at the Marriage Registry; no wedding banquet nor any ceremony or celebration between the 2 families was held. There was also no bridewealth (禮金) paid from the husband’s side. As will be seen later, this arrangement was subject to some scrutiny. 15.As time went by, especially after the arrival of the son, the couple found the 1st Property, being a one-bedroom flat, too small for the family and decided to purchase a larger home. They also decided to keep the 1st Property. In doing so, they would have to re-mortgage the 1st Property for some extra money. Given the level of income enjoyed by the husband, this was not a problem for them. The real problem, however, lay in the fact the Government had (and still have) a policy of charging double stamp duty on someone who purchased a second property. As the husband and the wife were already the legal owners of the 1st Property, if the new property (“the 2nd Property”) was also purchased in their names, double stamp duty would be chargeable. Neither could the 2nd Property be purchased in the name of the mother because she was already the owner of her public housing unit. 16.The couple therefore came up with a scheme that the wife’s and the mother’s names were to be “removed” from the 1st Property. The end result was that the husband became the “sole” owner of the 1st Property and the wife became the “sole” owner of the 2nd Property. 17.The scheme was carried out as follows. 18.On 6 March 2017, the wife signed the Provisional Agreement for the purchase of the 2nd Property at $5,500,000. The signing took place at the 1st Property and the mother was not present on the occasion. 19.In early March 2017 (the mother said it was on or about 4 March 2017), all 3 parties attended a solicitors’ firm for signing an Agreement for Sale and Purchase whereby the wife and the mother as vendors sold their interests in the 1st Property to the husband at an artificial consideration of $2,666,666.[1] It would appear that the Deed of Assignment was also signed on the same occasion, notwithstanding it was subsequently dated 5 May 2017. Anyway, the result is that the husband became the sole owner. It is common ground that not a single cent of the consideration was ever paid. The husband also caused the 1st Property to be re-mortgaged in favour of a new bank for $2,365,200, of which $1,925,543 was for the purchase of the 2nd Property. 20.On the same occasion, the wife also signed the Formal Agreement for Sale and Purchase of the 2nd Property. 21.On or about 4 May 2017, the couple attended the solicitors’ office again for signing the Assignment and the Mortgage of the 2nd Property. Under the mortgage, the wife was the mortgagor and the husband and the wife were the borrowers; a loan of $3,000,000 was raised. The documents were dated 8 May 2017. 22.The family made the 2nd Property their new home up to the breakdown of their marriage. The 1st Property was rented out briefly for the benefit of the family. 23.At trial, all parties acknowledged that the scheme was a fraud on the Inland Revenue. In my view, the parties’ dishonest conduct may also be a fraud on the mortgagee bank. The Mother’s Case 24.The mother is 74 years old. She has 2 children, the husband being the elder one and the younger is a daughter. Her husband died when the husband was just about 9 years old. The mother’s case is that she and the husband are the beneficial owners of the 2 Properties. The 1st Property 25.The mother said there was an agreement, common understanding and/or consensus between her and the husband on the property. 26.Her story is that in about January 2009 the husband was planning to get married and was searching a property to be used as his future matrimonial home. He initially planned to rent a flat but at the suggestion of the mother, it was decided that they should make a joint investment in a property. The mother would invest part of her savings in the property as the return was higher than just saving money at bank. The mother suggested that each was to invest 50% into the purchase price and each was to own 50% of the beneficial interest in the property; and the property would be used as the husband’s future matrimonial home. It was after this agreement that the mother and the husband began searching for a property and the wife was also invited to join them in property viewing on some occasions.[2] 27.In early February 2009, the 1st Property was identified. The price was $1,300,000. The mother said she then reached an oral agreement with the husband that she was to pay $650,000 towards the purchase price plus all the necessary and incidental expenses including stamp duty and the husband was to be responsible for the remaining $650,000 by way of a mortgage loan. They agreed that they should hold the legal title as joint tenants, with the entire beneficial interests of the 1st Property vested in them equally.[3] 28.On about 7 February 2009, the mother and the husband attended the office of the estate agent for the signing of the Provisional Agreement; they were accompanied by the wife. The mother was shocked when she was shown the Agreement which stated the wife was one of the 3 purchasers notwithstanding she had never agreed that the wife should be one of them, and that the husband never sought permission from her. At first, the mother was reluctant to accept this arrangement. However, the husband assured her that the agreement and/or common understanding was still valid such that she and the husband would remain the real owners, despite the fact that the wife’s name was added as one of the joint tenants. Feeling reassured, the mother signed the agreement and thereupon paid the initial deposit of $50,000. 29.The mother said the purchase was entirely a matter for her and her son. The wife did not have any say or that her views on the same mattered at all.[4] She accepted there were no communications between her and the wife. At all times, the husband, acting as a go-between or messenger, did all the communications. The mother added that when she paid the initial deposit, the wife said to her, “Auntie, 我哋唔可以攞你啲錢，我哋會還番比你㗎”. The English translation is, “Auntie, we cannot take your money. We will pay you back”. The mother relied upon this statement to say the wife was aware of, and acknowledged, the agreement and/or common understanding reached between her and her son.[5] 30.What follows thereafter are largely not in dispute and have been set out in [11] to [13] above. The 2nd Property 31.The mother said in respect of the 2nd Property there was an oral agreement reached between her and the husband in about March to May 2017. Her story, in brief, is this. 32.In about early 2017, the husband told her (1) that he intended to move to a larger property, (2) that he had to re-mortgage the 1st Property for some extra cash and (3) of the plan of “removing” the names from the property so as to save double stamp duty. Since the mother was already the owner of her own home, she could not be the owner of the 2nd Property. The husband therefore informed the mother that both she and the wife had to give up their legal title in the 1st Property, in order for the wife to be registered as the legal owner of the 2nd Property. [6] 33.At first, the mother was reluctant to give up her legal title. However, the husband reassured her that she would also hold 50% interest in the 2nd Property; and if the 1st Property were to be sold in the future, the husband would pay her back half share of the sale proceeds. In other words, both the husband and the mother would each be 50% beneficial owner of the two properties. It was in reliance upon the husband’s reassurance that the mother had her name removed from the 1st Property and allowed the husband to re-mortgage it. [7] 34.At all material times, the wife was aware of and recognised the oral agreement; and the husband and the wife had sought her consent on the disposal and re-mortgage of the 1st Property and the purchase of the 2nd Property. 35.Again, the mother accepted there were no communications between her and the wife. As before, the husband did all the communications for them. 36.In about mid-2017, after the 2nd Property had been purchased, the mother paid the husband a sum of $100,000 towards the renovation of the property. That was paid pursuant to the oral agreement and her belief that as owner, she should make contribution.[8] She relied upon this payment to say this shows she has an interest in the property. The Husband’s Case 37.It is no surprise that the husband and the mother are essentially on the same page: the 2 properties are beneficially owned by him and the mother in equal shares. 38.As far as the 1st Property is concerned, the husband said in his homemade Points of Defence that he and the wife’s original plan was to rent their home. They simply did not have the means to buy one because the wife had made it clear that she would not make any monetary contribution. [9] The wife was fully aware of the mother’s intention and purpose of treating the 1st Property as an investment. She even said to the mother to the effect that she and the husband would not take the money as their own ( 伯母我哋唔會要左妳的錢唔俾返妳，間屋妳有份有妳個名 ).[10] 39.As regards the 2nd Property, the husband had sought the consent of the mother before taking out a re-mortgage on the 1st Property; and the wife was fully aware of this.[11] The wife even expressly acknowledged that she was just holding the legal title for the husband and the mother when the Provisional Agreement for Sale and Purchase was signed. [12] The Wife’s Case The 1st Property 40.The wife said in about 2009, she and the husband planned to get married. It was never their plan to rent their home because they had decided to purchase one at Shatin, where both of their families lived. Both of them were in gainful employment and they had savings of about $100,000 odd, which should be sufficient for the 10% down-payment if the price was about $1 million. [13] 41.Through an estate agent with whom the mother was familiar, the husband and the wife viewed 5 properties. The mother, said the wife, accompanied them on all these occasions. The mother preferred a property in the same estate where she lived but the wife preferred the 1st Property, being at Shatin downtown and listed at an attractive price of $1,300,000. The couple finally decided on the latter. Since the price was over their budget, the husband indicated he would borrow a few ten thousand dollars from the mother. [14] 42.On a day in February 2009, the husband and the wife attended the estate agent’s office for the signing of the Provisional Agreement for Sale and Purchase. The mother came along. It was on that very occasion the mother insisted to pay the initial deposit of $50,000 for them. The wife declined and expressed that she and the husband were financially capable to deal with the matter. The mother was however unwavering, claiming the husband was her only son, she was determined to help them to purchase a home. After some wrangling, the wife finally gave in. [15] 43.The wife accepted the Provisional Agreement prepared by the estate agent clearly stated all the 3 parties were purchasers and she signed on it. The wife’s explanation was that she did not wish to create an unhappy scene; so she did not continue with the rows.[16] Yet, according to what were exchanged between her and the mother there and then, her understanding was that the mother’s money was a gift to them.[17] After the signing, the husband repeatedly assured her that the mother did not have any interest in the property.[18] 44.On a day before the signing of the Formal Agreement for Sale and Purchase, the husband, unexpectedly, informed her that the mother had decided to help him in the purchase by paying half of the purchase price (ie $650,000). It was a goodwill from his mother and the husband hoped she could accept. Due to her understanding that all these monies were assistance by way of gift, the wife conceded to the request. 45.It was against the above factual background that the 1st Property was purchased in their names. It was never mentioned by the mother that the purchase was for her investment. The mother made it a frequent talking point with her friends that she had generously purchased a home for her son. The wife said for the reason that the mother gifted them half of the matrimonial home, her family did not seek any bridewealth or wedding banquet from the husband 46.Thus, the wife’s version, in brief, is that all along, she and the husband intended to purchase their home with their own money. There was never any agreement that the 1st Property was to be owned jointly by them. All the monies contributed by the mother were gifts out of love and care for her only son. At no time did the mother ever assert she had an interest in the 1st Property nor did she ever participate in how to deal with it, specifically when several years later the making use of it in the purchase of the 2nd Property. The 2nd Property 47.In about 2017, the couple decided to purchase a larger home and found the 2nd Property. The scheme was that they had to re-mortgage the 1st Property and that the 2nd Property would be purchased in the sole name of the wife with a 30-year mortgage. They devised the paper exercise of sale and purchase of the 1st Property so that the husband became its sole owner. 48.What followed were the undisputed paper transactions done at the solicitors’ office set out at [18] to [21] above. It was the wife’s case that the mother was never involved in the process. The mother just signed the legal documents and acted upon their request. There was simply no need for her to communicate with the mother. There was no agreement or understanding whatsoever that the mother would have an interest in the 2nd Property. The mother was not even present when the wife signed the Provisional Agreement, nor was she involved in how the property was to be renovated. There was a WhatsApp group for the renovation; the only persons in the group were the husband and the wife and the renovation contractor. The Legal Approach 49.In Bhura v Bhura (No 2) [2014] EWHC 727, [2015] 1 FLR 153, Mostyn J provided some useful guidance on the approach to be taken by the court when dealing with dispute over ownership in a domestic setting:
Burden of Proof 50.Ms Choy, counsel for the mother, accepted that the mother relies primarily on common intention constructive trust in her claim. For the reason that both properties are currently not in the mother’s name, she accepted the mother bears the burden of proving her ownership. Parties’ Evidence 51.I shall start by making some observations on the parties’ credibility as a witness. 52.On assessing a witness’ credibility, DHCJ Au (as he then was) made the following observations in Lee Fu Wing v Yau Po Ting Paul [2009] 5 HKLRD 513 at [53]:
53.In a more recent case, Yu Man Fung Alice v. Chiau Sing Chi Stephen [2020] HKCFI 2923, Coleman J observed at [61] & [62]:
54.In the present case, there were conducts that are alleged to have happened proximate to the purchases and those which were not. Speaking of admissibly of these conducts as evidence of intention at the time of transfer, Stock NPJ said this in Leung Wing Yi Asther v Kwok Yu Wah (2015) 18 HKCFAR 605,
55.After having heard their oral evidence, I am sure none of the parties was telling the entire truth. As I shall demonstrate below, none of them was forthcoming as a witness. They just picked and chose the undisputed facts as skeleton and fleshed out with their fabricated evidence, mostly about what he or she had said, to make up his or her case. 56.The mother’s daughter (ie the husband’s younger sister) also testified for the mother. The sister’s evidence however was merely hearsay. She heard either from the husband or from the mother and had little personal knowledge on the matters. 57.I shall analyse the parties’ evidence in turn. The Mother and the Husband’s Evidence Acquisition of the 1st Property 58.The mother acknowledged she knew the legal implication of a joint tenancy: the one who survives take the interest. When the mother emphasized the 1st Property was her investment, she admitted she was well aware that the property would be occupied by the husband and wife as their matrimonial home. No rental would be payable to her. Not only that there was no rental payable, for the reason that the property would be used and in fact had been used for the agreed purpose, there was little prospect for the mother to “realize” her investment; or at least when she would be able to realize her investment was virtually unknown when she “made” the investment. 59.I agree with Ms Chiu that there was simply no way there would be more money in the future for her pension / retirement fund as what the mother said. 60.There is a material discrepancy between what the husband wrote on his witness statement dated 2 October 2020 and his oral testimony. The husband said in evidence that there were no communications between the wife and the mother and he was acting as a go-between or messenger as regards the agreement reached among them in respect of the 1st Property. However, a plain reading of his statement clearly referred to a discussion held amongst three of them and it was on that occasion a consensus was reached. He even said after the mother had left ( 在本人母親離開後 ), the wife made it clear that she would not be responsible for the mortgage repayments. The husband further said, after the consensus had been reached, all the 3 of them went out together viewing properties ( 開始三人一同四出「睇樓」 ).[19] 61.These contradict not only his own oral testimony but are also in contradiction with the mother’s evidence that she did not communicate with the wife and that it was she and the husband who went about viewing properties and nailed-down the 1st Property. 62.The mother was adamant that the wife did not have a say in the purchase of the 1st Property nor that her views mattered. There was no need for the husband and the mother to seek the wife’s views. Effectively, she was saying that the wife did not have a role to play at all. In my assessment, this is contrary to common-sense. The property was intended to be used as the matrimonial home for the husband and the wife. It must have been a joint decision of all 3 of them at least when it came to the choice of the property. Removal of the Mother’s Name 63.On the “removal” of her name, the mother was evasive when it came to what happened at the solicitors’ office when the legal documents were signed on 4 March 2017. 64.The mother testified that she did not know she was signing the Agreement for Sale and Purchase; she only knew it was for the purpose of removing her name. At one point, she said the solicitor did not explain the contents of the documents to her and at another point she said she did not recall whether she was so explained. But when being asked by the husband on a series of leading questions, the mother then stated she had asserted before everyone (including the wife) that she would have the same (ie half) interest in the 2nd Property; and upon hearing this, the wife did not object. 65.The mother’s testimony, as prompted by the husband, about what happened at the solicitors’ office was not so stated on her witness statement. It is hard to believe that she could not recall any details about the process but clearly recall she reiterated her interest and rights in front of everyone. 66.This testimony also contradicts the husband’s evidence in court where he said the mother was unwilling to sign the documents, saying that if she had signed she would have nothing. The husband then reassured the mother that she would also have the same ownership (ie 50%) in the new property. The wife also assured that they would not take the mother’s share. 67.About 2 weeks later on 17 March 2017, the husband sent 2 WhatsApp messages to the mother stating to the effect that if the mother considered that there was no protection due to the removal of her name, upon the expiry of 2 years when the interest penalty clause imposed by the mortgagee bank is spent, he would sell the 1st Property and return $700,000 to her. He asked the mother to help him out in times of difficulty. The 1st message was sent out at 10:00 pm and the 2nd one was at 10:07 pm.
68.Faced with these messages, the mother explained that she was against the removal of her name; this would render her without any protection or security. It was under this circumstance that the husband sent her these messages. The mother said she did not agree to the suggestion as per the messages. Yet, she admitted that she did not communicate her disagreement to the husband. Her explanation is difficult to understand. She explained to the effect that she did not reply to the messages because she did not agree. (“總之我唔同意就冇回覆佢啦”, “我唔回覆就我唔同意囉”). She further testified that her interest was not just limited to $700,000; her interest was in half of the property. 69.The husband, on the other hand, obviously for the purpose of saving the situation, testified that in fact the two messages did not contain the complete dialogues he had with the mother. He said before he could write further, the mother phoned him up to have her objection made known to him. He said the $700,000 was merely the 1st instalment. 70.In my view, this is utterly unbelievable. First, a plain reading of the messages does not suggest they were incomplete. Secondly, his version contradicts that of the mother. I believe the husband made it up in order to save the situation. 71.I shall return to these messages in this judgment below. The Parties’ Relationship 72.It is clear there were a lot of bitterness and resentment between the wife on the one part and husband and the mother on the other, as can be seen from the grumbles aired by them at trial. 73.As mentioned above, the husband pleaded that he had separated with the wife as from February 2012. He was legally represented at the time and this date still remains on his petition. The husband painted a picture that his relationship with the wife was terrible. The wife did not appreciate his contribution to the family. He suffered a lot and was the victim in this relationship. 74.Same as the husband, the mother spoke ill of the wife. She had a lot of grievances and disapproved of the wife’s behaviour over all these years: the wife never treated her well, never considered them as a family, never attended dinner on festivals, never communicated with her, and the list went on. The mother said that she did not speak to the wife on anything. 75.On the other hand, the wife said though she disliked the mother who always suddenly showed up at her home regardless of whether she was available or not. Yet her relationship with the mother-in-law was not as terrible as the husband wished to establish. She accepted she had not visited the mother for several years but at the minimum, she did not quarrel with the mother. She and the mother even went out for dinner to celebrate the son’s birthday in December 2018, and there were communications via WhatsApp with the mother and the husband’s sister. 76.When being asked by Ms Chiu on why the 1st Property was decided to be kept because the original intention was to have it sold and a larger unit was to be purchased with the proceeds of sale, the husband’s reply was he did not have trust in the wife because she had once threatened she would take the money. Their frequent conflicts were so serious that police had to be called a couple of times. 77.In my assessment, the wife’s version is closer to the truth; if the relationship was that bad, there was no reason why the parties (according to the husband and the mother’s case) would have agreed to let the wife became the sole-owner of the 2nd Property which is bigger and more expensive. The husband’s explanation that the wife promised to hold the property in name only is utterly implausible. The Husband and the Mother’s Conduct in the Proceeding The Husband’s Form E and Answers to Questionnaires 78.The husband filed his Form E on 19 October 2018. At that time, he was still legally represented. In part 2.1 of his Form E, “Give details of your interest in the matrimonial home (the 1st Property)”, he stated he had 1/3 of the ownership for the reason that he was holding the property on trust for the mother and the wife. 79.In Part 2.2, “Give details of all other landed properties in Hong Kong or elsewhere which you own or in which you have beneficial interest”, he stated he had 1/3 of the interest in the 2nd Property. 80.In other words, he stated unequivocally that his share of ownership in both properties was “1/3”. 81.In evidence, the husband explained it was in fact his open offer. He went at length to explain he was just given the Form to fill out by his then solicitors. He even ridiculously explained that he stated 1/3 because he wanted to give more to the wife for the reason that she was going to take care of the son. He thought he was supposed to fill out how he would like to have the family assets divided. He therefore had it filled out accordingly. He did not hear from his solicitor that there was any problem. He was a layman and put the blame on his solicitors. 82.I would like to point out that the husband’s explanation was an affront to the wisdom of anyone who heard this. There could not have been any mistake. As pointed out by Ms Chiu, if the husband was genuinely making an open offer, he could have stated this in Part 6 (Orders Sought) of the Form. 83.The husband further elaborated on the “1/3 ownership” in his Answers dated 3 January 2019 and 29 August 2019. He reiterated that he held 1st Property on trust for him, the wife and the mother in equal shares while the 2nd Property was held in the sole name of the wife on trust for 3 of them. There was an oral agreement among them as to the trust arrangement and no written document had been made. 84.Again, the husband put the blame on his solicitors who mistook his meaning by taking his open offer as his claim of his interest in the Answers. The husband’s evidence is a pack of lies. I have no hesitation in rejecting his evidence. The Mother’s Joinder Application 85.At the beginning, the mother was unrepresented. On 30 September 2019 she took out an inter-parte summons for intervention. In her supporting affirmation, which was affirmed on the same day at the Family Court Registry, the mother affirmed that each of the 3 parties had an equal share in both properties, ie each has 1/3 share. Both the husband and the mother confirmed the summons and the supporting affirmation were prepared by the husband. 86.It can readily be seen that this version was consistent with the husband’s version as stated on his Form E and Answers but differed dramatically from the husband and the mother’s case as pleaded on their subsequent pleadings which claimed that the wife had no interest in the properties whatsoever. Anyone could easily see this is clearly an insurmountable problem for them. 87.The mother’s solution was to plead ignorance. In evidence in chief, she simply refused to adopt the affirmation as part of her evidence. In cross-examination, she explained she was just asked by the husband to sign the affirmation and she had no knowledge of its contents. She trusted her son. She was just taken by the husband to court in order to claim her proprietary interest. At one point the mother even claimed at that time she did not know the husband was in divorce but when being questioned by the court, the mother admitted she was taken by the husband to the Registry of the Family Court for swearing the affirmation. When being asked by the court when she was aware of the contents of the affirmation, she said she only learned of them from her solicitor the week before the trial. 88.The husband admitted the summons and the affirmation were homemade by him. He equally pleaded ignorance albeit in a different way. At that time, he was in a rush. He was told by his then solicitor that the latter was not able to represent her mother. The husband therefore had no choice but to prepare the documents on his own. The way he did it was to copy from his own court documents including his Form E (which stated the husband had 1/3 interest in both properties) and those prepared by his then solicitors and he even had to translate some parts from Chinese into English. When being asked by Ms Chiu how he knew the legal term of “resulting trust” that appeared on the mother’s affirmation, he gave the excuse that he had just copied from his solicitors. Thus, this was an innocent mistake. 89.In my assessment, all these explanations are utterly unbelievable. 90.The mother attended the Family Court Registry and had the affirmation affirmed before a Commissioner for Oath. It is hard to believe that the mother adopted such a casual fashion in the lodgement of her claim and that she only learned of the mistake a few days before the trial. From the way in which the summons and the affirmation were drafted, I have great doubt over whether the documents were actually prepared by the husband. It is apparent that the documents were prepared by someone with legal knowledge. Anyway, I do not think I need to come to any conclusion on this. Assuming that the documents were prepared by the husband, it is still utterly unbelievable for him to have committed the mistake in the way he claimed if at that point he (and the mother as well) truly believed that the wife had no interest whatsoever in the 2 Properties. 91.On 26 September 2019, the husband and the wife went through an unsuccessful Financial Dispute Resolution (“FDR”) before Deputy Judge Chow. I do not know what happened in the FDR but it is hard to believe that even after the FDR, the husband was still unable to distinguish between an open offer and a claim of share. 92.I do not accept the husband was in a rush. It was on 30 September 2019 that the mother took out the summons and it was not until 15 January 2020 that by an order of HH Judge CK Chan that the mother was joined. The mother has since 24 June 2020 been legally represented. Her Points of Claim, settled by counsel, was only filed on 31 July 2020. There was ample time and opportunity for the mother to clarify the mistake and significantly there was not a reference to the mistake in the pleadings or in her subsequent affirmation. It is hard to believe that she only learned of the mistake just a few days before the trial. 93.I am sure the respective case of the husband and the mother about 50% ownership as pleaded on their pleadings were fabrications for the purpose of the present proceedings. The Wife’s Evidence 94.I now turn to the wife’s evidence. The Financial Assistance from the Wife’s Family 95.Under cross-examination, the wife was just minded at reciting her lines. She was at times argumentative, and avoided giving answers to even some simple questions; this undermined her credibility. 96.The wife reiterated that in 2008 the world was suffering from the Lehman Brothers crises. The property prices dropped drastically such that she and the husband had sufficient savings for paying 10% down-payment and the remaining balance to be paid by mortgage finance for a property of about $1 million. In any event, it was mentioned by the husband that he could borrow some money from the mother; and it was also her case that there was financial assistance available from her side of the family anytime as and when needed. Her father, a construction contractor, had the necessary financial ability. 97.The wife accepted that no wedding banquet was held and she did not require any bridewealth from the husband’s side. She explained since the mother had already paid half of the purchase price of the 1st Property, it was not necessary to incur further money. 98.There is an inconsistency in the wife’s testimony as to why wedding banquet was not held. The wife seemed to have offered two versions. At one point she said the decision was made before the purchase for the reason that they wanted to reserve money for the purchase; at another point, her reason was that since the mother had paid for half of the purchase price, she did not wish the mother to go deeper into her pocket. 99.She accepted her parents did not attend the marriage ceremony because, without any banquet, the ceremony was not a dignified one ( 不風光 ). In fact, on her side, the wife only had two of her friends, who acted as witnesses, attended the ceremony. None of her family members appeared. 100.The husband said the wife’s parents had long separated and were in terrible relationship. She did not need to inform her parents of the marriage. And no meeting was arranged for both sides’ parents as a matter of courtesy. In this regard, the husband’s version is supported by the fact that the marriage certificate adduced to court did not even contain the names of the wife’s parents. The wife said she did not know why this happened; it was the husband who handled the papers. To me, this is telling; this supports the husband’s version. If she wanted, the wife could have easily provided the names. If the wife’s parents found the marriage not a dignified one, they could have held a wedding banquet on their own. I find the husband’s version closer to the truth. 101.I am aware that subsequently the wife got a total of about $110,000 cash gift from her father and elder brother but that was after the marriage and the purchase of the 1st Property. 102.When being questioned on the feasibility of a 90% mortgage, the wife was adamant this could be done and relied upon a successful case they came about at the relevant time. The wife, however, conceded under cross-examination that she only knew of this case after they had moved into the 1st Property. 103.I am sure the wife was telling lies. I have to reject the wife’s version that there was financial assistance available from her family. 104.On the above analysis, I find none of the parties is a credible witness. 105.I reject what the mother said about her investment in her Points of Claim; specifically, on the point that the 1st Property was an investment such that it would bring her more money in the future for her pension / retirement fund. 106.I reject the wife’s assertion that there was financial assistance from her side of the family. 107.I find the husband and the wife did not have the financial ability to purchase their home and they could only do so with the assistance of the mother; the wife’s 90% mortgage assertion was probably an invention for the proceeding. 108.I also find that the parties’ relationship was not as bad as the husband and the mother wished to painted and that, as is evidenced from the paper exercise regarding the 1st Property, at the minimum, they had a “working” relationship. 109.Lastly, I disbelieve the husband and the mother’s version about what happened when the legal documents were signed in 2017. 110.With all these findings I now move to consider the ownership of the properties. 111.In Chan Chui Mee v Mak Chi Choi [2009] 1 HKLRD 343, it was held by Hon Lam J (as he then was) that the determination of beneficial ownership under a common intention constructive trust involved a two-stage test. First, the key was to establish the parties’ true common intention that the claimant should have a beneficial interest. Second, it was necessary to ascertain the extent of the parties' respective interests in the property, by adopting a holistic approach to quantification, surveying the whole course of dealing and conduct which threw light on what shares the parties must have intended. The court could not impose its own view of what it considered fair. 112.Inferred intention and course of dealings and conduct are all relevant: see Ip Man Shan Henry v Ching Hing Construction Co Ltd [2003] 1 HKC 256. What was the Common Intention of the Parties, if any? 113.In Stack v Dowden [2007] UKHL 17; [2007] 2 AC 432, Baroness Hale emphasized on the domestic context which is very different from the commercial world. Each case will turn on its own facts. Her Ladyship listed out many factors other than financial contributions which may be relevant to divining the parties’ true intentions:
114.In the local context where the population is predominately Chinese, Lam VP (as he then was) said in Primecredit Ltd v. Yeung Chun Pang Barry [2017] 4 HKLRD 327 at [1.6] that in a domestic context, particularly in relation to a matrimonial home, the Court is not constrained in that exercise by pure direct monetary contributions to the purchase price. In a Chinese setting, where explicit discussions on property rights within the family are not that common, the Court has to pay more regard to circumstantial matters: see also Ho Kwok Wing v. Chan Mei Mui [2020] 3 HKLRD 548 at [8.9] per Cheung JA. The 1st Property 115.According to the husband, if he had to rent a flat he would have to pay about $6,000 monthly as rental but if a flat was to be purchased in the manner that it turned out to be (ie half of the purchase price was paid by the mother), his monthly mortgage repayment would only be $3,000; this would give him an extra $3,000 odd per month for disposal. I accept what the husband said. I gather that this in turn would ensure the living expenses to be given to the mother. As a matter of fact, it is not in dispute that as from 2008 the husband paid $6,000 to $7,000 every month to the mother as living expenses. At one point, when being questioned by Ms Chiu on what her return on investment was, the mother at one point conceded that the return was in the monthly living expenses given by the husband. 116.It is unnecessary to engage in a sematic exercise on what the word “investment” means. The mother’s money that went into the 1st Property would have the effect of ensuring her living expenses, albeit in somewhat indirect way. On that view, it is not incorrect for the mother to say it was an investment. 117.I am sure the mother did not make the monetary contribution for no nothing. Her insistence in putting her name said it all. When she was cross-examined by the husband on this point, the mother said if the husband did not take care of her (“唔理我”), she could get the property. 118.The wife’s version that the money was a gift from the mother did not sit well with the fact that the 1st Property was purchased in the name of all the 3 parties. Indeed, under cross-examination, the wife conceded that at the time of signing of the Provisional Agreement, she did not believe the money was a gift. It was subsequently from the course of events during the subsistence of the marriage that led to her conclusion that the money was a gift. She specifically mentioned there were incidents when she suggested to the husband to return the money, the answers were “not necessary”. Significantly, it is in stark contradiction with what she said in her witness statement that she thought the money was a gift.[20] Lastly, in evidence, the wife mentioned that since the mother had little trust on her, the mother insisted to have her name added for the protection of the husband. As pointed out by Ms Choy, this could not sit well with her belief at the time of purchase that the money was a gift. 119.In my judgment, this explains why the mother insisted to have her name on the title deed. It follows that the title was not nominal but must have been of substance. This conclusion is reinforced by the husband’s WhatsApp messages mentioned in [67] above. If the mother had not minded at ensuring some real protection, she would not have been unhappy about the removal of her name. 120.In the same vein, the wife’s name on the register as an owner must mean something. Under cross-examination by Ms Chiu, the husband testified that the wife perennially demanded for being named as an owner. She “forced” upon him, even to the extent of threatening to withdraw from the marriage plan. The husband gave in after having obtained the reluctant consent of the mother. I accept the husband’s evidence in this regard. 121.As pointed out by Ms Chiu, it would be meaningless for the wife to insist upon being named as a legal owner, without intending to have any beneficial interest in the property but at the same time incurring liabilities as one of the borrowers under the mortgage. The only logical inference that can be drawn is that the mother and the husband unwillingly succumbed to the demand of the would-be family member that she would have an interest in the 1st Property. 122.Hence, on the above analysis, I reject the parties’ respective version on what happened at the time of acquisition of the 1st Property; specifically, I conclude that all of them were not truthful as to what happened at the estate agent’s office when the Provisional Agreement was signed. 123.Before I set out my inferences on what happened at that time, I have to make it clear that in my deliberation I give little weight to the fact that the mother had the keys and the smart cards of both properties. The keys gave her the convenience to see her grandson as and when she wished. I consider it is a rather common situation in Hong Kong. In a domestic context such as this, it is immaterial whether or not the mother was involved in viewing or selection of the 2nd Property or subsequent renovation of it, or whether or not the mother received any rental of the 1st or 2nd Properties. 124.On the evidence before me, I infer what happened at that time were as follows.
125.The common intention of the parties may be changed subsequent to the acquisition of the property. Lord Walker said in Jones v Kernott [2011] UKSC 53; [2012] 1 AC 776, at [14]:
126.The next question is whether or not there was a change in the common intention (or tacit understanding) after the purchase, in particular, whether the common intention changed when the husband’s and the mother’s names were removed for facilitating the purchase of the 2nd Property? 127.In my assessment, the answer must be in the negative for the following reasons. 128.First, a change in the common intention is not a case pleaded by the parties. 129.Secondly, the WhatsApp messages cannot be evidence that there was a such a change. It is worthy to note that in the messages the husband pleaded for his mother’s help. I think probably the suggestion he made was the best he was able offer to comfort his mother given his then stringent financial constraint. I recognize that subsequent to these 2 messages the mother allowed the “removal” exercise to proceed as planned. I do not think this could be an acquiescence on the part of the mother that her interest was limited to $700,000 or that there was a change in the common intention. In any event, the wife was not involved. Most importantly, it was never the contention of any party, especially the wife, that the messages evidenced a change in the common intention. 130.Thirdly, the “removal” exercise was a sham. The exercise was to carry out a fraud on the Inland Revenue. It has never been the contention of the wife that the mother agreed to abandon her interest in the 1st Property nor was there a change in the common intention. Her case is the mother never had an interest. 131.For the reasons aforesaid, I find the husband, the wife and the mother were at the time of the purchase the beneficial owners of the 1st Property in equal shares. Their interest has not changed notwithstanding that the property is now being held in the sole name of the husband. The 2nd Property 132.With the conclusion that I have arrived regarding the 1st Property, the issue regarding the 2nd Property should be a relatively straight forward one. 133.I have found none of the parties credible as a witness. If there were such an express oral agreement, the mother would not have been so unhappy that compelled the husband to have written the WhatsApp messages. I disbelieve the husband and the mother’s testimonies about the oral agreement. 134.On the evidence before me, I find the husband and the wife sought the mother’s consent and her co-operation to have the paper exercise carried out. The mother reluctantly conceded to the request, in the hope of helping the husband and the wife in acquiring a larger home, out of her love and care for the husband and his family. Obviously, at that time, all of them hoped for the best and none of them would have contemplated the breakdown of the marriage. 135.I find not only that there was no express oral agreement as alleged, there was no tacit understanding that the 2nd Property was to be owned by 3 of them as well. According to the mother, her relationship with the wife was terrible. In that case, there was no way that the mother could have agreed to let the property purchased in the wife’s sole name if the mother was to have a share in the property. On the other hand, I accept that the paper exercise was a sham devised by the husband and the wife for the purpose of acquiring a larger home. This evidence compelling points to the conclusion that there was a common intention on the part of the husband and the wife that the 2nd Property was to be beneficially owned by them equally. 136.The mother said, as owner, she contributed $100,000 for the renovation of the 2nd Property in about January 2018. That was after the purchase of the 2nd Property. This money, however, according to the husband, was never used and has remained in the husband’s account up to trial. The wife said this $100,000 was a gift from the mother. 137.There is a discrepancy on the part of the husband regarding how the money was given to him. The husband said in evidence that one day when he returned home he saw the money. However, according to his Answers dated 7 January 2019, he said the money was transferred to him. Be that as it may, there is no dispute that $100,000 now sitting in the husband’s account was from the mother. The question is what was it for? 138.With the conclusion that I have come to regarding the ownership of the 2nd Property, I find, on balance, that the money was given by the mother as a gift out of her love and concern for her son. 139.It follows that the mother’s claims have to be dismissed. 140.As pointed out by the Court of Appeal, but for the breakdown of marriage and the application for ancillary relief, there would not be any claim on the properties on the part of the mother. The underlying matrimonial dispute and the application for ancillary relief is the origin and the substratum for the litigation on ownership irrespective of the procedural routes adopted by the parties and the court to resolve the same; see: LLC v LMWA & LELP [2019] 2 HKLRD529 at [8], [22] & [23]. In the present case, the court is tasked to identify the matrimonial assets for the purpose of division between the husband and the wife. In doing so, in my view, the court is entitled to come to findings on ownership that were not pleaded by the parties. 141.I now turn to the ancillary relief part. Current Situation of the Parties 142.After the commencement of the divorce proceeding, the husband and the wife together with the son continued to live at the 2nd Property. This was the situation up to about August 2021. 143.As before, the wife continues to be a full-time mother. The son is currently attending Primary 5 at a school in Shatin. 144.It is unfortunate that the husband has been diagnosed to have advanced nasopharyngeal carcinoma in end of July 2021. Due to his illness, in about August 2021 the husband has moved back to live with the mother who has been taking care of him during the treatment and recovery period. Open Offers The Wife’s Open Offer 145.The wife’s open offer submitted on the 1st day of trial covered both the third party and the ancillary relief proceedings. It was:
The Husband’s Open Offer 146.The husband’s offer at the beginning of the trial was structured in a rather complicated way. I only need to set it out in brief.
147.At closing, the husband revised his offer by adding a maintenance of $9,000 per month for the benefit of the son. 148.The husband’s offer suggested that the wife and the son are to move back to the 1st Property. He did not explain how this could be done if the mother owns half of its interest. Applicable Legal Principles 149.The jurisdiction of the court in granting financial provision for a party and for a child of the family is governed by sections 4 and 5 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”). Pursuant to sections 6 and 6A of the same legislation, the court has the power to grant orders for transfer, settlement or sale of properties. 150.The principles upon which this case is to be considered are the conventional ones, namely those set out in section 7 of MPPO which confers a broad discretion on judges dealing with ancillary relief. That said, these principles are to be interpreted in the light of the Court of Final Appeal judgment in LKW v DD (2010) 13 HKCFAR 537. In that case, Riberio PJ referred to the four principles which are applicable to all ancillary relief proceeding, viz, (1) the objective of fairness: [56], (2) rejection of discrimination: [57], (3) the yardstick of equal division: [58] – [61] and (4) avoidance of ‘minute retrospective investigation’: [62] – [69]. 151.Ribeiro PJ further set out the steps to be taken by the courts in undertaking the exercise. In brief, they are:
The Financial Resources of the Parties The Matrimonial Assets 152.The 2 properties are the only substantial assets of the family. The husband and the wife agreed that the market value of the 1st Property is $4,650,000 and the 2nd Property is $6,530,000. 153.The 1st Property is currently subject to a mortgage of around $2,280,000; hence, a net equity of $2,370,000 ($4,650,000 - $2,280,000). With the mother’s 1/3 share being excluded, the net sum is $1,580,000. 154.The mortgage of the 2nd Property is standing at about $2,900,000; hence the net equity is $3,630,000 ($6,530,000 - $2,900,000). 155.The other items are not in dispute. The husband and the wife are relatively young; they still have 26 years to go before retirement at the age of 65. I give a 50% discount on their MPF. 156.The matrimonial assets are assessed at $5,863,000 and are set out below. Schedule of Assets
157.The parties are essentially debt-free. The Financial Resources of the Husband 158.The husband’s illness was only known towards the end of the trial. This is a “Black Swan Event” of this ancillary relief proceeding. He returned to the witness box on the 5th day of trial for updating his situation. 159.The husband is a qualified blasting engineer in tunnel construction. He is being employed by a well-established construction company. His monthly income was on average $84,000 before he fell ill. He is currently paid a sick-leave allowance of $45,000 per month. 160.According to his treating doctor, a specialist in Clinical Oncology, the husband completed a series of intensive radical chemoirradiation therapy in the end of November 2021. He is currently recovering from the acute and late toxicities of treatments. The recovery period is expected to be about 1 to 2 years. During this post-treatment phase, depending on his recovery progress, the husband is advised to resume his duties gradually. Given the safety measures related to his work which involves explosive blasting works, the husband is recommended to avoid heavy duties such as night shift or site works for at least 1 to 2 years from his resumption of duty. Heavily polluted working environment should be avoided as well. 161.At present, the husband is still in the process of recovery; it is too early to assess the prognosis. It is entirely unknown as to when and whether he would be in a remission or whether there would be a relapse. 162.The husband’s job as a blasting engineer is a hazardous one. Not only that his job requires him to possess some unique professional qualification but also requires him to work in some hostile environment. For this reason, his job has been a high rewarding one. On the evidence before me, I accept it is highly unlikely that the husband would be able to return to his previous work in the coming 1 or 2 years; his work would probably be limited mainly to office duties. This would in all likelihood mean a drop in his income. I do not have a crystal-ball informing me whether or not the husband would be able to return to his previous duties and for that matter, what his future income would be. All I can say is it is likely that the husband would continue to receive sickness allowance of $45,000 for some time and when it is exhausted, his income would probably be less than what he used to have. The Financial Needs of the Husband 163.The husband reported in his Form E of 16 April 2021 that his monthly expense, exclusive interim maintenance of $17,500, is $48,950. This $48,950 already includes the mortgage repayments and some of the utilities of the 2 Properties which are $21,000 and $4,500 respectively. I consider the figures reasonable. 164.The husband’s Form E was before his illness. He has been under medical treatment on private basis. While his medical expenses have been covered in part by his employer’s insurance, he has to pay some of them out of his own pocket. Doing the best I can, I assign $10,000 per month as his medical expenses. 165.I adjust the “tax” figure to, say, $2,500 per month to reflect the fact that the husband is in receipt of sickness allowance. 166.The husband is living with the mother in a self-owned public housing unit. There is no suggestion that the husband is required to pay any rental for this, nor is there any suggestion that he is not allowed to continue to live there. 167.The husband’s monthly needs are therefore assessed at $57,450; the breakdown is as follows,
168.It can readily be seen that this figure exceeds what he could afford in terms of his monthly receipt. This does not even include the interim maintenance of $17,500 that is currently payable. Given the precariousness of his health, I cannot fathom out how this situation can be sustained in mid or longer term. The Financial Resources of the Wife 169.The wife used to work as an accounting clerk earning about $10,000 per month. She ceased her work shortly after the birth of the son. 170.While the son has not been under any medication nor has there been any assessment by clinical psychologists, it seems the husband does not dispute when the son was in the kindergarten, he was diagnosed with autism, ADHD, Chinese dyslexia with symptoms of insufficient concentration and speech delay. The wife laid much emphasis on how she has spent all her time and attention to meeting the son’s special needs. I accept the son requires some special needs or attention but all along he has been attending regular school and by and large enjoying normal school lives. In my assessment, there is an element of exaggeration on the part of the wife. 171.The wife said she once considered returning to the labour market. I think this is the right direction. The wife is still young and capable of economically active. When the son moves to the secondary school in about 2 years’ time, there should be more flexibility in her time such that she may start by working part-time. Taking a board brush approach, I think at the beginning the wife should be able to earn around $5,000 per month and gradually work her way up. The Financial Needs of the Wife and the Son 172.The wife said she needs $23,500 per month. This has not met with challenge by the husband. This sum is exclusive of mortgage payments and some utilities which all along have been shouldered by the husband. I accept she needs $23,500 per month, of which $7,000 is general expense, $4,700 personal expense and $11,800 the son’s expense. How the Parties’ Financial Needs are to be Met? 173.I have assessed the husband’s monthly needs at $57,450 and the wife’s at $23,500, totalling $80,950. With a monthly receipt of $45,000, $80,950 is definitely way beyond the husband’s affordability. The present situation is simply untenable. I cannot see how this family (if I may still use this term) could survive without additional financial resources. 174.As time goes by, the values of the properties are capable of passive growth. I am aware that, where possible, the parties, especially the wife, may prefer to have the two properties preserved. However, where their monthly needs could not be met by monthly receipts, one would have little choice but to resort to the 2 properties. Ms Chiu, on behalf of the wife, suggested that the 1st Property could be rented out for some income. Given the uncertainties surrounding the husband’s health and that 1/3 of the share belonged to the mother, I doubt very much whether this is feasible. 175.If the 2 properties are to be liquidated, the wife and the son would need to rent a flat; there being little prospect for them to buy one. There is no evidence on the appropriate rental level before me. Ms Chiu suggested that the 1st Property, a one bed-room flat, is able to obtain not less than $11,500 per month. Using this figure as a reference, on the basis that the wife and the son need a 2-bedroom flat, I would give a sum of $16,000 per month. It means the wife and the son would need about $39,500 ($23,500 + $16,000) per month; the particulars of which are as follows:
176.The son is still in his tender age. His parents still have a long way to go in raising and nurturing him. I have no doubt that I should give the son’s needs a top priority. Assuming that the son takes up half of the general expenses, his monthly needs would be $23,300 (($23,000 ÷ 2) + $11,800). 177.The wife seeks a payment of $540,000 into court for securing the son’s needs for a period of 3 years. This represents $15,000 per month and is proposed in the absence of any rental expense. With the uncertainties surrounding the husband’s health, there is some attraction in this suggestion. 178.I adopt $23,300 as the monthly sum. With the husband’s illness in mind, and doing the best I can in striking a balance between the parties on the one part and the son on the other, I shall err on the safe side by making a provision of 4 years at $18,000 each month. It is hopeful that by the end of the period a clearer picture of the husband’s earnings may emerge. A monthly sum of $18,000 for 4 years would give a total of 864,000 ($18,000 × 48 months). The shortfall of $5,300 would have to be met by the husband by way of periodical payment. I believe this provides the security the son needs. 179.When the husband is relieved of the burden of mortgage repayments and utilities, his monthly needs would be reduced to $31,950 ($57,450 – ($21,000 + $4,500)): a figure that he can comfortably afford to pay $5,300 for the benefit of the son. Needless to say, the periodical payment may have to be revisited when the funds in court are exhausted or may be varied upon a material change in the circumstances. Deciding to Apply the Sharing Principle 180.On the above analysis, it appears that after the parties’ and son’s daily needs have been catered for, there are still assets of modest value available for division. The court generally decides, at this stage, that the sharing principle applies to the total assets, so that they should be divided equally between the parties unless good reason exists to the contrary: WLK v TMC (2010) 13 HKCFAR 618, at [82] Whether good reasons for a departure from equality exist Duration of the marriage 181.The parties got married in May 2009 after a brief period of courtship. On the evidence before me, I find the parties probably separated from each other in 2018, notwithstanding it was pleaded on the petition that they separated in 2012. This is thus a relationship of about 9 years. My experience informs me that this length of period generally calls for equal division. Full and Frank Disclosure 182.It was submitted by Ms Chiu that the husband belatedly produced his statements with the Bank of China. The disclosure was only made upon the request of the wife. The husband also only disclosed his bank statements with HSBC for the past 3 months as opposed to 12 months required under the Form E. Ms Chiu drew the court’s attention to the fact that the husband had a bank balance of $259,000 on 19 December 2018 but the same dropped to $147,000 in March 2021. Given that the husband’s monthly expense was only $66,450 (inclusive of interim maintenance) per month, it was submitted by Ms Chiu that the husband should have some undisclosed savings. Ms Chiu argued that the husband lacked full and frank disclosure and urged upon the court to draw an adverse inference against the husband’s financial situation. 183.The husband testified that, inclusive of the mother’s $100,000, he had about $300,000 in the bank. Prior to this, he had incurred $280,000 on legal costs. He also explained that the original account was changed to another called “The One”, so he only had 3 months’ statements. I accept what the husband said. At all times the husband was a fixed-income earner. There was no suggestion that the husband has had other sources of income. I consider there is no basis for drawing adverse inference against the husband. Earning Capacity of the Husband 184.The husband, aged 39 years old, has a degree and has always been the breadwinner of the family. I recognise that his career prospect is clouded by his illness but on any view, I have no doubt that he has a much superior earning capacity than the wife. The wife, also aged 39 years, has some general accounting qualification and experience only. I believe even in the long run the wife may not be able to earn as much as the sickness allowance that the husband is receiving. She may, at the start, be able to earn a modest sum which, I believe, would not be able to allow her to maintain a living standard comparable to what she had during the marriage. 185.The English Court of Appeal, in Waggott v Waggott [2018] EWCA Civ 727, [2018] 2 FLR, held that earning capacity is not capable of being a matrimonial asset to which the sharing principle applied entitled the wife to share but earning capacity, in appropriate cases, may be relevant to a fair distribution of the assets pursuant to the sharing principle. In my view, the disparity in the parties’ earning capacity is a relevant consideration in the present case and accordingly, it is a departing factor that I should take into account: see also SSLT v SMFC (Ancillary relief; Non-matrimonial Assets) [2019] HKFLR 458, at [124] – [127]. The Wife’s Responsibility 186.It should not be forgotten that the wife would continue to take care of the son. While this responsibility may become less demanding as and when the son grows up, nevertheless, this is an onerous one. I should give proper weight to this factor in favour of the wife. 187.Taking a board brush approach, I would tentatively allow the wife an extra 10% of the total matrimonial assets. Deciding the Overall Outcome 188.A finding that one or more of the departing factors are engaged does not necessarily mean that a departure must occur. The court is required to give an examination of the overall picture. 189.I have come to the tentative view that the wife should be given an extra 10% of the net matrimonial assets. I have also set aside $864,000 for the benefit of the son. If the tentative adjustment discussed above is given effect, it would give the following result. 190.The value of the matrimonial assets is $5,863,000. After having $864,000 reserved for the son, this comes down to $4,999,000 ($5,863,000 - $864,000). If the husband is to have 40% and the remaining 60% goes to the wife, they would have $1,999,600 and $2,999,400 respectively. In real term, the wife would have $999,800 ($2,999,400 - $1,999,600) more. Her monthly needs are assessed at $16,200, so this $999,800 effectively represents a capitalized spousal maintenance covering all her needs for about 5 years (61.71 months). 191.A clean break is to be encouraged wherever possible: VP v JP [2008] EWHC 112 (Fam), [2008] 1 FLR 742, at [59]. At the same time, I do bear in mind the remarks made by Baroness Hale in Miller v Miller and McFarlane v McFarlane [2006] 2 AC 618 that too strict an adherence to equal sharing and the clean break can lead to a rapid decrease in the primary carer's standard of living and a rapid increase in the breadwinner's: [142]. 192.Considering that this is a 9-year relationship, that all her needs have been covered in the coming 5 years plus a capital of close to $3 million and that she may save up her own earnings, I believe the wife should be able to maintain her living standard and achieve financial independence. On the basis of the above analyses, I consider this is a fair financial outcome and an appropriate case for a clean break as between the husband and the wife. Implementation 193.Leaving the 2 properties aside, the other assets are worth $653,000, with $535,000 (items 2 to 4 of the Schedule at [156]) in the husband’s pocket and the remaining $118,000 (items 6 to 8) in the wife’s. On 40% and 60% sharing basis, the husband should pay an equalization money of $273,800. 194.The 2 properties should be sold with proceeds of sale to be divided as between the husband and the wife in 40% and 60%. Orders 195.For the reasons aforesaid, I make the following orders:
Costs The Third Party Ownership Dispute 196.I have found all of the parties unbelievable witnesses. It is unnecessary to express a view on who is more culpable in the conduct of the proceedings. Notwithstanding that the mother’s claims is dismissed, in terms of each of his or her case, none of them can be considered as successful. I believe this litigation could be avoided if they were not led by greed. They should take the consequence for not being truthful. I consider the appropriate costs order should be no order as to costs. 197.I make an order nisi that there be no order as to costs of the third party ownership proceedings (including all costs reserved). The wife’s own costs to be taxed in accordance with Legal Aid Regulations. The Ancillary Relief Proceeding 198.In terms of their open offers, neither the husband nor the wife can be considered as successful. I consider the appropriate order in the circumstance is no order as to costs. In coming to this decision, I have already taken the conclusion reached by me that the wife should be given 60% of the net matrimonial asset into consideration. 199.I make an order nisi that there be no order as to costs of the ancillary relief proceeding (including all costs reserved). The wife’s own costs to be taxed in accordance with the Legal Aid Regulations. Section 18 Declaration 200.I am satisfied that the arrangements made in respect of the child of the family to whom section 18 of MPPO applies for his welfare are satisfactory or are the best that can be devised in the circumstances and I accordingly make a declaration to this effect. Referral to the Department of Justice 201.Lastly, the sham of removing the wife and the mother’s names on the 1st Property penetrated by the parties may amount to a criminal offence. I direct the clerk of court to refer this judgment to the Department of Justice for further investigation or enforcement action.
The Petitioner, FWY, appeared in person Ms Chiu of Chiu & Co, Solicitors, appeared for the 1st Respondent, TYCY Ms Alison Choy, instructed by Hampton, Winter and Glynn, Solicitors, appeared for the 2nd Respondent, FYL [1] The total price on the Agreement was stated to be $4 million. Since the husband is both the vendor and the purchaser, 2/3 of $4 million is $2,666,667. [2] Paras 18 and 19 of the Points of Claim [3] Para 22, ditto [4] Para 13, the mother’s Reply [5] Paras 27 – 31 of the Points of Claim [6] Para 44, ditto [7] Paras 45, 46 and 52, ditto [8] Para 56, ditto [9] Para 10(1), the husband’s Points of Defence [10] Para 10(2), ditto [11] Para 25, ditto [12] Para 29, ditto [13] Para 11(4), the wife’s Points of Defence [14] Para 11, ditto [15] Para 15(1), (2) & (3), ditto [16] Para 15(4), ditto [17] Para 15(5), ditto [18] Para 25, the wife’s witness statement dated 11 February 2021 [19] Para 4, the husband’s witness statement dated 2 October 2020 [20] Para 22, the wife’s witness statement dated 11 February 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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