Ysg (Yx) v. Lyag
Read the full judgment text of FCMC 15288/2015 on BabelCite. This Family Court judgment was delivered on 2 June 2022 before Deputy Judge Peter Barnes.
Ancillary relief – Matrimonial Proceedings and Property Ordinance – Asset pool – Black hole theory – Sharing principle – Clean break – Child maintenance – Singapore properties – Hidden assets – Rental income – Career sacrifice – District Court – Petitioner YSG (YX) v Respondent LYAG – Court found no evidence of hidden assets despite Wife's black hole theory – Wife's unreasonable refusal to rent C Property noted but not sufficient to depart from equal sharing – Compensation for career sacrifice factored into sharing principle – Maintenance for adult child N justified due to national service – Orders for sale of properties, equal division of proceeds, lump sum payments to Wife, and child maintenance made.
Legal issues: Existence of hidden assets (black hole theory) · Unreasonable refusal to rent C Property · Departure from equal sharing principle · Maintenance for adult child (N)
Outcome: Ancillary relief granted; Sale of Singapore properties ordered; Equal division of net assets; Child maintenance ordered; Decree Nisi made absolute.
Cites 4 cases
|
FCMC 15288/2015 [2022] HKFC 114 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO.15288 OF 2015 ________________________ BETWEEN
________________________ Coram: Deputy Judge Peter Barnes in Chambers (Not open to public) Dates of Hearing: 4, 7, 11, 14, 15, 18, 22, 23, 24 and 25 February 2022 Date of written Closing Submissions: 15 April 2022 (R), 22 April 2022 (P) (by mutual exchange on 22 April 2022) Date of oral Replies: 25 April 2022 Date of Judgment: 2 June 2022 ________________________ J U D G M E N T (Ancillary Relief) ________________________ Agreed exchange rates: 1USD = HKD7.78460 1SGD = HKD5.77630 1GBP = HKD10.64670 1AUD = HKD5.61360 1MYR = HKD1.86400 A. Introduction and Background 1.This judgment follows the Trial in February this year of the parties’ claims for ancillary/financial relief. 2.The Petitioner/Wife is from Singapore and is now 50 years of age. The Respondent/Husband, a national of Malaysia, is 49. They met in Singapore when they were working for the same international investment bank. They married in Singapore in November 2000, after about 5 years of dating. They have two children, both sons: N who was born in Jan 2003 and is now 19 years of age, and C, who was born in Sep 2007 and is 14 (“the Children”). N is undertaking national service in Singapore, and C is completing year 10 in an international school in Hong Kong, studying for his IGCSEs. 3.The parties have lived in Hong Kong with the Children since the end of 2007. Before that they were in Tokyo for just under two years, where the Husband had been posted by his then employer. Prior to that they lived in Singapore. They are both Hong Kong permanent residents, and both of them testified that they have no plans to leave, although the Wife said that she would likely want to spend time in whatever country or countries the Children decide to pursue their tertiary studies. 4.The Wife attended university in Singapore and upon graduating worked in the foreign exchange markets for an investment bank, specialising in derivatives. She moved to another investment bank, then returned to her first employer, rising to a senior position with the bank and by 2004, commanding an annual salary plus benefits of more than SG$300,000. 5.She ceased work in September 2004. The Husband was earning more than enough to support the growing family and the Wife says that her decision to stop working and to devote herself full time to caring for the Children and the household was fully supported by him. He has criticised her self-description of having “retired” at this point, but it is not in dispute that she left what was a well-established career in finance to focus on her role as a mother to N and later to C, to supporting her Husband’s career and to looking after the household. 6.When the parties met the Husband was working as an FX trader for the same investment bank, having completed his education in Singapore and London. By the time they married the Husband had found a position with another investment bank involving again FX trading and fund management. 7.In 2006 the Husband obtained a position with a leading international investment firm, and the family moved to Tokyo, where the Husband had been posted by the firm. As noted, from late 2007 the family moved to Hong Kong. Ultimately the Husband rose to a partnership position with this firm and to a leading position in its FX/Fixed Income Trading division. This was a highly lucrative position and the family enjoyed a very comfortable lifestyle and the parties accumulated considerable assets. 8.Since 2014 the Husband has been with a Hong Kong investment management firm. 9.Marital difficulties began in 2011 leading to periods where they were living separately. The parties finally separated permanently in August 2014 and have remained apart since then. Divorce proceedings were initiated by the Husband filing a petition on 28 August 2014 alleging “mild unreasonable behaviour” grounds. The suit was defended by the Wife but was eventually compromised in November 2015 on the basis that the Wife would file a fresh petition on the ground of one year’s separation with the Husband’s consent.[1] The Decree Nisi was pronounced on 8 March 2016. 10.Issues of custody and access concerning the Children were contested over several years, and necessitated the involvement of multiple experts including psychologists, culminating in the Court’s Judgment and Order dated 13 August 2019,[2] by which the parties have joint custody of C with care and control to the Wife and defined access to the Husband. By the same order the Wife has sole custody of N with reasonable access to the Husband (but there is at present no contact between N and his father and there has not been for some years). 11.The Husband has been providing interim financial support to the Wife for her and the Children pending the determination of ancillary relief. On 17 November 2020 the Wife applied by Summons for maintenance pending suit and interim maintenance for the Children on the basis that the amount the Husband was paying had been unreasonably reduced by him and was insufficient to meet her immediate needs and those of the Children.[3] The Husband had offered the Wife a Charman payment of HK$5 million which he said she had unreasonably turned down. Her application was dealt with on paper with the Court delivering judgment on 28 October 2021[4] awarding on an interim basis HK$85,000 per month for MPS and HK$217,000 for interim child maintenance backdated to the date of the Summons. Since N reported for national service, the Husband has ceased payments attributable to him on the basis that N is now an adult, who has completed his studies and is in full-time employment with the Singapore army. B. The Issues 12.The task of the Court is to achieve a fair distribution of the assets and ongoing support of the Children having regard to all the relevant circumstances. In doing so the Court will strive to achieve a clean break if the assets are sufficient to enable this to happen. The issues in this case are straightforward: What is the extent of the matrimonial pool? What are the parties’ other financial resources, including their current earnings and potential earning capacity? What are their needs, assessed appropriately including by reference to the standard of living during the marriage? What are the Children’s needs? Will the parties’ needs and those of the Children be adequately met by the assets and are there assets surplus to needs? If so, how should these be divided, and in particular, should the Court depart from equal sharing? 13.For the purposes of the Trial, the parties supplied the Court with an updated Schedule of Agreed and Non-Agreed Assets with a figure of approximately HK$241.6M net. As the title suggests, the value of some of the assets was not able to be agreed and multiple single joint experts were appointed and provided Reports. Some of the Reports resulted in agreement, others did not and those experts whose valuations could not be agreed gave evidence at the Trial. 14.Pursuant to pre-Trial directions given by the Court, the parties also produced a Scott Schedule of contentious issues. One of the more significant disputes concerns allegations of misconduct levelled by each of the parties against the other which they say has significantly impacted the matrimonial pool of assets available for distribution. 15.The Wife claims that during the marriage the Husband syphoned off millions of dollars in cash to undisclosed locations: her estimate is that this amounts to at least HK$100M. The primary basis for her allegation is a simple formula: her estimate of the Husband’s total earnings, deducting therefrom her calculation of the total family expenditure and then comparing what she says the current net position should be with the net position as disclosed. 16.The Husband for his part says that the Court should take into consideration the Wife’s conduct including her refusal to agree to lease out one or both of the two landed Singapore properties held in joint names during the past 6-8 years leading up to the Trial. He also criticises the Wife’s litigation conduct in using “every trick in the implacably hostile parent’s playbook” to delay the proceedings and to sabotage his access to the younger child, C.[5] He says the Wife (a) unreasonably contested his unreasonable behaviour Petition, resulting in a delay of 15 months and (b) unreasonably contested the children’s arrangements, resulting in a delay in a further 3 ½ years before the Court’s Judgment of August 2019. 17.The Wife disputes this. She says she was quite entitled to defend the Husband’s suit and the grounds of misbehaviour alleged, however “mild” they may have been. Further, she says that the prolongation of the Children’s proceedings was inevitable, having regard to the number of witnesses and the issues in dispute. I note that to the extent that the Wife’s conduct of the Children’s proceedings may have been inappropriate, this has been reflected in the Court’s Order dated 9 April 2020 that she pay a proportion of the Husband’s costs of those proceedings. C. The parties as witnesses 18.Both parties filed detailed a narrative affidavit/affirmation for the purposes of the Trial, which were confirmed during their oral testimony together with the other relevant affidavits/affirmations, and their respective Forms E and Answers to Questionnaires. The Wife 19.The Wife is a very intelligent woman. She presented her case forcefully and with the intention of raising all points of concern for the Court’s determination. During her oral evidence she was, at times, voluble, and her responses to questions developed into a statement of position or argument. This was natural enough. She is anxious to maintain her financial security and that of her two sons and to preserve the Singapore properties acquired during the marriage and which were financed, in part, by her pre-marital savings. She emphasised her limited earning capacity and that she is a cautious, risk-averse investor. 20.Both parties agree that the Court’s award should be on the basis of a clean break, if this is possible. Whether or not this is achievable without the sale of one or both of the Singapore properties is one of the issues in the case. The Wife was adamant in her assertion that the Husband is possessed of far more assets than he has disclosed and that this supports her claim and underpins her request for both Singapore properties to be transferred to her as part of her award. 21.Any clean break will take into account that, as noted, neither the Wife nor the Husband have plans to relocate from Hong Kong. In this respect, it was repeatedly suggested to the Wife that, at some point in the near future, given the divorce, she would return to Singapore to live. She refused to commit to this: her estimate of monthly expenses was on the basis that she would continue to live in Hong Kong, at least for the foreseeable future. 22.The Wife Opening Submissions[6] summarised her proposal thus:
23.She also sought payment of a HK$15M lump sum representing HK$108,500 per child per month, extrapolated over 4-6 years in respect of N and 10 years in respect of C.[7] 24.By the time of her Closing Submissions, this proposal had been modified, to a request that the Court order as follows:
The Husband 25.The Husband gave his evidence in an undemonstrative manner. He is also very intelligent. His responses at times were brief and to the point, but not incomplete. 26.The Husband has moved on – he has re-partnered and he and his fiancée have a child. He is anxious to formalise the relationship, and for this reason the Court was asked to make a pre-Judgment Section 18 declaration enabling the Decree nisi to be made absolute, without delay. The Wife opposed this, saying that there was no rush and the ancillary relief issues should first be dealt with, including those relating to N and C. 27.The Husband’s case can be briefly summarised:
D. The Law 28.The Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) provides the Court with a number of powers to grant financial relief to divorcing parties. They include the making of orders for lump sum or periodical payments for a spouse or child of a marriage (ss 4 and 5) and orders for the transfer or sale of real or personal property (ss 6 and 6A). 29.In considering such applications the Court is required, by Section 7 of the Ordinance, to have regard to the conduct of the parties and “all the circumstances of the case” including
30.Section 7(2) further provides that in considering whether and how to exercise the powers under ss. 5, 6 and 6A in relation to a child of the marriage, the Court must have regard to all the circumstances, including
31.The Court of Final Appeal in LKD v DD (2010) 13 HKCFAR 537 encapsulated the procedural steps the Court must follow in exercising its powers under these provisions to grant ancillary relief and the underlying principles to be followed in cases of this nature. 32.The Court is required to
33.The asset division and provision for payments by way of maintenance, whether spousal support or educational and other support for children is governed by the broad goal of working towards an outcome which is just, particularly having regard to
E. Step 1 – identification of assets and other financial resources E.1 The Assets 34.In addition to the cash balances in the joint or sole bank accounts, the significant assets are
35.Before dealing with the disputed values of the Singapore Properties and the wine collection, I will address the Wife’s theory that the Husband is hiding significant cash or other assets as well as the Husband’s claim for an adjustment due to the Wife’s refusal to accede to the Singapore properties being rented out. E.1.1 The Wife’s “black hole” theory 36.One of the most financially significant disputes is the Wife’s theory that there must be very substantial assets, of at least HK$100 million and likely much more, which have been successfully siphoned away by the Husband during the marriage and hidden somewhere. 37.This theory is primarily based on the Wife’s estimate of the total amount the Husband must have earned up to when they finally separated, less the estimated family’s expenses during the marriage, and comparing that figure with the disclosed assets. Her case is that even when appropriate allowance is made for the disputes over the values of those disclosed assets, there is an unexplained difference between the disclosed assets and the amount of wealth the family should now have according to her assessment. The only logical conclusion, she says, is that the Husband must have surreptitiously squirreled away large amounts of money which he is now hiding from her and the Court. She says that justice and fairness require (a) the Court to find that this has occurred and (b) assign a figure to the missing assets/money and add the amount back into the assets of the Husband before determining the appropriate division. 38.This theory was first presented with the Wife’s Inter-Partes Summons dated 5th July 2021 for specific discovery of various documents (“the Discovery Summons”) relating to the Husband’s compensation from his employers for the years 2001 to 2013. In her (8th) Affidavit in support, she claimed that the Husband had provided insufficient disclosure and that she had therefore been “forced to reconstruct the family’s earnings and expenses”. She continued:
39.By this time the parties had been separated for nearly 7 years and the proceedings, including the Husband’s initial defended Petition, had been on foot for the same period. The Wife had been legally represented for most if not all of that time, as had the Husband. The Wife says that she was concentrating on the disputed Children’s proceedings before this time, however the Court’s children’s Judgment was handed down in August 2019 and from that point on the parties were focussed on financial aspects. 40.The Wife exhibited to her 8th Affidavit (as a single exhibit YSG-21) a bundle of documents including the Husband’s salary and pay statements from 2006 onwards, compensation statements for 2011 and 2012, salary tax assessments for 2013 to 2016, lists of monthly deposits and withdrawals and hundreds of pages of statements of their joint HSBC account.[10] 41.The Wife presented an analysis of the Husband’s earnings over the years, based on these materials, including from the investment bank he was with prior to their marriage and up to his present employer and concluded that during this time the Husband had earned approximately HK$284 million. The Wife then put forward an estimate of the total family expenses for the same period as unlikely to have exceeded HK$37,060,000, and on this basis deduced[11] that the current assets in the Husband’s name should be at least HK$230,000,000. She continued:
42.As for the unexplained withdrawals, she exhibited a document collating the withdrawals from the HSBC account which she said were unexplained:
43.The Husband’s response (his 6th Affirmation) was to label the Wife’s requests for more documents as “more than just a fishing expedition. They are an impermissible attempt to conduct an audit of the whole marriage..”. He said the application was made extremely late in the day, given that the proceedings had been ongoing since 2014 and that no steps had been taken to advance the allegation of material non-disclosure prior to the Summons, including prior to the FDR on 27 April 2021. He added that in his view the theory was “pure wishful thinking”:
44.The Husband commented in his affirmation to the level of his financial disclosure in the case: two Forms E, two Answers to lengthy Questionnaires, 32 lever arch files of documents and that the part of the Wife’s theory that income must have been deliberately diverted/hidden would necessarily have involved his employers, which he described as “highly regulated financial institutions”, in the attempt to defraud the Wife. He added that all his income and other compensation was paid into joint accounts, save for the period 2011 and beyond when he became a partner with the particular investment firm, requiring him to open a private wealth management account, and that statements for that account had been disclosed with the first Form E. 45.As for the Wife’s estimate of the family expenditure, the Husband described this as “an egregious misrepresentation” and pointed to a report obtained by him from a firm of forensic accountants which had analysed the parties’ accounts for the four year period 2015 – 2018 in which the average annual expenditure was HK$16.296 million[12] and that “it is wholly implausible even with two households and the inordinate legal fees incurred that our annual spending during 2008-2014 was less than a third of what it was for the period of 2015-2018”.[13] 46.The Wife’s reply Affidavit (her 9th) disputed the Husband’s contentions and maintained that there was nothing oppressive in her discovery request, nor illogical about her theory of missing millions. Neither, she said, was her request in any way delayed, as the primary focus of the parties for the period from the commencement of litigation through to late 2019 was on resolving issues relating to the Children. 47.The Discovery Summons was eventually resolved by the Husband agreeing to a limited further disclosure of compensation summaries and other documents verifying his income for the period 2007 to 2013. The consent order, dated 20 October 2021, records in its Recital the parties’ agreement that
48.The Wife devotes a section of her (10th) narrative Affidavit for the Trial to her black hole theory and at §§170-177 she concentrates on an examination of a number of bank statements and credit card statements supporting her claim that the Husband had syphoned off approximately HK$154.1 million by a series of withdrawals, and specifically that
49.At the PTR on 13 December 2021, the Wife’s counsel confirmed that these allegations in the 10th Affidavit were additional to those raised by her in her 8th Affidavit in support of the Summons. Her counsel then sought an order that the Wife be allowed to hire and call as a witness a forensic accountant to aid her analysis of allegedly missing millions. This was refused. She did not appeal that refusal nor formalise her application by Summons and supporting affidavit. Such an application, if successful, would almost certainly have resulted in the Trial being adjourned. 50.During the Trial, the Wife sought to adduce a significant number of further documents she said were relevant to her black hole theory and that she had only just discovered a few days prior to the Trial. This was refused: see Ruling dated 18 February 2022. 51.In preparing for her oral evidence on this issue, the Wife had compiled various charts (“the Charts”) based on and cross-referenced to the admitted disclosure and updated with the newly discovered documents. On Day 6 of the Trial she sought to adduce them into evidence. Given the Court’s Ruling refusing to allow the recently discovered documents, the Wife was allowed the opportunity to modify the Charts to remove any references to these documents. 52.On Day 7 of the Trial (Tuesday 22 February 2022), the Wife produced the modified Charts and these were marked provisionally PP11-A to PP11-E. They were later marked P11-A to P11-E. They are detailed documents and the Wife said they had been prepared with the assistance of an accountant over some time, from about the time of the MPS/IM application. 53.These charts refer to refined total of the “unaccounted-for” assets as HK$147,244,943. Her Closing Submissions further refined this to approximately HK$104,000,000. 54.For the following reasons I am not satisfied there is any missing money or hidden assets. 55.First, it should be noted that an allegation of material non-disclosure for the purposes of placing assets beyond the reach of the claiming party is a serious one. The Husband referred in his Closing Submissions to a recent decision of Mostyn J[14] where the learned Judge commented that deliberate non-disclosure is a subset of fraud and that as such, “it is at the very least implicit that there is a burden on the claimant not only to prove distinctly the existence of a fraud but further that it was materially causative of a seriously wrong order being made.”[15] 56.In this case it is at the very least implicit in the Wife’s case that the Husband has been guilty of serious non-disclosure of substantial asset holdings and that this hiding/dispersal of assets has been continuing for a long time. On the first day of the Wife’s oral evidence, the Court heard argument on her application to adduce new evidence which she said supported her black hole theory (and which resulted in the Ruling dated 18 February 2022). During this exchange the Court clarified with counsel for the Wife as to the relevance of the additional documents, and whether it was really her case that the Husband had been engaged in cheating the Wife during the entire period of their marriage. He confirmed that it was. 57.Adverse inferences may be drawn where a party leaves gaps in the information which should properly be placed before the Court, and the Court will normally draw the inference less favourable to the non-disclosing party. But inferences “should only be drawn if there is some proper basis to do so.”: H v W & Ors [2013] HKCFI 2296; HCMC 6/2008 (10 September 2013) per Hon Au-Yeung J, at §§47-48. There, the CFI referred to the decision of Mostyn J in NG v SG [2012] 1 FLR 1211 which offered guidance on the circumstances where and the process by which adverse inferences arising from non-disclosure may be drawn. Madam Justice Au-Yeung noted Mostyn J’s emphasis on the requirement that “there must be a sound evidential basis for reaching a conclusion as to the scale of undisclosed assets” and that “[t]he court should not be led into a knee-jerk reaction that says simply because evasiveness and opacity is demonstrated there is some vast sum salted away.”[16] 58.The Wife has failed to convince me that the Husband has been guilty of such non-disclosure. 59.Secondly, I do not accept that the Wife has acted with sufficient timeliness in advancing her claim. Her theory, although first explicitly presented in mid-2021 with her Specific Discovery application, was first hinted at in her 2015 Form E in paragraph 5.2 of the Form dealing with “conduct”
60.The Wife says that she was primarily focussed on the Children’s proceedings, but this does not explain the late presentation of her claim that for the whole period of the marriage the Husband has been syphoning off vast sums of money into hidden destinations and that he should now been called to account for this gross misconduct. Financial disclosure was given during the dispute over the Children, for example, by a process of Questionnaires and Answers on the first round of Form E Financial Statements filed in 2015: the Wife’s first Questionnaire was presented in May 2017.[18] 61.After the August 2019 Judgment the parties refocussed on financial matters, and filed updated Forms E (in September 2019 and February 2020 respectively[19]) and there was another round of Questionnaires and Answers (H’s Answers were provided in September 2020.[20]) The Wife’s second Questionnaire sought bank statements for 2011 to 2014 and the Husband refused to provide these on the ground they were irrelevant, but this was not pressed by the Wife either by seeking leave to adduce a further Questionnaire or by a Summons for specific discovery (until much later). The FDR was fixed for 27 April 2021 by a consent order made on 21 October 2020.[21] At the (unsuccessful) FDR, directions were given for the agreement of valuation of the landed properties and in default the appointment of an SJE.[22] No directions were sought by the Wife for the appointment of a forensic accountant to conduct an audit of the family’s finances during their marriage. Nor were any such directions sought at the Case Management Hearing on 28 May 2021 when Trial dates and the date for the PTR were fixed and directions given for the appointment of one or more SJEs in default of agreement of values for the Wife’s jewellery collection and the Husband’s watch, wine and art collections.[23] I have already referred to the fact that at the PTR on 13 December 2021 the Wife applied through her counsel for the appointment of a forensic accountant but that this was made informally. It should also be noted that even at this late stage, the Court granted leave to the parties to adduce evidence from a single joint expert in relation to the Duxbury Calculation of the Wife’s needs.[24] To complete the picture, a further (consent) order was made on 4 January 2022 giving additional directions for the trial including provision for the parties to agree upon the additional materials to be used in cross examination of the Single Joint Experts to be called at the Trial.[25] No attempt was made at this time by the Wife to introduce evidence in the form of detailed charts explaining the alleged dissipation of assets or to call any person who may have assisted her in compiling them. 62.Thirdly, given the fact that the Wife asserts that this “syphoning off” began prior to 2011, when the first separation took place, and even going back to the start of their married life, it cannot be overlooked that on the Wife’s evidence (her 6th Affidavit in support of her MPS Summons[26]) during the years they were married through to separation the parties held joint bank accounts into which the Husband’s remuneration from his various jobs was paid and from which the family expenses were met. This is consistent with the Wife’s comment in her first Form E that it was only after the first “walk-out” in November 2011 that the Husband became mysterious with his finances.[27] Nothing in this 6th Affidavit for the MPS application is to the effect that the Husband had been syphoning-off millions of dollars each year from these accounts or had diverted his salary into other accounts or investments or in the acquisition of assets as yet undisclosed. 63.Fourthly, although the Wife forecast in her first Form E that the Husband had improperly diverted matrimonial assets whether cash or otherwise into “other financial instruments” she did not at any time later pursue this by seeking a preservation order or reversal of transaction order pending the determination of the question of ancillary relief. This underlines that she was not confident of being able to point a transaction or series of transactions by which the Husband was squirreling away or diverting his income into other accounts for the purpose of putting them beyond the reach of the Wife. 64.Fifthly, to the extent the black hole theory relied on the hiding of bonuses from the Husband’s employer(s), the Husband argued that that this may have involved the banks/firms in deliberate deceit, making such a theory inherently unlikely. Even if that is not a logical and necessary deduction, the direction/destination of these payments including bonuses could have been tested by the Wife seeking third party disclosure or asking the Court to issue subpoenas if she considered it necessary for such evidence to be obtained. She was asked about this in cross-examination, in respect of seeking information directly from the Husband’s current and immediate past employers. Her explanation for not doing so was that “I am not so acrimonious or greedy to dig up every single cent. Neither am I going to [D]. I know the guy.”[28] This was unconvincing testimony. I find that it is more likely that the Wife did not want to pursue this line of enquiry because she did not want to obtain confirmation that the Husband’s assertions as to the level of compensation he had obtained from his former and current employment were accurate and there are no hidden bonuses. 65.Sixthly, the Charts themselves were seriously deficient. As conceded by the Wife, there were mistakes in her calculations including in respect of certain unsold equity bonus shares, wiping off HK$9.3M of her estimate of the shortfall.[29] 66.The Husband’s main complaint was that the Wife’s estimate of the expenses was wildly off the mark: in the witness box he described it as “blindingly off.” Admittedly, the Wife conceded she had not accounted properly for tax liabilities on income, in respect of the Husband’s earnings in Singapore and Hong Kong, although she maintained the accuracy of her tax allowance for his employment in Japan. On her analysis, her miscalculation resulted in a further downward adjustment of HK$35.4M in her estimate of the size of the black hole.[30] 67.This was not accepted at all by the Husband as an accurate figure. In the Husband’s Closing Submissions, it was asserted that the Wife’s figure for expenses understated them by some HK$122M including the tax liabilities.[31] 68.It is simply not possible for the Court, unaided as it is by a forensic accounting analysis, to be confident as to the extent of the expenditure of the parties over the years. The Court has in mind that it is in the interests of the Wife to portray a modest expenditure and, for the Husband, to do the opposite. This is precisely why independent expert evidence is required. The burden rests on the Wife to make her case and to do so with sufficient precision and with the assistance of a professional auditor such as a forensic accountant, and one supplied with all relevant materials. She has not done so. The resulting imprecision is manifested in the variations of the size of the alleged black hole over the period of some 6-8 months from when it was first presented until the Trial. 69.Seventhly, to the extent the Wife relied on her alternative theory, namely the allegation of unexplained withdrawals, there are also significant problems. First, the Wife had included withdrawals but failed to include amounts credited or wired into the same account by the Husband.[32] 70.This alternative theory was the focus of the relevant part of the Wife’s narrative (10th) affidavit for the Trial. I am not satisfied that it holds water. If anything, it is even less convincing than the “there must be more than this” theory on which she primarily relies. I accept the Husband’s explanation of these withdrawals in his evidence to the Court and in his Closing Submissions[33], and that there is no basis to conclude that he has improperly and permanently diverted cash assets by a systematic series of withdrawals of large sums of money and that the Court should add-back such amounts into the matrimonial pot or adjust the distribution of the net assets to take into account this allegedly improper conduct. 71.I find that the Wife’s black hole theory is not made out. There is no proper evidential basis on which the Court can conclude that the Husband is hiding any assets whether in the form of cash or valuable property/investments. E.1.2 Non-rental of the Singapore properties 72.I will refer to the two Singapore properties as the “C Property” and the “K Property”. 73.Government approval is required for renting out the K Property as it is a house on land. There is no such restriction on renting the C Property. 74.The parties had obtained approval for rental of the K Property from the relevant body in Singapore, and this permitted the K Property to be rented through to 13 May 2016. Any rental beyond that time was subject to an appeal process: see email from Land Dealings (Approval) Unit of the Singapore Land Authority to the Husband dated 9 April 2015.[34] This email was in response to enquiries from the Husband on the possibility of obtaining an extension to the existing permission.[35] 75.As both properties were in joint names (and the Wife had custody of the keys to both) any further renting was a matter to be agreed by both parties. The Husband’s written evidence[36] was that the Wife rebuffed all his proposals for the properties to be rented out, and that this was unreasonable and has resulted in significant loss of rental income which might otherwise have defrayed the expenses of the parties and contributed to the remaining mortgage on the K Property. 76.The sequence of requests and responses is this:
77.The Husband says that there was no good reason why the properties could not have been rented out, and the Wife closed off an important source of revenue which, inter alia, could have contributed to the repayment of the mortgage on the K Property. His Opening and Closing Submissions placed the loss at some HK$9.317M “and counting”. 78.The Wife’s Closing Submissions[42] argued that:
79.By all accounts, the C Property has been completely unused by either of the parties in recent years and on the Wife’s case N has been staying with his paternal family in Singapore during his present national service. There is no evidence N has used the property at all, and further, he only commenced national service last year. There is no rational reason why the C Property could not have been rented for at least some of the period since the proceedings commenced in 2014. 80.Even at the reduced rental of say SG$4,000 per month, I consider that it would have been reasonable and sensible for the Wife to have agreed that it be leased pending the conclusion of these proceedings at least to meet some of the expenses of both parties. The evidence suggests that there were potential tenants in 2018 and 2020, and if the property had been advertised there may well have been more. 81.Even though the C Property had been empty for a year or two after the previous lease in 2013 and before the Husband’s first suggestion that it be re-rented, it was not in such a state as to be uninhabitable (the Wife’s proposal that N should be able to use it now, supports that even now it is in a habitable condition). Allowing for the possibility of gaps between leases and the possibility it might not rent even at $4,000/month, I find that it is likely that the failure to rent the C Property has resulted in a loss of at least SG$150,000. Did the Wife’s unreasonable refusal amount to misconduct[45] such that the loss of rental should be reflected in the final distribution?[46] I think that it did. There was no logic to her position which was driven by emotion rather than practicality. 82.K Property is more problematic. There is no evidence of a potential tenant/lessee for the period of a year from May 2015 to May 2016 when the SLA permission expired. Tenants for large properties such as this might prefer longer tenancies, and if only for a year, then the option of renewal. It is not certain that the appeal or application for an extension of permission to lease the property would have been granted. I have not ignored the Wife’s evidence that if the K Property is transferred to her as part of an award, she will want to rent it out, which seems to contradict her insistence that the permission to lease it until 2016 was the final extension from which the SLA would not waver. Nonetheless, as time passed with the property being empty, it has deteriorated to the point where it is not leasable without at least some remedial works being performed (paint, floorboards/tiles, garden, pool etc) if not quite the extensive renovation the Wife intends to undertake if it is transferred to her. 83.It is part of the Husband’s case that the K Property must be sold to achieve the clean break sought by both parties. The same 2015 SLA email to the Husband confirming the limited permission to rent the K Property[47] reminded the Husband that when the property was purchased, it was the condition they could not sell the K Property until five years after obtaining and retaining vacant possession of it. The Husband’s argument that the Wife unreasonably refused to lease out the K Property in the last five years is in a sense inconsistent with his case that there should be an order for its sale, as such an order could not be complied with if the property had been leased during this period. 84.I do not agree with the Husband that the Court should in these circumstances find there is a loss due to the Wife’s refusal to allow K Property to be rented out. E.1.3 Singapore properties K Property 85.The K Property is a two-storey house of some 4,585 square feet internal area (including basement) with car porch and terrace situated on approximately 11,800 square foot of land comprising a garden and swimming pool. It is situated in a Landed Housing Area of Singapore. Although not itself a “Good Class Bungalow”[48] it is in a District which contains such properties. There is only a limited supply of such properties in Singapore. 86.The parties purchased K Property in March 2005 for approximately SG$4.8 million, with a down-payment of approximately SG$970,000 paid by the Wife. 87.It is in joint names. Again, the Wife asserts that the intention and understanding was that it was purchased for the benefit of the Children. This is denied by the Husband. 88.It was apparent through the Wife’s presentation of her case that one of her main aims is to preserve the K Property in the family and for that reason the Husband’s equal share should be transferred to her. She has advanced multiple arguments to support this including her initial financial contribution to the property from her pension/savings, without which she says its acquisition would not have been possible. She says that the Husband has always been aware of her aspiration of living in a freehold property rather than renting, owning property in a colonial style in Singapore, and passing it down through her family.[49] 89.After the purchase, the mortgage on the K Property was partially financed through renting it out. In recent years this has not been happening. The Husband has been meeting the mortgage payments since the last tenant moved out. C Property 90.The C Property was purchased for SG$1.43 million, or about HK$8.312 million, in 2000. This is an apartment of some 1,900 square feet with a 300 square foot patio. The Wife paid the 20% down-payment of SG$286,000 (= HK$1.65 million) out of her savings and contributed a further SG$281,000 to the mortgage payments, out of her Singapore pension fund, CPF. The Husband also contributed SG$80,000 cash and a further SG$72,000 from his CPF.[50] The property is now mortgage free, the mortgage payments having been met by a combination of rental (2006-2013) and by the Husband. The property was renovated after purchase and the parties lived in it until they relocated in 2006 to Tokyo. If C Property is sold the Wife will be required to return SG$435,000 to the CPF.[51] The Husband will also have to return an amount to the CPF, on his estimate SG$584,402.[52] 91.The Wife says that she and the Husband had agreed that, having relocated away from Singapore, the C Property would not be sold but be kept for the Children, and that therefore it should not be included in the computation of the matrimonial assets. She refers to this being accepted by the Husband during some counselling sessions held with two of his best friends when she and the Husband were going through marital difficulties. She does not go so far as to say that the property is held on trust in a proprietary or equitable sense, just that this understanding should be given weight when consideration is given as to how the properties ought to be distributed.[53] She resists any order that the property should be sold. 92.The Husband says this alleged intention/understanding to keep the C Property for the Children is simply untrue, and he points to the fact that as a non-Singapore citizen, in order to become a co-owner of the property he was required to demonstrate to the Singapore government that he was not only a Singapore permanent resident but that he was making a significant economic contribution to Singapore. He says the fact that his application was rejected several times until it was finally accepted shows his intent to become a legal and beneficial co-owner of the C Property, and that if it was always the parties’ joint intention that it would simply be held for the Children, it would have been much simpler for it to be held by the Wife in her sole name. 93.The Court appointed SJE, Ms. Sherri Fong from Knight Frank Pte Ltd to supply an independent value of the properties. Ms. Fong is a Senior Director of Advisory and Valuation at Knight Frank’s Singapore office. Ms. Fong prepared reports on the two properties[54], and valued them on 2 December 2021 (the date they were inspected), on an “as is” basis with vacant possession. Ms. Fong estimated the market value of the K Property at SG$20 million and the C Property at SG$3,550,000.[55] 94.The Husband accepts both valuations. If anything, his position is that the properties are worth more, particularly the larger K Property, given the current robust state of the property market in Singapore. The Wife’s position is both valuations are too high, and she refers, inter alia, to an email from HSBC Singapore of October 2020 giving indicative values of K Property at SG$15m and C Property at SG$3.28m.[56] 95.During her evidence (by VCF) Ms. Fong was referred to the recent cooling measures introduced by the Singapore Government.[57] It was put to her that these measures had the intention of reducing the price of properties; she disagreed, it was the intention of them to “stabilise a market” in which prices had been increasing considerably. She agreed that these measures, which included an “ABSD” or additional buyers stamp duty imposed on certain classes of potential buyers who had contributed to the “heat” of the market, had achieved the desired effect of discouraging foreign buyers from the market for the time being. 96.It was suggested to Ms. Fong by the Wife’s counsel that the net effect of these measures was a reduction in value of the C Property and the K Property of about 10% for each of them. For the K Property, Ms. Fong disagreed: she said this kind of property was “very limited and very scarce” and for 20 years there had been limited increase in stock for landed housing. She agreed that the C Property might have been affected somewhat, but that demand overall still outstripped supply. 97.The Wife focussed most of her cross-examination of Ms. Fong on the K Property. For the purposes of this, the Wife had obtained recent external and internal photographs of the house and Ms. Fong was taken to these. The photographs indicate water damage including damage to flooring and mould on the walls. Ms. Fong agreed that the condition of the property was poor: she explained the word “fair”[58] was accepted as ‘valuer-speak’ for “no good” and that if the property had been in reasonable condition she would have described it as “average”. 98.For the K Property, Ms. Fong adopted the Direct Comparison Method, by looking at sales of similar detached houses, with appropriate adjustments for differences in location, land area, age etc.[59] 99.Ms. Fong was closely questioned by the Wife’s counsel on her methodology and her choice of comparable properties. It was suggested that two of the comparable properties she had selected were in a better area including their proximity to one of the top colleges in Singapore. She agreed that this was an element in the assessment of value, but that the K Property was also close to very good schools. 100.Ms. Fong was then taken by the Wife’s counsel to an article on the “Top 5 Districts for Landed Housing in Singapore”[60] (part of the agreed additional cross-examination materials, and which had been sent to Ms. Fong prior to her being called) and asked to agree that the District in which the property is situated was less salubrious than the District with the chosen comparable properties and that historically the prices in the former were lower than the latter. She disagreed and indeed her position was the reverse was the case. 101.The HSBC indicative value for the K Property was put to her and it was suggested that a more reasonable value for the K Property should be SG$15M.[61] 102.Ms. Fong disagreed. She was not moved from her conclusion on the value she had attributed to K Property and confirmed that she had made all necessary adjustments, including as to location, land area and condition when arriving at the market value. 103.The Husband’s counsel similarly suggested a different value for the K Property, of SG$25M. Again, Ms. Fong disagreed. At this point she noted that given its condition, the K Property would need “major renovation” even if there were no structural defects (on which she was not able to comment as explicitly noted in her report[62]). 104.I have considered the detailed criticism of Ms. Fong in the Wife’s Closing Submissions which again places emphasis on the K Property, given its considerably greater value and significance compared with the C Property.[63] These submissions reiterate all the matters put to Ms. Fong in cross-examination including the inappropriateness of comparing one District with (on the Wife’s case) properties in a better District, the impact of the Singapore Government’s cooling measures and its poor condition. 105.At §79 of the Closing Submissions the Wife submits that “Given the ‘fair’ condition only, the ‘assumption’ that K is in sound order and free from structural faults, rot infestation and other defects is not wholly reliable. Further discount should reflect likelihood that in fact over the past 20 years it has fallen in some disrepair.” (Emphasis in the original) 106.At no point during the cross-examination of Ms. Fong was a positive case put to her that the K Property has structural faults. She had acknowledged the “fair” meaning “no good” condition of the property, the water damage and the mould and generally that it was in a poor state of repair. She did not say that there were any significant structural faults. She was in no position to assume that there were, absent information to suggest the property was so impaired. 107.If it was part of the Wife’s case that the K Property has significant structural issues, then she should have adduced appropriate evidence e.g. from a structural engineer. In any event, it may not have mattered, as Ms. Fong confirmed that she had also taken into account in arriving at her appraised value the possibility a potential buyer may wish to demolish and rebuild. 108.I accept the values placed on the two Singapore properties by Ms. Fong. E.1.4 The Wine 109.The Husband has a substantial collection of fine wines, located in three specialist storage facilities in Hong Kong, the UK and Geneva. 110.The parties were unable to agree on the value of the collection, and an SJE was therefore appointed, pursuant to the Order at the CMC on 28 May 2021. 111.Mr. Wainwright has his own business, Wainwright Advisors. He has considerable experience in appraising fine wines, having worked in the industry for some 25 years, including a period with the wine division of Christies and with Zachys. 112.In Mr. Wainwright’s letter/report dated 10 December 2021[64] he makes the following points (inter alia):
113.This letter attached a list of some 4,000 “lots” grouped into two charts, the first being approximately 3,400 lots which he valued at HK$10,777,270 (“Chart A”) and the second, 623 lots valued at HK$2,538,900 (“Chart B”). The Chart B lots are all from either 2003 or 2007 (the birth years of the Children). 114.Mr. Wainwright acknowledged in his oral evidence the somewhat imprecise nature of what he is tasked to do, that values of fine wine are “as variable as the stock market” and that indeed, the values sometimes correlate to the stock market. He spoke of the various influencing factors: the scarcity of the wine, its vintage, the most recent auction price as a “good market indicator”. He acknowledged the fact that the market for top end wines was in an upward trend, although for mid-range wines it was somewhat static, if not reducing in price. He referred to other factors which might justify premia to be attached to certain lots – larger bottle size, for instance, and that the lot was still in its original wooden or cardboard case. 115.A significant number of the lots in the Husband’s collection are White Burgundy, and this variety has been affected by pre-mox in recent years. Mr. Wainwright confirmed that this might well significantly impact on the value of the lots and some bottles might not be drinkable. He added, though, that a maximum of 5% of the lots might be so tainted. 116.Conversely, the Red Burgundies are very sought after, and Mr. Wainwright was of the view that the relevant lots, since his report of only two most prior to the Trial, might have significantly risen in price, between 10% to 15%, and a few of the lots by even more than this. 117.Mr. Wainwright’s view was that, taking into account the potential increase in value of some of the wines, the overall collection for those listed in Chart A may have increased to closer to HK$12 million and those in Chart B to a total of $3 million. 118.Mr Wainwright gave impressive and convincing evidence. 119.I accept the Wife’s submissions that, overall, the value of the wine collection has increased since Mr. Wainwright’s Report. I do not accept the argument that the effect of Mr. Wainwright’s evidence was that none of the individual lots would have decreased in value. His oral evidence and revised estimate explicitly noted that some of the lots may not gained in price and some may have decreased. Further, at no point did Mr. Wainwright give evidence that the entire collection “had risen by 20%”, or that, overall, I should conclude that is worth, as the Wife now submits, in the order of HK$16,500,000.[65] 120.I conclude that the present value of the wine collection is HK$15,000,000. 121.I accept the Husband’s evidence that some of the wine is subject to an agreement precluding it from being sold on the open market without first offering it to the vendors from which it was obtained.[66] I also note that the Chart B wines were specifically acquired with the intention of passing them on to N and C when they came of age, and the Husband’s submissions that the Chart B wines be divided in specie between the parties and taken off the asset schedule. This was not agreed to by the Wife. She said she had no interest in obtaining any of the wine as part of her award, even though it is, at present at least, an appreciating asset. E.1.5 Summary of Asset Pool 122.The values of the properties in Malaysia and the land in Australia have been agreed. 123.The Malay property in Selangor is jointly owned by the Husband and his brother. It is a commercial property and is rented out, with the income contributing to the mortgage repayments. The Husband cannot dispose of it without his brother’s agreement, and the Husband views it as part of his retirement fund. 124.The Australian property interest is a 12.5% interest in some 864 acres of farmland in Victoria, held through a company. I accept that it is illiquid in that it is unlikely to be able to be sold with ease to a prospective investor. I decline to reduce the value of the Australian investment by 30% but will take its illiquidity into account in the overall award. 125.Bearing in mind the above findings, and the agreed values/liabilities, the asset position can be summarised as follows (I acknowledge that the bank balances may have fluctuated, and the amounts are to some extent outdated):
In summary
E.1.6 Earnings and earning capacity The Wife 126.The Court accepts that the Wife has a relatively limited earning capacity, given the length of time since her last employment in 2004. Whatever label she attaches to her cessation of work in 2004 is irrelevant to the question of her present capacity to earn. She is intelligent and well educated and has high-level experience, albeit somewhat dated, in the financial sector. She is multilingual and has the right to work in Hong Kong and in Singapore. She has many years ahead of her before the “traditional” retirement age of 65, and her role as full-time mother will be at the very least winding down in a few years’ time when C attains his majority and attends national service in Singapore. 127.The Husband’s position is that the Wife has a significant earning capacity she is electing not to exercise. He said in his narrative affirmation that he put the Wife “to strict proof” of the job applications she made in the past two years (i.e. 2019 to 2021).[68] It was made clear during the Wife’s oral evidence that she had made no such applications. 128.The Husband’s contention was that now N is in national service, and C is a teenager, the Wife no longer needs to be available for them and she could look to “returnship” opportunities for experienced and able people in the finance industry who have taken a career break to have children and who are looking to return to the industry.[69] He produced, with his narrative affirmation and later by letter from his solicitors, some examples of such opportunities. 129.I have considered these. They involve retraining over a period of 3 months or so, for potential employees with appropriate skill sets who have taken a break from employment for 2 years or more. CRB’s letter suggested that these opportunities could pay approximately US$8,000 – US$12,000 per month and potentially more with bonuses. The aim of the bank/institution at the end of such re-training would be the offer of a permanent position. Other suggestions with CRB’s letter were positions as “investment counsellor” with a bank in Hong Kong, offering a base salary of HK$1.2 million per annum. 130.The Wife said in cross-examination that she had no intention of applying for jobs, and that she was focussed on looking after C. On the “returnship” offers, she stressed her age, and asked rhetorically “would I, as a 50-year-old, have a chance?” Her position through to 2004 was on sales, reliant on a client network, and awareness and up-to-date knowledge of the markets. She conceded though, that “it might be something I will look to in the future.” The Wife’s Closing Submissions criticised these suggestions as short term “internships”, not realistic or suitable long-term employment prospects. Further, that the Wife would be “unlikely to be a competitive candidate for their related full-time positions” and that it “was painfully clear in examination-in-chief that W did not have the relevant work experience or qualifications to even apply for these positions.”[70] 131.Whether or not the Wife could have, say 10 years ago, re-entered the financial sector with or without the assistance of such retraining, it is going to be more difficult for her to get back into the industry now. She is likely to find it difficult to compete with younger candidates and those who have perhaps decided to return to work after a much smaller career gap of say 2-4 years, as opposed to some 17-18 years. I have not ignored the Husband’s submissions that she had the opportunity to return to remunerative employment earlier, particularly since separation, but even if she had done so (in say 2014, 2015 or 2016) this would have been challenging for her given the decade of not working. 132.I also accept that the Wife has been very involved in the Children’s schooling, and that this may have particularly been so in the past two years during the Covid-19 pandemic when for periods schools have been conducting classes remotely. 133.The Wife has the potential to earn a reasonable salary in the financial sector, but this will require some retraining and updating. She seems to have very little motivation towards that direction, and indeed baulked at the suggestion she should do so. 134.I do not accept the Husband’s argument that I should conclude that the Wife has an earning capacity of not less than HK$1.2 million per annum. My view is that if she was to return to work she could not reasonably expect to command more than a third of that sum, at least initially. I note the Husband’s current earnings are approximately that amount i.e. HK$400,000 per annum, albeit that is his base salary. The Husband 135.The Husband has been in his present position as Business Development Director and Senior Portfolio Manager with D Co since early 2014. He says he was eased out of his previous position as partner of the international bank.[71] His initial salary with D Co was US$200,000 pa[72] but to due to trading losses in 2016, 2017 and 2018[73] he had to take a pay cut to US$50,000 pa from 1 July 2019.[74] This is his present salary.[75] 136.His employment terms entitle him to a share of the net profits and a performance bonus in accordance with formulae set out in a schedule to the contract. 137.His total income is based on 10% of the net profit, i.e. gross profit less operating costs, which includes his salary.[76] Any losses are accumulated year-on-year and carried forward to the following year, at the beginning of which he is informed of a “High Water Mark Shortfall” i.e. the amount he must make before he is entitled to anything in addition to his base salary.[77] 138.In his narrative affirmation, the Husband explained that in addition to taking a pay cut, he was required to buy back some of his trading losses at a negotiated discount, and these buy-backs took place in 2019 and 2020.[78] He has not earned anything in addition to his base salary and he spoke of the potential difficulties he may have in retaining his position unless things improve. 139.The tax assessments for the financial years 2014/2015 onwards show a sharp decline in the Husband’s income.[79] 140.The Wife submitted the Court should find the Husband’s capacity far exceeds his present salary of ~HK$33,000 per month. She did not accept his poor performance in recent years given the health of the stock market as indicated by the Dow Jones and Nasdaq indices (among others). It was her case that there is no reason for the Husband to remain at D Co and could earn far more if he was to join a “large corporation”.[80] She confirmed this view in the witness box, and that the image portrayed by the Husband was wrong. 141.In cross-examination, the Husband accepted the suggestion that despite what he is earning now, this could improve to a point where he could expect to make HK$1 million per annum, and indeed that the reason he invested in the buy backs was his hope and expectation of earning more, and that HK$3 million per year “would be a good result” although he would not concede that was his present earning capacity. He accepted that the markets had been buoyant but since mid-2021 have been poor. 142.It is the Husband’s case that to the extent that he could be earning more, this will be short-lived as this is a “young man’s industry”.[81] 143.I reject the Wife’s contention, implicit in her evidence and submissions, that the Husband could and should be earning far more than he is at present. There are, of course, prospects that his earnings will increase. He has twice invested substantial sums by way of buy backs to look forward to better times when, under his current terms of employment, he will be entitled to receive performance bonuses or profit shares without them being blocked or reduced by clawback. 144.It is also clear that the Husband has a significantly greater earning capacity compared with the Wife’s, and that will continue to be the case for the foreseeable future. This is a significant factor in this case. Other 145.The Husband’s fiancée is in a secure position which pays well. She is contributing to the household expenses, and this I have taken into account. 146.The Husband argued, in my view unsuccessfully, that the Wife can expect to receive an inheritance from her late mother’s estate and, when the father passes, from his estate. Am not convinced that there is any likely prospect, for the reasons contended for by the Wife in her evidence and in her Submissions. This may seem summarily dismissive of the Husband’s contentions. It is not. I have considere all of the points made by both parties, and their evidence on the matter.[82] E.2 Needs The Wife 147.As already noted, the Wife has argued this as a needs case. She confirmed her expenses were those listed in her updated Form E but set out her anticipated expenses in a new table in her narrative affidavit (with some abbreviation of the commentary/explanations):
148.The Wife said that she is willing to adjust her living standards “to accommodate the realities of our divorce and its necessary impact on our finances” and that although this list was commensurate with the standard of living during the marriage, she was willing to adjust her needs to $350,000 per month.[83] Housing 149.The Husband’s repeated submission, including on the MPS/IM application, was that the Wife has been “over-housed”. Specific potential alternative rental properties of a similar cost to his ($80,000 per month) were suggested by him. 150.The Wife produced the current rental agreement on her flat.[84] It was renewed on 30 June 2020 for a period of 2 years from 1 October 2020 to 30 September 2022 at $160,000 per month.[85] The Wife accepted in her evidence that she could move to less expensive accommodation at $120,000 per month, and that the figure of $133,000 took into account costs of renewal (deposit etc). As she is in the second year of the lease, she is able to give two months’ notice to quit according to the terms of the tenancy agreement. 151.The current flat is a six-bedroom flat of some 4,300 sf net size. It is located in Central and is one of the more salubrious of apartment blocks in this area of Hong Kong. 152.I accept that this is excessive and beyond the Wife’s needs generously assessed. For the purposes of assessing needs I will allow $110,000 per month for this item inclusive of management fees. Other 153.Shortly prior to the Trial the Wife filed an Answer to the Husband’s Notice to Admit Facts in which she Wife accepted that her average monthly spend had been HK$58,105 but that this was “for the family’s bare and minimal essentials pending the determination of the AR proceedings”, taking into account the Covid-19 circumstances and that the Husband had not being complying with the MPS/IM judgment/order and had cut his payments to $240,000/m. 154.In Closing[86], the Husband advanced the following submissions on the Wife’s revised schedule of expenses:
155.I approach the calculation of the Wife’s expenses by grouping them into general, personal and child-related. 156.I accept the following as reasonable:
157.Total monthly General and Personal expenses: HK$233,150. I will attribute $60,000 of the General expenses to the Children. 158.As for cars, I accept that it is reasonable for the Wife to purchase a family vehicle such as an Alphard or equivalent. This will likely cost in the region of HK$1 million including stamp duty. It is also reasonable for her to look to having to replace this say every 8 years with a replacement price including trade-in of say $700,000. That equates to an additional $7,300 per month in the budget. 159.I also accept that the Wife will want to purchase her own car, possibly a first- or second-hand sports car and that this is likely to cost $2,000,000 - $3,000,000. Naturally, the more expensive the vehicle the greater the maintenance and insurance expense. 160.She is likely also to want to join a club in Hong Kong and this will carry additional and significant costs. Her Closing Submissions asked that the membership of the H Club be transferred to her at HK$nil consideration. 161.These additional costs will broadly arrive at a figure of $200,000 per month for the purposes of the Duxbury calculation. Children’s expenses 162.Some time was spent on the topic of who will be directly responsible for the procedure of paying C’s school fees. This was, in my view, unnecessary. The Husband wants to pay the fees directly. That is sensible. The Wife’s stated position in her Summons for maintenance pending suit/interim child maintenance was that the status quo i.e. that she pays the fees should be kept “until after the conclusion of the financial proceedings.”[87] The Husband will be paying these fees directly, with effect from the start of the 2022-23 school year. Until then the Husband will continue to reimburse the Wife for C’s school fees (if any are outstanding or yet to be billed). 163.I will allow the following additional expenses for the Children:
164.I will round up the specific child-related expenses to $40,000/m per child and the child-attributable expenses (i.e. including general expenses) to $70,000/m per child. 165.I accept that to a considerable degree, with effect from his entry into national service, the Wife’s expenses attributable to caring for N have ceased and this will remain the case while he is serving in the Singapore military. 166.Nevertheless, the Wife’s application for an order that the Husband should pay maintenance for N into the future is accepted. 167.The Husband’s submits that the Court has no jurisdiction to make such an order. For the following reasons I disagree. 168.Section 10 of the MPPO prescribes the Court’s power to make orders for the financial maintenance of adult children and the limited circumstances where this is permissible:
169.“Special circumstances” include situations of illness or other physical or mental handicap.[88] Courts have made provision where a child wishes to take a gap year between high school and university.[89] 170.National service in Singapore is an obligation which falls on all male Singapore nationals when they turn 18. It is not optional. Failure to report for national service is a criminal offence. This law applies to Singapore nationals who are resident overseas. 171.N had no choice but to report for national service. Neither will C. 172.According to the Wife’s evidence, both of the Children have aims to continue their studies at university. Enquiries have been made for N with Imperial College, London and the National University of Singapore. 173.I find that the obligation to report for national service in Singapore before continuing to tertiary studies amounts to “special circumstances” within the meaning of section 10(3)(b) of the MPPO justifying the making of an order which provides for ongoing maintenance payments under s. 5 of the same Ordinance. Nonetheless, the Husband is entitled to expect that both N and C will have already selected a tertiary course and enrolled in full-time education by completion of their national service. If this does not happen, then in my view the obligation to make payments should cease. If either child wishes to take a “gap” year, then it will be necessary (assuming the Husband opposes this) for the Wife (or the Children) to apply to the Court for further order. 174.The Wife’s case for capitalisation of ongoing child maintenance depended significantly on her complaint that the Husband had not complied with the MPS/IM Order in respect of N. As will be seen from the orders made on this Judgment, the needs relating to N very significantly reduced since his reporting for national service. In my view, there is no justification for an order that interim maintenance be capitalised. 175.If/when N (and later C) attend university, adjustments will have to be made to the ongoing maintenance for the Children including for university fees and other costs associated with overseas study and for adjustment to the Order which is made below for ongoing periodical payments for N and C. If those matters cannot be agreed (every effort should be made to do so) then the matter will have to be brought back to Court. The Husband 176.I accept that the Husband has needs including rent expenses which at present considerably exceed his income. Duxbury 177.A Duxbury calculation retains utility as a tool to determine how much might be needed to meet the living expenses of the party to a marriage who might otherwise need to be maintained for life by ongoing periodic payments. It is designed to facilitate the achievement of a “clean break” by capitalising the obligation to maintain into a lump sum. The tables have been developed to take into account a “discount rate” namely the rate of return on the lump sum exceeding inflation. 178.The Wife stressed her low risk tolerance and that she would be conservative, perhaps extremely conservative, in her investment decisions. She said she had not interested in foreign exchange investments, even though she was involved in selling such products when she was working, and the only shares she had invested in were bank shares. She was wary of government bonds due to inflation. She would need cash in order to renovate the K Property and lease it out in order to pay off loans. 179.She maintained her position under cross-examination. 180.The Wife referred in her 10th Affidavit to the Duxbury Tables published by the Hong Kong Family Law Association[90] with the assistance of a firm of forensic accountants. This was before Ms. Chi was appointed. 181.I was impressed with Ms. Chi and have confidence in the report she submitted. I have carefully considered the Wife’s Closing Submissions and the analysis contained therein. 182.I do not accept that the Wife will adopt the very conservative, risk-averse investment strategy she sought to advance in her oral and written evidence and in her Submissions. However, even assuming for present purposes that the Wife will adopt a low risk strategy, and on the basis that her needs are $200,000 per month, this equates to a Duxbury figure of $72,141,636 (i.e. $200,000/$50,000 = 4 x $18,035,409). Allowing for the possibility that Ms. Chi erred in her calculation by adopting a remaining lifespan of 38 years rather than 39.3 years, I find that the Wife will need a sum of Duxbury sum of between HK$75,000,000 and HK$80,000,000. E.3 Deciding to apply the sharing principle 183.On the basis of the above findings, and allowing for the sale of the two Singapore properties, there are assets surplus to needs. The next question, per LKW v DD, is to apply the sharing principle. 184.Notionally, a 50/50 split will result in each party receiving HK$124,000,000. 185.This is clearly sufficient to provide for the Wife’s needs, allowing for the Husband’s continued obligation to provide for the Children. 186.Subject to Step 4, the parties should share the net assets equally. E.4 Are there are good reasons to depart from equal division of the assets? 187.The Wife submitted that the K Property was “totally funded by W (and rentals)”[91] and that given her investments she asks both Singapore properties “(i) to be transferred to her, and passed on to the Children as they were always intended; (ii) not to be included in matrimonial assets to fund H’s financial settlement of divorce as he had intended since 2011, (iii) not to be included in the matrimonial assets to fund H’s exorbitant expenses, past present and future.”[92] She asks that the properties be “returned” to her. 188.The Husband’s Closing Submissions analysed the Wife’s claim that the rental income covered the mortgages on both properties.[93] I accept these submissions. 189.A significant portion of the Husband’s present assets, including investments, have accrued post-separation and it was submitted by the Husband that this constitutes a good reason to depart from equal sharing. However, I have to bear in mind that the Husband’s success, and his periodic substantial bonuses both pre- and post- separation resulted in part from the Wife’s dedication to supporting him in his chosen career.[94] 190.As noted, the Wife seeks 60% of the net assets and part of her reasoning is that this would properly reflect her sacrifice of her career. This is essentially a “compensation” submission. 191.I accept that there is a marked difference in earning capacity, and that the Wife gave up a promising career in the financial industry. Although there is no certainty that she would have risen to the same career heights as has the Husband (i.e. his partnership position with the international firm), there is no reason to think otherwise. It is a fact that the Wife gave up what would very probably would have been a successful and lucrative career.[95] 192.The Court must proceed on the basis that compensation for relationship-generated disadvantage
193.This is not an exceptional case. 194.I find there is no reason to depart from equal sharing. E.5 Deciding the outcome 195.The assets will be divided in accordance with the following specific orders. In arriving at this decision I have taken into consideration all matters, including what I have found is the Wife’s unreasonable refusal to permit the C Property from being rented out from 2015 onwards. I have taken into account the Wife’s contribution towards the purchase of the K Property, but also that the Husband has been responsible for the mortgage repayments on this property including without any rental assistance since it was last leased, as well as the fact that a significant proportion of the current assets are the product of the Husband’s post-separation earnings. I have noted that that the Australian property investment and certain other investments may be relatively illiquid. 196.Each of the Singapore properties will be sold with the net proceeds of sale to be divided equally between the parties. They are to cooperate in the marketing of the properties, and renovation costs (if any) will be shared equally. 197.The balance of the assets amount to HK$121,560,030. Half of that is HK$60,780,015. Deducting the assets in the Wife’s name leaves HK$53,725,466. Exercising my discretion, I will reduce that to HK$53,500,000 to take into account what I have found is the Wife’s unreasonable refusal to facilitate the renting of the C Property. The Husband will pay this by three lump sums as set out below. 198.The result, including after the sale of the two Singapore properties, will enable each party to purchase suitable accommodation in Hong Kong should they wish to do so. It will enable their needs and those of the Children to be met. The future tertiary educational costs of the Children cannot at this time be determined and will need to be addressed when appropriate. It is to be hoped that the parties will be able to resolve such matters without the need to return to court. 199.My order is as follows:
F. Costs 200.Neither party has succeeded fully and there will be an order nisi to be made absolute within 28 days that there be no order as to costs including all costs reserved. Either party wishing to vary this order may do so by writing to the Court with short submissions (no more than 5pp, 14 point font). The issue will be dealt with on paper. 201.The Wife twice sought extension of time to file her Closing Submissions, and costs were incurred by the Husband in considering these requests and responding to them including writing to the Court. On 25 April 2022 (the date of the hearing of submissions in Reply) I made an order, by consent, that the costs of the final extension (granted to 22 April 2022) be to the Respondent to be summarily assessed. I have considered the Statement of Costs for Summary Assessment dated 22 April 2022. This estimates the costs of the two extension requests. Exercising my discretion I assess the costs of the Respondent pursuant to the Order at $10,000, with solicitor’s costs at $5,000 including disbursements and counsel fees at $5,000. Such costs to be paid by the Petitioner within 14 days from the date of this Judgment.
Mr. Azan Marwah and Mr. Josh Baker instructed by PC Woo & Co for the Petitioner. On 25 April 2022 the Petitioner was represented by her solicitors, Mr. Simon Tang and Mr. Jacky Suen, without counsel. Mr. Richard Todd instructed by CRB for the Respondent [1] Order 25 November 2015 [2] Bundle A, p24 [3] A/36 [4] A/58 [5] H’s 6th Affirmation, §10(b) [6] W’s Opening, §9 [7] Ibid [8] W’s Closing, §412 [9] LKW v DD [2010] HKCFA 70; (2010) 13 HKCFAR 537 at §62 (Ribeiro PJ) [10] Bundle B1-1 [11] Para 61 [12] Para 33 [13] Para 34 [14] Cathcart v Owens [2021] EWFA 86 [15] At §36 of the judgment [16] NG v SG, at §7 [17] C1/1494 [18] See R’s Answers at C1/1434. [19] C1/1512 and C1/1594 [20] C1/1552 [21] A/32. The eighth First Appointment Hearing. [22] A/39 [23] A/43 [24] Order at A/74-1, para 3. [25] A/74-5 [26] W’s 6th, §§9-10 [27] C1/1499 [28] Day 8 [29] W’s Closing, §306 [30] W’s Closing, §§307-323 [31] H’s Closing, pp40-43 [32] H’s Closing, §65 [33] H’s Closing, §§67-68 [34] B1/383 [35] B1/380 [36] H’s 8th, §35 [37] B1/338 [38] B1/339 [39] B4/1122 [40] B4/1127 [41] B1/341 [42] W’s Closing, §§386-396 [43] W’s 10th, §56 [44] W’s Closing, §394-5 [45] LKW v DD (2010) 13 HKCFAR 537 at §104 [46] ARAV v VP [2011] 3 HKLRD 759 [47] B1/383, also at E2/1971-72 [48] A “bungalow”, in Singapore, is a fully detached landed property. [49] W’s Opening, §112, cf W’s 10th §§53-54 [50] H’s Closing, §76. [51] W’s 10th, §§21-22 [52] H’s Closing, Updated Schedule of Assets and Liabilities [53] W’s Opening, §104 [54] D/1726 (K Property), D/1741 (C Property) [55] D/1734 & 1749 [56] B1/427 [57] F1/1988 – 2020 [58] D/1732, para 3.11 of the K Property Report [59] D/1733 paras 4.1-4.2 [60] F1/2021 [61] She was also aware of another estimate of Cushman and Wakefield at SG$14M: F1/1987 [62] D/1740, Appendix 5, note 14. [63] At §§37++ [64] D/1815 [65] W’s Closing, §§128-130 [66] H’s 8th, §41, and Exhibit GYAL8-17 [67] W’s Closing, §87 [68] A/186, §21 [69] Exhibit GYAL8-6 and GYAL8-7 B4/1015, 1025; E2/1971.50 onwards [70] W’s Closing, §164 [71] A/74-38, para 22 [72] B2/458 [73] A74-39 [74] Letter D Co to H dated 28 June 2019, B2/505 [75] 2021 contract at B4/994 [76] H’s 8th, §15 [77] §16 [78] Exhibit GYAL8-4, B4/1010 [79] Exhibits YSG-21-7, YSG-21-8, cf YSG-37 and YSG-38 [80] W’s 10th, §§150-152. [81] H’s Closing, §131 [82] I have also noted the Husband’s explicit submissions on the point that this issue is only relevant if this to be regarded as a needs case: H’s Closing, p91 (heading) [83] W’s 10th, §132 [84] Exhibit YSG-19 [85] B1/208-27 [86] H’s Closing, §138 [87] A/74-18, §28. [88] C v F (Disabled Child: Maintenance Orders) [1998] 2 FLR 1 [89] Re N (Payments for Benefit of Child) [2009] 1 FLR 1442, at §§78-81 (Munby J) [90] www.duxburyetc.hk [91] W’s Closing, §269 [92] W’s Closing, §277 [93] H’s Closing, §§81-88 [94] LKW v DD, at §§95-97 [95] As Baroness Hale found in respect of Mrs. McFarlane: see LKW v DD at §121 [96] LKW v DD at§130 [97] In the case of C Property, net of the obligation by each of the parties to return a certain sum to the CPF |
Cases cited in this judgment
Further hearings and rulings under FCMC 15288/2015