Wsw v. Cslpc
Read the full judgment text of FCMC 7214/2019 on BabelCite. This Family Court judgment was delivered on 12 August 2022 before Deputy District Judge Jacqueline Lee.
Matrimonial proceedings – Ancillary relief – Asset division – Disclosure – Child maintenance – 55:45 split – No order as to costs. The court determined the genuineness of the Husband's loans, valuation of insurance and MPF, and children's needs. The matrimonial pot was computed at HK$68,453,690.40. Due to the Husband's non-disclosure and lack of contribution, the pot was split 55:45 in favour of the Wife. Orders included property transfers, lump sum payment, and child maintenance.
Legal issues: Genuineness of Husband's loans · Valuation of Manulife policy and bonus · Valuation of MPF · Computation of assets · Earning capacity and needs · Children's needs · Asset division ratio
Outcome: Matrimonial pot split 55:45 in favour of Wife. Husband to pay lump sum and child maintenance.
Cited by 6 cases · Cites 6 cases
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FCMC 7214/2019 [2022] HKFC 155 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 7214 OF 2019 ________________________
________________________ Coram: Deputy District Judge Jacqueline Lee in Chambers (Not Open to Public) Dates of Hearing: 3 May to 5 May, 10 May to 11 May 2022 Date of closing written submissions by the parties: 8 June 2022 Date of closing reply written submissions by the parties: 6 July 2022 Date of Judgment: 12 August 2022 ____________________ J U D G M E N T (Ancillary Relief) ____________________ 1.This is the trial on ancillary relief between the Petitioner (“Wife”) and the Respondent (“Husband”). Background 2.The parties were married in November 2007 and separated in September 2015. The Wife is 45 years old and is a director of a bank. The Husband is 44 years old. He used to work in the securities industry and now he manages his own investment portfolios through self-owned companies. There are two children of the family (“Children”), boys, namely L and J, who are now aged 12 and 11. 3.On 20 June 2019, the Wife petitioned for divorce on the ground of the parties having lived apart with each other for a continuous period of at least 2 years. The petition went on uncontested. Decree Nisi was granted on 24 June 2020. 4.On 23 January 2020, by consent of the parties it was ordered that joint custody of the Children be granted to the Petitioner and the Respondent with care and control to the Petitioner and defined access to the Respondent. The Husband is entitled to day access to the Children on every Tuesday and weekly staying access to the Children from Friday afterschool to Sunday morning. The Wife’s case and her open proposal 5.The gist of the Wife’s case is that, the Wife and the Husband will share the parties’ assets with a 65-35 split in her favour. According to the Wife, the total size of the matrimonial pot is HK$71,852,836.40 (of which HK$21,825,540.19 being the Husband’s net assets and HK$50,027,296.21 being the Wife’s net assets). 6.The Husband should pay the Wife a lump-sum of HK$5.3 million which represents the Children’s school and/or tuition expenses and periodical payment of HK$21,721 per month per child, representing expenses other than the Children’s educational expenses, and such amount to be annually adjusted in accordance with the Hong Kong Composite Consumer Price Index. 7.To achieve a 65-35 split of the matrimonial pot, the Wife will buy out the Husband’s legal and beneficial interest in the matrimonial home, and the Husband will buy out the Wife’s legal and beneficial interest in NF Mansion. The Wife will then pay a lump sum of HK$4,118,000 as equalization money to the Husband. The Husband’s case and his open proposal 8.The Husband proposes an equal division of the whole matrimonial pot (including his disputed liabilities). The most significant family assets are the matrimonial home and the Wife’s private bank account, which will involve the Wife paying an equalization sum of HK$24,404,129.69 to the Husband, the Wife buying out the Husband’s share in CDL (the matrimonial home) and the Husband’s buying out the Wife’s beneficial interest in NF Mansion. 9.The Husband proposes to make periodical payments of HK$33,318.50 per month per child, upon receipt of the full equalization payment, and for the Wife to meet all costs in respect of the Children. The Husband further proposes that each party be responsible for their own accommodation expenses and holiday expenses, as both parties incur such expenses for the benefit of the Children. Undisputed matrimonial assets Properties 10.The parties agreed that the following were matrimonial assets:
11.Most of the properties were owned by private limited companies. By way of a Consent Order dated 23 January 2020, the parties agreed that the Husband will not contest the beneficial ownership of B Garden, A House and CF House. 12.All of the above properties are all subject to existing mortgages. While the net values of the matrimonial home and Fa Yuen Street property are agreed by the parties, the parties also reached agreement regarding the valuation of B Garden, NF Mansion, TADL and TIL, but have not been able to reach agreement as to the amount of the borrowings which should be taken into account as part of the liabilities. 13.The major dispute here is the Husband obtained an overdraft facility (“OD Line”) from China Citic Bank in around November 2017 to refinance the mortgages over five properties (i.e. B Garden, NF Mansion, M Centre, CF House and A House). The Wife’s Private Bank account 14.It is agreed that the parties deposited a sum of HK$3.87 million (each has 50% interests of this sum) from the refinancing of the former matrimonial home in October 2010 to open a private bank account in the Wife’s name. In additional to the HK$3.87 million, the Wife had contributed HK$2.4 million to form seed money of her private bank account. The parties agree that it was meant to be a joint investment portfolio. 15.The Wife argued that the parties separated in 2015, and she was solely responsible for the expenses of the family, it would be unjust to expect her to share her post separation accrued income with the Husband. 16.At the trial, the Wife confirmed that she accepted to take the private bank statement value, i.e. US$ 2,260,953 (or HK$17,636,337.78 at an exchange rate of 1:7.8004) as the value of the account. Accordingly, there is no longer any dispute about the value of the Wife’s private bank account. Insurance Policies and MPF Accounts 17.The parties have several insurance policies and MPF accounts. The Wife has a Manulife policy which was acquired after separation (“Manulife Policy”). 18.The Wife submitted that the Manulife Policy should be valued at the surrender value of US$21,073.99 (HK$164,385.55), whereas the Husband’s case is that it should be valued at the amount of premium paid as at 31 December 2021 (US$150,000 or HK$1,167,000), as the policy comes with a guaranteed return, and the surrender charge only applies if it is surrendered in the first 10 years. Personal properties 19.At the trial hearing, the parties agreed that they would keep their own personal valuables, except the Wife raised a request that the Husband had not included two Patek Philippe watches in his Form E. Parties informed the court that they would attend the safe deposit box together after the trial to locate the watches. The Husband agreed to give one of the watches to the Wife if these watches were in the safe deposit box. 20.The Husband said he left the two watches in the matrimonial home, while the Wife said she could not locate them. Both parties therefore tried to check if the watches were in the safe deposit box with the bank. Initially, the parties were under the impression that the safe deposit box was solely maintained under the name of the Husband, however it turned out that the Wife was also one of the authorized person who enjoyed unrestricted access to the safe deposit box. 21.After the trial, the parties attended the bank together and tried to locate the watches, but it was discovered that there were only some gold ornaments in the safe deposit box. Parties had settled the division of these gold ornaments amongst themselves. 22.Both parties do not know whereabouts are the Patek Philippe watches, and there is no evidence to suggest that either party retained the watches, I hold the view that the value of the Patek Philippe watches should not be included in the matrimonial assets. Disputed liabilities 23.The Wife has some credit card debts and an outstanding tax liability of HK$830,156 as at 31 December 2021. 24.The Husband claims that he owes significant amount from his family members and friends as follows:
25.In addition to the above loans and the OD Line referred to above, the Husband also has outstanding loans from money lender (HK$23,261), HSBC (HK$17,824.14), and amounts owing to one of his companies, NSAL (HK$3,290,509) and miscellaneous credit card debts and tax liabilities. The Law 26.The governing principles in relation to the distribution of the family assets in the dissolution of marriage are set out section 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO”), Cap. 192 and the Court of Final Appeal’s decision in LKW v DD (2010) 13 HKCFAR 537, laid down ‘4 Principles’ and ‘5 Steps’ as “guidelines”as to how section 7 shall be approached. 27.The relevant law and legal principles in respect of the jurisdiction of the court in granting financial provision were succinctly summarized in JTMW v NAV [2022] 2 HKLRD 490 by His Honour Judge Ivan Wong as follows:
Identification and assessment of assets 28.The parties have signed a joint agreed schedule of assets and liabilities (“Joint Schedule”), which was dated 29 April 2022. The parties have agreed that the cut-off date for identifying assets for the purpose of this trial is 31 December 2021. 29.As a general position, all matrimonial assets and liabilities should be valued at the date of the ancillary relief trial. Thus, in general, available values as close to the trial hearing date as possible will be used. Nevertheless, where the parties had specifically agreed to use a value for the asset or liability as at a different date, I adopted that value. Post-separation accrual 30.In Kan Lai Kwan v Poon Lot To Otto (2014) 17 HKCFAR 414 at [133], Ribeiro PJ explained that the principles provided in Rossi v Rossi [2007] 1 FLR 790 is preferable as it points to various factors relevant to deciding whether a post-separation accrual justified departure from equality, including the length of the marriage and separation, the nature of the property accruing and the means or efforts by which it was acquired. Issues 31.I do not need to traverse all of the evidence and submissions for the purposes of this decision, though I have them all freshly in mind. In the present case, the main issues to be considered are:
Credibility of Witnesses 32.The Wife was a candid witness giving straightforward and spontaneous answers. I have no reason to doubt the credibility of the Wife’s evidence. 33.The Husband was giving very guarded answers. When confronted with contradictory evidence and issues such as the whisky business (only disclosed at the trial), which called for explanation, he would engage in a long process of rambling and filibustering without attempting to address the point put to him. This is relevant to my assessment of his credibility. Such rambling and evasive answers indicate that he is not a truthful and reliable witness. 34.The Husband at cross examination revealed that he had the habit of keeping scanned copies or photocopies of bank records. The Husband, however, when being asked why he could not produce documents to support some of the important aspects of his case, he explained that he did not take copies of those documents. For the explanations given by the Husband to be true it will entail too many coincidences taking place. 35.Further, the Husband could not explain why he did not attempt or could not obtain copies of the relevant documents directly from the banks. Whether the Husband’s loans should be regarded as genuine loans and as family liabilities? The Husband’s loans owed to his mother and other family members 36.As at January 2022, the Husband claimed the total sum owed to his family and friends was HK$6,406,241. It is the Husband’s case that the loans should form part of the liabilities. 37.The Husband said he had to borrow monies from his family members after being laid off by an investment bank in 2008. Afterwards, he started to set up investment pool to make investments on behalf of his family members and friends. 38.The Husband explained that his various investment activities provide little or “negative” cash flows, which were barely sufficient to cover the mortgage repayments, therefore he needed to have debt financing through personal borrowing, re-mortgaging of properties and taking out bank overdraft. 39.The Husband said after 2012, and save for 7 months in 2017, he had no employment income, and his mother lent him a sum of HK$1.3 million to cover his outgoings. His mother raised such sum by re-mortgage her own landed property at Tai Wo Hau. The said sum was deposited into his bank account on 19 February 2016. 40.While the Wife accepted the existence of various mortgage loans from banks, she disputed the amount to be deducted as liabilities. She also disputed all alleged personal loans of the Husband. 41.The Wife opposed the alleged personal loans as little documentation or no documentation was produced. Although the Husband tendered a copy of pay-in-slip showing a sum of HK$1.3 million had been deposited into his account, there was no documentary evidence produced in support of under what circumstances the monies were deposited. 42.The Husband further said his friend Mr. Lo lent him a sum of HK$1 million in 2017. The Husband produced emails written by him to Mr. Lo as evidence. Again, it is not clear under what circumstances the monies was given to the Husband, whether they were loans or shares of investment. 43.The Husband also said HK$1.1 million loan from his brother was for the acquisition of the 5% shares in TADL. The Wife criticized the chain of emails produced by the Husband were not conclusive evidence of the existence of a loan. The Husband tendered 19 emails, of which 17 emails were from the Husband and the only 2 emails from his brother merely saying “Yes correct” and “OK”. 44.The Wife criticized the Husband’s answers to her questionnaire were neither complete nor informative. The Husband did not provide any breakdown and accounting records to identify how the loans were being applied. There is simply no evidence of loans and she asked the alleged “loans” be excluded from the computation of the matrimonial pot. 45.While it is true that family members and friends may not put everything in writing, however when litigation was clearly inevitable, and the Wife had made clear in her questionnaires that these loans were going to be challenged, the Husband had still not sought for any of these creditors to be a witness in support of these alleged loans. No witness statement of any creditor was produced. As such, no creditor was available for cross-examination by the Wife. 46.No explanation was given as to why the Husband did not ask these creditors to be his witnesses. All that was presented before the court were bald statements from the Husband that he borrowed monies from his family members. 47.In Ip Man Shan & Ors v Ching Hing Construction Co Ltd & Ors (No.2) [2003] 1 HKC 256 at [155] Deputy Judge Lam (as he then was) summarized the legal principles in respect of drawing adverse inference against a party’s evidence as follows:
48.The court is not in a position to do an auditing for the parties as to how much the Husband borrowed and where the monies have gone. Save and except, the Husband alleged that he borrowed a total sum of HK$3,756,241 from his family members between 2008 to 2013, the other alleged loans were apparently incurred after the parties’ separation in September 2015. Loans of HK$3,756,241 from family members between 2008 to 2013 49.According to the Husband’s affirmation, he said the monies were lent to him by his family members on the understanding that it would be repaid with a good return. 50.At the trial, the Husband however said he was not sure whether the funds given to him should be treated as loans or for investment purpose. He said for the purpose of this litigation, he would treat the monies as loans, but he wanted the court to decide for him. He also admitted that there were no agreed interest nor repayment date on these funds. 51.It is trite that the burden falls on the Husband to prove that these loans are genuine and are still owing. I find that the Husband has failed to come up to proof on the existence of the alleged loan of HK$3,756,241 due and owing to his family members for the following reasons:
Loan of HK$1,300,000 from the Husband’s Mother in 2016 52.The Husband alleged that he borrowed HK$1.3 million from his mother as his living expenses in 2016. At the hearing the Husband however said the said sum was also used to invest in stocks as well. It appears that the Husband is not certain whether the sum was given to him as a loan or for investment purpose. 53.Again, the Husband admitted that there was no agreed interest nor repayment date on this sum. It was only until recently when his parents indicated that they would like to be repaid after the conclusion of this trial. 54.It is apparent that the demand for repayment from the Husband’s parents was not coincidental to this trial but was rather triggered by this trial. On the thin evidence available, I am unable to accept the Husband’s case that this sum was indeed a loan from his mother. I hold that the Husband has failed to prove the loan from his mother, (even assuming there was once a loan) is still due and owing. Loan of HK$1 million from Mr. Lo in 2017 55.The Husband said Mr. Lo lent him a loan in the sum of HK$1 million in 2017. The Wife challenges this alleged loan. Firstly, the alleged loan is dubious. No documentation was provided to prove this debt, but merely supported by one-sided email sent by the Husband, which Mr. Lo never responded. 56.Secondly, despite the fact that HK$500,000 has remained outstanding since the end of 2017 and that the Husband has been paying Mr. Lo interest on a monthly basis, there is no reason why the Husband, who is extremely sensitive with numbers, will have inadvertently omitted it from his 1st Form E dated 30 August 2019. 57.Thirdly, the interest rate charged by Mr. Lo of 8% was much higher than that charged on the refinancing extended by China Citic Bank in December 2017. 58.As mentioned above, the Husband demonstrated that he had the habit of keeping records of bank documents. What makes thing looked dubious here, is that the Husband could only produce deposit slips showing his monthly interest repayments to Mr. Lo, but not the payment or repayment of the substantial sum. The mere evidence that there were transferred of monies or alleged repayment is insufficient to establish that the loan is a true loan. 59.I find that there is no basis to hold that the alleged outstanding debt of HK$250,000 owed to Mr. Lo exists or is still subsisting. 60.Further, even assuming there was once a loan, the loan was allegedly used to pay the Husband’s various expenses. The Husband’s various expenses were incurred after parties’ separation, these are not family liabilities, therefore, in any event I will exclude this sum of HK$250,000 as family’s liabilities. Loan of HK$1.1 million from F in 2019 61.The Husband alleged that HK$1.1 million was borrowed from F in 2019 to buy-out TADL’s shares from minority shareholders as a result of a litigation settlement. 62.The Wife submitted that the Husband merely tendered two transfer slips as proof of loans from F. However, no other evidence was adduced to show that these transfers were for the purpose of repaying the HK$1.1 million loan documented in the emails, in particular the repayment amount does not tally with the loan amount. 63.The Wife also complained that if the Husband did not have sufficient funds to buy out the interests of the minority shareholders of TADL, it would be simpler for F, who through his shareholding in another private company B, to buy out the interests of the minority shareholders directly. 64.The Wife criticized the alleged circuitous route taken by the Husband does not make sense and the only explanation offered by the Husband was he “regret” at having done so. 65.Despite the Wife’s scepticism I accept the Husband’s case in this respect. The Husband had produced settlement agreement to show that it was indeed the Husband who contracted to buy out the interests of the minority shareholders. The loan from F is supported by the Husband’s bank statements showing payments by monthly instalments to the Husband between January 2019 and October 2019. 66.I accept this loan from F to the Husband is a genuine loan and TASL forms an asset in the matrimonial pot, it will be unfair to disregard this loan on the one hand and allow the Wife to share in the fruits of this asset on the other hand. 67.Based on the above, I will only include the loan from F to the Husband in the sum of HK$1.1 million in the family liabilities. As for the rest of the alleged loans, I find that the Husband has failed to come up to prove on the existence of those alleged loans owed to his family members and friends. I will exclude these liabilities when calculating the size of the matrimonial pot. Amount due from the Husband to NSAL in the sum of HK$3,290,509 68.NSAL is jointly owned by the Husband and F. The Husband confirmed that he took out HK$3.6 million from NSAL between 31 March 2020 and 31 December 2021 for repayment of liabilities and living expenses. The parties agreed that the valuation of NSAL is zero. 69.The Wife challenged this loan on the ground that most of the funds from NSAL were used to pay for the Husband’s legal fees, repayment of credit card debts, bank loans, alleged loans from Mr. Lo and contributions to his parents. 70.The Wife submitted that taking the Husband’s case to the highest, out of the HK$3.6 million, he merely spent HK$242,657 on family car expenses, which the Husband admitted that the family car was also partly used for his own purposes. It is unfair to require the Wife to bear the Husband’s post-separation liabilities, when only a small portion was incurred for the sake of the family. 71.I am mindful to that fact that the Wife had also spent a substantial amount of her existing funds on her legal fees (totalling HK$2,836,040 as at May 2022), which directly reduced the size of her assets. I agree with paragraph 43 of the Husband’s counsel closing submissions that it would be unfair to require the Husband to bear his own legal costs in full in addition to sharing the Wife’s legal costs. 72.In the circumstances, upon considering the Husband’s Form H filed on 3 May 2022, I will allow HK$3,227,657 of which HK$2,985,000 being the Husband’s legal costs and HK$242,657 being the sum spent on family cars as liabilities. Personal guarantee executed by the Husband for NSAL in the sum of HK$5,081,537 73.There is no evidence to show that China Citic Bank claims against the Husband for HK$5,081,537. According to the audited financial statements of NSAL, as at 31 December 2021, HK$5,081,537 represented the total negative equity. The Husband confirmed his intention to hold the investment positions of NSAL until maturity or only sell them at prices above or close to their purchase prices, rather than realizing the investment with a substantial loss. 74.The Husband also agreed that the OD line was NSAL’s liability and that NSAL had no intention of defaulting on the loans from the OD line. 75.Further, the parties have agreed the valuation of NSAL at zero. It is unfair to include NSAL’s total negative equity as the Husband’s liability in the matrimonial pot. 76.In the circumstances, I hold that HK$5,081,537 be excluded as family liabilities. Liabilities incurred post-separation Refinancing of properties 77.The Wife argued that the Husband has refinanced his properties in at least 2 occasions. He first took out a HK$10.56 million loan in November 2017 by re-mortgaging all his 5 properties to China Citic Bank. 78.The Husband further re-mortgaged his property in A House which increased his debts from HK$1,640,000 to HK$1,930,182.83. The Husband had not offered any explanation as to why further mortgage had to be taken out. A second mortgage on A House, M Centre and CF House were taken out in October 2019, but the exact amount was not disclosed. 79.While the Husband claimed that since filing his 1st Form E in 2019, he earned a monthly income of HK$20,000, but the mortgage repayment in respect of his 5 properties were ranging between HK$42,000 to HK$45,000 a month. 80.In his 2nd Answer, the Husband confirmed that he was the one who was responsible for the mortgage repayment. The Wife complained that it remains a mystery as to how the Husband with a monthly income of HK$20,000 could afford to repay the mortgage and it is rather unusual that the mortgage repayment has been met by cash. 81.The Husband explained that in November 2017, he had arranged for re-mortgage of 5 properties. A sum of HK$10.56 million was granted to him and he used HK$6.15 million to pay off the outstanding mortgage at that time and the balance of HK$3.85 million was deposited into his account. 82.The Husband said he used the HK$3.85 million to repay the Wife’s parents loan (at the trial, it turned out to be for investment purpose), his brother’s loan and acquired 5% shares in TASL. The remaining funds were spent on his ordinary living expenses. However, there were no documents provided in support of the application of the funds. 83.The Husband further explained that the 2nd mortgage registered against the 5 properties in 2019 are related to the OD line and it was not the case that he had further taken out any personal loans by pledging the 5 properties. The OD line is not for withdrawing cash but for making further investments in the stock market to increase the revenue of NSAL. 84.The Wife agreed that even though such loans were incurred solely for the benefit of the Husband’s personal businesses and living expenses, the Wife is still willing to shoulder the burden of the mortgage balances outstanding before the refinancing took place. 85.The Husband confirmed that he did not seek the Wife’s consent before he arranged for the refinancing because he treated the 5 properties as his independent assets. The Husband at cross examination said he did not have a strong stance as to whether the Wife should bear the additional liabilities from the refinancing. 86.None of the funds that the Husband received upon the refinancing, nor the income producing the properties which the Husband used as security for the refinancing were used for the benefit of the family. I accept the Wife’s case that it will be unfair for her to shoulder the burden of the Husband’s refinancing when such loans were solely for the benefit of the Husband’s personal businesses and living expenses. I therefore hold that only the sum of HK$6,646,254.24 being the outstanding balances for mortgages under China Citic Bank and B Garden before refinancing should be taken as liabilities. Personal loan from money lenders 87.The Husband confirmed that he obtained personal loan from a money lender and the outstanding sum was HK$23,261. The Husband explained that the funds were used for TIL’s operations and also for his own living expenses. 88.As TIL owns properties and the said properties form part of the matrimonial pot, I will include this loan as liabilities of the matrimonial pot. Since a portion of this loan was applied as the Husband’s personal expenses, I will take this into consideration when I come to consider applying the sharing principle of the matrimonial pot. How should the Wife’s Manulife insurance policy and her bonus be valued? 89.The Wife took out an insurance policy with Manulife after separation. The Wife by her latest Answer dated 28 March 2022 explained that the life insurance was purchased for the protection of the Children in the unfortunate event that she passed away. The Wife proposed that the surrender value of the life insurance policy in the sum US$ 21,073.99 should be adopted as the value of the policy. 90.The Husband said the Wife is placing a sum of US$30,000 (i.e. HK$233,400) each year into the policy since February 2017. It is unrealistic to simply value the insurance policy at its surrender value, i.e. US$21,073.99. The Husband submitted that it is unlikely that the Wife will surrender the policy during the Surrender Charge Period (defined as the first 10 years of the policy), therefore the policy should be valued without any deduction for the surrender charge at US$47,832.75. 91.However, the Husband said if the policy in fact only worth US$47,832.75, it would mean that the Wife has achieved a gross return of -68% over 5 years. If this is to be accepted, then the Wife had frittered away assets by her reckless financial decision. 92.The Husband further submitted that the policy indeed should be valued at US$150,000, i.e. the amount of the premiums paid by the Wife since the issuance of the policy up until the cut-off date. The Husband referred to a provision of the insurance policy which said in the event of the Wife’s death, her estate will stand to receive a guarantee amount of US$5,000,000. As a result, the value of the policy is at least the amount of the insurance premiums paid so far. 93.I accept that the Wife took out the Manulife insurance policy for the benefit of the Children. I find it appropriate to adopt the surrender value of the policy in the computation of available assets, as no one knows what will happen in the future. The Wife’s bonus 94.The Wife admitted that a sum of HK$1,130,500 was received by her on 20 January 2022 as bonus. While the Husband argued that the said sum falls to be taken into account in the matrimonial pot. The Wife relied on the judgment of Mostyn QC in Rossi v Rossi [2007] 1 FLR 790 to exclude the bonus from the matrimonial pot. 95.The relevant paragraph in Rossi v Rossi stated:
96.The parties have long separated since September 2015. I accept that the Wife’s bonus did not represent the fruits of any joint matrimonial efforts, in particular, the Wife was offered the current employment after the parties separated. In the circumstances, I will exclude the Wife’s bonus from the matrimonial pot. How should the parties’ MPF be valued? 97.The illiquidity nature of pension or MPF was discussed by His Honour Judge Ivan Wong in SSLT v SMFC, [2019] HKFC 250 at [44] to [48] and Her Honour Judge Grace Chan in LWF v WST, [2021] HKFC 164 at [48] to [50]. 98.The parties are now in their mid-40s. Both of them will probably work until the age of 65. Taking into account of all the circumstances of the case, I give a discount of 50% on the face value of their MPF. Given the above, what is the computation of assets available for distribution? 99.Based on the findings set out above, I come to the conclusion that the parties’ assets and liabilities come up to about HK$68,453,690.40 as follows:
What are the earning capacity and needs of the parties? The Wife’s financial means & reasonable needs 100.The Wife is now 45 years old. She has a master degree in business administration and has been working in the finance and investment field since 2004. She was made redundant by a bank in 2015 and shortly afterwards she managed to secure employment with an investment bank. In July 2018, she was made redundant again. Since March 2020, the Wife worked as a director in fixed income, currency and commodities sales of a bank. 101.Her average income is HK$165,166.67 per month as at January 2022. The Wife also has other source of financial income, which is rental in the sum of HK$11,300 from her solely owned landed property and investment returns from her private bank account. 102.I accept that the Wife does have a significant earning capacity and her earning capacity is likely to be higher than that of the Husband’s. 103.She has filed 3 Form Es (dated 28 August 2019, 11 March 2021 and 28 January 2022 respectively). According to her 3rd Form E, her total expenses have increased from HK$165,500 to HK$313,500 per month. 104.In the Wife’s Answer dated 28 March 2022, she said in paragraph 5 that she is not seeking any spousal maintenance for herself, hence she will not reply to question regarding her personal expenses. 105.The Wife has sufficient means to meet her own needs and expenses. The main dispute here is about the quantum of the Children’s expenses and the amount of maintenance that the Husband should pay the Wife going forward. The Wife has revised some of the figures regarding the Children’s expenses at the hearing, which I will deal with in the later part of this Judgment. The Husband’s financial means & reasonable needs 106.The Husband is now 44 and was the Wife’s colleagues at an investment bank. He was made redundant in 2008. Afterwards, the Husband worked for various companies in the securities and finance industry. 107.The Husband was last made redundant in May 2012. His departure was related to an investigation by the SFC on his then employer, supervisor and himself. He was finally found clear of any misconduct, but the Husband said the fact that he was once involved in an SFC investigation put him in a very difficult situation to find similar job in the financial industry. The Husband therefore started to set up his own investments business and trading in securities and properties. 108.The Husband claims to have an average monthly income of HK$28,500. The Husband also has other financial resources that are available to him namely the return from his investments that he will continue to receive and that will continue to invest on a rolling basis. 109.He has also filed 3 Form Es (dated 30 August 2019, 11 March 2021 and 31 January 2022 respectively). His total expenses have increased from HK$24,000 to HK$105,317 per month, the breakdown of which is as follows:
110.The Wife does not take any issue with the Husband’s monthly household expenses in the sum of HK$9,425 (excluding mortgage instalments in the sum of HK$41,000) and his personal expenses the sum of HK$20,545 (excluding HK$10,000 being contribution to parents). 111.The Husband’s personal expenses included a sum of HK$10,000 being contribution to his parents. Such payment is voluntary in nature and is made out of his love and concern for his parents, which may not be necessarily shared by the Wife. I will not allow this item for the purpose of the ancillary relief. 112.As for the Husband’s mortgage loan in the sum of HK$41,000, I see no valid reason to disallow this sum as part of his expenses. In the circumstances, the Husband’s monthly expenses is HK$70,970. What are the needs of the Children? What order should be made to take care of the Children’s needs? 113.The Wife is seeking a lump sum payment of HK$2.4 million representing the Children’s education expenses from Year 1 to Year 7 and periodical payment in the sum of HK$41,108 from the Husband. The Wife also adopted an alternative fall-back position, in case I do not grant a lump sum payment order in respect of the Children’s maintenance, the Wife requests the Husband to pay HK$64,358 per month. 114.Under this part, I will go through the expenses for the Children, which the Husband disputes. 115.According to the Wife’s closing submissions and the solicitors for the Wife’s letter dated 14 June 2022, the Wife said the Children need to spend HK$82,216 per month, i.e. each child HK$41,108. The Husbands makes the following objections:
116.The Husband criticised the Wife for having over exaggerated the Children’s financial needs. He requested the court to make appropriate downward adjusts on a broad brush basis. 117.I am mindful that the Husband has to incur some expenses when the Children are with him during the weekly staying access, and I will factor these expenses in as part of the Children’s monthly expenses. 118.Doing the best I can and taking a broad brush approach, I assess the Children’s needs as follows:
119.The total sum of the maintenance for the Children is therefore HK$113,332 per month, i.e. HK$56,666 for each child. 120.The Children are now aged 12 and 11. Assuming maintenance for the Children is paid up at least to the age of 18, the elder son would reach the age of 18 in 6 years’ time. With this calculation, the sum of parties is expected to contribute a total sum of HK$8,839,896 (i.e. (For Children HK$113,332 x 12 x 6) (For younger son only HK$679,992)) as Children’s maintenance during this period. 121.The Husband, on the other hand relied on investments and the tutoring school as his source of income. 122.Given the current global economic conditions, earning money by investing on the stock market or property market is a difficult endeavour and one that may not necessarily produce good results. The Husband, in paragraph 79 of his 1st Affirmation filed on 20 April 2021 said his investment activities in the past had “provide little or negative cash flows”. In order to secure the interests of the Children, it seems to me that it would be appropriate to put aside from the Husband’s share of the matrimonial assets a sum of HK$2,039,976 being approximately half of his contribution to the Children’s expenses up to their age of 18 and the remaining portion, I will ask the Husband to contribute by way of periodical payment. How should the assets be divided bearing in mind the principles identified in the Court of Final Appeal’s decision in LKW v DD? 123.It is clear from the above analysis that both parties are able to meet their own needs and their Children’s daily needs from their income and assets; and accordingly where prima facie there are assets surplus to needs, the sharing principle should apply. Whether good reasons for a departure from equality exist? The financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future 124.In general terms both parties need sufficient money to house, feed and clothe both themselves and their children. They will also need to provide for the Children’s future education. Standard of Living Previously Enjoyed 125.The standard of living was comfortable but not ostentatious or generally extravagant. The family was housed in a self-owned apartment measuring 1,083 sq. ft. with 1 car parking space. The Children received private education and they travelled four times a year for holidays by economy class and stayed at decent hotels. Age of the Parties and Duration of the Marriage 126.Parties are in their mid-40s. They got married in November 2007 and separated on 10 Sept 2015. They were married for 7 years and 10 months. Contribution to the Family 127.It is not disputed that after the Husband left the matrimonial home in 2015, he did not directly make financial contribution to the household expenses, but if one considers the overall contribution to the welfare of the family during the marriage, I accept that both parties made a valid contribution towards the family. The Husband’s non-disclosure 128.The law on disclosure is well known. Each party has a duty to make full and frank disclosure of their financial resources and income. This duty is absolute and continuing. It is fundamental to the ability of the court to make appropriate orders that each party abide by this duty. 129.The issue of financial disclosure is not meant to be a game of hide and seek. If one party has deliberately and continuously failed to fulfil his duty then in the absence of such full and frank disclosure the court may draw such adverse inferences, as it considers reasonable in all the circumstances of the case. 130.The Wife criticized the Husband of serious and deliberate non-disclosure of material facts. The material non-disclosure which the Wife complained of included:
131.The Husband did not accept there was any material non-disclosure on his part, and even if there were, it is un-intentional. 132.I accept the Wife’s complaints that the Husband has refused to produce documents and has refused to answer or vaguely answered reasonable enquiries raised by her, which included the followings:
133.I find that the 1st Form E filed by the Husband is far from satisfactory, many of the crucial information were missing and the Husband tried to put the blame on his former’s solicitors for such inadequacies, I cannot accept this explanation. 134.The Husband has been legally represented throughout. His personal income, liabilities and outgoings no doubt are live issues and must have been loomed large in his mind. His 1st Form E must have come from his instructions. I am not satisfied that there was any plausible explanation, therefore an adverse inference should be drawn in such circumstances. 135.Further, the evidence regarding the mystery of the Husband with a monthly income of HK$20,000, but could afford to settle monthly mortgage repayment ranging between HK$42,000 to HK$45,000 support the Wife’s case that the Husband had not given a full picture of his financial ability. 136.For the avoidance of doubt, I accept that the Husband is more likely than not to have some undisclosed assets. It seems to me that the adverse inference to be drawn must be seen in the context of the case. By the same token I accept entirely that as far as possible the Husband should not be allowed to benefit from such an approach. Monies owed to the Wife 137.It is the Wife’s case that since the Husband left the matrimonial home in 2015, she has roughly contributed HK$10 million as the family and Children’s expenses. She asks the court to take into account of these monies owed to her when considering the division of assets. 138.The Wife claimed that the Husband had not contributed to the following expenses of the family and the Children:
139.The Husband disagreed to repay monies owed to the Wife after their division of assets. He particularly disagreed to repay half of the Children’s expenses, the ESF debenture, membership fees and HK$1.35 million of loans. 140.Before separation, the parties are jointly responsible for the expense of the Children. Despite the Husband explained that he did not have stable income and had made a total contribution of HK$354,200 between January 2016 and December 2020, I fail to see any reason why the Wife should shoulder the bulk of the Children’s expenses and the vast majority of the mortgage repayments for the matrimonial home for the period from September 2015 to June 2021. I will take this into consideration when I come to consider applying the sharing principle of the matrimonial pot. Deciding the overall outcome 141.Having largely dealt with section 7(1) of the MPPO considerations when discussing the different issues as set out above, and the fact that:
142.Taking into account all of the above factors and my findings as set out above, I accept that fairness dictates that this is a case where the yardstick of equality should be departed from. I am of the view that the matrimonial pot be split between the Wife and the Husband on the ratio of 55: 45. The sum which the Husband is entitled to receive from the matrimonial pot is HK$30,804,160.68 (i.e. HK$68,453,690.40 x 45%). The Husband contributed HK$17,734,529.09 to the matrimonial pot, therefore the Husband is entitled to a sum of HK$13,069,631.59. Final Order 143.I make an order as follows:
Cost 144.Given that neither party can be considered as entirely successful in his or her application. I consider that the appropriate costs order should be no order as to costs. 145.I make an order nisi that there be no order as to costs of the ancillary relief proceedings (including all costs reserved).
Petitioner : Mr. Eugene Yim instructed by Messrs Rita Ku & Solicitors Respondent : Ms. Bonnie Cheng instructed by Messrs Chaine Chow & Barbara Hung | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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