Sm also known as Hms v. Hdg
Read the full judgment text of FCMC 3929/2016 on BabelCite. This Family Court judgment was delivered on 24 February 2023 before District Judge S. Lo.
Matrimonial causes – Ancillary relief – Division of assets – Sharing principle – Child maintenance – Full and frank disclosure – District Judge S. Lo – FCMC 3929/2016 – Parties married 2006, one child – Family assets approx HK$58.5 million – Husband challenged valuations but failed to adduce contrary expert evidence – Court drew adverse inference against Husband for failure to disclose assets – Sharing principle applied with yardstick of equal division – Departure from equality justified due to Wife's higher financial needs and contributions – Wife awarded 54% of net sale proceeds of properties – Child maintenance set at HK$50,550 per month – No order as to costs.
Legal issues: Valuation of Family Assets · Duty of Full and Frank Disclosure · Application of Sharing Principle and Departure from Equality · Assessment of Child Maintenance
Outcome: Ancillary relief granted. Sale of properties ordered. Wife awarded 54% of net proceeds. Child maintenance ordered.
Cited by 1 case · Cites 3 cases
|
FCMC 3929/2016 [2023] HKFC 36 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 3929 OF 2016 ----------------------------
----------------------------
----------------------- J U D G M E N T ----------------------- 1.This is the trial of the parties’ claims for ancillary relief. The petitioner will be referred to as “Wife” whilst the respondent as “Husband” below. Background 2.The parties started living together in 2004 and got married in May 2006. The Husband is now 50 years old and the Wife is 49 years old. They have only one child of the family who was born in February 2012, now 11 years old. 3.The parties together with the child were residing in a unit in Happy Valley (“Wing On Lodge unit”), which is owned by a limited company set up by the parties (“Great Prospect”). The parties through Great Prospect also own another property together with a carpark in Happy Valley (“Winfield property”), the apartment of which is currently rented out for the sum of $63,000 per month whilst the carpark is separately rented out for $3,500 per month. 4.After the birth of the child, the Wife left her position as a recruiter in a company and are not working since then. She focused on looking after the child who was diagnosed with a chronic medical condition and special dietary needs. The Husband is the primary financial provider and breadwinner of the family in addition to the rental income of the Winfield property. 5.The Husband moved out from the Wing On Lodge unit in March 2015. The Wife and the child continue to live in the said unit up to now. 6.The Wife commenced the divorce on the ground of unreasonable behaviour in April 2016 and decree nisi was pronounced on 10 August 2016. It is a marriage of about 11 years including the parties’ co-habitation. 7.By the consent order dated 23 May 2018, joint custody of the child was granted to the parties and care and control to the Wife with defined access to the Husband. 8.Pursuant to the Order made by me on 10 July 2020, the Husband do pay by way of maintenance pending suit to the Wife the sum of $39,800 per month for herself and the child of the family commencing on 15 July 2020, and thereafter payable on the 15th day of each succeeding month until further order (“MPS Order[1]”). 9.Pursuant to the Order made by me on 15 December 2021, the valuation reports of the Winfield property, the Wing On Lodge and various companies owned by the Husband were to be prepared by the single joint expert (“SJE”) and the case was set down for trial with 3 days reserved. The relevant legal principles and approach 10.The Court's jurisdiction in making an order for periodical payments, lump sum and sale of property is founded on sections 4, 6 and 6A of the Matrimonial Property and Procedure Ordinance (“MPPO”), in particular section 6(l)(e) provides:
11.The factors to be taken into account by the Court in the exercise of its powers under the above sections are set out in section 7 of the MPPO:
12.In LKW v DD (2010) 13 HKCFAR 537, after considering the line of English authorities of White v White [2001] 1 AC 596; Miller vMiller and McFarlene v McFarlene [2006] 2 AC 618, the Court of Final Appeal (“CFA”) has given a detailed discussion on how a Hong Kong court should approach the issue of ancillary relief. A brief summary is as follows:
13.I would follow the guidelines laid down in LKW’s case and discuss the relevant matters as mentioned in section 7 of the MPPO below. Standard of living 14.Prior to the separation, the parties were living in the Wing On Lodge unit of about 1150 sq ft, enjoying club membership, having a car, domestic helper and holidays 3 to 4 times a year within the region and abroad. The child is now studying in an international school. 15.I consider that the standard of living of the parties before separation is comfortable and can be regarded as middle class level. Husband’s income and earning capacity 16.According to his Form E dated 30 June 2022, his current salary as a regional program manager is $105,000 per month whilst his previous salary with Jones Lang Lasalle was only $70,000 per month. I consider that he has a very high earning capacity. 17.The Husband also receives the rental income of the carpark of the Winfield property for the sum of $3,500 per month. Wife’s income and earning capacity 18.According to her Form E dated 30 June 2022, she is unemployed as she needs time to look after the child of the family who suffers from serious allergies and eczema. 19.As already said in para. 23 of my MPS Judgment dated 10 July 2020[2], I maintain that she still has some earning capacity and can do some part-time job, especially when the child is in the school (from 7am to 3pm Monday to Friday) and the domestic helper is able to look after the child after return from the school. She had indeed started to re-educate herself by enrolling a Master’s of Counselling program. I am aware of her medical condition that she claims to have a high risk of breast cancer. Nonetheless, there is no or insufficient medical evidence saying that how it will affect her earning capacity. In view of her age, her tertiary education level and some previous working experience, I consider that on a broad brush approach, she is able to find a part-time job, such as private tutor earning about $15,000 per month. Meanwhile, the Wife also receives the rental income of the Winfield property for the sum of $63,000 per month to defray the mortgage instalments and other living expenses. 20.After this Judgment, the parties would receive not less than $25 million upon distribution of the family assets. I am sure that they should make use of it for some investment and that the usual and reasonable return should be around 2 to 3% per annum, ie $500,000 to $750,000 per annum. 21.In any event, I have no doubt to find that the Husband has much higher earning capacity than the Wife. Step 1: Identifying Assets Main Assets of the Family 22.The main assets of the family are the Winfield property, the Wing On Lodge and the various companies owned by the Husband and/or jointly by the parties, values of which are assessed by the SJE in the 2 valuation reports respectively dated 1 December 2021[3] and 29 June 2022[4] pursuant to my Order dated 15 December 2021 as follows:
23.The parties also owned another company called Conscious Living Ltd but agreed that it has no significant value. 24.The Wife accepted the above valuation reports and submitted that the size of the family pot consists of the following:
25.However, the Husband challenged the valuations of the Winfield property, Zen International and World Wide Asset Ltd and agreed the values of the remaining assets. He considered that the market value of the Winfield property should be $35.5 million as it was the last offer the parties received from a prospective buyer on 3 June 2021. Regarding the value of Zen International, the company has been closed and struck off. The Husband also considered that the residual value of World Wide Asset Ltd was only $17,000. 26.Mr Frank Wong of SJE attended the trial for examination by the Husband and gave oral evidence. 27.In my view, since SJE is an expert jointly appointed by the parties as the Husband is not qualified as an expert, I disagree that the Husband is entitled to challenge the expert opinion of the SJE. If the Husband indeed disagreed with the SJE’s opinion, what he should do is to seek leave from the court to adduce another expert report to challenge the SJE’s opinion. But he fails to do so. 28.Besides, I am satisfied with the oral evidence of Mr Frank Wong of SJE giving at the trial for clarification and explanation of his methodology used for the 2 valuation reports. In particular, Mr Frank Wong answered to the Husband’s questions concerning the valuation of the Winfield property as follows:
29.As to the value of Zen International, the Husband provided a certificate dated 18 February 2021 proving of this company being struck off[7]. Even if that may be the case, I consider that he fails to disclose or account for the sum of $1,190,000 being the value of this company. Although he said that half of such sum belongs to his sister, he did not produce any documentary proof of transferring any sum to his sister who had not given any evidence to the court. I will not accept his mere-say-so. 30.Furthermore, he produced his own HSBC statement dated 5 September 2020 which showed that a sum of $1,172,549.71 with transaction details “GOLD/EXCHANGE CREDIT” was credited into his account on 11 August 2020 and that a sum of $972,870 with transaction details “DEBIT AS ADVISED” was withdrawn into his account on 12 August 2020[8]. According to the HSBC statement of a joint name account of the Husband and his sister dated 10 September 2020, it showed that a sum of $972,870 was credited into this account on 12 August 2020 and that a sum of $970,000 with transaction details “GOLD/EXCHANGE CREDIT” was withdrawn into his account on 13 August 2020[9]. 31.The Husband fails to provide further financial documents in respect of this “GOLD/EXCHANGE” transaction. Nor his sister filed any affirmation or statement for clarification or explanation. In the circumstances, the court is entitled to draw adverse inference against him and considers that he fails to make full and frank disclosure of all his assets. 32.Besides, he said in part 5.1 of his Form E[10] that “My parent’s investment in Zen holdings, a company that owned part of a commercial building in Hanoi, Vietnam, was sold/settled in August 2020…..”. He fails to clarify the relationship between Zen International and “Zen holdings” or that they were the same company. No valuation is done on “Zen holdings”. The Husband fails to provide further financial documents in respect of this company. In the circumstances, the court is entitled to draw adverse inference against him as he fails to make full and frank disclosure of all his assets. For the purpose of Step 1, the said sum of $1,190,000 being the value of Zen International shall form part of the family assets. 33.For the value of World Wide Asset Ltd, I accept SJE’s opinion instead of the Husband’s view that the residual value of this company was only $17,000. 34.To sum up, I find and conclude, as accepted by the Wife that the total value of the family assets is $58,512,972. Monies allegedly owed by the Husband to the Wife 35.The Wife contended that the Husband owed her about $2 million, breakdown of which is set out in part 2.9 of her Form E dated 30 June 2022[11]. However, she did not provide sufficient documentary evidence to prove each and every items of such claims. 36.According to the fourth principle in LKW’s case[12], the court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tend to deplete the parties’ (and the courts’) resources and to increase antagonism and discourage settlement. Such attempts have been encountered in various contexts, including disputes over the extent of a party’s assets; over the contribution made to the welfare of the family; over the parties’ conduct; over claims to be compensated for having suffered some disadvantage, and so forth. 37.I would only adopt a board-brush approach to deal with this issue. Upon perusal of the breakdown of the alleged $2 million, some items are acceptable, such as child’s maintenance from 2016 to 2017 and its shortfall from December 2018 to May 2021, Great Prospect account fee, fire and home insurance of the properties, rental of the car park of the Winfield Property. The remaining items are doubtful as the Wife provided very limited documentary proof for them, such as alleged 50% of the funds the Husband received from Décor Holdings, Zen International etc. The Husband did not make any reply to the Wife’s claims item by item. I consider that for some items, it may be possible for the double counting of the values of these companies. I assess on board-brush basis that the Husband owes her a sum in the region of $800,000. I would make adjustment in the final order to reflect this sum below. Step 2: Assessing the parties' financial needs 38.In view of the substantial sum of the family assets, I consider that it is sufficient to meet all the financial needs of the parties including the child. 39.According to the Husband’s Form E[13], his total monthly expenses were $78,042 including the child’s monthly expenses for $26,722. I consider that the Husband has very high income and is able to satisfy his own financial needs. He is able to pay part of the child’s expenses. He suggested in his Open Proposals filed on 5 September 2022 that upon distribution of the family assets, each of the parties do contribute $2 million towards an investment account for the child which shall be managed by an independent third party mutually appointed. The Wife seems disagreed. In my view, the court simply has no jurisdiction under MPPO to make such an order and this proposal must be rejected. 40.As said above, the Wife has some earning capacity but her and the child’s financial needs are much greater than that of the Husband. According to the Wife’s Form E, her total monthly expenses were $112,187.84 after deducting the rental income from the Winfield property. Most of the expenses indeed relate to the Wing On Lodge unit and the Winfield property, such as the mortgage instalments, rates and managements fees etc. If these 2 properties are sold, the expenses will be greatly reduced. Great Prospect shall then be dissolved if the parties agree and all expenses in relation thereto such as auditor fees, business registration fees in relation thereto etc will be unnecessary. In order to save expenses, I therefore reject the Wife’s open proposal that she shall keep the Wing On Lodge unit and only the Winfield property be sold. I also consider that the Wife and the child shall move to an apartment smaller than the Wing On Lodge unit of about 1150 sq. ft., after sale of these 2 properties. Usually, the rent payable covers rates and managements fees. The expenses can be lowered down. 41.Although the parties agreed the total monthly expenses of the child for the sum of $56,718 during the trial, I found that such sum was not entirely accurate as it included the mortgage instalments, rates and managements fees etc relating to the Wing On Lodge unit and the Winfield property but has not taken into account of the rent to be incurred by the Wife after the sale of the Wing On Lodge unit. 42.I would say that after this Judgment, both parties shall try to lower down their standards of living. In the circumstances, I have to assess the future general expenses of the Wife and the child, which are set out as follows:
43.I consider that half of the said $57,000 being $28,500 represents the child’s monthly general expenses. Besides, I assess $38,900 as the monthly personal expenses of the child, breakdown of which is set out below:
44.Thus, the total monthly expenses of the child are $67,400 (ie $28,500 + $38,900). Although the Husband offers to pay some of the child’s expenses such as school fees, school bus transport etc direct, I refuse to accept it as he has the long history of failure to pay MPS to the Wife as ordered. 45.Having considered the Husband’s higher earning capacity than the Wife and their investment return as said in para. 20 of this Judgment, I exercise my discretion to order the Husband to pay ¾ of $67,400 (ie $50,550) to the Wife as the child’s monthly maintenance. Step 3: Deciding to apply the sharing principle 46.At this stage, I decide to apply the sharing principle with the yardstick of equal division but shall see if there are any good reasons to depart from the equality principle. Step 4: considering whether there are good reasons for departing from equal division 47.The court has to consider all the matters listed in paragraphs (a) to (g) of section 7(1) MPPPO and other relevant factors as mentioned in LKW’s case. It was said in para. 85 of the CFA’s Judgment in LKW’s case:
Source of assets as a factor 48.The Husband contended that prior to the marriage, he received an inheritance of about US$2.5 million by way of a trust from his late parents and he used it to purchase the Wing On Lodge unit and the Winfield property and to invest in various companies owned by him. He just said in his affirmation[15] that his parents passed away when they were at the age of 53 (ie in 2003) and 62 (ie in 2006). He fails to provide any documentary proof for what he said, in particular for the actual amount received from the alleged inheritance or the trust. I refuse to accept his mere-say-so. 49.It was said in para. 93 of the CFA’s Judgment in LKW’s case:
50.In my view, it is not a short marriage in the present case. Furthermore, the Wing On Lodge unit was obviously purchased as the matrimonial home which was a capital asset intended for and devoted to family use. The court would not put too much weight on this factor. 51.Besides, I accept the Wife’s evidence that during the marriage, the parties had a long history of buying and selling a lot of landed properties such as Fun Tat Building in April 2007, Tak Sing Lane in May 2007, Garfield Mansion in 2009, Bellevue Place in November 2010, Nam Wing in February 2012 etc and that they used the sales proceeds to increase the family wealth and/or purchase another property such as the Wing On Lodge unit and the Winfield property. Parties’ Conduct 52.The Husband argued that the Wife’s unreasonable refusal to sell the Winfield property amounts to “obvious and gross” misconduct. 53.The Wife said that the Husband kept pressing her to sell the 2 properties but disagreed to share the proceeds with her equally. Previously, the Imperial Terrace property was sold and the sale proceeds were equally divided by the parties as agreed[16]. 54.It was said in para. 104 of the CFA’s Judgment in LKW’s case:
55.In my MPS judgment[17], I had already said that the court has no jurisdiction to make an order for sale of the property on an interim basis. The court will only exercise such power after the trial of ancillary relief. 56.Indeed, the Winfield property including the car park generates a decent rental income totaling about $69,500 to $66,500 in the past for the purpose of defraying the family expenses. It is also well known that the property market in Hong Kong fluctuates a lot. No one has the crystal ball to predict if the price of the property will go up or down in the future. In my view, the Wife’s refusal to sell the Winfield property does not amount to “obvious and gross” misconduct which would be inequitable to disregard. 57.On the other hand, the Wife complained that the Husband did not regularly pay the maintenance pursuant to the MPS Order and other outgoings such as school tuition, medical insurance etc to her amounting to the total sum of about $2 million as set out in part 2.9 of her Form E, which has been discussed above. I also disagree any of the Husband’s conduct amounting to “obvious and gross” misconduct which would be inequitable to disregard. Contributions to the welfare of the family 58.I consider that the Husband has greater financial contribution to the family before his moving out in March 2015. However, the Wife certainly made tremendous household contribution to the family in terms of looking after the child. The court must reject gender or role discrimination when assessing the parties’ respective contributions. 59.It was said in para. 113 of the CFA’s Judgment in LKW’s case:
60.I am of the view that the contributions of the parties to the welfare of the family are more or less the same. Compensation 61.Although the Wife had said that she gave up her job after the birth of the child and become a full-time house wife, I will not consider as a factor again as said in para. 126 of the CFA’s Judgment in LKW’s case:
Step 5: Deciding the outcome 62.To sum up, I find that:
63.It was said in para. 131 of the CFA’s Judgment in LKW’s case:
64.I have to step back and look at the overall impact of all the relevant factors which carry certain weight for departure from equality. Upon careful consideration of all the circumstances and factors, I would exercise my discretion that the Wife shall share a little bit bigger portion of the family assets than the Husband. I am of the view that after the deduction of the respective mortgages[20], the Wife shall have 54% of the sale proceeds of the Wing On Lodge unit and the Winfield property, and the remaining proceeds to the Husband. Such a distribution of assets is fair as between the parties. 65.For the avoidance of doubt, the Wife shall continue to receive the rental income of the apartment of the Winfield property whereas the Husband shall continue to receive the rental income of the carpark of the Winfield property pending the sale. Order 66.In the circumstances, I now make an order as follows:
Costs 67.Regarding the question of costs of the ancillary relief proceedings, I consider that since the parties are unrepresented at the trial of this application and their open proposals are not entirely accepted by me, I would exercise my discretion to make no order as to costs including all costs reserved, if any.
The Petitioner: unrepresented appearing in person The Respondent: unrepresented appearing in person [1] my MPS Judgment dated 10 July 2020 [2020] HKFC 139 [3] See Bundle 1, pg.9 - 47 [4] See Bundle 1, pg.48 - 59 [5] Outstanding mortgage loan [6] Outstanding mortgage loan [7] See Bundle 8, pg. 73 [8] See Bundle 9, pg. 42 [9] See Bundle 9, pg. 14 [10] See Bundle 1, pg. 144 [11] See Bundle 1, pg. 107 to 111 [12] Paras. 62 and 63 of the Judgment [13] See Bundle 1, pg. 144 [14] See para, 16 of the Husband’s statement of open proposal filed 5 September 2022 [15] See Bundle 1, pg. 94 [16] See Bundle 9, pg. 221-222 [17] See para. 19 thereof [18] See para. 24 of this Judgment above [19] See paras. 30 - 32 of this Judgment above [20] See para. 24 of this Judgment above | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Other judgments that cite this case
Further hearings and rulings under FCMC 3929/2016