Case Document

100%Judiciary

FCMC No. 475/2021

[2023] HKFC 183

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 475 OF 2021

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BETWEEN
	F, CWP	Petitioner
and
	K, TF	Respondent

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Coram:

His Honour Judge S Lo in Chambers (Not Open to Public)

Dates of trial:	9, 10, 16 and 17 May 2023
Date of Petitioner’s closing submissions:	26 June 2023
Date of Respondent’s closing submissions:	10 July 2023
Date of Judgment:	19 September 2023

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J U D G M E N T
( Ancillary Relief )

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Introduction

1.This is an ancillary relief trial. Both of the Petitioner (“Wife”) and the Respondent (“Husband”) are aged 39.

2.The parties married on 8 December 2012 and separated in the early of 2020. It was a marriage of about 7 years. There is one child of the marriage (“Child”), who is 8 years of age.

3.By consent of the parties, an Order was made on 26 August 2021 for the joint custody of the Child, with care and control to the Wife and defined access to the Husband.

4.Decree Nisi was pronounced on 22 October 2021.

Parties’ Respective Open Proposals

5.The main family asset is the parties’ former matrimonial home (“FMH”) which is valued at about HK$2.6m (net of mortgage)[1] and registered in the Wife’s sole name. There are a lot of disputes concerning issues of adding back.

6.The Husband filed his Open Proposal on 6 March 2023. On the Husband’s case, the total matrimonial pot comes to a total of HK$5,003,273. He is prepared to accept a sum of HK$2,250,000 from the Wife on a clean break basis representing a capital split of 55-45 in the Wife’s favour. In addition, he is prepared to pay a monthly sum of HK$6,000 per month as maintenance for the Child excluding the HK$1,200 per month that he pays on top for Child’s Chinese tutoring. The Husband said that he is prepared to make this generous proposal in the hope that a settlement can be reached without the need for a full trial. Should the matter have to be fully litigated, he will be asking the Court to split the capital assets on a 50-50 basis as both parties are in gainful employment with comparable earning capacities.

7.In his Revised Open Proposal in his closing submissions, he submitted that the total matrimonial pot comes to a total of HK$5,065,583 and maintained to accept a sum of HK$2,250,000 from the Wife by 3 instalments, if the court considers necessary, on a clean break basis. He is also prepared to pay a sum of HK$11,000 per month as the Child’s maintenance. In addition, the Husband agrees to pay and is currently paying for the following expenses for the Child:

(1)  HK$1,200 per month of Chinese tutoring when the Child is with him;

(2)  50% of the Child’s reasonable fees for consultations with psychiatrists for her ADHD condition and other medical expenses to the extent that the same is not covered by the Wife’s work insurance within 14 days upon production of the relevant receipts;

(3)  50% of any other extra-curricular activities costs that the Child wishes to join provided that the activities and costs have been mutually agreed between the parties in advance.

8.The Wife proposed in her opening submissions that there is no division of capital (where all of the capital assets are in her name) “in exchange for only claiming $1 nominal child maintenance”. She further proposed that the Husband shall give an undertaking to bear half of the Child’s university tuition fees.

9.In her closing, the Wife made the alternative proposal of capital split of 65-35 in her favour with secured periodical payment of the Child’s maintenance of HK$18,861 per month.

10.She further made another proposal to continue living in the FMH with the Child until the Child reaches 18 and when the FMH has to be sold, split between the parties in the proportion of 65-35 in her favour. In addition, the Wife seeks the Child’s maintenance of HK$18,861 per month from the Husband before the sale of the FMH and the Child’s maintenance of HK$25,611 after the sale of the FMH.

The relevant legal principles and approach

11.The Court's jurisdiction in making an order for periodical payments, lump sum and sale of property is founded on sections 4, 5, 6 and 6A of the Matrimonial Property and Procedure Ordinance (“MPPO”), in particular:

"5. Financial provision for child of the family in cases of divorce, etc.

(1) Subject to the provisions of section 10, in proceedings for divorce, nullity of marriage or judicial separation, the court may make any one or more of the orders mentioned in subsection (2)—

…….

(2) The orders referred to in subsection (1) are—

(a)  an order that a party to the marriage shall make to such person as may be specified in the order for the benefit of a child of the family, or to such a child, such periodical payments and for such term as may be so specified;

(b)  an order that a party to the marriage shall secure to such person as may be so specified for the benefit of such a child, or to such a child, to the satisfaction of the court, such periodical payments and for such term as may be so specified;

(c)  an order that a party to the marriage shall pay to such person as may be so specified for the benefit of such a child, or to such a child, such lump sum as may be so specified.

……..

6. Orders for transfer and settlement of property and for variation of settlements in cases of divorce, etc.

(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation, or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of sections 10 and 25(1), make any one or more of the following orders, that is to say-

…..

(e)   an order for the sale of such property, as may be specified in the order, being property in which or in the proceeds of sale of which either party or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion, and for the use of the proceeds of such sale.

….."

12.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:

"(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, the value of either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.”

13.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:

(1)  The previous Hong Kong Court of Appeal decision in C v C [1990] 2 HKLR 183 should be overruled. In other words, the principle of "reasonable requirements" should no longer be followed;

(2)  When the court exercises its discretionary powers under section 7 of the MPPO, guidance may properly be sought from the White v White line of cases;

(3)  Financial provision applications are highly fact-sensitive and judges dealing with them must ultimately be guided by section 7 of the MPPO and the implicit aim of arriving at a fair financial outcome as between the parties;

(4)  In most cases, the available assets are usually not sufficient to cater for the needs of both parties so that the exercise does not progress beyond consideration of their needs;

(5)  On how section 7 of the MPPO should be approached, the CFA identified four principles underpinning the White v White line of cases:

(a)   The first principle - objective of fairness. The implicit objective of a section 7 exercise is to arrive at a fair distribution of the assets as between the parties;

(b)   The second principle - rejection of discrimination.   The concept of fairness requires the refutation of any gender or role discrimination;

(c)   The third principle - yardstick of equal division. With a view to eliminating insidious discrimination and promoting fairness, judges should check their tentative views on distribution against a yardstick of equal division which should be departed from only for good articulated reasons;

(d)   The fourth principle - rejection of minute retrospective investigation. The court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tends to deplete the parties' (and the court's) resources and to increase antagonism and discourage settlement;

(6)  The actual steps to be taken by a court in undertaking the section 7 exercise are as follows:

(a)   Step 1: identifying assets:

The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing.

"The object will of course compute the net financial resources, taking into account of all material liabilities. At this stage, the court need not attempt to distinguish between matrimonial and non-matrimonial property, that being an exercise best undertaken (if necessary) when considering distribution of the assets."

(b)   Step 2: Assessing the parties' financial needs:

The assessment of the parties' financial needs. If the total resources are not enough to meet the parties' needs, the section 7 exercise should stop here and there is no room to apply any sharing principle;

(c)   Step 3: deciding to apply the sharing principle:

If surplus assets would remain after the parties' needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties' total assets, with a yardstick of equal division as part of that principle. This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division;

(d)   Step 4: Considering whether there are good reasons for departing from equal division:

In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of section 7 and the implicit objective of a fair distribution of the assets. Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations; and

(e)   Step 5: Deciding the Outcome:

The question as to whether factors exist justifying a departure from equality is fact-sensitive and the weight to be given to such factors remains a discretion for the court. But where the court decides upon a departure, articulation of reasons for doing so is necessary as a check to ensure fairness of the outcome.

14.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.

Issues in Dispute

15.The Agreed and Signed Statement of Factual Issues in Dispute[2] and the Joint Schedule of Assets and Liabilities[3] were filed and signed by the Husband’s solicitors and the Wife’s then solicitors setting out briefly the parties’ respective stance in respect of the issues and assets in dispute.

16.Nonetheless, there are many new issues or points not stated in the Agreed and Signed Statement of Factual Issues in Dispute and the Joint Schedule of Assets and Liabilities, such as the Husband’s UK pension, his legal fees spent for proceedings in Malaysia etc, but only raised in the Wife’s Opening Submissions and even only in the Wife’s Closing Submissions for the first time. As some of them were not put to the Husband under cross examination and he was not given a proper opportunity to respond. I consider that it would therefore be unfair to the Husband if those new issues or points are to be taken into account.

17.I also accept the submission of Ms Leung for the Husband that many of these other points are so trivial that they have no meaningful impact on the final ancillary relief. In my view, the court will only resolve the major or main issues and assets in dispute but not each and every alleged issues and assets since it will contradict the fourth underlying principle as laid down in LKW’s case, namely the court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tended to deplete the parties’ (and the courts’) resources and to increase antagonism and discourage settlement.

Standard of living during the marriage

18.The family’s standard of living during the marriage was humble and modest. The FMH is a 2-bedroom flat in Kennedy Town measuring about 470 square feet. It is a 29-year old standalone building with no clubhouse facilities. The parties would usually eat at home and only eat out once during weekend. They would visit the Husband’s family in Malaysia once a year and usually, they had a short holiday to an Asian country once a year.

19.The Child studies at a local school with no school fees other than miscellaneous expenses. Apart from ballet, the Child undertook some extra-curricular activities organized by her school and had some tutoring. The Child also has ADHD condition with features of Oppositional Defiant Disorder and other medical needs, such as precoious puberty, which required regular follow up in the public hospital.

Parties’ earning capacities and needs

20.As the parties agree that this should be a clean break case with no spousal maintenance and both of them can well cover their own needs and accumulate savings, I am of the view there is no need to analyse the parties’ respective monthly expenses.

21.Based on the parties’ tax returns, their respective incomes, inclusive of salary and bonuses in the last 5 years were as follows:

Year Husband (HK$) Wife (HK$)

2017/2018 $992,500 $696,492

2018/2019 $1,155,042 $915,650

2019/2020 $1,122,344 $819,255

2020/2021 $982,056 $975,088

2021/2022 $1,123,330 (incl. bonus of HK$185,640) Not provided

22.I understand that the bonuses received by both of the parties from their employers were discretionary. In 2017/2018, the Husband had the total income around 30% more than the Wife’s. In 2018/2019, the Husband had the income around 20% more than the Wife’s. In 2019/2020, the Husband had the income around 26% more than the Wife’s. In 2020/2021, the Husband’s income was more or less the same as the Wife’s.

23.The Wife has not provided her 2021/2022 tax returns. I consider that she has roughly the similar income as in 2020/2021. She also contended that the Husband failed to disclose his housing allowance of HK$282,000 as stated in his Employer’s Return of Remuneration and Pensions for 2021/2022 under “Rent paid to landlord by employer”[4]. Ms Leung for the Husband did not make any submission in this regard. In my view, such benefit must be considered as part of the Husband’s income. Thus, I accept the Wife’s submission that the Husband had the additional income of HK$180,350 (ie $282,000 – $101,650[5]) and his total income shall be HK$1,303,680 (ie $1,123,330 + $180,350) in 2021/2022, which is around 30% more than the Wife’s.

24.In short, I find that the Husband has much higher earning capacity than the Wife, but not “substantial disparity of income” as contended by the Wife.

Child’s Maintenance

25.Before I deal with the parties’ own ancillary relief claims, I would determine the Child’s maintenance first.

26.On 24 August 2020, prior to exchanging Form Es, it was agreed between the parties that the Husband would pay the Wife a sum of HK$5,000 a month as interim maintenance for the benefit of the Child, plus 50% reimbursement of extra-curricular activities (“ECA”) and tuition fees (the latter capped at HK$4,500) as per the interim Order dated 24 August 2020.

27.In the Husband’s Opening, he considered that the Child’s reasonable expenses come up to HK$11,723 per month, and he was prepared to pay a monthly sum of HK$6,000 per month (slightly more than 50%) as child maintenance.

28.In his Closing, the Husband was prepared to pay a sum of HK$11,000 per month as child maintenance. In addition, the Husband agreed to pay and was currently paying for the following expenses for the Child:

(1)  HK$1,200 per month of Chinese tutoring when the Child is with him;

(2)  50% of the Child’s reasonable fees for consultations with psychiatrists for her ADHD condition and other medical expenses to the extent that the same is not covered by the Wife’s work insurance within 14 days upon production of the relevant receipts;

(3)  50% of any other ECA costs that the Child wishes to join provided that the activities and costs have been mutually agreed between the parties in advance.

29.The Husband suggested that the parties shall each be responsible for the Child’s holiday expenses.

30.In the Wife’s Opening Submissions, she was only claiming HK$16,272 per month but in her Closing, she now seeks child maintenance of HK$18,861 per month from the Husband before the FMH is sold and HK$25,611 per month after the FMH is sold.

31.To start with, I accept the Husband’s undertaking to pay 50% of the Child’s reasonable fees for ADHD and other medical expenses as mentioned above. However, the Wife had claimed the ADHD training course fees of $1,833 per month (about HK$22,000 per annum) and I consider that it is reasonable. Hence, the Husband’s undertaking has to be revised by including the reasonable ADHD training course fees capped at HK$11,000 per annum. As the amount payable by the Husband is quite small, I do not think that it will be disputed by him.

32.For other medical expenses, since the Wife has got the medical insurance from her employment covering the Child, I do not think that the Child’s medical expenses uncovered by the insurance would be very huge. But in case, the Wife no longer has the work medical insurance covering the Child for whatever reason, she may consider making application for variation in the future.

33.However, I refuse to accept the Husband’s undertaking to pay 50% of any other ECA as suggested above. First, it is not easy to ascertain if the Child do wish to join such ECA or not. Secondly, based on the history in these proceedings and their relationship, I doubt very much such activities and costs can be mutually agreed between the parties in advance. It will only create more disputes. As submitted by Ms Leung for the Husband in the Closing, the Wife has bombarded the Child with a full plate of activities, which makes it particularly difficult for the Child to cope.

34.The Wife accepted the ceiling of the Child’s tuition fees to be HK$4,500 per month and claimed HK$7,492 per month as the Child’s ECA expenses.

35.In a Diagnostic Assessment Report by Dr. Felicia Lau, Registered Clinical Psychologist dated 4 January 2022, Dr. Lau has observed, inter alia, that the Child has difficulty sustaining her attention and therefore recommended that the school should provide school-based adjustment service to cater for the Child’s educational needs when needed. She further recommended that classwork and homework be reduced[6].

36.According to the Wife’s evidence under cross examination, under her proposal, the Child will have to attend about 53.8 to 65.5 hours per month of tuition and ECA. The Child also has to attend church Sundays. Under cross examination, the Wife said that as they had to rush from church to art class, they had to take a taxi instead of MTR.

37.I agree that as the Child has difficulty sustaining her attention, she is exhausted by the amount of activities arranged by the Wife. Since joint custody of the Child was granted to the parties, they shall jointly seek expert advice as to how many hours per week or month is suitable for the Child. In the meantime, I consider that HK$2,500 per month for ECA is reasonable.

38.On the other hand, as the Husband had agreed to cap the tuition fees at HK$4,500 (but not the ECA) as per the interim Order dated 24 August 2020, I accept that the tuition fees at HK$4,500 per month is reasonable. Besides, in the best interest of the Child, I consider that the other Child’s needs have to be interpreted generously. I assess the Child’s reasonable monthly expenses to be HK$27,312, breakdown as follows:

(1) Household expenses for 3 people, including domestic helper:

Child’s share, ½ of the expenses (HK$)

Rental expense $16,000 $8,000

Utilities $1,800 $900

Food $4,000 $2,000

Household expenses $1,800 $900

Domestic helper $6,000 (including insurance, travel expenses as per employment contract etc) $3,000

Total $14,800

(2) Child’s own expenses:

Amount (HK$)

School fees $133

Extra tuition fees $4,500

School books and stationery $450

School bus fees $949

Dental $100

Extra-curricular activities $2,500

Clothing / shoes $300

pocket money
meal out of home $300
$500

Other transport $400

Uniform
Travel/holiday/entertainments $380
$1,200

Other expenses – toys, supplements, hair cut etc $800

Total $12,512

GRAND TOTAL OF CHILD’S MONTHLY EXPENSES $27,312

39.Since the Husband has much higher earning capacity than the Wife, I consider that he shall bear 60% of the Child’s monthly expenses, namely $16,400[7] (ie $27,312 X 60%) in addition to his undertaking to pay 50% of the Child’s reasonable fees for the ADHD training course capped at HK$11,000 per annum, consultations with psychiatrists for her ADHD condition and other medical expenses to the extent that the same is not covered by the Wife’s work insurance within 14 days upon production of the relevant receipts by the Wife.

40.I am in mind not to revise the Husband’s undertaking to pay 60% of the Child’s ADHD fees etc since the figure is not significant. Strictly speaking, the court shall not unilaterally impose a fresh undertaking on him if he is not prepared to give voluntarily.

Parties’ financial contribution to the FMH

41.Although the FMH is registered in the Wife’s sole name, it is undoubtedly a matrimonial asset and available for distribution in the ancillary relief trial.

42.The FMH was purchased at the price of HK$5,350,000 with 70% mortgage. In January 2017, the parties moved in until they decided to move out of the FMH and into a flat in Wai Wah Court, Kennedy Town, Hong Kong (“Wai Wah Court”) in late 2019. Eventually, they separated in early 2020 and the Wife moved back to the FMH with the Child.

43.The Husband claimed that he contributed HK$450,000 towards the down payment of the FMH, which was acknowledged by the Wife in her 1^st Answer to Questionnaire dated 18 December 2020. But the Wife claimed in her closing that he only contributed HK$440,000. She also said that she paid HK$828,901.75 including stamp duty, estate agent commission, legal fees etc whilst the Husband said that both parties contributed about HK$260,000 to settle other expenses.

44.There is no dispute that the Wife’s mother had advanced a loan of HK$610,000 to the Wife for the down payment of the FMH. The Husband’s case is that both parties contributed towards repayment of the down payment loan to the Wife’s mother but the Wife disagreed.

45.In short, the Wife said that the total sum paid for the purchase of the FMH is HK$1,878,901.75 and she claimed to have made 77% (ie $828,901.75 + $610,000 / $1,878,901.75) financial contribution to the purchase of the FMH whereas the Husband only made the remaining 23%.

46.The Wife provided the Whatsapp message between her and her mother as well as the relevant bank statements in June 2018 but the Husband failed to provide any documentary proof for his alleged contribution towards the repayment of the loan to the Wife’s mother. On the balance of probabilities, I accept that the Wife solely repaid the said loan of HK$610,000 to her mother.

47.Similarly, for the other expenses such as stamp duty, estate agent commission, legal fees etc, I accept the Wife’s evidence as she was able to provide a detail breakdown with some support documents whilst the Husband only made a bare assertion. However, I would accept the Husband’s contribution of HK$450,000 instead of HK$440,000 towards the purchase of the FMH, since it has been acknowledged by the Wife in her 1^st Answer to Questionnaire dated 18 December 2020.

48.To conclude, I accept that the Wife had made roughly 76% financial contribution to the purchase of the FMH whereas the Husband made the remaining 24%.

49.For the mortgage instalments, I consider that both parties had contributed towards repayment of the mortgage equally from the beginning (ie January 2017) up to October 2019 and thereafter up to this date, the Wife is solely responsible for the mortgage repayment including the management fees, rates etc. Ms Leung for the Husband rightly submitted that although the Wife has paid for these expenses, her bank account balance would have dropped as a result. It is already reflected in the Joint Schedule of Assets and Liabilities and taken into account in the calculation of the size of the matrimonial pot. Furthermore, it is noteworthy that the family lost the rental income of the FMH due to the Wife’s moving back to the FMH since October 2019 and furthermore, the Husband has to be responsible for the monthly rental of Wai Wah Court for HK$24,500 by himself.

50.In my view, as the Wife has to pay rent for her and the Child’s accommodation in any event if she chooses not to move back to the FMH, I disagree that she can be said to have made extra financial contribution to the FMH for the alleged sum of HK$683,144 (ie HK$15,526 X 44 months) when she is residing therein. The monthly mortgage instalment for HK$15,526 should be more or less the same as the rental to be incurred by her if she and the Child stay in a flat of similar size of the FMH.

Beneficial Interest in the Malaysia Property

51.The property situate at Kuala Lumpur (“Malaysia Property”) is registered in the sole name of the Husband. The agreed value of the property is MYR877,716. After deducting the outstanding mortgage (about MYR510,450), there is a net equity value of about MYR367,266, which is equivalent to about HK$617,007.

52.The rental income of the Malaysia Property is about MYR2,300 per month, whereas the monthly mortgage instalment is about MYR2,675.31 per month and the management fee is about MYR600 per month. In other words, there is no surplus left over for the Husband.

53.The Husband’s case is that his father owns 30% of the beneficial interest in the Malaysia Property by reason of the parties’ common intention and/or resulting trust. On the other hand, the Wife contends that the Husband is the sole beneficial owner of the property. The value of the difference between the parties is only HK$185,102 (being 30% of HK$617,007).

54.The Husband’s case is that his father had paid the down payment of about MYR184,040 (equivalent to about HK$373,600). The Husband said that this is supported by a cheque dated 1 March 2013 drawn by the Husband’s father for the down payment of the Malaysia Property. In addition, the Husband’s father is responsible for maintaining and upkeeping the Malaysia Property. The Husband’s father’s monetary contribution in percentage terms rounds up to about 20% of the purchase price (HK$1,807,470) but since he was going to be responsible for maintaining and upkeeping the property and handling the leasing of the property, it was agreed between the Husband and his father that his father should have 30% of the beneficial interest instead of 20%.

55.The Wife’s position is that the Husband is the sole beneficial owner of the Malaysia Property, in line with the registered legal ownership although she alleged for the very first time in her opening submission that the down payment for the Malaysia Property was paid by the Husband’s father as a wedding gift to the parties.

56.The Husband gave evidence at the trial that his father has not been able attend the trial to give evidence on the beneficial ownership of the Malaysia Property due to his ill health and consequent difficulty in travelling from Malaysia to give evidence. Ms Leung for the Husband relies on Ip Man Shan & Ors. v. Ching Hing Construction Co. Ltd. & Ors[8] (unrep, HCA 3674 of 1985, 15 January 2003) and invites the Court not to exercise its discretion to draw an adverse inference against the Husband simply because his father’s inability to attend trial.

57.Although a Form F dated 29^th November 2022 was served on the Husband’s father to notify him of the dispute relating to the Malaysia Property and the Husband’s father did not apply to be joined as party to the proceedings, I consider that as the Malaysia Property is registered in the sole Husband’s name, the Husband has the burden of proof to show otherwise, namely resulting or common intention constructive trust based on the alleged agreement with his father, he instead of the Wife shall therefore take out the joinder application and ask for preliminary issue proceedings on the beneficial interest in the Malaysia Property. If he fails to do so, I am of the view the court is entitled not to accept the Husband’s bare assertion.

58.Furthermore, the Husband’s father has not filed any affidavit and the Wife is deprived of the opportunity to cross examine the Husband’s father as to the alleged agreement and I consider that it is not fair to her.

59.In the circumstances, I conclude that the Malaysia Property is solely owned by the Husband and its net equity value of about MYR367,266, (equivalent to about HK$617,007) is considered as a matrimonial asset for distribution in the ancillary relief trial. The difference between the parties for the sum of HK$185,102 shall be added to the Husband’s assets.

Addbacks – HK$1m transferred from the Wife to her mother on 11 June 2019

60.It was clarified by the parties during the trial that the correct date of the transfer should be 11 June 2019, and not 11 July 2019, as stated in the List of Issues.

61.On 11 June 2019, just 7 months before the Wife commenced divorce proceedings under FCMC273 of 2020, she transferred HK$1 million to her mother. In my view, it is very suspicious given the proximity in timing. Indeed, the Wife has previously admitted under Part 5.1 of her 1^st Form E dated 7 October 2020 that she had transferred a sum of HK$650,000 to her mother from September to December 2019 “out of fear” of these proceedings and agreed to have the said sums returned to her and properly accounted for in these proceedings[9].

62.It is also noteworthy that she had paid some legal fees[10] to Messrs Alvin Cheng & Rosaline Choy, a matrimonial law firm, as early as in October 2019 and afterwards, engaged Messrs Payne Clermont Velasco in taking out the 1^st set of divorce proceedings under FCMC 273/2020 and Messrs Leung Tam & Wong acting for her in filing the Form 4 for the 2^nd set of divorce proceedings under FCMC 4089/2020.

63.As pointed out in the Social Welfare Report that the parties’ relationship in fact began deteriorating in 2015 when they started seeing a marriage counsellor[11] as the Wife accused that the Husband had been unfaithful to her.

64.In her 1^st Answer, the Wife alleged that the transfer of HK$1m on 11 June 2019 to her mother was made for the following purposes:

(1) Out of the HK$1m, HK$965,993 (i.e. HK$759,698 principal and HK$206,295 interest) was repaid to her mother for loans provided by her mother and sister respectively.

(2) The surplus amount of HK$34,007 was treated as a gratitude payment to the Wife’s mother for her help in looking after the Child for 3 years since birth[12].

65.In terms of the breakdown of the loans from the Wife’s mother and sister, the Wife alleged that she borrowed:

(1) HK$770,000 from her mother in 2009 for investment purposes; and

(2) HK$94,000, HK$21,800 and HK$43,842.04 from the Wife’s sister in 2007, 2008 and 2010 respectively.

66.The Wife further alleged that over the past 14 years, she only made 2 repayments to her mother in the sums of HK$50,000 and HK$200,000 on 11 March 2016 and 24 March 2016 respectively. She failed to elaborate what the outstanding principle and interest are after such repayments.

67.As the Wife has failed to call her mother and her sister to give evidence to confirm the veracity of the alleged loans and repayments and also failed to explain why they could not even file affidavits, I would draw an adverse inference against her (see Ip Man Shan’s case (supra)). Furthermore, the Wife has failed to provide satisfactory documentary evidence in support of her case of the alleged loans, interest and repayments. The Wife made no more than a bare allegation that there were such loans which had not been repaid for over 14 years.

68.In respect of the alleged payment of HK$770,000 from the Wife’s mother to her in 2009 for investment, I consider that it is either a gift or a soft loan that does not have to be repaid. I further accept the submission of Ms Leung for the Husband that the amount charged for interest on the alleged loans totaling HK$206,295 and the alleged gratitude payment of HK$34,007 by the Wife to her mother are entirely arbitrary and not supported by any documentary evidence.

69.Alternatively, I find that the sudden repayment of the alleged loan of HK$1m on 11 June 2019 was made with an intention to defeat the Husband’s claims in these proceedings and that it has to be added back to the family pot.

HK$178,301 paid by the Wife to her sister from September 2019 to May 2022 for alleged ‘tuition fees’ for the Child

70.The Husband’s case is that the Wife has made excessive payments to her sister, which were disguised as tuition fees for the Child’s benefit, which were made with an intention to defeat the Husband’s ancillary relief claim or were otherwise reckless and wanton and should be added back. The Husband’s case is that payments by the Wife to her sister in excess of HK$4,500 per month should be added back to the matrimonial pot.

71.At the 1^st Appointment hearing on 24 August 2020, the Husband only agreed for his share of tuition fees to be capped at HK$4,500 per month.

72.The Wife admitted her 1^st Form E[13] that she paid the following number of hours of extra tuition fees to her sister:

Month No. of hours Amount (HK$)

January 2020 22 $6,600

February 2020 0 $0

March 2020 0 $0

April 2020 9 $3,000

May 2020 (Husband commenced proceedings) > 30 $10,000

June 2020 > 75 $25,000

July 2020 > 84 $28,000

August 2020 > 72 $24,000

September 2020 > 54 $18,000

73.Under cross examination, the Wife agreed that not all of the payments were for extra tuition fees for her sister. The Wife said that as she had to work, she needed her sister to help the Child with her studies and to take her to the co-parenting centre at Causeway Bay and that such trips take 3 hours each time.

74.In my view, the Wife has a full-time helper who could have taken the Child to the co-parenting centre. Paying the Wife’s sister tuition fee rates of HK$300 per hour for work that a helper could have done is plainly not justified.

75.Ms Leung for the Husband rightly pointed out that in July 2020, when the Wife paid her sister HK$28,000 per month of alleged ‘tuition fees’, she also paid HK$20,000 per month to her mother as alleged ‘maintenance’. This equates to more than half of her salary. In my view, it is unreasonable and excessive.

76.Besides, the relevant tuition fee receipts were not disclosed and the Wife has similarly failed to call her sister to give evidence to confirm the veracity of these alleged tuition fees. An adverse inference should be drawn against her.

77.Having said that, I am of the view that the tuition fees incurred may not be the same every month and that they are still within the reasonable range if amount of the tuition fees paid by the Wife to her sister is below HK$6,000 per month in view of the Wife’s substantial income. To conclude, I find that the payments of tuition fees by the Wife to her sister which exceed HK$6,000 per month were reckless and wanton, and that on a broad-brush approach, the sum of HK$100,000 has to be added back to the family pot.

HK$170,888 paid by the Wife to her Mother since December 2019 for alleged ‘maintenance’

78.The Husband’s case is that the Wife has made excessive maintenance payments to her mother and that the payments by the Wife to her mother in excess of HK$8,000 per month should be added back to the matrimonial pot.

79.Prior to the commencement of these divorce proceedings, the Wife only paid a monthly contribution of HK$8,000 per month to her mother. The sum increased to HK$15,000 per month in February 2020 shortly after the Wife commenced divorce proceedings under FCMC 273 of 2020 in January 2020 and further increased to HK$20,000 per month in June to September 2020, shortly after the Husband commenced this 2^nd set of divorce proceedings. The Wife has failed to call her mother to give evidence on the alleged maintenance payments. Similarly, an adverse inference should be drawn against her.

80.During the marriage, the Wife agreed that she only paid her mother a monthly maintenance of HK$8,000. The Wife explained that the monthly maintenance was paid taking into account that the parties and the Child were all living at her mother’s place and that since they did not have a helper at that time, the Wife’s mother assisted to take care of the Child.

81.The Wife further explained that she increased her monthly maintenance to her mother in December 2019 from HK$8,000 to HK$10,000 because her father had moved in to live with her mother and the increment was to cover the father’s expenses. On the balance of probabilities, I accept her explanation.

82.However, the Wife further increased from HK$10,000 to HK$15,000 in February 2020, shortly after she filed a Petition for divorce in January 2020. She further made a payment of HK$68,888 to her mother on 6 May 2020.

83.The Wife’s explanation is that she had received a bonus and pay increment at the time and the remainder of HK$48,888 (i.e. HK$68,888 less HK$20,000) was a one-off gift to her parents for the Mother’s Day and Father’s Day. However, she has not continued to increase her monthly maintenance after May 2020 despite the fact that her income had continued to increase. In fact, it was reduced back to HK$8,000 per month by the time of her 2^nd Form E in September 2022.

84.In my view, the gift, maintenance or contributions to the parents may be varied every month and they are still within the reasonable range if amount paid by the Wife to her mother as well as her father is below HK$10,000 per month. I reject the Wife’s explanation for sudden one-off gift of HK$48,888 to her parents for the Mother’s Day and Father’s Day but I consider that HK$18,000 as one-off gift to each of her parents is acceptable. I also reject the sudden increase from HK$10,000 per month to HK$15,000 per month, ie 50% increment, which is very substantial and not proportional to the increase in her salary at that time. I conclude that such payments which exceed HK$10,000 per month were reckless and wanton, and that on a broad-brush approach, the sum of HK$120,000 has to be added back to the family pot.

HK$296,200 of alleged unaccounted withdrawals by the Husband

85.The Wife alleges that a total sum of HK$296,200 was withdrawn from the Husband’s bank accounts on 24 December 2018, 16 April 2019, 10 September 2019, 8 November 2019 and 21 January 2020 with an intention to defeat the Wife’s ancillary relief claims.

86.The Husband’s case has been set out in his 1^st Answer, 3^rd Answer and 2^nd Affirmation, i.e. that these withdrawals were made to exchange Malaysian Ringgit for payment of expenses in Malaysia including injection of capital in Beyond Infinity Consultancy (“BIC”), legal fees, mortgage repayment, insurance premia, his parents’ allowance and donations etc.

87.Ms Leung for the Husband submitted that the following withdrawals from Husband’s HSBC account no. 611-610XXX-888 bank statements can be matched up with the Wife’s allegations:-

Date Transferee Amount (HK$)

10/9/2019 Ng Wei Keng $25,000

8/11/2019 Ho Kwong Ming $30,000

21/1/2020 456-773XXX-001 $75,000

Total $130,000

88.The Husband’s case has been set out in his 1^st Answer, 3^rd Answer and 2^nd Affirmation, i.e. these 3 withdrawals from his account were for the purpose of exchanging Hong Kong dollars for Malaysian Ringgit with his friends who wanted to buy Hong Kong dollars to pay for expenses in Malaysia, including his business of BIC, legal fees, mortgage repayments, insurance premia, his parents’ allowance and donations etc.

(1) With respect to the transfer of HK$25,000 on 10 September 2019 by the Husband from his HSBC account to his friend Ng Wei Keng, Ng Wei Keng had transferred a corresponding total sum of MYR13,370 to the Husband to his Maybank account on the same day as follows:

Date Particulars Amount (MYR)

10/9/2019 IBK FUNG TFR TO A/C NG WEI KENG MEPS FUNDS TRA INSTANT TRANSFER 10,000+

10/9/2019 IBK FUND TFR TO A/C NG WEI KENG MEPS FUNDS TRA INSTANT TRANSFER 3,370+

Total 13,370

(2) With respect to the transfer of HK$30,000 on 8 November 2019 by the Husband from his HSBC account to his friend Ho Kwong Ming, Ho Kwong Ming had transferred a corresponding total sum of MYR15,898 to the Husband to his Maybank account two days before on 6 November 2019 as follows:

Date Particulars Amount (MYR)

6/11/2019 IBK FUNG TFR TO A/C WK TRADING n SERVIC* MISC MBB CT- 15,898+

(3) Lastly, with respect to the transfer of HK$75,000 on 21 January 2020 by the Husband from his HSBC account to the account 456-773XXX-001, the exchanged amount of MYR39,267 is reflected on the same say in the Husband’s Maybank account as follows:

Date Particulars Amount (MYR)

21/1/2020 IBK FUNG TFR TO A/C WK TRADING n SERVIC* MISC MBB CT- 39,267+

89.The Husband was not specifically challenged on these alleged unaccounted withdrawals during cross examination. During cross examination, the Wife only went so far as to make an allegation that because the withdrawals made in December 2018, April 2019 and transfer of monies to Ng Wei Keng in September 2019, they were not reflected as directors’ loans on the balance sheet of BIC.

90.With some supporting documents produced by the Husband, I accept the Husband’s explanation on the balance of probability and refuse to add back these sums as requested by the Wife.

HK$215,820 of allegedly questionable transfers by the Husband

91.The Wife alleges that the following transactions were made with an intention to defeat the Wife’s ancillary relief claims[14] or that these withdrawals were “excessive”:-

Date Particulars Amount (HK$)

30/4/2021 Transfer to “OOI Y** B*** 00-2104-301954954100” from the Husband’s SCB current account no. 451-8-946XXX-0 94,820

20/12/2021 Transfer to “Other Bank Internet Banking” from the Husband’s SCB savings account no. 451-8-946XXX-1 55,000

18/8/2022 Transfer to “WANG S***** 002208-181143218300” from the Husband’s SCB savings account no. 451-8-946XXX-1 32,000

26/5/2022 Transfer to “502-124662-001 N52593XXX836 (25MAY22)” from the Husband’s HSBC account no. 611-610XXX-888 18,000

17/8/2022 Transfer to “IP C*** F*** 00-2208-171548XXX600” from the Husband’s SCB savings account no. 451-8-946XXX-1 16,000

Total $215,820

92.The Husband provided explanations for these transfers in his 3^rd Affirmation as follows:

(1)  The transfer of HK$94,820 on 30 April 2021 to “OOI Y** B***” was used to exchange Hong Kong dollars for Malaysian Ringgit[15]. The Husband has provided his Maybank account statement showing an equivalent deposit of MYR50,000 by Ooi Yit Boon on the same day.

(2)  The transfer of HK$55,000 on 20 December 2021 was for payment of legal fees for his Hong Kong solicitors, Messrs Ip & Heathfield[16]. The Husband has provided a Capscreen of the payment record and receipt from Messrs Ip & Heathfield.

(3)  The transfer of HK$32,000 on 18 August 2022 to “WANG S*****” was for payment of rental security for the Husband’s new residence. The Husband has provided Schedule 1 of his rental agreement dated 19 August 2022 showing an equivalent amount of security deposit.

(4)  The transfer of HK$18,000 on 26 May 2022 was for payment of legal fees to Norton Rose Fullbright in relation to proceedings in Malaysia. The Husband has provided a copy of the official receipt from Norton Rose Fullbright dated 26 May 2022.

(5)  The transfer of HK$16,000 on 17 August 2022 was for payment of 1-month rental for the Husband’s new residence. The Husband has provided a copy of the official receipt for the rental payment dated 17 August 2022.

93.Under cross examination, the Husband was questioned by the Wife on only 1 of 6 disputed transfers, namely, the transfer to “OOI Y** B**” on 30^th April 2021 in the sum of HK$94,820. The Husband answered that the transfer was for the exchange of Malaysian Ringgit to pay for legal and other expenses. This is consistent with the Husband’s explanation in his 3^rd Affirmation. The Husband has provided his Maybank account showing an equivalent deposit of MYR50,000 by Ooi Yit Boon on the same day.

94.This was confirmed by the Wife herself at §105 of her Closing Submissions. No further submissions were made on the other 5 out of 6 disputed transfers in the Wife’s Closing Submissions.

95.In the circumstances, I am satisfied with the Husband’s explanations which are supported by documents with respect to each of these transfers and hence, I reject the Wife’s claim for addbacks in respect of these unaccounted withdrawals.

Husband’s businesses in Malaysia

96.The Wife has put in issue the following matters with respect to the Husband’s businesses in Malaysia “Beyond Infinity Consultancy”, “3 Dynasty Trade” and “Petz Paradise Boarding And Shop”:-

(1)  What are the values of the said businesses?

(2)  Whether or not the Husband receives undeclared income from the businesses, and if so, how much?

(3)  What is the Husband’s beneficial interest in the businesses?

(4)  Whether there was mingling of the Husband’s personal finances with the finances of the businesses?

Beyond Infinity Consultancy (“BIC”)

97.BIC was registered in October 2018 which provides E-Commerce solutions and training services.

98.Ms Leung for the Husband submitted that first, there is no expert evidence before the Court as to the value of the business as no such application has been taken out. As to the business’s value, the Husband has given affirmation evidence that there is no asset in the business other than liquid cash of about MYR50,000. The money is used to pay for various expenses including wages, delivery fees, marketing expenses, rental fees and software subscription fees.

99.As reflected in the profit and loss statement, the business made a net loss of MYR26,346.39 in 2019 and a net loss of MYR2,777.55 in 2020. Despite making a profit of MYR50,771 in 2022, the profit merely covered the losses made in previous years. Taking into account various operating expenses and anticipated future expenses, the Husband’s case is that the business is of insignificant value.

100.Second,the Husband is the 100% beneficial owner of the business. The partnership was initially set up in alliance with the Husband’s brother and the beneficial interest was discussed and agreed between them to be 90% (the Husband) and 10% (the Husband’s brother). Since 2021, the Husband’s brother had decided not to participate in the business in the capacity of a director but to remain as an employee. The Husband therefore bought out his share for not more than MYR5,000, so the business now wholly belongs to the Husband as reflected in the Husband’s 2^nd Form E dated 23 September 2022.

101.Third,the Husband confirmed that he has not made any withdrawals from the business. The only time he received money from the business was subsidies from the Malaysian government’s scheme to help small businesses through COVID.

“3 Dynasty Trade” and “Petz Paradise Boarding and Shop”

102.The Husband explained that these two sole proprietorships are merely business names with no substance. Although he had registered them, there are no existing businesses or companies in active and/or in operation.

103.Ms Leung for the Husband submitted that first, with regard to “3 Dynasty Trade”, the name was registered based on an idea to buy and sell products from trade fair and no action had ever been taken to implement the idea at all. It was eventually abandoned due to Covid-19. The Wife was well aware of the Husband’s idea as they had discussed it back in 2018 (2 years prior to separation in January 2020).

104.Second, with regard to “Petz Paradise Boarding and Shop”, it is also a trade name with no substance. It was recently registered but the Husband has not taken any action to implement the idea.

105.Third, in order to alleviate the Wife’s suspicions, the Husband has lodged two applications with the Malaysian government to verify his tax obligations. The status of the businesses show that the accounts are dormant, meaning that the businesses are merely a registration, with no operation.

106.During cross examination, the Husband explained that his brother previously had a 10% stake in the business and that in 2021, the Husband had purchased his brother’s stake for MYR5,000 as his brother did not want to be embroiled in these proceedings. His brother’s name continues to appear in the business’s website as he remains an employee of the business. The only time the Husband received money from the business was subsidies from the Malaysian government’s scheme to help small businesses through COVID (including paying staff salaries). The Husband has already declared income from BIC in the sum of HK$3,500 per month in his Updated Form E. The payments ranging from MYR1,000 to MYR3,000 per month referenced as “gaji” or “Gov Sub”.

107.The Husband further explained that he made the withdrawals on 24 December 2018, 16 April 2019, 10 October 2019, 8 November 2019 and 21 January 2020 (totaling HK$296,200) were for the purpose of exchanging Malaysian Ringgit for expenses in Malaysia, including injecting capital for BIC, legal fees, mortgage repayments, insurance, premia, his parents’ allowance and donations etc. The withdrawals on 24 December 2018 and 16 April 2019 were made to exchange Malaysian Ringgit for injection into BIC. The total amount of capital injections from his Maybank account no. 114272-XXX830 from 3 January 2019 to 4 August 2020 came to a total of MYR42,299 (equivalent to about HK$70,166.17).

108.The Husband declared income of HK$3,500 per month from BIC in his 2^nd Form E[17], he explained that that was sourced from a Malaysian government subsidy for small medium enterprises during Covid (which would include monies to pay for staff salaries). This source of income has now stopped.

109.I accept Ms Leung’s above submissions and the Husband’s above evidence. I consider that the capital injections made into BIC are not relevant to the question of the value of the business. If the Wife disagreed with the Husband’s case that the said businesses are of insignificant value, her then lawyers had to seek the court direction for appointing an expert, usually a single joint expert, for valuation of the businesses or their income etc. The Wife claimed to have the qualification of Chartered Financial Analyst Exam Level 1. In my view, she is just a factual witness but not entitled to give expert evidence in this regard. Without the assistance of the expert properly appointed by the court, I cannot simply accept the Wife’s submission or her own comments as to the value or income of these businesses.

110.On the balance of probability, I find that none of the businesses (ie BIC, 3 Dynasty Trade and Petz Paradise) have any significant value or generate any significant income to the Husband.

Alleged non-disclosure of the Husband

111.The Wife also took issue with the following entries found in the Husband’s bank statements: -

(1)  Maybank account 114209-XXX577;

(2)  Maybank account 214271-XXX707;

(3)  Maybank account 264276-XXX158;

(4)  The balance of the Malaysian Employees Provident Fund (EPF) and the whereabouts of it.

112.Ms Leung for the Husband submitted that first, although the Wife now purports to take issue with the Husband’s non-disclosure of Maybank account 114209-XXX577, the Husband’s case is that Wife is in fact well aware that this is a bank account that belongs to the Child. The bank account has been untouched. The Husband had totally forgotten about it. Having been reminded by the Wife, the Husband has applied for and provided the bank statements from January 2020 to August 2022 in his 2^nd Form E (with the balance of MYC3,112.54).

113.Second, with respect to the numbers “214271-XXX707” and “264276-XXX158” extracted from the Husband’s Maybank statements, the Husband has explained time and time again and these are bank reference numbers for fixed deposits and not undisclosed bank accounts.

114.Third, with respect to the balance of the Husband’s EPF, the Husband has explained that when he permanently relocated from Malaysia back to Hong Kong in April 2016, he withdrew his EPF funds. Thus, the account balance is zero.

115.In his 2^nd Affirmation at §64, the Husband had set out all of the fixed deposit and returns on fixed deposits in a table format that from 27 November 2018 to 27 February 2020 a total sum of MYR156,000 had been placed into fixed deposit and in return, the Husband had received a total of MYR163,045 back in his account, inclusive of principal and interest.

116.On the balance of probability, I accept the Husband’s explanations and reject the Wife’s allegations.

Husband’s Personal Loan

117.There is no dispute that the Husband indeed took out a HK$1m loan on 3^rd March 2021. According to the Husband’s 1^st Form E, his cash and securities balance at the time was only HK$190,067 and he said that after separation, he had to borrow in order to keep up with his usual living expenses, including credit card expenses, tax bills and additional expenses on rental of a flat and legal fees. As the Husband explained under cross examination, a significant portion of his debt was incurred in order to pay for legal fees. According to his latest Form H, he has incurred a total amount of HK$1,671,800 on legal fees.

118.Ms Leung for the Husband submitted that the Wife’s expenses on legal fees have already been taken into account in the Joint Schedule of Assets and Liabilities as it is reflected in her up-to-date bank account balance. If the Husband’s expenses on legal fees were to be excluded, it would be highly unfair to the Husband since the Wife’s expenses on legal fees have been taken into account. I accept Ms Leung’s submission.

2015 Honda vehicle

119.The Husband’s case is that the car belongs to his father and that in any event, it does not have any resale value[18]. Ms Leung for the Husband argued that should the Wife wish to contend otherwise, she should have applied for leave to adduce expert evidence on the resale value of the car.

120.It is one of the disputed assets as stated in the Joint Schedule of Assets and Liabilities, in which the vehicle was estimated to be valued at MYR22,500 as at 26 November 2020.

121.In my view, as the vehicle is registered in the name of the Husband and his father has not filed any affidavit nor attend the trial for cross-examination by the Wife, the Husband’s evidence that the car belongs to his father must be rejected.

122.As to the valuation, I consider that it is not proportional for incurring expert fees and that on board-brush approach, I add back MYR18,000 (approximately HK$30,000) to the Husband’s asset.

Husband’s BOC Life Annuity

123.The Wife suggested that the cash value of HK$195,634 (instead of HK$133,223.26) under the Husband’s asset should be adopted in the Joint Schedule of Assets and Liabilities, and the premium payable of HK$60,070 should be regarded as a liability of the Husband. Ms Leung for the Husband accepted. It has the effect of increasing the size of the matrimonial pot by HK$62,410.74 but under the Husband’s asset.

Exclusion of the Wife’s MPF

124.In the Wife’s Closing Submissions, she suggested that her MPF of HK$595,457 should be excluded since most of it was accumulated prior to marriage or alternatively, that the Court should only include 30% of it in the matrimonial pot.

125.In my view, for the purpose of Step 1: Identification of Assets, it is unnecessary to distinguish the matrimonial or non-matrimonial assets. But it may be a good reason to depart from the equality principle in Step 4 if the court accepts that most of the Wife’s MPF accumulated prior to marriage.

Identification of Assets

126.To conclude, I find that the matrimonial pot comes to a total of HK$5,151,596.74, breakdown of which is set out as follows:

Wife (HK$) Husband (HK$) Total (HK$)

Matrimonial pot (excluding addbacks)

$3,693,916 ($39,832)

Difference in value of Malaysia Property
2015 Honda $185,102

Vehicle
BOC Life Annuity $30,000

$62,410.74

Addbacks $1,220,000[19] -

Total $4,913,916 $237,680.74 $5,151,596.74

Whether there are good reasons to depart from equality

127.As both of the parties have very good earning capacities, their own financial needs are well catered for. I decide to apply the sharing principle for distribution of the family assets but I have to see if there are some good reasons for departing from an equal division.

128.As discussed above, the Wife’s financial contribution in respect of the down payment of the FMH is higher than that of the Husband.

129.Having said that, I am fully aware of and will take into account the submission of Ms Leung for the Husband regarding the FMH which was intended for and devoted for the family use. Ms Leung relied on the LKW’s case:

“98. It should be noted that these refinements are nor generally applicable to the matrimonial home and other assets which have been intended for and devoted to family use. Lord Nicholls pointed this out in Miller / McFarlane as follows:

“The parties’ matrimonial home, even if it was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. …in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.”

Baroness Hale agreed, describing the matrimonial home as a prime example of a capital family asset.”

130.Besides, I have to consider the duration of the parties’ marriage which is not very long, only lasted for about 7 years. Most of the Wife’s MPF of HK$595,457 was accumulated prior to marriage or after separation, which the Husband made no contribution. It is one of the good reasons to depart from an equal division.

131.I also accept that save as to the down payment of the FMH, the parties’ financial contribution to the family was more or less the same during the marriage. However, in respect of the household contributions especially the contribution in looking after the Child who has ADHD condition with features of Oppositional Defiant Disorder and precoious puberty which required regular follow up in the public hospital, I am of the view that the Wife’s contribution in looking after the Child is greater than that of the Husband bearing in mind that the Wife is a working woman engaging in a substantive employment at all material times.

132.As discussed above, the Husband has much higher income and earning capacity than the Wife. I also find that the parties had maintained their own financial independence to a great extent save as to the financial contribution to the family’s and the Child’s expenses during the marriage.

133.Besides, I find that the amount of interim monthly maintenance of HK$5,000 plus reimbursement of 50% of ECA and tuition fees (capped at HK$4,500) payable by the Husband as per the interim Order dated 24 August 2020 is obviously inadequate. As he shall pay the Child’s monthly maintenance for HK$16,400 in addition to his undertaking as aforesaid, he has to make up the difference of about HK$10,000 to HK$12,000 per month for the period at least over 3 years.

134.In the circumstances, after taking into account all the relevant factors in section 7 of the MPPO, I exercise the discretion to award 65% of the total matrimonial pot (ie HK$3,348,538 = HK$5,151,596.74 × 65%) to the Wife. As the Wife has the assets of value of HK$4,913,916, she has to pay the difference in the sum of HK$1,565,378 (ie $4,913,916 - $3,348,538) to the Husband.

Deciding the outcome

135.As to the Wife’s original Open Proposal of keeping the FMH in exchange for HK$1 nominal child maintenance, it is utterly unreasonable since the Wife may always come back to the court in the future for variation of the Child’s maintenance if she considers any “material change of circumstances”. It will be extremely unfair to the Husband if his ancillary relief claim for the FMH had already been dismissed by the court.

136.Regarding the Wife’s Revised Proposal for secured periodical payments, Ms Leung for the Husband relied on Family Law and Practice in Hong Kong, 3^rd Edition, §5.058 as cited in NWSA v CTYT [2021] HKFC 119, §195-§196 and submitted that order for secured periodical payments are rare. It is generally accepted that an order for secured periodical payments will only be made if the fear of the party seeking the order was justified. It is not disputed that the Husband has the Malaysian nationality but according to the Maintenance Orders (Reciprocal Enforcement) Ordinance Cap. 188, Malaysia is one of the reciprocating countries in the relevant schedule. Hence, even if he may be in breach of the Child’s maintenance order made by the Hong Kong court in the future, the Wife is entitled to issue legal proceedings against him in the Malaysian court for enforcement in case the Husband has gone back to Malaysia. Besides, there has been no history of non-payment for the Child’s maintenance by the Husband save as to the dispute concerning the amounts of the tuition and ECA fees. I thus reject the Wife’s Revised Proposal for secured periodical payments.

137.Concerning the Wife’s Alternative Proposal to continue living in the FMH with the Child until she reaches 18 in addition to the Child’s maintenance from the Husband, Ms Leung for the Husband opposed and relied on Elliott v. Elliott [2001] 1 FCR 477, CA, §7:

“ignore the husband’s reasonable entitlement to deploy capital to house himself at the end of a long marriage during which he has worked hard…and has contributed his earnings to the building of the family capital.”

138.Ms Leung submitted that this type of Order postponing the sale of the former matrimonial home is known as a Mesher Order. The former matrimonial home is settled on trust for sale and the sale postponed until the children reach majority so as to enable the wife to provide a home for herself and the child until the child grows up. The proceeds of sale can then be divided in whatever proportions the court considers appropriate.

139.I accept Ms Leung’s submission and consider that in order to achieve the clean break, the court shall be very slow in making this kind of order. In the present case, the Child is only 8 years old. If a Mesher Order is made, that means the Husband has to wait for 10 years before the FMH can be sold, which I think, is unfair to him. Further, it may not be desirable to the Child if one day, she has to change school or to study secondary school which may be far away from the FMH and the Child may then have to change her residence in her best interest.

140.Ms Leung correctly submitted that the Court should be cautious not to give undue weight to the disruption to the custodian parent and child if the matrimonial home is sold at the expense of disregarding the non-custodian parent’s financial needs. In Choy Kin Choy v. Choy Chan Lai Ngar [1993] HKLY 580, the wife and husband were married in 1986 and separated in 1990. The children, aged 19, 13 and 9 continued with the wife post-separation. The husband earned HK$5,500 per month. The wife earned HK$6,500 per month. Her eldest son contributed HK$2,400 per month to the family income. The matrimonial flat was worth HK$3.1m. The trial judge ordered that to effect a clean break, there should be a legal charge of 25% placed on the property not to be enforced by the husband until the youngest child reached majority, or the wife remarried or the flat was sold by the wife. The maintenance for each of the younger children would be HK$1,500 per month. The husband appealed.

141.The Court of Appeal allowed the appeal and held that:

(1)  The practical effect of the order was to disregard the husband’s financial needs.

(2)  Although the inconvenience of moving would have a disruptive effect on the lives of the wife and her children, and whilst the welfare of the children was a primary consideration, this aspect had been given undue weight bearing in mind the position in which the husband was placed by the orders.

(3)  The most inevitable effect was to deprive the husband of the matrimonial property after several years. His business had suffered a downturn. He was now left with HK$38,000 in the account and the amount was being progressively reduced by the monthly maintenance payments.

(4)  On the evidence, if the former matrimonial home were sold and the wife awarded two-thirds of the proceeds, she would be able to buy a reasonable flat in the same residential area.

(5)  The judge’s decision was so plainly wrong that the only conclusion was that he erred in the discretion in all the circumstances of the case. Taking into account the provisions of section 7 of the MPPO, the orders would be set aside.

142.In the present case, as the parties have very high income, postponement of the sale of the FMH is not necessary when capital division leaves them with sufficient sum for the purpose of accommodation, whether by way of renting a flat of similar or larger size in the same or different area, or even purchasing a new flat.

143.I also accept that this type of order is not common in Hong Kong since it will only reduce the flexibility. For instance, it may sometimes be necessary for the family to move to a bigger apartment when the child or children grow up, or move to another district to accommodate the location of the new schools, or for many other reasons, such as the child may study overseas in the future.

144.To sum up, with a view not to creating more uncertainty, I reject the Wife’s Alternative Proposal and an order for sale of the FMH shall be made unless the Wife is prepared to pay the required lump sum of HK$1,565,378 by instalments as suggested by the Husband.

Order

145.In the circumstances, I now make an order as follows:

1.  Upon the Husband’s undertaking to pay 50% of the child’s reasonable fees for the ADHD training course fees capped at HK$11,000 per annum, consultation fees with psychiatrists for her ADHD condition and other medical expenses to the extent that the same is not covered by the Wife’s work insurance within 14 days upon production of the relevant receipts, he do pay the Wife the sum of HK$16,400 per month for the maintenance of the child of the family commencing on 5 October 2023, and thereafter payable on the 5^th day of each succeeding month until the child reaches the age of 18 years old or completes the full time tertiary education, whichever is later;

2.  For the avoidance of doubt, the Order for interim maintenance dated 24 August 2020 be discharged;

3.  The FMH be sold within 3 months after the grant of the decree absolute by private agreement in the open market for the minimum price of $5,700,000 or price mutually agreed by the parties and the Husband do receive the sum of HK$1,565,378 from the sale proceeds and the remaining be paid to the Wife after deduction of the outstanding mortgage[20]; if it cannot be sold within the said 3 months, it shall be sold by way of public auction;

4.  All costs of and incidental to the sale of the FMH (including but not limited to reasonable legal costs, estate agent’s fees and auctioneer’s fees, stamp duty, if any) shall be borne by the parties in equal shares;

5.  The Husband shall have the conduct of the sale of the FMH, including but not limited to appointing a firm of solicitors for conveyance, estate agent and auctioneer, if necessary, in respect of such sale;

6.  Subject to the compliance with the above, the parties shall retain all the cash and other assets in his or her own name and the parties’ applications for ancillary relief claims against the other do stand dismissed;

7.  There be liberty to apply for implementation of the above order; and

8.  section 18 declaration of MPPO be granted.

146.In case the parties can reach agreement for payment of the lump sum of HK$1,565,378 by instalments, they may apply for permanent stay of execution of the order for sale made above by way of consent summons.

Costs

147.Regarding the question of costs of the ancillary relief proceedings, I consider that since the parties’ proposals are not entirely accepted by me and some issues are determined in favour of one party or the other, no party can be said to be the effective winner. Therefore, I exercise my discretion to make an order nisi that no order as to costs including all costs reserved, if any, which shall become absolute unless any of the parties apply for variation by summons with supporting affidavit with 14 days.