Chan v. Chung
Read the full judgment text of CACV 461/2022 on BabelCite. This Court of Appeal judgment was delivered on 19 April 2023 before Hon Chu VP, Cheung and Au JJA.
Civil Appeal – Ancillary Relief – Matrimonial Property – Pension – Equal Division – Duration of Marriage – LKW v DD – White v White – Z v X – Whether non-matrimonial property becomes matrimonial property over time – Appeal against District Judge's order awarding wife one sixth of husband's pension – Court held marriage lasted over 10 years so non-matrimonial pension assets merged – 80% of pension treated as matrimonial property – Wife entitled to 40% of entire pension – Appeal allowed – Costs order nisi parties bear own costs
Legal issues: Proportion of pension to be treated as matrimonial property
Outcome: Appeal allowed. Order varied. Wife awarded 40% of husband's pension.
Cites 5 cases
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[English Translation - 英譯本] CACV461/2022, [2023] HKCA 560 ON APPEAL FROM: [2022] HKFC 149 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 461 OF 2022 (ON APPEAL FROM FCMC NO 9689 OF 2016) ____________________
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________________ JUDGMENT ________________ Hon Cheung JA (giving the Judgment of the court): I. Appeal against ancillary relief order 1.The petitioner (“the wife”) pursuant to the leave granted by this court ([2022] HKCA 1733) lodged an appeal against the decision on ancillary relief by District Judge K.K. Pang dated the 29 July 2022. Leave was granted only for the issue of whether Judge Pang’s decision to add one third of the pension of the respondent (“the husband”) to the matrimonial property was correct. As the parties have no objection for this court to deal with the appeal by way of paper disposal, we shall handle the present case accordingly. The parties have also lodged their respective written submissions. 2.The wife and the husband were married in October 2003. Their son was born in June 2009 who is now about 13 years old. The parties separated in August 2014. The wife petitioned for a divorce in 2016 and was granted a “decree nisi” on 16 August 2017. Their marriage lasted for over 10 years. The husband is about 54 years old. He has joined the Hong Kong Police Force since 1986 and will retire by the end of April 2023. He is currently a station sergeant. The wife is about 47 years old. She is a part-time worker receiving an unstable income. The parties have joint custody of the son with care and control to the wife who takes care of the son six days a week. II. JudgePang’sdetermination 3.In respect of the wife’s application for “ancillary relief”, District Judge K.K. Pang made the determination as follows: 1) Total assets of the parties 4.Leaving aside the issue of calculation of the pension in the present appeal, the total assets of the parties are worth HK$235,442, including HK$221,331 from the husband and HK$14,091 from the wife. Judge Pang held that there was no reason to depart from the principle of equal division in the present case. Since the wife is in possession of assets worth HK$14,091, she could get a total of HK$103,620. 2) The husband’s assets 5.The husband’s assets are as follows:
6.The total assets of the respondent including wristwatch, insurance policies and Hong Kong Police Credit Union account are worth HK$243,551.00 (HK$27,000 + HK$66,551 + HK$150,000), and the net assets are worth HK$221,331 (HK$243,551-HK$22,220). 3) The wife’s assets 7.The wife’s assets and debt are as follows:
8.The wife’s net assets are worth HK$14,091.97 (around HK$14,091.00) (i.e. HK$80,045.68 minus HK$65,953.71). 4) Pension 9.When the husband retires at the age of 55 by the end of April 2023, he will receive a pension of about HK$6,168,960. The pension scheme provides that if the husband does not draw any lump sum, he will receive monthly pension of HK$36,720. However, if he chooses to draw 25% of the pension in a lump sum, he will receive a lump sum of HK$1,542,240 and a monthly pension of HK$27,540. The calculation of a lump sum pension can only be a multiple of 5% and the maximum is 25%. This pension is the most valuable property of the parties. 10.Judge Pang held that one third of the pension be added to the matrimonial property and the wife receive half of this one-third pension, i.e. one sixth of the pension. Judge Pang, in his judgment on ancillary relief dated 29 July 2022, held as follows:
III. The wife’s appeal 11.The wife lodged an appeal against Judge Pang’s determination that she would get one sixth of the husband’s pension. She submitted that she should be awarded the portion equivalent to one third or even half of his pension. IV. Legal principles 12.Before the marriage, the husband has been entitled to a pension to be received at the time of his retirement. It involves the issue of whether the pension should be regarded as matrimonial property or not. The Court of Final Appeal analysed this issue in LKW v DD (2010) 13 HKCFAR 582(Chinese translation of the judgment). First of all, the Court of Final Appeal explained at paragraph [82] that the total assets should be divided equally between the parties unless there is obvious and good reason for departing from an equal division. Then, the Court of Final Appeal dealt with the matter that the principle of equal division might not be applicable to non-matrimonial property.
13.In Z v X (C Intervener) [2015] 5 HKLRD 791 at paragraph [24.6], this court said, “the longer the marriage the more likely non-matrimonial property will become merged or entangled with matrimonial property.” V. Our views 14.When the parties got married in 2003, the husband has worked as a police officer for 17 years. His entitlement to a pension has accumulated for 17 years which cannot be treated as matrimonial property at the time of their marriage. As their marriage has lasted for a rather long period of time, this non-matrimonial property gradually becomes part of the matrimonial property as time goes by. When the parties divorced in October 2017, the husband was yet to be retired and he could only get his pension in five and a half years. In the circumstances, Judge Pang might exercise his discretion not to treat the entire pension as matrimonial property. In our view, when Judge Pang exercised his discretion, he was plainly wrong to only regard one third of the pension as the matrimonial property. He overlooked the point mentioned earlier that when a marriage has lasted for a long period of time of 10 years, the original non-matrimonial property will gradually become part of the matrimonial property. This is because the longer the marriage, the parties’ interdependence grows, it becomes harder and harder to disentangle what came from where. When the court exercises its discretion, the principal consideration should be fairness. The court ought not take time to distinguish whether it is matrimonial property or not. Judge Pang had overlooked this important factor as he only awarded a ratio of one third. Taking into account the overall circumstances of the case, including the length of the marriage and the husband could only get his pension in five and a half years, we are of the view that it is appropriate to treat 80% of the pension as matrimonial property in which the wife could get 40% of the entire pension. VI. Conclusion 15.We allow the appeal and amend Judge Pang’s decision on the wife’s award of the pension from one sixth to 40%. Paragraph 7 of the order of Judge Pang be varied as follows:
16.We will not disturb the other orders made by Judge Pang. We make a costs order nisi that the parties do bear their own costs of the appeal and the application for leave to appeal (CAMP 419/2022).
The Petitioner, in person. The Respondent, in person. Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Walter Lee, solicitor. |
Cases cited in this judgment
Further hearings and rulings under CACV 461/2022