Ebs v. Ntcd

CACV 543/2021, [2024] HKCA 335

On Appeal From [2020] HKFC 242

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 543 OF 2021

(ON APPEAL FROM FCMC NO 2128 OF 2013)

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J U D G M E N T

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Hon G Lam JA (giving the Judgment of the Court):

A. Background

1.This is the appeal by the Respondent (to whom we shall refer as the “wife”) against the judgment of Her Honour Judge Melloy dated 23 November 2020 (“Judgment”)[1] on final ancillary relief, including child support and division of family assets.  The wife contends that there should be a greater (60:40) departure from an equal division of the assets in her favour than that allowed by the judge (48.7% : 47.2%), and that the Petitioner (to whom we shall refer as the “husband”) should be ordered to bear two-thirds instead of half of the son’s maintenance which should moreover be increased in amount.  By way of cross-appeal, the husband contends that the judge’s order should be varied to provide for a payment to him by the wife on account of mesne rent and the decrease in capital value of the former matrimonial home (“FMH”) due to the wife’s failure to vacate the property as required by the judge’s order.

2.The background can be stated as follows.  The wife is Singaporean, born in 1968, and the husband is American, born in 1970.  They met in around 2003 when they were both working in Hong Kong for a well-known investment bank, and they moved in together in October 2004.  They looked for an apartment, and the FMH, being two conjoined flats at Residence Bel-Air (with a saleable area of 2,568 sq ft), was purchased in the husband’s name with his funds in September 2005.  They moved into the FMH in 2006, and married in Singapore on 11 January 2007.  They separated shortly thereafter, and the husband through solicitors proposed a deed of separation.  But then they reconciled, and their son (“B”) was born in December 2008.  They separated again in April 2009 when the husband moved out, and did not live together as a couple on a permanent basis from that time onwards, although they continued on occasion to hold themselves out as being married. The judge described the marriage as follows:[2]

“ By both parties’ account this was an unconventional, volatile and difficult relationship which included frequent periods of separation. Initially the Petitioner husband described this as a very short marriage. Ultimately, however, he accepted that this was in reality a marriage of a reasonable length; the wife refers to it as being a marriage of 10 and a half years. It would be fair to state that there appear to be significant and unresolved emotional issues on both sides and it is of note that B is now estranged from his father.”

3.On 20 February 2013, the husband petitioned for divorce in Hong Kong.  On 19 April 2013, those proceedings were stayed, and were only revived in September 2016.  It is common ground that the parties’ marital relationship ended in late 2016 or early 2017.  The decree nisi was pronounced on 6 June 2017.  On 15 November 2017, an order was made by consent for joint custody of B to the parties, with care and control to the wife and reasonable/defined access to the husband.  The wife and B continued to reside at the FMH, while the husband lived elsewhere.  Ancillary relief was determined by the judge in 2020 by her Judgment. Unfortunately this did not prove to be the end of “a highly emotive and drawn out piece of litigation”.[3] The decree absolute for divorce was granted on 17 February 2021. 

4.Both parties had had careers in investment banking.  The wife ceased to work in an investment bank in May 2009.  After B was born, the wife had been a full-time stay-at-home mother.  The husband was at one time managing director of another investment bank in Hong Kong, though he was made redundant in January 2017, apparently due to post-traumatic stress disorder and major depressive disorder.

5.During the separation the husband continued to pay for the mortgage repayments and all expenses related to the FMH, as well as B’s school fees, whereas the wife continued to meet her own expenses otherwise and B’s remaining expenses.[4]

6.In relation to the future, the judge referred to the husband’s narrative affidavit in which he said he wished to change from investment banking to a more sustainable and less volatile financial future. He had registered a real estate investment company in Arizona and met with investors and professionals with the possibility of launching a real estate fund for Asian investors.  He said that without access to liquid capital, the business would not get off the ground for many years.  He believed that his business plan, based on an equal division of assets, would generate post-US tax income of US$200,000 to US$250,000 per year.  The judge thought that there was nothing to suggest the husband’s new venture would not be a success and that if it was not successful he would still hopefully have some of the assets left and he would also have a reasonable earning capacity otherwise.[5]

7.As to the wife, the judge accepted her evidence that it would be very difficult for her to return to work in the financial field and that in any event she did not wish to do so.  The judge considered that the wife could retrain and work in some other capacity if she wished to do so, but she might not need to since her UBS and Charles Schwab accounts if kept intact would provide sufficient funds for her to support herself and to contribute towards B’s maintenance going forward.  She would also have funds from the sale of the Singaporean property that she owned.[6]

B.  The Judgment below

8.The question of ancillary relief was heard before the judge in September 2020.  The wife originally took the position that certain assets held in her name did not belong to her and in so doing “did go outside the bounds of what is acceptable litigation conduct” and “sought to deliberately mislead the court” and “to perpetuate an untruth”.[7]  She also failed to make full and frank disclosure in some material aspects until the trial and made very late disclosure, “ambushing the husband”.[8] Towards the end of the trial, however, the extent and value of the family assets were by and large no longer disputed.

9.In her Judgment, given in November 2020, following the five-step approach laid down in LKW v DD (2010) 13 HKCFAR 537, the judge first identified the assets within the matrimonial pot as set out in a “largely agreed” schedule included in the husband’s closing submissions.  The FMH was valued at HK$100.5 million, with a net equity of about HK$79 million after deducting a mortgage loan, selling expenses, and US capital gains tax of HK$14.6 million.  The assets came to a total amount of about HK$192.7 million,[9] though in the later calculations the judge adopted a figure of $193,765,514, which is not challenged on this appeal.[10]

10.The judge referred broadly to the needs of both parties and the son, and stated that it was accepted that prima facie this was a “sharing case” in that both parties’ needs could be met from an appropriate share of the asset base.[11]  The judge dealt with and rejected the wife’s case that there should be “add backs” in her favour on account of B’s expenses from 2013 to 2020.[12]  The judge then resolved the question of how B’s needs should be met, by ruling that HK$8 million out of the matrimonial pot should be put to one side, either to be held in court or, if the parties could agree, in a trust fund, to cover B’s school fees and his anticipated university fees.[13]  The judge accepted that provision should be made for a possible increase in US capital gains tax in relation to the FMH following the change of US President, and ordered that the wife deposit funds into court for her half share of that potential increase.[14]  (That part of the order was subsequently stayed, and the increase in US capital gains tax did not materialise.)

11.The judge noted that based on how the individual assets were then held (treating the savings at HSBC Beijing and BEA, which were held in the wife’s name but derived from the sale of matrimonial assets, as jointly owned), the husband had assets of about HK$91.4 million and the wife HK$94.4 million.[15] At §§33-46 of the Judgment, the judge examined each of the factors set out in section 7(1)(a) to (g) of the Matrimonial Property and Proceedings Ordinance (Cap 192) (“MPPO”) including, in particular, “(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”.  In relation to this the judge stated:[16]

“ I accept that both parties have each made a full contribution to the marriage in different ways. The wife has been a full time and devoted mother to B and she has also contributed to the family financially. The husband has also continued to make a full financial contribution notwithstanding the difficulties caused by these proceedings and his current unemployment. In particular, the husband has enabled the wife and B to live in the Bel Air property for a considerable period of time, notwithstanding the rather unusual nature of their marital relationship.”

12.The judge then dealt with the wife’s contention that her own assets belonged to her but in addition she expected to receive a share of the FMH, holding that in the circumstances of this case it would be “completely inequitable” to allow the wife to retain all of the assets in her sole name and to give her a share of the FMH in addition.[17]

13.At §51 of the Judgment, the judge concluded:

“ Thus, it is my intention to make an order with respect to the division of assets which gives the wife slightly more than 50% of the asset base in recognition of this and in order to ensure that she retains significant funds in her main income producing accounts. This will ensure that she has sufficient money to maintain herself and to contribute more or less equally towards B’s costs going forward, outside of the educational fund. In addition, funds accumulated during the party’s relationship by their investment in real estate and held in the HSBC Beijing Savings account … and BEA Savings … shall be split equally between them as they are clearly funds that were accumulated during the party’s relationship. The husband shall also retain the Bel Air property notwithstanding its marital home status.”

14.At §§53–54 of the Judgment, the Judge decided to divide the family assets as follows:

“ 53. Consequently, the final division of assets shall look like this:

i) Monies held for B / Educational Trust fund – HK$8,002,122

ii) Assets held by the wife: HK$94,369,788

iii) Assets held by the husband: HK$91,393,604

54. Ultimately, this means that the wife will leave the marriage with approximately 48.7% of the matrimonial pot and the husband will retain 47.2%. The remainder will be held for B’s future educational needs.  It seems to me that this slight deviation from the yardstick of equality is fair and reasonable in the circumstances of this particular case.”

15.As regards B’s expenses, the judge arrived at the figures of (i) HK$65,000 per month being a half share of the wife’s household expenses in future, and (ii) HK$40,000 per month being B’s actual expenses other than school fees which would be covered by the HK$8 million fund.  The husband had undertaken to pay for B’s school bus fees and insurance premia.  The judge ordered the husband to pay periodical payments for B’s maintenance in the sum of HK$52,500 being a half share of B’s expenses.[18]

16.In the end, the judge ordered (on the husband’s undertaking to continue to pay for B’s school transport fees and insurance fees):

(1)  Approximately HK$8 million in the parties’ joint bank accounts be paid into court by the wife (as she had control of these accounts) as a fund for B’s school and university fees.

(2)  The wife shall pay the husband a lump sum of HK$7.5 million (representing the husband’s share of the funds in the HSBC Beijing and BEA savings accounts).

(3)  The wife shall pay into court a sum of HK$6 million to provide for the potential increase in US capital gains tax payable on the sale of the FMH.

(4)  The parties shall each retain all other assets and liabilities held in their sole names.

(5)  The husband do pay to the wife periodical payments for B in the sum of HK$52,500 per month, the first payment to be made on the first day of the month following the wife and B moving out of the FMH, until B’s 18^th birthday or cessation of full time education, whichever is the later or until further order.  In the interim the husband do pay the wife periodical payments for B in the sum of HK$15,000 per month as a contribution towards B’s expenses, with effect from 1 December 2020 until the commencement of the payment of HK$52,500 per month referred to above.

(6)  The division of capital as set out above shall be in full and final settlement of each party’s claims for all forms of ancillary relief.

(7)  There shall be liberty to apply on an urgent basis.

(8)  The wife and B shall vacate the FMH within 60 days.

C.  Proceedings and events after the Judgment

17.The wife sought leave to appeal against the Judgment and a stay of execution of parts of the order. This was refused by the judge in her ruling on 25 January 2021.[19]  Meanwhile, although the 60-day period for the wife and B to vacate the FMH expired on 22 January 2021, they continued to reside there.

18.On 8 February 2021, the wife issued a summons in the Court of Appeal seeking leave to appeal and a stay of execution of parts of the order.  On 25 November 2021, this court granted leave to appeal, but refused any stay except for the order to pay HK$6 million into court for the potential increase in US capital gains tax.[20]

19.On 14 April and 20 October 2022, the husband filed a respondent’s notice and a supplementary respondent’s notice respectively, raising a cross-appeal.

20.The wife and B eventually vacated the FMH and gave the husband access to the property on about 11 February 2022.

D.  The wife’s appeal and husband’s cross-appeal

21.In her Notice of Appeal, the wife has raised inter alia the following grounds of appeal:

(1)  the judge failed to consider the exceptional circumstances and to apply the compensation principle in such context to arrive at a greater departure from equal division (60:40 in favour of the wife) to achieve fairness;

(2)  the judge failed to understand that the wife’s and B’s combined needs are far in excess of the husband’s and consequently failed to make a larger departure from equal division of assets (specifically a 60:40 division) and to make the husband bear a greater share of B’s needs;

(3)  the judge failed to comply with the duty under s 7(2) of the MPPO to place B, as far as practicable, in the financial position he would have been in had the marriage not broken down.  Monthly child support of HK$15,000 prior to B moving out is plainly well below his actual needs.  The amount for B after moving out is insufficient and deprives B of the right to be maintained as before;

(4)  the judge erred in ordering the husband to pay only half of B’s ongoing monthly maintenance, despite the wife being unlikely to return to the workforce and her negligible projected income, in contrast to the husband’s superior expected future flow of income;

(5)  the judge erred in finding that the wife had considerable passive income from her investment accounts to fund herself.  The evidence at trial does not support such finding, the wife was not cross-examined on this point; returns from such accounts were slim; and the judge ignored the effect of inflation and failed to consider that the wife would likely need to liquidate her investment portfolio to pay for housing and ongoing needs;

(6)  the judge erred in ordering the wife to pay into court HK$8 million as a fund for B’s school and university fees.  The amount should be paid to and managed by the wife, who can be trusted to make all necessary arrangements for B with the education fund.

22.By way of cross-appeal, the husband contends that by reason of the wife’s wrongful occupation of the FMH from 23 January 2021 until 11 February 2022, the Judgment should be varied to provide for (1) a payment by her to him in the sum of HK$1,866,800 (HK$143,600 per month × 13 months) in lieu of mesne rent, and (2) an additional lump sum payment of HK$4.7 million by her on account of the decrease in the capital value of the FMH during the same period.

23.In the discussion below, we shall deal in turn with the three main issues raised by the wife’s appeal, namely: (1) whether there should be a greater departure from equal sharing based on compensation and needs principles; (2) whether there should be a greater sum of maintenance for B and the husband ought to bear two-thirds of B’s expenses; and (3) whether the HK$8 million education fund for B should be paid to and managed by the wife.  We shall then turn to the husband’s cross-appeal.

E.  The wife’s appeal

E1.  Compensation

E1(a) The wife’s contentions

24.As can be seen from §§53-54 of the Judgment (quoted above), the judge’s division of the matrimonial assets resulted in the wife getting 48.7% and the husband 47.2% of the total, with the rest (4.1%) going to the education fund for B.[21] The 1.5% difference between the wife’s and the husband’s shares is, the wife says, too small.  She submits that the assets should be divided in such a way that she receives HK$109,560,150 (56.63%), the husband gets HK$75,893,606 (39.23%), with HK$8 million (4.14%) set aside as B’s education fund, and that this departure from equal sharing is warranted by “compensation” for her and by her greater needs.

25.It is submitted on behalf of the wife that the judge ought to have taken into account compensation for the wife’s relationship-generated disadvantage and arrived at a higher percentage for the division of assets in her favour.  Reliance is placed on Miller v Miller and McFarlane v McFarlane [2006] 2 AC 618 (“Miller/McFarlane”) where Lord Nicholls said at §13:

“Another strand, recognised more explicitly now than formerly, is compensation. This is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage. For instance, the parties may have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned. Then the wife suffers a double loss: a diminution in her earning capacity and the loss of a share in her husband’s enhanced income. This is often the case. Although less marked than in the past, women may still suffer a disproportionate financial loss on the breakdown of a marriage because of their traditional role as home-maker and child-carer.”

26.In the same case, Baroness Hale said at §140:

“A second rationale [for the redistribution of resources from one party to another], which is closely related to need, is compensation for relationship-generated disadvantage. Indeed, some consider that provision for need is compensation for relationship-generated disadvantage. But the economic disadvantage generated by the relationship may go beyond need, however generously interpreted. The best example is a wife, like Mrs McFarlane, who has given up what would very probably have been a lucrative and successful career. If the other party, who has been the beneficiary of the choices made during the marriage, is a high earner with a substantial surplus over what is required to meet both parties’ needs, then a premium above needs can reflect that relationship-generated disadvantage.”

27.In the notice of appeal, the wife complains that the judge failed to consider the exceptional circumstances of the case and to apply the compensation principle in such context to arrive at a greater departure from equal division to achieve fairness, and that the judge failed to recognize the exceptional circumstances in the case warrant a departure from an equal division (60:40 in favour of the wife) by application of the compensation principle and to provide a cushion for the wife’s relationship-generated disadvantage.  The exceptional circumstances are set out in the notice of appeal as follows: (a) the wife’s “supreme” earning capacity up to 2009; (b) the difficulty for her to return to the financial or banking field; (c) the wife agreed to leave the workforce and become a full-time mother because of the assurance/security the husband gave her – that everything she had earned would be hers, and the husband would share his income with her; (d) the wife had given up her career to become a full-time mother; (e) the marital relationship was unusual and the wife was almost alone in looking after the household and raising B; (f) in breach of his undertaking, the husband did not pay for all the expenses for the wife and B, and the wife had to pay for the expenses not covered by the husband; and (g) the parties’ assets and liabilities had not mingled, other than the provisions made for B.

28.In the submissions of Ms Anita Yip SC, who has appeared with Ms Lily Yu for the wife, it is said that there is an extraordinary element in this case which elevates it above others, making it manifestly unjust if there was no significant recognition by way of compensation.  In particular, it is said that the wife gave up her highly lucrative career (not just career aspirations as in certain previous cases), which earned many times more than the husband’s, to fall in line with the family’s needs; that she suffered a relationship-generated disadvantage in the form of a crippled earning capacity post-divorce, so that she and B needed a cushion for the gradual transition from divorce to independence whilst reclaiming her career or some security for the future; that the husband benefited and will continue to benefit from the wife’s single-handed responsibility towards B, guaranteeing the integrity or enhancement of the husband’s earning capacity; and that the wife had been responsible for B’s expenses (other than the FMH-related expenses, school fees and school bus fees) leading to a decreased capital base for her.

29.The primary response of the husband is that compensation is a new point not open to the wife to take on appeal.  In any event, it is submitted on his behalf that the facts of the present case do not exceptionally justify a further separate adjustment based on compensation.

E1(b) Is the wife raising a new point?

30.In assessing the husband’s preliminary objection, it is pertinent to have regard to the guidance given by the Court of Final Appeal in LKW v DD (2010) 13 HKCFAR 537 in relation to compensation.  There, after referring to the passages in Miller/McFarlane quoted above, Ribeiro PJ explained the difficulties arising from compensation as a factor in the distributive outcome.  His Lordship pointed out that the risk of double-counting in “clean break cases” arose in part because:

“ 126. … compensation for ‘relationship-generated disadvantage’ is, like ‘contribution’, already intrinsically factored in as part of the sharing principle. By recognizing that a spouse who has given up a potentially lucrative career to take up a traditional role within the family should enjoy equal status with the breadwinner and should receive an equal share of the assets unless there is good reason to the contrary, the sharing principle gives effect in principle to this form of compensation.

127. I therefore find it difficult to see how double-counting can be avoided if some additional premium is to be attributed to the lost opportunity of an independent lucrative career.  It seems unfortunate that in Miller/McFarlane, ‘compensation’ was treated as an independent strand of fairness apparently standing apart from the strand represented by the sharing principle. …”

31.Ribeiro PJ then explained McFarlane as a case with special facts where allowing for compensation in this sense was justified, with no risk of double-counting.  In particular, it was a case about periodical payments ordered to be made by the husband, as the capital was not sufficient to permit a clean break.

32.In a case such as the present, which concerns the sharing of assets adequate to cover the parties’ needs, Ribeiro PJ set out the appropriate approach to compensation as follows (at §130):

“ In my view, the approach to ‘compensation’ should be similar to the approach to ‘contribution’ previously discussed. Our courts ought to proceed on the footing that compensation for relationship-generated disadvantage is generally already factored in upon any application of the sharing principle. The extent of the compensation allowed for in applying that principle and deciding the extent of any possible departure from an equal division is, in any particular case, a fact-specific question which will depend on the nature, certainty, permanence and other qualities of the disadvantage incurred, viewed in a broad brush way. It will only be in exceptional cases that a separate element of the award over and above the amount already factored in should be dedicated to such compensation on the special facts of the particular case. In such exceptional cases, the court should not attempt to try the issue evidentially or conceptually as if it were a damages claim. A broad brush attribution of some percentage of the award to the element of compensation would generally be sufficient.” (emphasis added)

33.An illustration of the application of the principles may be found in WLK v TMC (2010) 13 HKCFAR 618, a case in which judgment was handed down by the Court of Final Appeal on the same date as LKW v DD.  There, compensation was a central part of the wife’s claim run at trial, but was rejected as a factor by the trial judge because of the absence of evidence of the income that the wife would have earned as a concert pianist – being the career she gave up for the relationship (see §§38-53 of the first instance judgment: FCMC 5508/2005, 14 July 2008).  The Court of Appeal held that the compensation aspect should have been included given that the wife had dropped everything including a burgeoning music career in order to care for and be with the husband at his insistence (CACV 339/2008, 22 July 2009, at §96).  The Court of Final Appeal, agreeing with the Court of Appeal, said that the wife had given up her career ambitions in order to fall into line with the husband’s wishes in contemplation of the getting married.  An element of compensation ought to be recognised, and the judge erred in treating it not as an element of the sharing principle, but as if it were the equivalent of a separate civil claim for damages for financial loss and rejecting it for lack of cogent evidence of quantifiable financial loss on that basis.[22]  Ribeiro PJ, with whom the other members of the court agreed, referred to the principles set out in LKW v DD, and said that the judge “should have applied the sharing principle, allocating a proportion of the award as compensation for relationship-generated disadvantage as a result of the wife abandoning her career aspirations to accept the role preferred by the husband in their marriage”.[23] On a rough and ready basis, a proportion of 3% (HK$1.38m) of the total assets (HK$45.8m) was attributed to this element, resulting in an overall award of 32% of the total assets to the wife.[24]

34.Subsequent English cases also indicate that the principle of compensation will only be applicable in a “very rare and exceptional case”: SA v PA [2014] EWHC 392 (Fam) at §36; see also Waggott v Waggott [2018] 2FLR 406 at §139; WC v HC [2022] EWFC 22 at §21(vii).

35.In our view, if the wife had wished to advance such an exceptional case for an increase in her favour in the apportionment of assets, based on the principle of “compensation” by reference to the specific facts or factors she now relies on, it was incumbent upon her, who was legally represented throughout, to make that clear to the husband and to the judge.

36.In her ruling refusing leave to appeal, the judge stated that compensation was essentially a new point that had not properly been raised at trial, saying:[25]

“ It is of note that the wife did not particularly raise any issue with respect to compensation, save in passing and that it did not form part of her open proposal at trial. Further Miller/McFarlane [2006] 2 AC 618 was not produced for the court’s consideration and no reference was made to it in the written or oral opening, or indeed in the written closings. The wife did reference the fact that she had given up a lucrative career in order to care for B and she did argue that the parties had entered into an agreement whereby it was understood that she would retain all of the assets held in her sole name. (This point was not accepted by the husband or by the court). It is, with respect, very difficult for the court to consider an issue if it has not been fully argued before it at first instance. …”

37.It seems to us that the judge’s description of the position at trial is fair and accurate.  The only place in the materials below that Ms Yip (who did not appear below) has been able to point to where compensation was mentioned is the wife’s written opening submissions placed before the judge, where it was stated by the wife’s then counsel, at §39:

“ … This is a case in which W asks for a greater percentage to be apportioned to her, both on the basis of the needs of their son B and on the basis of W’s limited earning/income potential (given the demands of B, her age, outdated experience etc), sacrifices and past expenses, all of which on W’s case should be ‘compensated’ and ‘reimbursed’ by H. Therefore an equal division of assets would need to be accompanied by spousal maintenance or if it is a clean break there must be an asymmetrical division of assets to achieve that and make that workable and to meet the ‘yardstick of equality’ and for the financial arrangements to be just and fair.”

38.There was no reference to any relevant principle or authority, and no explanation how the wife’s position qualified as an exceptional case warranting a specific and additional element for adjustment as a matter of compensation.  In the course of setting out the matters to be considered by the court, §62 of the wife’s trial opening stated, under the heading that concerned contributions by each of the parties to the welfare of the family:

“ It has always been the consensus that the W would give up her highly successful career to care for the family, in particular for [B] as a full-time mother/housewife. H became the sole breadwinner of the family.”

39.These two paragraphs, with respect, did not sufficiently and fairly signal either to the court or to the husband the contention that there was some disadvantage suffered by the wife as a result of the marriage that should exceptionally call into play a special adjustment on account of “compensation” for her.  Miller/McFarlane was not cited.  Nor was attention drawn to the part of LKW v DD or WLK v TMC explaining that in exceptional cases, compensation, in addition to being intrinsically reflected in the sharing principle, may be relied upon to justify “a separate element of the award over and above the amount already factored in”.[26]  Compensation was not even mentioned in the wife’s closing submissions at trial, though there was mention of “an agreement that in exchange for W forgoing her highly successful and very well remunerated career, H would be the sole breadwinner of the family while W a full-time mother and homemaker.”  For his part, the husband’s written closing noted that “there is simply no argument here for ‘compensation’.”[27]  The wife’s notice of appeal complains[28] that there was no discussion of the compensation principle in the Judgment, but given how the case was run below, this was neither surprising nor a fair criticism.

40.While there was some mention in the submissions below of the wife giving up a lucrative career to become a full-time mother, it seems to us fair to say that there was no focus on the exceptionality of her “supreme” earning capacity whether in absolute terms or relative to the husband’s, or on the “modus operandi” of the marriage, or the future handicap on the wife’s earning capacity, or more generally, the “nature, certainty, permanence and other qualities of the disadvantage incurred”[29] by the wife.  Whilst it might sometimes be a fine line, in our view what the wife seeks to argue now is not merely a variation in the manner of presentation of a particular line of argument already run below, which may be permissible, but a new case: see Law Society of Hong Kong v A Solicitor (CACV 78/2014, 10 July 2015) at §4.

41.Ms Yip prays in aid the “quasi-inquisitorial role” of the trial court in ancillary relief litigation, referred to in Parra v Parra [2003] 1 FLR 942 at §22.  This must, however, be looked at in conjunction with what Ma CJ said in Mimi Kar Kee Wong Hung v Raymond Kin Sang Hung (No 2) (2015) 18 HKCFAR 210 at §43:

“ … there are limits as to how far this point can be stretched, particularly in the present case. What it does not mean is that matrimonial litigation is some form of ‘free for all’ where procedural rules and practice, coupled with their rationale, have no application. In matrimonial litigation, I daresay that the court would exercise its quasi-inquisitorial role most acutely where children are concerned, or if one or the other party or both parties suffered from some disadvantage. Where, however, both parties are properly represented (as in the present case where at every stage, H and W have been represented by leading counsel), the court can in almost every case, unless some exceptional circumstances exist, rely on the parties to look after their own interests. It would be quite wrong in such circumstances for the court to second-guess, much less override, the parties’ approach to the litigation, much of it being driven by tactical considerations.”

In the circumstances of this case, we do not think that the quasi-inquisitorial aspect of the court’s function assists the wife in the present context.

42.Ms Yip further submits that compensation is not a “stand-alone claim”, but a strand or element that the court would consider in a broad-brush way as part of the circumstances of the case in determining whether a departure from a 50:50 division is called for.  We fully accept that compensation is not a separate claim or separate head of damage such as may be found in personal injuries cases.  But this distinction does not mitigate the problems arising where the point is sought to be raised for the first time on appeal.  Mr Azan Marwah, appearing with Mr Josh Baker on behalf of the husband, drew attention to the various matters that, they submit, would have been the subject of particular and different evidence and submissions at trial had the point been taken, including: (1) whether the wife suffered any “prospective economic disparity” (Miller/McFarlane at §13); (2) whether any prospective disparity was “relationship-generated” (Miller/McFarlane at §140); (3) whether the wife really earned so significantly more than the husband as to make this case exceptional; (4) whether the wife would have practised her allegedly stellar career over an appreciable period during the marriage: SA v PA (supra), §36(iii); and (5) whether the wife’s career would have resulted in resources greater than those otherwise to be ordered by the needs or sharing principle: Waggott v Waggott (supra), §139.  More generally, they submit that had the point been raised, there would also have been debate whether compensation was not already factored into the sharing principle, whether further departure would not amount to double counting for overlap with needs, and whether this was an exceptional and rare case justifying a separate element of the award to encompass compensation.

43.The gravamen of this ground of appeal – that the principle of compensation was not considered by the judge – is not a fair criticism because the point was not squarely raised below.  In the circumstances of this case it is not enough for Ms Yip to point to the affidavits below and suggest that various facts potentially relevant to the compensation principle may be found here and there.  Nor is it to the point for her to submit that the court would avoid deciding on the minutiae of the parties’ married life.  The nature of the case run below has a central effect on how the case was conducted by both parties: Osman Mohammed Arab v Ng Shui Ching Irene [2020] HKCA 818 at §45.  It seems to us plain that the new case, if run at trial, would have affected the course of evidence or conduct of the case below, and would have resulted in further findings of fact made by the judge which this court is not in a position to make.  We are not satisfied that there is no reasonable possibility that the state of the evidence would have been materially more favourable to the husband if an exceptional case for the compensation principle had been advanced at trial.  Accordingly, following Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 at §38 and Lehmanbrown Ltd v Union Trade Holdings Inc (HCMP 977/2015, 17 June 2015) at §10, we hold that the wife is barred from advancing this ground.

E1(c) No basis to impugn the Judgment in any event

44.In any event, based on the available materials we are not satisfied that this is an exceptional case calling for a separate element in adjusting the apportionment between the parties over and above what the judge awarded having taken into account relevant matters including contributions made by the wife.

45.The judge found that the wife would receive sufficient investment income to meet expenses and felt sure that she could also retrain and earn income even if not in finance.  The judge did not find any significant “prospective economic disparity”.  The returns from the husband’s intended business venture using his share of the family assets were comparable to the investment income on the wife’s share.  The judge did not find that the husband was the “beneficiary” of choices made in the marriage (contrast Miller/McFarlane at §§13 & 140).  The judge recognised that the wife had a “very successful career”[30] but there was also some evidence suggesting she was made redundant by her employers in 1999, 2004 and 2009 respectively.  The wife said that after the end of her maternity leave in 2009, she simply continued to stay home for B rather than having been terminated from her job.  She seems to have accepted however that the large payment she received for 2008/9 included redundancy payment made by the employer to avert a pregnancy discrimination claim.  The wife alleged that she had retired from work and become a full-time housewife because the husband had agreed that everything she had earned would be hers and that he would share his income and salary with her (and B).  The judge did not find there was such an agreement, and implicitly rejected it, saying it would be “completely inequitable” to allow the wife to retain all of the assets in her name and give her a share of the FMH in addition.[31]  There was no finding of any “relationship-generated” termination of the wife’s career in investment banking.  There was an email from the wife to the husband in May 2009 in which she indicated she would not work in that industry again, saying: “I have done and got what I wanted out of my career and it is time to take another path.”  The judge also noted that the wife had said at trial that in any event she did not wish to return to work in the financial field.[32]

E2.  Needs

46.In addition, it is submitted on behalf of the wife that she has greater future needs to take care of than the husband.  In particular, it is said that B grew up in a 3000 ft² flat and their housing requirement will necessitate liquidating a substantial share of the wife’s assets, and that the wife also has to be responsible for the housing and other needs of her parents.  It is also submitted that the judge was wrong to find that the wife had considerable passive income.

47.In approaching the wife’s challenges on these points, we remind ourselves of what Hartmann JA said in HK v BD (CACV 252/2009 & 71/2010, 15 October 2010) at §14:

“ When determining matters of ancillary relief, in all but the simplest cases, a judge in the Family Court will be required to weigh up a large number of different considerations, giving to them what weight is appropriate in order to come to a decision as to the equitable distribution of the family assets. In making his determination, the judge will of course do so in fealty to the guidelines set down in s. 7 of the Matrimonial Proceedings and Property Ordinance, Cap. 192. But these guidelines, by their diversity and lack of hierarchy, are inherently flexible and purposefully so, designed to ensure a fair outcome in cases of widely different circumstance. But it has been said that fairness has a broad horizon. In seeking an equitable distribution of a matrimonial estate, an exercise based on judicial discretion, different judges will invariably come to different conclusions, each being reasonable. That being the case, it is only when a conclusion is plainly wrong, falling outside of the parameters of reasonable disagreement, that an appellate court will be entitled to interfere.”

48.The judge was clearly cognisant of the wife’s financial needs, including her general expenses and responsibilities to her parents (though it seems that her evidence that she paid them HK$25,000 per month did not emerge intact from cross-examination), in considering the overall division of assets,[33] and balanced them against her assets and income.  The judge took note that the wife “needs to retain sufficient capital in order to continue to receive a passive income, given that this is how she has funded herself over the last 10 years or so”.[34]  A 3.5% return on her UBS account (HK$35.8m) and a 2.8% return on her Charles Schwab account (HK$10.1m) annually – being the average return over the last couple of years – would yield HK$1.54m.  Inflation does not affect the judge’s view that the wife would receive considerable passive income.  The judge also noted that the wife would take the Singapore property under the order and noted her intention to sell it in which case she would have funds available to buy a property in Hong Kong or elsewhere or to increase her “already significant liquid asset portfolio”.[35]  A return of 3.15% p.a. (mid-point between 3.5% and 2.8%) on the funds from that property (HK$35.8m) would produce another HK$1.13m.  In addition to those two accounts and the Singapore property, the wife would have an additional HK$12.6m under the judge’s order, giving her 48.7% of the assets in contrast to 47.2% for the husband. 

49.In our view the orders made by the judge fell within her broad discretion.  The wife has not demonstrated that the judge’s decision was plainly wrong or that there was any error that calls for intervention by this court. 

E3.  B’s maintenance

50.In connection with the judge’s decision on B’s maintenance, two points have been raised by the wife: (1) that B’s maintenance should be increased by HK$50,000 per month for elite ski training; (2) the husband should be ordered to bear two-thirds instead of half of B’s ongoing maintenance.  In assessing these challenges it is again necessary to bear in mind the proper approach of the appellate court as set out in HK v BD quoted above.

51.The judge took B’s share of the general living expenses with his mother (including rent) to be HK$65,000.  There is no complaint about this element.  In addition, the judge assessed the child-specific expenses for B to be HK$40,000 per month (excluding school fees which would be covered by a separate fund, and school bus and insurance fees which would be solely borne by the husband).  That amount included HK$20,000 per month for extra-curricular activities.  In arriving at this calculation the judge said:[36]

“ In so far as B’s actual expenses are concerned it is of note that in her affidavit evidence the wife says that in order for B to continue to ski at a competitive level, she will need an additional HK$50,000 per month. With respect this is plainly outside the realms of what might be considered reasonable and shall not be entertained. It is a matter for the wife if she wishes to pay for this from her own resources. The husband has offered HK$10,000 per month being his share of the cost for ECA’s otherwise, but asks that he provide this by way of undertaking. Given the current highly conflict nature of these proceedings, it does not seem to me to be sensible to expect the parties to be able to discuss the issue of ECA’s on an ongoing basis going forward. Consequently, an estimate for ECA’s has been included in the schedule of B’s actual expenses. …

… I have also included a figure for holidays, entertainment/presents and toys books etc, even though it is hoped that in time that the husband will also be paying for B to go on holiday and other trips with him and that he will also buy B other presents and gifts.  In part the inclusion of a reasonably small figure for these items is in recognition of the current situation that exists between father and son.”

52.The judge did not accept the amount the wife claimed for competitive skiing, which B was not engaged in until just before the trial and long after the breakdown of the marriage.  Both parties’ prospective income had come down from the heights of their previous careers by the time of trial.  The judge had earlier noted that even though the asset pool was large, choices would have to be made with respect to the wife’s and B’s lifestyle including the affordability of some of the extra-curricular activities chosen for B.[37] The ECA’s stated in the wife’s claims had been HK$12,000 from 2017 to 2019 and even in August 2020 were only claimed to be HK$24,400.[38]  The judge was entitled to regard an additional HK$50,000 per month, claimed at trial, to be “plainly outside the realms of what might be considered reasonable”.  We do not see any error in principle in the judge’s approach in this regard, taking into account section 7(2) of the MPPO.

53.As to the husband’s share of B’s maintenance, it is not in dispute that in allocating responsibilities for the child’s maintenance the court may take into account the parties’ relative earnings; see e.g. SANK v PGN (Costs, Disclosure, Maintenance) [2011] HKFLR 390, §56. The judge arrived at her decision having considered the parties’ respective future earning capacities.  The judge did not accept the wife’s arguments on the husband’s earning capacity.  Employing his capital in the intended business, the husband would have earnings from his new venture.  But the judge also found that the wife would receive a significant passive income and ordered that she would receive a slightly more than equal share of the family assets, to ensure that she had sufficient money to maintain herself and “to contribute more or less equally towards B’s costs going forward, outside of the educational fund”.[39]  The judge considered this to be a case where “the parties will have no difficulty in meeting their financial needs, obligations and responsibilities from their own share of the asset pool, although they may both need to each cut their cloth accordingly.”[40]

54.The judge, a very experienced family court judge, made an assessment in this case based on her views of the parties’ finances and needs which in our view fell within the discretionary ambit afforded to the trial court.  We do not think that the wife has passed the high hurdle for impugning her Honour’s decision.

E4.  Payment of HK$8 million into court as B’s education fund

55.The wife seeks to impugn the judge’s order that the HK$8 million education fund for B be paid into court.  This can be dealt with briefly.  As Mr Marwah has pointed out, the wife expressly submitted in closing submissions at trial that she was “willing to accept” either setting up a trust or paying the money into court, though she also submitted as she could safely manage B’s expenses it would be an unnecessary expense to set up a trust fund.  The judge can hardly be faulted for ordering payment into court, whilst noting that a joint application could be made for a trust fund to be set up.  The wife’s notice of appeal alleges that having the funds in court is “infeasible”, but this is not made out.  As pointed out on behalf of the husband, education fees are generally regular and fixed payments.  The amount needed will usually be well documented and known in advance.  The judge’s order provides for application to be made for payment out on a termly basis.  This is neither contrary to principle nor plainly wrong.  This ground of appeal is therefore also to be rejected.

E5.  Conclusion on the wife’s appeal

56.For the above reasons, the wife’s appeal is dismissed.

F.  The husband’s cross-appeal

F1.  The husband’s claims

57.The Judge’s order made in the Judgment of 23 November 2020 required the wife and B to vacate the FMH within 60 days, i.e. by 22 January 2021.  As a matter of fact, they did not leave until more than a year later, on around 8–11 February 2022. 

58.By respondent’s notice dated 14 April 2022, the husband seeks a variation of the order below to provide for a payment to him by the wife in lieu of mesne rent in the sum of HK$1,866,800 (being monthly rent of HK$143,600 × 13 months).  By supplementary respondent’s notice dated 20 October 2022, the husband says that as a result of the delay in the sale of the FMH due to the wife’s continued occupation, he has suffered a loss equivalent to HK$4.7 million through the decrease in value of the property during the period of wrongful occupation.  He seeks a further variation of the order below to provide for an additional lump sum payment by the wife in that amount.

59.On 21 March 2023, this court gave permission for the husband, and consequentially also for the wife, to file further affidavits for the purposes of the husband’s cross-appeal by way of his supplementary respondent’s notice.[41]

60.We should mention that the husband needed leave to cross-appeal: Ng Hong Ki v Leung Fong Kiu [2012] 1 HKLRD 435, §§18-26, but had not applied for it.  However, no point had been taken on this at all by the wife even at the hearing, and the parties had also proceeded, in the husband’s application to adduce further evidence for the cross-appeal, on the footing that there was an extant cross-appeal.  Accordingly, we would give the husband leave to cross-appeal and dispense with the need to re-file and re-serve the respondent’s notices.

F2.  The relevant facts

61.Following the Judgment, by letter dated 14 December 2020, the husband’s solicitors reminded the wife that she should forthwith look for alternative accommodation as the sale of the FMH must proceed without delay.

62.On 21 December 2020, the wife issued a summons in the Family Court seeking leave to appeal against the Judgment and stay of execution, including the order requiring her to vacate the FMH, pending appeal.  The summons did not of course by itself bring about a stay of execution.  On 21 January 2021, the husband filed a summons for an order that he be at liberty to pursue formal possession proceedings should the wife not vacate the FMH on the next day.

63.The 60-day period allowed by the judge’s order expired on 22 January 2021.  The wife did not leave the property.  Her application for leave to appeal and stay of execution was dismissed by the judge on 25 January 2021.  Two days later she issued another summons in the court below seeking an extension of time for 6 months to vacate the FMH. 

64.By letter dated 30 January 2021, the wife offered to allow viewings of the FMH within certain hours by appointment, and proposed to consider applying to the Court of Appeal for stay of execution in substitution for her summons for time extension.  In response, on 2 February 2021, the husband counter-proposed that the time for the wife to vacate the FMH be extended to 30 June 2021 on condition that the wife undertook to vacate the FMH on 30 June 2021 and to comply with paragraph 2 of the judge’s order (which required her to pay the husband a lump sum of HK$7.5 million) on or before 8 February 2021.  The wife did not accept the husband’s counter-proposal, did not pay the husband as ordered, and did not undertake to leave the FMH by 30 June 2021 or any definite date.

65.On 5 February 2021, the judge dismissed the wife’s summons for extension of time, though the wife agreed that she would allow agents and potential purchasers to view the FMH during weekdays.  The husband’s summons of 21 January 2021 was adjourned sine die with liberty to restore.

66.On 8 February 2021, the wife filed a summons in the Court of Appeal for leave to appeal and stay of execution of, inter alia, the order for vacating the FMH.  This application was dismissed by the Court of Appeal, which observed in its decision dated 25 November 2021 that it was not the wife’s stance in the appeal that she and B should be able to continue to reside in the FMH.  Indeed, ironically, in §7 of her grounds of appeal the wife claimed that the judge had erred in not making an order for sale of the FMH.

67.By letters dated 1 & 2 December 2021, the husband asked the wife to confirm that she would vacate the FMH by no later than 31 January 2022.  No such confirmation was given.  On 7 December 2021, in the context of dealing with the outstanding question of costs between the parties, the judge made an order that unless the wife comply with, inter alia, the order for her to vacate the FMH by 11 February 2022, her submissions on the question of costs would not be taken into account.  On 10 December 2021, the husband issued a summons in the Court of Appeal for a Hadkinson order that unless the wife comply with, inter alia, the order requiring her to vacate the FMH by 11 February 2022, she be prevented from making any further applications or submissions in the appeal proceedings and her appeal would not be progressed or listed for hearing.  The Hadkinson order was made by Chow JA on 7 February 2022 by consent.  Eventually, on 11 February 2022, having moved out of the property, the wife gave the husband access to it.

68.The FMH was listed for sale for HK$115 million. On 2 May 2022, after having arranged more than 30 viewings, the husband received a first formal offer to buy the FMH at HK$95.8 million, which he accepted.  The sale was completed on 18 July 2022.

F3.  Jurisdiction

69.There is no dispute that this court has jurisdiction in principle to accede to the husband’s claims on his cross-appeal based on events subsequent to the ancillary relief order.  They are not claims for recovery of damages as such but seek in essence to reopen the ancillary relief order.  Clearly it is a jurisdiction to be exercised sparingly and with caution.  Thus, in giving leave for further evidence to be adduced, Chu VP referred to the need for finality in litigation and observed that the general position remains that in financial ancillary relief cases, the court makes an assessment of the assets available for distribution based upon a snapshot taken at the time of the trial, and that it is generally inappropriate for a party to seek to introduce evidence of matters occurring years after the trial.[42] Nevertheless the power is there and can be exercised where special circumstances warrant it.  The parties accept that the governing conditions are those set out in Barder v Caluori [1988] 1 AC 20 at 43 for granting leave to appeal out of time from an ancillary relief order on the ground of new events (applied in Hong Kong in YTC v CWK [2006] 4 HKLRD 267), which have been conveniently summarised by Mostyn J in BT v CU [2022] 1 WLR 1349 at §7:

“ (i) New events have occurred since the making of the order invalidating the basis, or fundamental assumption, upon which the order was made.

(ii) The new events should have occurred within a relatively short time of the order having been made. It is extremely unlikely that could be as much as a year, and in most cases it will be no more than a few months.

(iii) The application to set aside should be made reasonably promptly in the circumstances of the case.

(iv) The application if granted should not prejudice third parties who have, in good faith and for valuable consideration, acquired interests in property which is the subject matter of the relevant order.”

70.To these four conditions Mostyn J added a fifth, namely,

“ that the applicant must demonstrate that no alternative mainstream relief is available to him which broadly remedies the unfairness caused by the new event”.

Mr Marwah disputes the existence of this additional condition.  For her part, Ms Yip accepted at the hearing that the fifth condition is not a prerequisite for the existence of the jurisdiction, but a discretionary consideration going to whether the court’s power should be exercised.

71.On behalf of the husband, Mr Marwah submits that a fundamental premise underlying the division of assets as ordered by the judge was the agreed value of the FMH and that the husband would be entitled to vacant possession 60 days after the order.  The wife’s failure to vacate the FMH as ordered and the decrease in the value of the property during that time had falsified that assumption and frustrated the basis of the judgment.  It is therefore justified to reopen the decision and make the wife bear the consequences of her substantial delay.

F4.  The wife’s conduct

72.It seems to us that there are exceptional circumstances here that enliven this court’s jurisdiction to adjust the division of assets.  The wife had flouted the court’s order for over a year by failing and refusing to vacate the FMH.  She was legally advised and must in any event be taken to have been aware of the obligation to comply with the court’s order.  It was not until unless orders were made finally setting a deadline of 11 February 2022 that she eventually vacated the property. 

73.Ms Yip submitted that in the 13 months in question there are two periods during which the wife’s occupation of the FMH was not unlawful, when she was, it is submitted, “passively allowed” to occupy the FMH.  We do not accept this argument.  The husband’s offer of an extension of time for vacating the property was conditional on the wife complying with her payment obligation, which she did not.  Further, it is trite that her applications for stay of execution and for extension of time for compliance did not suspend her responsibility to do what she was ordered to do.  There was anyhow little basis for seeking a stay pending appeal when she did not appeal against the allocation of the FMH to the husband.  The unless orders stipulated special consequences for non-compliance by a specified date but did not give the wife any licence to stay beyond the original date.  The fact that the husband refrained from instituting possession or contempt proceedings in the meantime does not mean that the wife was allowed to continue to occupy the property. 

74.Nor do we accept Ms Yip’s submission that non-compliance with court orders is not uncommon.  In our view, given its extent the non-compliance in this case was very serious.  The net equity in the FMH represented some 85% of the assets apportioned to the husband which he needed for the business venture he intended to pursue.  In the history and context of this case the wife’s conduct is in our judgment a sufficiently central and egregious circumstance that engages the jurisdiction of this court, on appeal, to take account of it and adjust the division of assets between the parties.

F5.  Losses caused to the husband

75.By continuing to occupy the FMH in disregard of the court’s order, the wife had deprived the husband of potential rental income or investment return on the sale proceeds during the relevant period, thereby saving herself rental or similar expenditure.  Mr Marwah accepts that credit should be given for the fact that if the wife had vacated the FMH earlier, the husband would have had to pay maintenance for B on a higher scale according to the judge’s order.  There was nevertheless a substantial net loss caused to the husband which was concrete and readily quantifiable.  The rental value of the FMH was agreed by the parties at trial at HK$143,600 per month.  In determining ancillary relief it would be inequitable in our view to ignore the damage thus inflicted on the husband directly through the wife’s misconduct.

76.Indeed, it may be that the wife was a trespasser during the relevant time and would be liable, if sued for trespass in a civil action, for mesne profits.  Ms Yip submits that, on the husband’s case, the wife would be a trespasser and the husband had an “alternative mainstream relief” by way of a civil suit, and that the fifth condition set out in BT v CU is therefore not satisfied.  We acknowledge that in appropriate cases there may be available routes in the civil law for ex-spouses to recover against each another based on ordinary causes of action.  But as mentioned above, there is no dispute that the fifth condition, even assuming it exists in law, goes only towards the exercise of discretion.  There is no suggestion here that the wife would have a defence to a civil action brought by the husband which she could not raise in these proceedings.  In the present case, having regard to the whole history of the matter and to the exceptional conduct of the wife in disregarding the court’s order, it is in our view right for the matter to be dealt with in this court by way of adjusting the ancillary relief.  The fair order in our view is to require the wife to pay a sum to the husband representing 12 months’ rent at HK$143,600 per month, less the credit to be given by the husband on account of the reduced maintenance for B for 12 months.

77.As to the husband’s alleged loss due to the decrease in the capital value of the FMH, Mr Marwah points out that the property was treated as having a value of HK$100.5 million in the judge’s assessment, based on an agreed valuation.[43] He submits that if the wife had vacated the FMH in compliance with the judge’s order, the husband would have been able to sell it at that value instead of HK$95.8 million, the sale price he accepted in May 2022.  Further, he submits that there is no cause of action in civil law that the husband can pursue to recover this loss.

78.Three points raised by Ms Yip in opposition can be quickly disposed of.  First, Ms Yip submits that there is double-counting for the husband to make a claim in respect of both mesne rent and decrease in capital value.  We disagree.  Mesne rent represents in effect the loss of the use of the property or its sale proceeds during the period in which the husband should have had its benefit.  Loss of capital value represents the depreciation in the FMH’s market value caused by the wife’s obstruction to the sale.  They are conceptually distinct losses with no inevitable overlap.

79.Secondly, Ms Yip submits that the husband opted for having the FMH in his share of the family assets and thus took the risk of market movements after 2020.  This argument has no merit.  It is true that a final order will not be set aside simply because an asset which was taken into account has substantially changed in value. Fluctuations in asset values due to market movements are commonplace and generally do not provide a proper basis for setting aside an earlier order: CH v MEH [2012] 1 HKLRD 751, §§24 & 26.  In this case the husband might be said to have agreed to bear the consequences of market movements up to the time he would have been able to sell the FMH under the judge’s order, but that should have been a date relatively soon after 22 January 2021.  It is wrong to suggest that the husband agreed to bear the risk of the wife’s refusal to comply with the court’s ancillary relief order, which exposed him to market risks for another year to May 2022.

80.Thirdly, Ms Yip submits that it was the husband’s failure to market the FMH actively from February 2021 onwards and his decision to “flash-sell” it after arranging viewings in April 2022 that accounted for the lower sale price.  In our view, the husband could not be criticised for being hesitant in marketing the property during the period when the wife refused to leave or even to commit to a definite date when she would vacate the property.  Given the history of the matter, it would have been foolhardy for the husband as vendor to promise the purchaser vacant possession when he was being denied it by the wife.  Nor can the eventual sale be said, on the evidence, to be unduly hasty.

81.In our view, however, there are insuperable difficulties in attributing the difference between the agreed value of HK$100.5 million and the sale price of HK$95.8 million to the wife’s delay in moving out.  The figure of HK$100.5 million came from the valuation report placed before the judge which valued the property as at 16 January 2020.  This was more than a year before the date when the husband would get vacant possession under the judge’s order.  Assuming the husband would have taken about the same amount of time in getting the FMH sold in 2021, there is insufficient material to show that the whole or a definite part of the decrease in value had occurred in the year from May 2021 to May 2022 and not before. The Covid-19 pandemic was already in full swing by the time of the Judgment and might well have adversely affected the property market.  A newspaper report in October 2022 adduced by the husband stated that property transactions were expected to fall to historic lows, “with the first half of the year affected by Covid-19 knockdowns and the second half hit by rising interest rates”.  The same report recorded that Hong Kong had been raising rates since March 2022 in lockstep with the US Federal Reserve.  There is no reliable way of assessing how much of the drop in the value of the FMH was attributable to Covid-19 which might have taken hold in 2020 or early 2021 on the one hand and to interest rate hikes on the other hand which only started in Hong Kong in March 2022. The Bloomberg property price chart in the newspaper report adduced by the husband is broad and general.  In response the wife adduced transaction data on Residence Bel-Air from Midland Realty.  These statistics do not speak with one voice.  On the available evidence it is not possible for this court to be satisfied that it would be just to hold the wife responsible for the difference in value of HK$4.7 million or any part of it.

82.In these circumstances we are not prepared to make any adjustment on account of the fact that the FMH was eventually sold for HK$4.7 million less than the value agreed for the purposes of the ancillary relief trial.

G.  Disposition and costs

83.For the above reasons, the wife’s appeal is dismissed.  The husband’s cross-appeal, for which we give leave, is allowed in part, with an order to the effect that the wife do pay a sum to the husband representing 12 months’ rent of the FMH at HK$143,600 per month less the credit to be given by the husband on account of the reduced maintenance for B for 12 months.  The actual net amount should be worked out and put in the draft order for the court’s approval.

84.There will be an order nisi that the wife do pay the husband the costs of the appeal, with a certificate for two counsel.

85.As to the cross-appeal, taking into account the fact that the husband did not succeed on the point about the capital value of the FMH, which was also the basis of the application to adduce further evidence, and that he omitted to seek leave to appeal, we make an order nisi that the wife is to pay two-thirds of the husband’s costs of the cross-appeal, with a certificate for two counsel.

Mr Azan Marwah & Mr Josh Baker, instructed by Messrs. Withers, for the Petitioner

Ms Anita Yip SC & Ms Lily Yu, instructed by Messrs. Lily Fenn & Partners, for the Respondent