Kksr v. Clh Aka Zl
Read the full judgment text of FCMC 13299/2019 on BabelCite. This Family Court judgment was delivered on 18 July 2024 before Her Honour Judge Thelma Kwan.
Matrimonial proceedings – Ancillary relief – Add-back – Conduct – Non-disclosure – Departure from equal sharing – Child maintenance – District Court. – The parties were married in 1996 and separated in 2018. – The husband failed to account for overseas property sales and income. – The court found the husband's conduct was gross and obvious. – Departure from 50-50 sharing to 55-45 in favour of the wife. – Child maintenance set at $27,500 per month. – Wife awarded costs.
Legal issues: Add-back of unaccounted assets · Departure from equal sharing due to conduct · Child maintenance assessment
Outcome: Ancillary relief granted; 55% to Wife, 45% to Husband; Clean break
Cited by 6 cases · Cites 7 cases
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FCMC 13299/2019 [2024] HKFC 141 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 13299 OF 2019 ----------------------------
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------------------------------------------------------------ JUDGMENT ------------------------------------------------------------ This Application 1.This is the ancillary relief trial between the Petitioner Husband (“H”) and the Respondent Wife (“W”). There is a child of the family (“K”) who was born on XX January 2009, aged 14 at the time of trial. 2.During this 5 days trial, both parties are legally represented and gave evidence at trial. Background 3.H is Singaporean, born in February 1961; he was 62 at the time of trial. He says he is now retired. He had a son with his first wife whom he divorced in 1989. He has lost contact with his son and his ex-wife for more than 20 years. 4.W is Singaporean, born in January 1972; she was 51 at the time of trial. She is now retired. 5.The parties met in Singapore in January 1992. Back then, H was working as an Air Maintenance and Engineering Officer with X Air Force, and W was a Sales Consultant and Receptionist at a Beauty Salon. 6.In September 1993, W relocated to Hong Kong to work as a flight attendant with Y, whilst H remained in Singapore. 7.In October 1995, they met again, and subsequently married in Singapore in April 1996. 8.Due to work requirements, early in their marriage, the parties were in a long-distance relationship where W lived in Hong Kong and H lived in Singapore. 9.In June 2002, H relocated to Hong Kong to work as a Marketing Director with a US company. The parties lived together since then, initially at a property at Seaview Crescent (“SC”), then purchased a property at Caribbean Coast in 2009 (“CC Property / FMH”), where they lived together until their separation. 10.In July 2003, H established his own company (“EW”) supplying aviation parts and equipment, he says EW ceased operation in August 2016. 11.In March 2010, the parties adopted K in Hong Kong. 12.However, the parties’ relationship gradually deteriorated and it broke down irretrievably in early 2018. They separated in March 2018. It is W’s case that H has unilaterally ceased all financial contribution to herself and K, including school fees, management fees of the Hong Kong properties and household expenses in around July 2019. 13.H filed a petition for divorce on 7 November 2019, W and K moved out of the FMH to SC in December 2019. The Decree Nisi was granted on 30 September 2020. 14.W resigned from Y and her employment ended in January 2023. History of litigation 15.On the same day of the Petition, H also sought an exparte injunction, that W be restrained from dealing with their FMH. The said injunction was then discharged on 18 November 2019. 16.By the Order dated 30 June 2020, the parties have joint custody of K with care and control to W and reasonable access including staying access to H, and K is not to be removed from Hong Kong without leave until she turns 18. 17.W filed a MPS summons on 23 December 2020, and by the Order dated 19 April 2021 (“MPS Order”), H is to pay $17,500 per month to W from the date of the MPS Order and W can make use of the rental income generated from the CC Property until further order of the Court. 18.W filed a summons for specific discovery on 30 September 2021, which Order was handed down on 21 February 2022. H’s case and his Open Proposal 19.It is H’s case, based on his calculation, that the matrimonial pot is $37,814,514.14. He adds the value of the agreed matrimonial pot and the amount that he is asking for add-back to arrive at this number. Adding-back 20.H says the following should be included in the matrimonial pot:
21.H says he has retired by 2016, and also been living in and out of hotels since he left the FMH. 22.H also argues that he has provided information to the best of his abilities, and some information is dependant on third parties or his personal attendance overseas. He says the bulk of the proceeds or income was applied towards his own needs, legal costs and travelling. Apportionment of matrimonial assets 23.H puts forward two proposals:
An equal sharing case 24.In his closing submissions, H’s counsel says that there should be no departure from equal sharing, thus the matrimonial pot should be apportioned in half. 25.Furthermore, H’s counsel invites the Court to adopt H’s Proposal 2, which H prefers. K’s expenses 26.H proposes:
27.H says that his proposal as to K’s expenses is reasonable and in line with HHJ KK Pang’s finding in the MPS Judgment (“MPS Judgment”) that K’s needs to be in the region of $24,000 per month. In his open proposal he says he is happy to continue to pay $17,500 per month for K. W’s case and her Open Proposal 28.It is W’s case, that the matrimonial pot is $35,231,361.44, this is the agreed figure between the parties. Adding-back 29.W says the following should be included in the matrimonial pot:
30.W says H has failed to account for a number of the financial position of the parties’ various matrimonial assets which include inter alia H’s unilateral sale of 7 matrimonial properties, and also failed to make material non-disclosure of bank accounts, business operations, and sale proceeds. She says while H claims to have retired in 2016, she discovered he has continued to operate some business which generates income to him. And even when he eventually delivered up more information, it came very late in the day. 31.W’s counsel argues that H actions amount to financial / litigation misconduct, she submits these conduct cannot be remedied by a cost order, as there has been depletion of assets, H’s conduct was of a serious enough nature to justify an order for adding back of the above-mentioned amounts to the matrimonial pot, or a departure from equal division. A needs base case 32.W says that she seeks to depart from equal sharing of the matrimonial pool based on H’s financial and litigation misconduct, as well as for her needs. 33.W says for a clean break, the FMH would likely have to be sold. Once the FMH is sold, mortgage instalments of $8,176 per month and management fees of $4,460 per month cease to apply. In such circumstances, her general and personal expenses per month will be $17,607 and $21,300 respectively, thus $38,907 in total. As a result, W says that her needs are at least $18,000,000 on a Duxbury calculation, although no Duxbury calculation by a SJE has been ordered. 34.W says that K’s general and personal expenses per month are currently $17,607 and $40,000 (school fees and levy of $16,490 included) respectively, thus $59,607 in total. W also says that K will continue to study at D College until completion of Year 13 and depending on which university K attends, the estimated total education expenses may range from $1,304,440 to $2,744,440. W proposes K’s expenses be shared equally between H and W. 35.W challenges H’s expenses to be excessive and not adequately supported by documentary evidence. W claims that H travels extensively and does not spend much time in Hong Kong. W says that H’s realistic and reasonable needs are $26,600 per month exclusive of maintenance payment, which is in line with the finding in the MPS Judgment. As a result, H’s needs are $7,000,000 on a Duxbury calculation. Apportionment of matrimonial assets & K’s expenses 36.W calculates K’s expenses as follows:
37.W proposes:
38.In order to come up with the lump sum payment for K’s expenses and H’s share of the matrimonial pool, W proposes:
Issues 39.There is an agreed list of issues by the parties:
The Matrimonial Pot and the Parties’ respective positions Agreed items 40.The following table represents schedule of landed properties owned by the parties and their respective positions on ownership and value (from SJE or by agreement).
41.It is noted that the valuation of flats C & D of CC Property as a single unit is $13,700,000. 42.W has $891,036 in her bank account, and H has $425,314, together they have $54,577 in their joint accounts. 43.H’s life insurance is valued at $289,125, W does not have anylife insurance. As to pension, H’s is $2,323,495 whilst W’s is $208,760. H has shareholdings at $1,516,920. 44.The parties agreed assets totalled $35,231,361. Disputed Assets Wife’s Case A. Sale proceeds from selling overseas properties 45.W says that H sold part of the matrimonial assets, which were 7 overseas properties, prior to and during the current proceeding, without her knowledge; and the sale proceeds from those transactions should be added back to the matrimonial pot. The following table represents the said transactions with details of ownership, transaction date and selling price.
46.W says that H’s explanations as to the whereabouts of the sale proceeds have been evasive and inconsistent, taking an example, H’s explanation of using the sales proceeds of Unit 302 to reinvest in the Thailand Property is not reasonable, as the latter was purchased in October 2019 before the former was sold in December 2019. H generally says that these proceeds have been applied towards his living expenses, legal fees, and purchase of shares. B. Exchange Rate difference 47.With regard to the sale proceeds of these overseas properties, W contests that H has applied the exchange rate as of 14 November 2022 to all the transactions instead of the prevailing exchange rate of the date of each transaction to the effect that H is able to lower the amount of sale proceeds. W alleges that H should be held accountable for the resulting discrepancy of $1,067,841. The following table represents the said transactions with the transaction date, net sale proceeds (“NSP”) in local currency, and the equivalent HK$ amount using W’s and H’s respective exchange rates.
48.H disagrees with W’s allegations that during the marriage, he was always the person who managed the property investments to the effect that he did not need to seek W’s permission whenever he bought or sold the properties. H says that the sale proceeds were used to pay for family holidays, invest in shares, reinvest in properties and sustain his living including paying legal fees; any unused funds are now in his various bank accounts. 49.H says that he adopted the exchange rate of 14 November 2022, as this date was close to the date when the Agreed List of Issues and Agreed Schedule of Joint Landed Properties were filed. H further says that W’s proposal to fix the value of sale proceeds at the exchange rate of the transaction date essentially ignores the fact that the proceeds were already “turned into cash”. C. Rental income 50.W alleges that H at all times received and kept the rental income from the overseas properties. His disclosure with regard to these have been haphazard. Rental contracts were produced for some but not all the properties, pulling together what was produced and known to the W, a table was produced during trial and also subsequently attached to the closing submission, showing total rental income received from October 2019 – August 2023 of $1,712,190. 51.H says that the rental income was used to finance his living, as he was a retiree with no other income. D. Valuation of V Property, Philippines 52.W does not accept a previous valuation of PHP23,340,000, as she understands that the property value did increase during the relevant period of time. W says that H should be responsible for the discrepancy between the net selling price of PHP19,580,000 and the actual value at the material time which based on valuation is PHP25,000,000, which was approximately $490,000. 53.H disagrees, he deems the sale price was the best offer at the time, which is in line with W’s expert evidence that there would be a bargaining allowance of 5% to 30% of the asking price. E. Cash withdrawals 54.W says that H hid $400,000 cash in different currencies hidden in small cabinet under the worktable at the FMH; and H withdrew PHP2,200,000 from his Metrobank account, and spent it on his personal trips. 55.H denies W’s allegation, and says W gave inconsistent descriptions as to the appearance of the said cabinet as well as the amount of cash during cross-examination. H says that he used the cash to pay for K’s expenses and family holidays. H points out that the W first says it was $400,000 in her affirmation of November 2022; then in a prior affirmation in 2019, says it was about $300,000. Photos were taken of the cash which appears in various currencies. H counterclaims that W took the cash upon her discovery, and when the cash was returned, the total amount came to be $245,000 by his tally. 56.H says the PHP2,200,000 was spent on his overseas trip and diving. W says this was withdrawn in April 2022 and was not disclosed until May 2023. No disclosure was made prior to FDR in August 2022, H’s 10th and 11th affidavit on 10 August 2022 and 17 February 2023, and his updated Form E dated 19 May 2023. H on cross examination accepts that there are no receipts or proof of such spending. F. Shares 57.H says that he has used the sale proceeds from various properties towards buying shares for investments, these largely appeared in the Dah Sing Bank (“DSB”) joint account, and subsequently H moved his investments to his sole account with Standard Chartered Bank (“SCB”). W produced a detailed breakdown of the share transactions, amount used to purchase, amount received on sale, and net profit. The breakdown covers the period from 16 October 2019 to 28 May 2021 for DSB and 5 November 2020 to 22 March 2023 for SCB, these were produced as Table 1 and Table 2 during the proceedings. It is H’s evidence that he sold his shares in DSB and transferred money to SCB and then repurchase shares therein. W submits that H started selling down his shares in his SCB account from September 2022 to March 2023, with a resultant net gain of $567,980. 58.H denies that he withdrew money from their joint accounts to buy shares in his personal account to prevent dissipation of matrimonial assets by W. H agrees that the shares now held in his SCB account forms part of the matrimonial pot. As per H’s Form E dated 19 May 2023, the total value of all holdings was $1,516,920. F. Conclusion 59.By W’s calculation, after deducting the expenses in connection with all the transactions above, the total of $5,939,366 unaccounted by H should be added back to the matrimonial pot. 60.H disagrees with W’s calculation because W double counts the assets and ignores his expenses. He maintains that there is nothing to add back to the matrimonial pot. H’s case A. Sale proceeds from Nanning Property 61.The property in Nanning in W’s sole name was sold in October 2022 for RMB 435,000. 62.H says that W’s explanation of using the sale proceeds of RMB377,013 from selling Nanning Property to pay K’s expenses and legal fees is unreasonable as she already had a loan of $500,000 from her friend as well as her withdrawals of JPY1,230,000 and AUD14,700 from their OCBC joint account. H also says that W could not provide an explanation supported by documentary evidence as to the whereabouts of the sale proceeds. 63.In W’s Reply submission, her counsel has shown transactions in her bank account and the receipt of funds from the Nanning Property. This came in three tranches of SGD19,994 on 12 January 2023, SGD31,994 on 9 February 2023, and SGD17,994 on 22 February 2023. This totals around $410,000 on conversion from SGD. 64.W says that she was on unpaid leave since July 2022, and the rental income generated from the FMH was not enough to pay for her and K’s expenses and legal fees. In September 2022, she had only $100,000 in her bank account, and she could not pay off the upcoming legal fees as well as the legal fees owed to her previous solicitors which amounted to $418,000, without selling Nanning Property. She explained in her examination in chief and under cross examination that this went to 4 months of school fees for K at $74,000, payment for previous lawyers, and she spent the balance on living expenses. 65.She says that her solicitors have duly informed H of this sale in October 2022. B. Cash withdrawals 66.H says W has withdrawn JPY 1,230,000 and AUD14,700 from their OCBC joint account in around October 2020; W says this is about $166,100, and by H’s calculation translates into $179,000. 67.As to W’s withdrawal of JPY1,230,000, this was converted to SGD15,626 and can be traced to the joint account belonging to W and her mother. W says this is for a monthly sum of SGD1,000 for her mother, and that H is well aware of her payment to her mother during the marriage. This amount constitutes 16 months of payment from July 2019 when H stopped paying family expenses to October 2020 when this withdrawal was made. H says that W’s explanation of paying maintenance to her mother is not supported by any documentary evidence. H also says when confronted, W did not mention to him that she is paying maintenance to her mother, and her answers given during cross-examination was evasive. 68.As to W’s withdrawal of AUD14,700, she says this is approximately $80,000 of which $70,000 went to her bank account with Standard Chartered, and she kept $10,000 as cash. Of the $70,000, she used $55,062 as school fees for K. H says that W’s explanation of paying K’s school fees was unreasonable because W at that time still received income of $30,000 and already took out a mortgage of $2,000,000 against the FMH. 69.W says that H stopped payment of all household expenses and K’s expenses, which amounted to $40,000 to $50,000 a month. H contributed only $10,000 a month since December 2019 while pocketing half of the rent, that is $17,500, generated from the FMH. She therefore had to withdraw money from the joint bank accounts, knowing that this is the account which has paid for the family expenses. 70.In response to H’s contention that his financial position was exacerbated after the W’s withdrawal, and was forced to sell the Australian property; W’s counsel points out the balances of the parties joint account before and after the said withdrawals which shows that the account was funded, and refutes in saying that H was not forced to sell the Australian property but chose to do so. 71.W also says that H’s raised queries on the Singapore account which she disclosed in late December 2021 and January 2022, no question was raised after production of documents until this hearing. C. Loan to B 72.W lent $170,000 to B when she was dating him. 73.W says that B has already repaid the whole sum to her by end of 2014, but under cross examination acknowledged that she was still receiving repayment in 2015. 74.H says there was no proof showing that Billy had repaid the loan in full, and invites the court to add back $170,000 to the matrimonial pot. D. Joint account of W and her mother 75.H says W treated the balance of $66,704 in the said joint bank account as hers entirely, as reflected in W’s Form E. 76.W says that her mother is the actual owner of the bank account, and adding her name onto the account is only to allow W to assist her mother in managing it in case unfortunate events happen to her mother. W further says that she has no knowledge of how her mother uses the money in the bank account. E. Mortgage against the FMH 77.W took out a mortgage on the FMH in August 2019 for $2,000,000. 78.H says that W’s action caused an extra liability to be incurred, which essentially means she has dissipated $2,000,000 worth of matrimonial assets, especially when it was unnecessary to do so. 79.W says that H stopped all financial contributions towards K and herself in around July 2019, she therefore had to rent out the FMH to generate income to support her and K’s living expenses. She then took out a mortgage against Flat D of the CC Property in August 2019 to pay for the renovation of SC before moving in as it had been rented out for many years without a proper renovation. She says that at the material time, H did not move out of the FMH as agreed, had locked her out of their study, and repeatedly lost his temper at K; it was important that she left the FMH to get out of the situation. Out of the $2,000,000 mortgage, $1,100,000 was for renovation, and the balance was for her and K’s living expenses as well as legal fees. 80.At the hearing, W gave explanation on the spending on renovation and legal fees, in H’s closing submission, this was not further challenged. However, H insisted that W has borrowed more than she needed, and that it was unnecessary to do so at that time, and asks for this $2,000,000 to be added back. F. Conclusion 81.The Court is invited to add back JPY1,230,000, AUD14,700, the mortgage of $2,000,000, the loan of $170,000 to B, and 50% of the balance of joint account of W and her mother to the matrimonial pot. 82.W disagrees with H’s suggested addbacks. The Applicable Law & Legal Principles 83.Section 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO”), Cap 192 sets out the matters that the court must have regard to when making orders for ancillary relief:
84.The Court of Final Appeal in its landmark judgment of LKW v DD [2010] 13 HKCFAR 537 has laid down a 5-step approach in assessing the division of the parties’ matrimonial assets:
85.Which are to be considered against 4 guiding principles, namely:
86.I shall come to some other relevant legal principles when I discuss various issues below. Credibility of Witnesses 87.I would like to start briefly with my observation of the respective parties’ demeanour at the hearing. 88.W’s suggests to me that the H displayed “hallmark characteristics of a witness lacking in credibility” and quoted the case of Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513 at §53 which provides the guidance in this regard. In brief, one needs to consider if the party’s case is inherently plausible or implausible; whether the party’s case is contradicted by evidence, whether a witness has been discredited over one or more matters to which he has given evidence, and his demeanour. 89.I accept W’s submission that H has given false evidence on oath, as under cross examination, I find that he has not been telling the truth; in particular when he says he has retired and no longer earning an income. H has also admitted that he has not reported his income to the tax authorities. I also find the way in which he was giving oral evidence to be vague and evasive. 90.As for the W, I am not of the view that her credibility is challenged. Admittedly, while there was occasional lack of clarity in her answers, I do not find that she has been lying, nor do I find that her case has been contradicted by evidence in any substantial way. 91.Against this observations of mine, I shall proceed to apply the legal principles to this case. STEP 1: Identifying the Matrimonial Assets 92.Under this heading, the Court is to consider the financial resources of the parties, with reference to s.7(1)(a) of the MPPO. Matrimonial Pot 93.According to the agreed joint asset and liabilities schedule dated 19 April 2023, the agreed net value of the matrimonial pot is $35,231,361.44. I will deal with the various disputed assets below. H’s failure to account 94.W has produced a detailed table at trial (Table 3) and Tab C of her closing submission, which is a tally of her calculation of the proceeds of sale of overseas properties, rental income, net profit from sale of shares, cash at home and deduct therefrom the H’s allegation of how these have been spent, including his living expenses (not known as never provided), payment of legal fees, purchase of shares, and reinvestment into other properties to arrive at her proposed add-back amount of $5,939,366. 95.From Tab C of W’s closing submission, in Hong Kong dollars using W’s currency conversion approach:
96.I am of the view that W has presented a plausible calculation of these unaccounted-for sums, having taken into account what she could pull together in terms of H’s claim on how these monies have been spend, and with analysis of the transactions in question. 97.I will add here that I do not intend to dive into analysing the share transactions summary prepared by W, suffice to say H has been using money in his hand to engage in share transactions and the value would invariably and indisputably be part of the matrimonial pot. I also acknowledge there is dispute on how much was actually in the “hidden” cabinet on the parties’ respective case but I will not make a finding on the actual amount. That said, and on this issue, I do accept that there are substantial amount which was not explained by H when given opportunities to do so. Broad-brush assessment of the H’s living expenses during this period 98.W has not taken into account the living expenses that H alleges to have come out of these sums. She is correct that H never produces any breakdown of how much he is spending. Clearly, I am unable to assess how much his needs were over the period of time when all the amounts were allegedly received by him and unaccounted for. The best reference I can have in this regard is from the MPS Judgment on 19 April 2021 which assessed the H’s expenses at $26,600. I notice that from H’s reply submission when he says that W has failed to accurately reflect the reality and ignored some of the H’s evidence in her Table C, he himself utilize the number from the MPS Judgment. I will adopt the same. The estimated living expenses is therefore $26,600 x 57 months = $1,516,200. I have adopted the start date of November 2018 as that was when he first disposed of his overseas properties which are under dispute, and calculated up to July 2023. 99.Assuming he has been paying the MPS ordered at $17,500, he would have paid from April 2021 and calculated to time of hearing in July 2023, that would tally $17,500 x 28 months = $490,000. 100.The estimated amount of living expense and payment of MPS is therefore $2,006,200. Pitching this against the amount of $5,939,366, this still leave around $3,900,000 unaccounted for. 101.In asking to add back the amount of $5,939,366, W says Tab C does not represent other amounts that were also unaccounted for. W also seeks to add the amount of above-mentioned PHP2,200,000 which H withdrew from his Metrobank account in April 2022 and which he claims to have spent on trips but acknowledged he has no supporting documentation. This equates to $330,000, which means over a course of 16 months he spent $20,625 per month on trips which must be an exaggeration, or just unreasonably excessive. 102.She also disagrees with H on the amount at which he sold the Philippine property, she said it was sold at an undervalue by PHP3,086,000, which is $438,212. On this issue I accept H’s argument that this there could be fluctuation in an eventual sale price which is lower than the valuation, this is always subject to market condition, and I do not intend to take this discrepancy into account. H’s allegations Mortgage loan of $2M August 2019, Cash withdrawal of JPY1,230,000 and AUD 14,700 October 2022 and Sale of Nanning Property October 2022 103.These are monies taken out by W and by her case, this was required for her living expenses, K’s school fees, a one-off renovation costs for SC, and payment to her mother. I shall deal with W’s expenses below. Loan to B 104.W says she was involved in a relationship with B during the marriage and but brought to an end to appease the H. She says that the loan was indeed repaid, not in 2014 as originally claimed but in 2015. 105.I accept W’s argument that this loan of $170,000 8 years ago is not of an amount and of a time frame which needs to be featured in these proceedings. W’s joint account with her Mother 106.The amount in this account from the W’s first Form E was $66,704, where she stated that this account is in the name of her mother; in her updated Form E, the amount is $18,751 wherein W explained that this account belongs solely to her mother. Looking at the agreed schedule of assets, the value placed on this account is $2,848.28, which is 50% of SGD1,012 converted into HK$ of $5,696.55. H also alleges that money has left this account before this value was adopted for the schedule. 107.Not much was covered in cross examination on this topic except for questions surrounding W’s delivery of passbook account information. On the basis of the amount in question, and the lack of challenge to the ownership of the account at trial, I shall not be taking this issue into consideration. W’s need for living expenses 108.From the evidence, W was without any meaningful financial support from the H from at least July 2019 until the MPS decision in April 2021. She was on unpaid leave since July 2022. She ended up needing to mortgage the FMH, borrow money from friend, withdraw money from joint account, and sell the Nanning property to supplement her cash flow for expenses. Looking to these numbers, these constitute:
109.Looking at W’s case, after netting $1,100,000 for renovation from $2,593,714, the balance is $1,493,714. I cannot see how much legal fees W has to pay during this period, but she did say she had to pay off her previous lawyers and the Form H for trial shows she has paid legal costs of $2,144,662 up to time of trial with around $800,000 outstanding; she has also repaid her friend for the $500,000 loan to her. I also take into account the MPS Judgment which assessed the M and K’s needs to be $74,000 per month (and even with the MPS Order of $17,500 only from April 2021, this brings it down to $56,500), W decreasing income over this period and that she receives rental income from the FMH. 110.In the whole scheme of things and on a broad-brush bases, I accept W’s case in her need to seek further funds to support herself and pay for K, and accordingly will not be adjusting the matrimonial pot in accordance with H’s submission. Interest Rates 111.As various transactions in this case span over a period of time when properties were disposed and there had been currency fluctuation, W has adopted the exchange rate at time of transaction, whereas H has used the date of 14 November 2022. This latter date does not have much bearing on the time line, H says it was closed to the date when the Agreed list of issues and Schedule of joint land properties were filed, this was just before the first PTR on 18 November 2022. 112.H argues in the reply submission that by that time (November 2022), the sale proceeds had been converted into cash, and as such “it is only reasonable that the value of the cash should be recorded in exchange of the relevant foreign currency on the date of recording them for the two documents mentioned above”. 113.W says that as JPY, AUD and PHP has depreciated in the interim, this has resulted in a discrepancy of $1,067,841. (See paraph 47 above) 114.In my view, H’s case is that he has used the various sale proceeds for various purposes, mostly for expenses in Hong Kong, so they must have been converted over the course of the period; H never gave evidence as to when these currency conversion took place, and W were not able to track the fund flow. I am not of the view that H should just pick a date to determine these foreign currencies in HK$ equivalent, especially when it has not been agreed and resulted in around $1 million difference, of which W is rightly taking issue. For a fair approach for this case, I accept the W’s position that the exchange rate should be taken as of the date of sale as a uniform approach to determine the amount received from the disposed properties. Parties’ Earning Capacity H’s case on income and earning capacity 115.According to H’s Form E dated 19 May 2023, he has retired since June 2016. His counsel repeats this in his opening submission. He also says he receives no monthly salary in his Form E of May 2023, and relies on the net rental income of $19,600 generated from his properties. In his counsel’s closing submission, the H position is that he has “scaled down the business in 2016” and “the year he officially retired was 2019”. W’s case on H’s income and earning capacity 116.W disagrees that H is retired, as she alleges that despite EW ceased to operate back in August 2016, H still continued to pursue business with an intention to transact and earn a profit until at least 2019. 117.W also disagrees with H’s explanation that another company of his (“AET”) was only for APEC travel card and not for business, as there were funds in and out from AET’s bank account before its dissolution on 30 June 2021. W therefore asserts that AET continued its operation until July 2021. 118.W further says that H used to co-own another company (“E”) with his friend (“M”) with whom H still have business dealings after de-registration of E on 13 March 2014. 119.W points out that despite his initial denial, H was in fact a founder and shareholder (49%) of another company (“AKC”) co-owned with M. W also points out that although H claimed not to have any business registered in Singapore, he has indeed registered 3 companies there. W’s case on her income and earning capacity 120.According to W’s Form E dated 19 May 2023, she has retired since January 2023. She receives no monthly salary. She relies on the rental income of $36,000 generated from her properties. 121.Before retirement, W earned $52,000 per month at the height of her career as a flight attendant with Y. However, W says that her monthly salary was reduced to $22,050 from January 2021 because of COVID. W further asserts that her career prospects and employability as a flight attendant at her age are extremely limited, and it would be unrealistic to suggest that W could make $52,000 per month if she rejoined the airline industry. H’s case on W’s income and earning capacity 122.H says W retiring at the age of 51 before the official retirement age of 55, was for litigation purpose, because W could not offer any satisfactory explanation for her decision to retire a couple of months after Hong Kong re-opened the boarders and the aviation industry continued to pick up. Discussion 123.I am of the view that H’s case that he has retired in 2016 was successfully challenged under cross examination. The evidence that we see is that he appears to continue engaging in transactions that brings income to him after 2016. I am also of the view that his age at 62, with no apparent declared ailment, is not an impediment to him in continuing with his business in trading of aviation parts, and conclude that this is something he is able to continue to do, at least on a selective part-time basis to supplement his income. The lack of sufficient information in this regard has made it impossible for me to put a number to his income. 124.As to the other source of H’s income, which he declared in this Form E to be rental income of $19,600, comes from the Cambodia property, two carpark spaces, his workshop in Hong Kong, as well as his Bangkok property. 125.As for W, I am unable to accept that she has no earning capacity at age 51. I am conscious that she has been a flight attendant for a number of years, and her last income was approximately $22,000. While I am not able to assess whether she can return to the airline industry in any form or role, she should be able to utilize her experience in the service / hospitality industry to find some work. Acknowledging that this may mean a career change at her age, I do not expect her income to be substantial, but it should not be less than her last salary. This will be taken into account at the final assessment of these proceedings. STEP 2: Assessing the parties’ needs H’s case on his needs 126.According to the Updated Form E, H estimates that his general and personal expenses on a monthly basis to be $31,940 and $47,350 (including MPS of $17,500) respectively. H says that K’s expenses are mostly covered by his monthly payment of $17,500 to W pursuant to the MPS Order. He further provides $1,000 per month for K’s entertainment and holidays. His totals are therefore $80,290. 127.Breakdown as follows:
128.H maintains that he has been staying in a hotel room for 3 years and he would like to have a home in Hong Kong, and if possible, moving into the FMH after the current proceeding, as reflected in H’s Proposal 2, or acquiring another place on the Kowloon side. W’s case on H’s needs 129.W challenges H’s expenses, in particular those related to holidays and travel, for being excessive and not supported by evidence. 130.W further challenges H’s needs as to accommodation, as H has been spending substantial time in Thailand since 2019 and the Thailand Property has never been rented out since purchased in 2019. On this W produced an investigation report with her 9th Affirmation showing H’s entry and exit from May 2019 to August 2022 into and out of Bangkok. On a quick perusal of the report, H was in Thailand every month from May to December in 2019; in 2020 he flew in and out of Thailand in the first quarter and then stayed from March to September; in 2021 he was briefly in Thailand between 2 August to 22 September; and his regular travel resumes in February 2022 taking him to Thailand every month until the end of the report time in August 2022. This is during covid. W says that he spent 48% of the time over that period in Thailand. To that end, W alleges that H was not paying any rent as claimed and he does not treat Hong Kong as his place of primary residence. W proposes $26,000 per month for H’s expenses, which is in line with the MPS decision. W’s case on her needs 131.According to the said Form E, W estimates that her general and personal expenses on a monthly basis to be $47,830 and $21,300 respectively. The total is $69,130. As mentioned above, W has in her open proposal states that if the FMH is to be sold, she will have less expenses as she does not need to pay for CC Property’s mortgage ($8,176) and management fees ($4,460) but she will also loose the income therefrom. 132.The following comes from her updated Form E
H’s case on W’s needs 133.H does not challenge W’s expenses. There is nothing mentioned in H’s opening, closing and reply about W’s needs, W’s case therefore is that her numbers are not challenged. Discussion 134.To start with, I need to recap that HHJ KK Pang has assessed H needs at $26,600 in April 2021. 135.From H’s numbers, I would remove his rental expense. There is of course a need for accommodation, in the long run, he may need to acquire a property as he plans. Looking back at his previous rental figures, his 2021 MPS application says $10,800, his November 2022 narrative affidavit says $21,000 and his Updated Form E now says $29,040. So, this item of expense has increased three-fold over 2 years. Not much has been addressed on the H’s accommodation needs at trial, nor did H respond to W’s contention that he has a property in Bangkok which was never rented out since purchase in 2019, and which he can use as she says Hong Kong is not his primary residence. I take note that he has never tried to reinvest in a property in Hong Kong after the parties’ separation despite his selling and buying overseas. He has continuously lived in hotels over the duration of the divorce proceedings which suggest to me that there is little intention to find a place of some permanence, he has not even rent a property as his base in Hong Kong, this points to me that he may well be leading a peripatetic life as suggested by W. If he has aspired to have one property in Hong Kong to each of the party, it should have been considered in the light of realistic economics of the situation. I acknowledge that there is a residence available to him in Thailand; I find his hotel rental needs to be exaggerated and if he is in HK, this expense can be pared down. Even if he wants to purchase his own accommodation, he should not be needing a huge apartment and could be properly budgeted. 136.On his personal expenses, I first draw reference to the MPS decision which finds that his personal expense to be $26,600 – $9,900 (rental at that time as found by HHJ KK Pang) = $16,700. I also make reference to what he says in his Form E that he has been relying on his rental income of $19,600 for his living expenses as he is retired. 137.I also find his meals out of home and holiday expenses excessive. I adopt the number of $6,000 for meals and place his holiday expenses on the same level as W and K at $3,500. I will also adopt $5,000 for transport, clothings and shoes, personal grooming, entertainment, presents gym and supplements. His insurance shows a marked increase from his MPS number of $700 to $3200 per month with no support. The only insurance document he produced for his Updated Form E pertains to surrender value of his AIA life policy, so $3,200 is not accepted and I will use $800 for his insurance. He has a mobile plan for himself and K at $450, and says he gives $1000 per month for K. 138.I calculate his personal expenses as $6000 + $5000 + $3500 + $700 + $800 + $450 = $16,450. 139.Looking at the matrimonial pot, I am of the view that he can be covered in terms of the accommodation needs, should he be purchasing a small apartment, renting short term or staying in hotels when he is here. I have assessed that he still has earning capacity and his business does not require him to be stationed in Hong Kong as he appears to be conducting this via correspondences. His personal needs are not excessive, he can still have income from his various properties, and if he uses the Bangkok property himself, will bring his rental income down to $18,000 per month, this is more than adequate to cover his own personal expenses. 140.W says in her open proposal that without the FMH expenses, her general expense will go down to $17,607 per month. In my view this number does not add up. I will conduct my own calculation as follows: I will deduct mortgage and management fees of the FMH of $8,176 and $4,460. I will also reduce her utilities to $3,500, and food and household expense to a total of $8000. This will bring her General expenses to $8,000 (mortgage for SC) + $3500 + $2,210 + $8,000 + $300 + $5,300 + $884 = $28,194, I will round this up to $30,000 as the W’s general expenses. On this number, M should be responsible for herself and ½ share for K, which brings this to $22,500 and H should be responsible for $7,500 for K. 141.My observation on this post divorce expenses is that when W has liquidity in her hands, she should consider paying off the SC’s mortgage of around $1.5 million which can reduce her monthly expenses by a further $8,000. 142.As for her personal expense, I am of the view that her personal grooming can be reduced from $3,500 to $1,500, the tax on property rental income should also go away when FMH is sold, so this will reduce her personal expenses further by $2,500. Removing $4,500 from her personal expenses will bring her number to $16,800, which is more or less the H’s personal expense as well. 143.M’s monthly needs is therefore $22,500 + $16,800 = $39,300. Taking into account her earning capacity which I assessed to be no less than her last salary at $22,000, she still needs $17,300 per month which must come from the capital, or she has to find a job with a higher income. 144.In the W’s scenario, she will have a roof over her head for herself and K. There will also be a need to contribute to K’s expenses at least for another 8 years. K’s Needs 145.As to general expenses, and base on the above calculation, K’s general expenses needs should be ½ of M’s, which is $15,000. As for personal expenses, W provides estimates with a rising trajectory whereas H does not provide any, except $1,000 for entertainment and holidays, as he maintains that all other items are being paid for with his contribution of $17,500 W. W expects that the school fees will increase year on year, which is not an unrealistic conjecture. 146.H says that the figures given by W were inflated. He relies the MPS Judgment that K’s needs to be in the region of $24,000 per month. In his opening submission, he says K’s expenses should be $28,000. H’s closing submission recognises some minor adjustments in terms of uniforms, and ECAs, but he still maintains that his $17,500 for K is a reasonable proposal. 147.The following table represents the parties’ proposals of K’s needs:
148.Looking at W’s latest proposal on K’s expenses, my observation is that entertainment and holidays and “Others” which is listed as “Supplements, skin care products, toiletries, personal hygiene items” in the Form E look a bit on the high side, but I do not intend to shave this number down substantially. Looking at this overall, the total number needs to take into account increase in school fees in the coming years, and children expenses will always increase with age. I will round down this number to $40,000. 149.I therefore estimate K’s expenses to be $55,000 ($15,000 + $40,000), each parent is to contribute $27,500 towards K’s expenses on a monthly basis. 150.It is noted that W has serious concerns about H’s ongoing payment of K’s expenses for H has at various times objected to paying K’s maintenance. W alleges that H stopped contributing to the household and K’s expenses for a period from July 2019. To that end, W invites the Court to order a lump sum payment, as she believes that would best secure K’s welfare in the future. 151.I do not have information before me as to how my assessment of K’s needs at $55,000 can be translated to a lump sum. In any event, I am not minded at this juncture to make an Order for a lump sum payment for a child. STEP 3: Deciding whether to apply the Sharing Principle 152.I have come to the conclusion that the parties’ needs can be satisfied by the matrimonial pot, taking into account the capital they will retain or receive, their respective earning capacity, and the need to contribute to K’s expenses for the upcoming approximate 8 years. 153.This is a marriage of 23 years, it is my view that there should be a clean break between the parties, which is in line with the parties’ proposals. The starting point on this assessment is that the parties will have a 50-50 share of the matrimonial pot. STEP 4: Reasons for Departure from the Sharing Principle 154.On this penultimate step of ancillary relief analysis, I shall address H’s conduct and the extent to and principles under which it is to be taken into regard. To recap, W has asked for an adjustment of the 50-50 sharing due to the H’s conduct with W getting 58% of the pot; and H’s submission is that it should be a 50-50 sharing. Failure to Account 155.It was submitted that H’s conduct in his failure to account amounts to financial misconduct, and that it constitutes wanton dissipation of family assets which could only be remedied by add-back principles. 156.H has argued that he was the person in charge of family investment and handling of rental income, W says in oral evidence that that was true “before things turn bad”. I am of the view that H cannot rely on his previous role in the marriage with regard to management of family finances to say that H does not have a duty to properly account during and for the purpose of the divorce proceedings. 157.H argues that this is not wanton dissipation, and that he has accounted for the funds. 158.Referring to my analysis above, I find that the way in which H gave sweeping statements on how these proceeds were dealt with was unhelpful as there was no proper accounting or tracking of these funds when it is clear that this is an important issue for these ancillary relief proceedings. When one looks at the parties’ respective submissions, I find that despite the ambiguity of the evidence provided by H, W was able to piece together and analyse what they have at hand to show the extent of unaccounted funds, having only the information from his less than satisfactory account of the way he deployed those funds. On the H’s closing submission, despite this very live issue pervading through the hearing, I am still not assisted as to any breakdown on his spending on living expenses, his unsupported allegation of spending on travel, or how much was spent on legal expenses (except from the Form Hs). I have no reservation in accepting W’s case that H has failed to account for a good part of the matrimonial assets. 159.I turn to the recent Court of Appeal decision in LCC v LTLA CACV 281/2022 [2024] HKCA 406 on 30 April 2024 in which Madam Justice B Chu devoted a section of her judgment to go through the jurisprudence on Add - back principles starting from §27. The guidance has aways been to exercise caution when invoking this principle. In quoting from the case of MAP v MAP (Financial Remedies : Add-back) [2015] EWHC 627 (Fam), she said at paragraph 41:
160.I also find the following excerpts of the Judgment to be helpful, namely §§47 - 48 and 61:
161.In the line of cases quoted by Madam Justice Chu, dissipation took the form of overspending or frittering of family assets, gambling, gifting away, and in one case, spending on drugs alcohol and prostitute. Not all the cases ended in funds being added back to the matrimonial pot. 162.I acknowledge that the case law does not say that failure to account equates dissipation, as dissipation would mean that family assets have been spent. The word wanton also carries with it an element of intention in the act of dissipating but this aspect of the jurisdiction was left in some ambiguity (see paragraph 44 and 50 of the LCC v LTLK above). It is trite that to allow add - back of amount under the line of jurisprudence requires a high bar. I find that in this case, the unaccounted-for money is not wanton dissipation, as it is not clear to me, nor is it the W’s case, that the money has been spent. But it is a factor that must be taken into account, and it is a consequence of the H’s failure to provide satisfactory account of how these monies had been deployed, which resulted in an apparent reduction in the agreed matrimonial pot before the court. 163.It was submitted by W’s counsel that while litigation conduct on the part of one party can be remedied by a cost order generally, the depletion of matrimonial assets through litigation misconduct cannot be remedied by an order for costs as the Order only allocated remaining assets and fail to take into account the lesser wealth on the table as a result of a defaulting party’s conduct. 164.This issue will be read further with the issue of disclosure elaborated below. H’s non disclosure 165.W has taken issue with various non-disclosure on H’s part which needs to be taken into account. Non-disclosure regarding overseas properties 166.This is the same area of concern in terms of failure to account by H, but the following information deals with how the H dealt with the provision of information with regard to these properties. 167.W alleges that despite her concerns as to the disposition of assets from the outset, H did not address many of them properly, even after W’s specific discovery application. The following table represents the alleged misconduct by H.
168.As a starting point, I think it is important to consider the time lapse between the sale of the properties until the provision of documents by H. 169.The following are some of the comments from the W regarding the disclosure made by H with regard to these properties:
170.W says H had gone along with valuation of the Philippines Property at the first PTR in November 2022, and then went off to sell this property in May 2023. Valuation report was filed in early July, and H disclosed the contract of sale with information on proceeds 5 days after and only three weeks before trial. W says unnecessary costs has been incurred and H should have informed her and the Court that he intended to sell the property. H on this says W was informed of the sale shortly after and told the W there was no need to value the property. Non-disclosures relating to retirement and other income 171.Quite an amount of time was spent on cross examination of the H on this topic. To set the scene, W’s counsel says H repeatedly says he had retired in June 2016 and after EW ceased business on 31 August 2016. Despite W repeated questions on this topic in her Form E, her affidavits, and under her specific discovery application, H maintained his retirement date in his lawyer’s letter in July 2020, his first Form E in October 2020, his 10th affidavit in November 2022 and all the way up to his 2nd Form E on May 2023, less than 3 months before the trial. EW 172.During cross examination, he was shown a number of quotations containing his handwriting in July and October 2016 and January 2019, using his home address as contact and work email address. He admitted under cross -examination that he had continued working after his alleged retirement date. 173.He was found to have received USD49,988 into EW’s corporate account in January 2017. W says he has said twice that EW’s corporate account was closed in 2016, and that he did not produce bank statements for EW beyond January 2015. 174.H was also asked about his withdrawal of $1,400,000 from EW’s corporate bank account in December 2014 to pay off the FMH mortgage, but W says full payment was made in August 2014. H was repeated asked where this money went, while H said he would check with the bank, no answer was forthcoming. When asked where this money has gone at trial, his oral evidence was vague and he said it “might” have gone to purchase of the Philippines property or Bellagio. AET 175.According to an extract of business registration information, this business was in operation from March 2017 to June 2021. This company was not disclosed by H in his first Form E or his 1st or 2nd Answer but was only revealed after W’s specific discovery application. He says AET is dormant and was only used to maintain his APEC card. However, on cross examination, emails were put to him regarding quotations being made on AET letterhead in 2018. AET’s bank account had transactions coming in and out in June 2018 which H failed to explain. And H was also unable to explain why $150,000 left AET’s corporate account in April 2019 and transferred to his personal name account. The relevant bank statement shows a deposit of $170,000 into this account in March 2017. Despite W’s repeated ask about this amount, the source of payment, no answer was ever provided by H. In his re-examination, H explains that this is an interbank transfer, the evidentiary document shows a AET cheque in the sum of $150,000 for the H, so this goes to show that the amount left AET corporate account and enter his account but does not explain the deposit into AET, where it came from and why its account is being used to pass through funds, having in mind H’s case that AET is a dormant company. Other Companies 176.H failed to disclose a business by name of AKC, he denied participation nor ownership, but he was shown company documents showing he was one of the founder of the company and holds 49% thereof. 177.With regard to another company EIL which he co-owned with M and incorporated in 2008. He was he was a director but the company was de-registered in 2009, evidence shows that there was an invoice from another company addressed to EIL in March 2014; under cross examination, H assumed it was a “typo”. 178.H denied he had any Singaporean business; three were uncovered, H says he did not disclose these because he wasn’t sure if these are still in existence or if the account is active. He was cross-examined on an order addressed to EW with a Singapore address for attention of his brother-in-law in February 2015. Under cross examination, he says he manages the Singapore business from Hong Kong remotely. Non-disclosure relating to bank statements 179.W says that H’s other non-disclosures include his failure to provide statements of his various bank accounts as well as those of EW and AET. 180.W complained that H failed to provide bank statements for Maybank in Cambodia, and Metrobank in the Philippines. For the latter account, bank statements were only produced in June 2023. He says he had to make personal trips to these places to get his bank statements, but W says H has been to both Cambodia and Philippines in the interim and failed to obtain statements on his trips. 181.H only produced limited bank statements from BDO Bank in the Philippines and only after W’s specific discovery application. W says H did eventually attended the BDO Bank in person to produce bank statements from Feb 2022 to July 2023 just before the trial. 182.H only produced limited statements for his WL Bank 0025 account and only after W’s specific discovery application in December 2021, but these are only statements dated September 2019, March 2021, April 2021 and May 2021. Non-disclosure relating to Shares 183.With reference to W’s compilation of the above-mentioned Table 1 and 2 which was her analysis of share transactions of the H, W found out that H has liquidated the shareholdings in their joint account, and used the proceeds to purchase shares in his personal account. The account to which the H transferred these holdings was not disclosed until the specific discovery application when W made enquiry regarding a related credit card. 184.I note further here that the time when H started using his personal account at SCB for share transaction in November 2020 was the month after W has withdrawn the JPY and AUD from their joint account in October 2020. It was also from this month onwards, that H started to sell down the shares from their DSB joint account. I find this timing coincidental and aligned with W’s comment that H switched his share transaction account to prevent her from accessing family assets. H’s response to W’s allegations 185.H says he has repeatedly made disclosure by Whatsapp, emails, correspondence and via solicitors. Despite all the information that was given, W has turned a blind eye and continues to insist it was lacking. 186.H says that W’s complained non-disclosure has been dealt with by W’s specific discovery summons. H was already penalized by paying costs for such summons. Subsequent to that summons, H has been making prompt and full disclosure. As such, H should not be penalized again on the same basis for this trial if the Court finds that there was litigation misconduct on H’s part for non-disclosure. Discussion 187.The law is trite with regards to parties’ ongoing duty of full and frank disclosure in the midst of divorce proceedings. In this case, W had two rounds of answers to questionnaires, and H had five. W was only able to elicit more information from H after her specific discovery application in September 2021, and H was ordered on 21 February 2022 to provide additional information per W’s request and had to pay 2/3 of the costs of the discovery summons. Discovery by H was made in April and May 2022. 188.In turning my mind to this duty of full and frank disclosure, I remind myself of the often-quoted passage from the case of L v L [2006] HKFLR 121 from Mr Justice Lam (as he then was) at §198:
189.From the very number of times H has been ordered to make disclosure, coupled with his various answers during the proceeding, the way he answered question at the oral hearing, together with the above summary of unsatisfactory disclosure; I am satisfied that H has failed deplorably in this duty. H’s evidence left little to be desired and his case is full of gaping holes. 190.I will not go into minute retrospective investigation of these information; such is not the approach as guided by leading authority. The question before me is therefore, how are these non-disclosure on the H’s part is to be taken into account. 191.Various authorities have been submitted to me in this regard. H contests W’s “rather dubious proposition” that litigation conduct and financial misconduct is one and the same is unsupported by the law. He relied on the decision of Thorpe J in the case of P v P (Financial Relief: Non-Disclosure) [1994] 2 FLR, which held that the failure of a party to give full and frank disclosure is to be dealt with by an order in costs, and not a reduction of the share of the available assets. That said, H acknowledged in his reply submission that “The only situation that litigation misconduct may amount to financial misconduct is when there is a flagrant breach of obligation to make full and frank disclosure coupled with a dishonest presentation. Even then it is still up to the court to bring that into a balancing exercise to see whether such conduct is gross and inequitable not to disregard.” 192.Thorpe LJ sitting in the Court of Appeal in the case of Tavoulareas v Tavoulareas [1998] 2 FLR quoted his own finding in P v P, and also the case of M v M (Financial Provision: Party Incurring Excessive Costs) [1995] 3 FCR 321, where he has also said the following:
193.W advocates that whether the effect of the conduct is to be reflected in a cost order or when determining the division of the matrimonial assets, the objective is to achieve a fair outcome which properly reflects all the circumstances. On this, she relies on the HHJ I Wong decision in JTMW v NAV [2022] HKFC 46, I will make reference to the following §§ 65 and 66.
194.W quotes two more cases on this approach, one is WSW v CSLPC [2022] HKFC 155, where DDJ J Lee in her assessment of the husband’s non-disclosure and where wife has contributed to the Children’s expenses, departed from the 50-50 sharing to give the W 55% of the matrimonial pot; and the case of NKPL v NSF [2022] HKFC 140 wherein the Court again depart from the 50-50 principle and grant the husband a 60% of the matrimonial pot due to the wife conduct including the lack of full and frank disclosure. 195.I would like to circle back to the case of P v P relied upon by H. In that case, Thorpe J at 392 E – H, commented on a passage from B v B (Real Property: Assessment of Interests) [1988] 2 FLR 490 which dealt with the wife’s conduct in that case and in which the court therein ruled that the conduct was inequitable to disregard. Thorpe J said:
196.What can be drawn from this case on my reading, is that Thorpe J was not saying that conduct is only to be remedied by costs. He accepted that a flagrant breach of the duty of full and frank disclosure can be brought into a balancing exercise by the Court, adverse inferences can be drawn, but costs order is appropriate (versus reduction of share of matrimonial assts) where a party’s dishonesty has “failed to conceal from view any substantial assets”. 197.I am of the view that this is just such a case that falls into the category as described by Moylan LJ in the case of TT v CDS, and as enunciated by HHJ I Wong in the case of JTMW v NAV. This is also a case where the dishonest party has succeeded in concealing from view assets that should be in the matrimonial pot. There is clearly conduct on H’s part which has left unexplained “missing” family assets and which H has failed to proffer any decent explanation despite given numerous chance to do so. The way the evidence has been put forward is clearly set to leave W in an ambiguous cloud of unanswered questions, which but for the effort of her legal team, the court would have little assistance. In this regard, one could only imagine the costs that have been expanded by her in putting her case together. 198.There is no need for me to put my finger on an exact number as to how much is exactly missing from the family pot, there is sufficient basis for me to draw an adverse inference against H that that there are assets which have not been brought to light. What is clear to me is the undeniable impression left with this Court as to the H’s case, with the lack of information, lack of satisfactory explanations, lack of breakdown, and lack of a clear path to trace transactions, it is hard not to construe these actions on his part as a deliberate attempt to obfuscate. The Court should never condone such behaviour. I think there is dishonest intention on H’s part, and I find that his conduct is of a gross and obvious nature and inequitable to disregard. The inequity here is in W’s inability to access the part of the matrimonial pot which is not on the table due to the way in which H had chosen to present his case. This is a case which justifies my departure from the usual 50-50 sharing principle. STEP 5: Deciding on the Outcome What is a fair outcome? 199.Achieving a fair outcome is one of the important pillars that forms the foundation to our decision. I am of the view that fairness in this case involves an adjustment to the sharing principle. As shown above, the pot has decreased in size due to H’s failure to account for the family assets, this ties in with his duty of full and frank disclosure which is found to be lamentable in his case. I am therefore of the view that I shall depart from the 50-50 sharing of the matrimonial pot, and give 55% to W and 45% to H. 200.With information from the agreed schedule of assets and liabilities, the various percentage holding can be seen as follows:
201.In considering this percentage, I have taken into account matrimonial assets which has been unaccounted for by H including sale of his overseas properties and the rental income from these properties prior to their sale; the unsupported spending by him of his withdrawal of PHP2,200,000, the interest rate discrepancy and the extent to which H has failed in his duty of full and frank disclosure. I am conscious that he has made a last-ditch effort to put in information which W criticizes as a mere show for optics for then upcoming trial, however looked at, this is clearly not fair to W as she and her legal team had no doubt need to scramble to put their case together at the last minute to challenge H’s evidence. I have also taken into account that K will be living with M, and an element of buffer has been built in, as I have been reminded of the concern M has over H’s payment of maintenance as shown by his previous unilateral cessation of payment. 202.At this point, I have taken into regard the parties’ respective proposals. In particular, W is the owner of the two Hong Kong properties, of which she lives in one, and receives rental from the other. H has a property in Thailand, and one property in Cambodia jointly owned with W which he asks for and W has indicated her intention to transfer this Cambodia property to him. H also has two carparks and one workshop in Hong Kong. 203.W should have a roof over her head, this is to protect K’s interest for on-going stability. To reduce her expenses, she would therefore be expected to keep her present residence, dispose of the FMH, and use the sale proceeds to make equalization payment to H, and keep some liquidity for living expenses and to support K. 204.As for H, assuming he retains the two carparks, the Workshop and the Cambodia Property for rental income, he will have $15,854,112 - $2,640,000 (2 carparks) - $1,970,000 (workshop) – $705,088 (Cambodia property); which leaves around $10 million and his earning capacity to support his living, and to pay for K until she finishes her tertiary education. 205.Based on my decision to depart from the 50-50 sharing principle, H is to have 45% of the matrimonial pot which is $15,854,112.45. Given he has $12,479,766.82, and the value of the ½ share of the property in Cambodia is $352,544, there should be an equalization payment of $3,021,801.63 to be paid by the W to him. Time shall be given for W to deal with any existing tenancy arrangement and to liquidate the FMH. The Order 206.For the reasons aforesaid, I make the Order as follows:
Costs 207.H has submitted that in so far as W seeking costs on the basis of H’s alleged misconduct, he has been penalized when he paid for costs under W’s specific discovery summons. The Costs Order made against him then was for 2/3 of the W’s costs. Admittedly, the cost he paid was justified in the light of W needing to take out a Summons to ask for missing information. H’s lack of disclosure and the attitude in which it was conducted pervade throughout the proceedings and I am of the view that it was not limited to what was sought at the specific discovery hearing. Therefore, this conduct has not been remedied by the Costs Order made in the discovery summons. 208.In conclusion, I have found against H on his various unaccounted for family assets, I have concluded that he has failed in his duty of full and frank disclosure, I have also decline his proposal of 50-50 division of the family pot, and instead adopt W’s ask for a departure from equal division. In an overall assessment, W can be considered to be the successful party and costs should therefore follow the event. 209.W shall be awarded the costs of these ancillary relief proceedings, to be taxed if not agreed, with certificates for counsels. This to be an Order Nisi to include all reserved costs, and be made absolute 14 days from the date of this Order.
For Petitioner: Mr Eugene Yim instructed by Messrs Chaine Chow & Barbara Hung For Respondent: Ms Madeleine Booth instructed by Messrs Hugill & Ip | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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