Tkw v. Nlps
Read the full judgment text of FCMC 9831/2022 on BabelCite. This Family Court judgment was delivered on 17 January 2025 before Deputy District Judge W.Y. Ho.
Matrimonial Causes – Ancillary Relief – Nuptial Agreement – Enforceability – Matrimonial Assets – Valuation – Sharing Principle – Clean Break – Lump Sum Payment – Costs. The Court held the Declaration was not a final nuptial agreement due to ambiguity and lack of final confirmation. Matrimonial assets included companies Fxxxxxx and WxGxxxx. Insurance valued at policy value. Wife to pay Husband lump sum of $14,341,616 in instalments. Costs to Husband.
Legal issues: Enforceability of Declaration · Valuation of Matrimonial Assets · Division of Assets
Outcome: Wife to pay Husband lump sum of $14,341,616 in instalments; Costs to Husband
Cites 6 cases
|
FCMC 9831/2022 [2025] HKFC4 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 9831 OF 2022 __________________________________ BETWEEN
___________________________________
--------------------- JUDGMENT --------------------- Note: For the protection of privacy, the personal information in this decision has been redacted. 1.Both parties apply for ancillary relief against each other. 2.On the day of the trial, the parties’ open proposals were as follows:
3.All monetary figures are in Hong Kong dollars unless otherwise specified. A. BACKGROUND 4.As at the date of the trial, the Petitioner (“the Husband”) is 62 years old and the Respondent (“the Wife”) is 58 years old. The parties do not have any children. 5.I set out the chronology of the salient facts below:
B. THE ISSUES 6.The parties have lodged a Joint Statement of Issues in Dispute. I summarize the issues in dispute as follows:
C. THE ENFORCEABILITY OF THE DECLARATION 7.Counsel for the Husband, Mr. Chan, argues the following:
8.Counsel for the Wife, Mr. Chow, argues the Declaration is akin to a post-nuptial agreement and the same should be enforceable. 1) Parties’ version of the background surrounding the Declaration 9.The parties do not dispute that after the Wife discovered the Husband’s extra-marital affair, parties had various conversations leading up to the signing of the Declaration. 10.A summary of the Wife’s version of events is as follows:
11.The Husband’s version of events are, needless to say, different. He denies he promised to gift the Former Matrimonial Home to the Wife. His version of events are summarized as follows:
12.It is not disputed that shortly after signing the Declaration, the Wife sent a WhatsApp message to the Husband stating the following (“the 2nd WhatsApp Message”) on 8 September 2021:
2) Enforceability of the Declaration 13.The approach to be taken when considering the enforceability of nuptial agreements is set out in the two leading cases of L v C [2007] 3 HKLRD 819 and SPH v SA [2014] 4 HKC 271. The Court of Final Appeal adopted the majority judgment of Radmacher v Granatino [2011] 1 AC 534 and have recognized the following 3 main principles (see paragraphs 30, 34, 39 of SPH v SA) :
14.Hence in considering the enforceability of nuptial agreements, this court is not to take “an overly legalistic approach” (see paragraph 45 of L v C) and would enforce nuptial agreements in absence of any vitiating factors or hardship (see paragraph 47 L v C). 15.Having considered the evidence and submissions of counsel, I agree that the Declaration was not meant to be a final agreement. It is clearly written at the bottom of the Declaration: 此聲明書會交律師審閱，或許需要修改！一切以最終確認為準！This clearly means the parties envisaged lawyers would peruse the Declaration and amendments may be made. All terms were subject to final confirmation. 16.It is not disputed that there was no final confirmation by the parties of the terms set out in the Declaration. Furthermore, the parties did not engage lawyers to advise them on the terms of the Declaration. Nor did they engage lawyers to draft a final confirmation and/or separate agreement to confirm the contents of the Declaration. Subsequent to the signing of the Declaration, the parties did nothing to confirm the finality of the signed Declaration. 17.This position is consistent with Mr. Chow’s submission that the Declaration is not a contract (paragraph 38 of the Closing Submissions). 18.Mr. Chow submitted the Declaration is in fact a summary of what the parties previously agreed (paragraph 31 of the Closing Submissions). However, I reject his submissions. 19.If the Declaration were a record of what has previously been agreed, there would not have been the need to insert the caveat at the bottom of the Declaration. The insertion of the caveat clearly indicates the parties anticipated there would be some further “fine-tuning” of the agreement. There may have been some main terms agreed to (for example the Wife’s loan to the Husband for Fxxxxxx’s debts) but there were still other matters the parties felt the need to or the possibility of seeking legal advice on. 20.I also note that the Wife has never acted on the matters set out in the Declaration in that she never lent money to the Husband for him to settle Fxxxxxx’s debts. In such circumstances, the inference to be drawn is that the Wife herself also does not view herself bound by the Declaration. 21.I therefore find the Declaration itself is not a comprehensive and final nuptial agreement and cannot be considered as such. The submissions and/or arguments relating to the vitiating factors surrounding the Declaration are therefore redundant. 22.The question is therefore: what did the parties purportedly agree to prior to separation, if anything? 23.The Wife claims Husband agreed orally to gift her the Former Matrimonial Home in contemplation of divorce. She claims the use of the phrase “也願意無條件簽處離婚” in the Declaration is evidence of such. 24.I do not accept the Wife’s claim over the Former Matrimonial Home. 25.The use of the phrase “也願意無條件簽處離婚” is ambiguous. It can mean a variety of things not restricted to the ancillary relief claims. 26.It is trite law that if an agreement is vague or ambiguous such that no definite meaning can be given to it without adding further terms, the agreement may be rendered unenforceable (see Chitty on Contracts 35th Edn, Vol 1, paragraph 4-186). Although agreements with vague terms can still be enforceable, there must be no conceptual uncertainty (see Chitty on Contracts 35th Edn, Vol 1, paragraph 4-187). 27.In the present case, there are no contemporaneous documents supporting the Wife’s allegation that an “unconditional divorce” is equivalent to forsaking all ancillary relief claims, especially that over the Former Matrimonial Home. In the parties’ the 1st WeChat Message and the 2nd WhatsApp Message, there is simply no mention of the Former Matrimonial Home. Given the Wife’s careful nature and her acute business sense of needing to reduce their agreement to writing with a witness to the same, I find it peculiar that she failed to mention the purported agreement relating to the Former Matrimonial Home in her recap of their agreement in the 2nd WhatsApp Message. I am of the view the use of the phrase “unconditional divorce” is conceptually so vague that it is incapable of enforcement and incapable of being interpreted in the manner as put forward by the Wife. 28.Although Mr. Chow submits the execution of the Nomination is evidence to prove the Husband’s agreement to gift the Former matrimonial Home to the Wife, I do not accept his submissions. In my view, it is clear there has never been any formal consensus between the parties that the Husband would gift the Former Matrimonial Home to the Wife unconditionally upon divorce. Nor has there been any consensus between the parties the Husband would forsake all his ancillary relief claims. This is evident by the Husband’s action of filing a Form A in the previous proceedings (FCMC 8703/2021) shortly after he claims to have no ancillary relief claims in his Form 4. Furthermore, this is consistent with the Wife’s own concession under cross-examination that the parties never specifically mentioned whether the Husband was to give up his ancillary relief claims upon divorce. 29.By reason of the above matters, I reject the Wife’s claim there was any post-nuptial agreement that the Husband was to give up all his ancillary relief claims against the Wife in the event of divorce. I further reject the Wife’s claim there was an agreement by the Husband either to gift her the Former Matrimonial Home or to waive all his claims against the same. D. MATRIMONIAL ASSETS 30.In considering the proper ancillary relief order to be made, the court is to consider the factors set out in s.7 Matrimonial Proceedings and Property Ordinance. HHJ Wong in the case of SSLT v SMFC [2019] HKFLR 458 has succinctly set out the well-known principles enunciated in LKW v DD [2011] HKFLR 106 to be considered when considering ancillary relief applications. Paragraphs 25 and 26 of HHJ Wong’s judgment reads as follows:
1) Parties’ undisputed assets and liabilities 31.The following are the undisputed assets and liabilities of the parties:
32.The disputed assets and liabilities of the parties are set out in summary below:
2) The Wife’s Assets and Liabilities 33.The Wife’s purported loans to Fxxxxxx and the Wife’s personal guarantee for Fxxxxxx’s debts will be discussed in a separation section below. (i) The Wife’s Insurance Policies 34.The Wife has calculated the value of her insurance policies by taking the “guaranteed cash value” only. Her rationale is that since any non-guaranteed components are not certain, her insurance should only be considered at the guaranteed cash value. 35.The Husband strongly contests the Wife’s calculations and believes the insurances should be valued at their policy value. I agree. 36.I am of the view that although it is true the non-guaranteed components of the insurance policies are not certain; it is only the precise value that is uncertain. It does not mean the Wife would only receive the guaranteed cash value at the time of surrender. It is likely that the Wife would receive a sum over and above the guaranteed cash value. To take the guaranteed cash value would be a gross underestimate of the insurance policies. 37.In such circumstances, I am of the view the Wife’s insurance policies should be considered at their policy value as at the date of the hearing. As for the policy value of the Manulife policy, I accept the value should be considered as the surrender value. Since the documents only indicate the surrender value at 55 years old and 60 years old, I am of the view an average of those two figures would reflect the surrender value at the Wife’s present age. I accept counsel’s submission that the figure of USD$58,000 is reflective of the policy value. 38.I therefore reject the Wife’s proposed value of all her insurances and find the total value of the Wife’s insurance policies should be $5,926,983.40. (ii) Wife’s valuables and car 39.Having considered Mr. Chan’s submissions on the value of the Mercedes Benz and the evidence the Husband produced on the same, I do not accept the Mercedes Benz should be valued at $468,000. The Husband produced a print out of a similar car for sale online for the price of $468,000 to support his claim. However, the print out is lacking in various particulars, for example the number of previous owners, the mileage, and whether it has any options installed. It is trite to say that prices on the second-hand market vary drastically depending on factors like mileage and the numbers of previous owners. Furthermore, this is merely the asking price by the owner. There is no evidence that similar cars have been sold at the same asking price. I therefore accept the Wife’s value of $400,000 as being the value of her car. 40.In so far as the Husband seeks to add back the sum of $250,000 paid by the Wife to secure the car, I have considered the jurisprudence on add-backs and the recent case of LCC v LTLA [2024] HKCA 406. In LCC v LTLA, the Court of Appeal succinctly summarized the historical jurisprudence and principles relating to add-backs at paragraphs 27 – 61 of the judgment. I shall not repeat the same. 41.Having considered the relevant case law, the evidence, and the submissions of the parties, I am of the view that this is not a “wanton dissipation of assets” and/or expenditure. I also do not find the expenditure to involve any gross misconduct on the Wife’s part. The Wife wanted to secure a particular type of car and due to its popularity, she had to pay an extra premium of $250,000. Although I agree in comparison to the value of the car, the premium seems to be a hefty price to pay, there is no evidence to challenge the bona fide nature of the said payment. There is no evidence to rebut the Wife’s evidence that a premium had to be paid for the purchase of the said car. In all the circumstances, given the parties’ standard of living, the price of the car was not extravagant even if the premium was taken into consideration. I therefore do not accept the premium paid should be added back into the matrimonial assets. 42.As for the jade pendent and the Rolex watch, I agree with Mr. Chan’s submissions in that there is no explanation as to why the Wife suddenly depreciated the value of the same in her second form E. I therefore accept the value of the pendant and the Rolex Watch should be $30,000 each as per her first Form E. (iii) The Wife’s stocks and cash in bank accounts 43.The Petitioner asks the court to make adverse inferences against the Wife due to the drastic decrease in value of stocks and cash in bank accounts in her second Form E. 44.I have considered submissions of Mr. Chan. I do not accept his submissions. 45.Firstly, Mr. Chan has not proposed a specific inference to be drawn. It is therefore unclear what adverse inference the Husband is asking the court to draw. Secondly, there is no evidence to suggest there has been a deliberate dissipation or that the funds are now elsewhere which should be added back. 46.I therefore take the value of the bank account and the stocks as evidenced by the various bank statements to be the correct value for the purposes of calculating the Wife’s assets. (iv) WxGxxxx 47.The parties do not dispute the Wife is the sole shareholder and director of WxGxxxx. 48.WxGxxxx is valued at $3,156,000 by the singe joint expert. In reaching this valuation, the single joint expert has not calculated the debt of $1,058,140 owed to the Wife because the Wife represented to the expert the said debt had been settled. However, the parties in the Updated Schedule of Assets and Liabilities continue to count this debt as part of the Wife’s assets. This clearly means WxGxxxx has in fact not settled the debt to the Wife. Hence in calculating the division of assets and to avoid double counting of the said debt, I am of the view the proper value of WxGxxxx should be $2,097,860 (that is, $3,156,000 - $1,058,140 = $2,097,860). 49.In the Joint Schedule of Companies and Landed Properties submitted by the parties, the Wife claims WxGxxxx should not form part of the matrimonial assets. However, there were never any submissions on this made by Mr. Chow in his opening and closing submissions. Moreover, it was not put to the Husband during trial that WxGxxxx, for whatever reasons, should not be considered part of the matrimonial assets. 50.Other than the one line contention made in the Joint Schedule of Companies and Landed Properties, I note there is simply no further evidence or submission being made to support the claim that WxGxxxx should not be considered a matrimonial asset. 51.WxGxxxx was established during the marriage in 2018. It is clear from the evidence that the Wife used the earnings of WxGxxxx to finance her financial contributions to the marriage. I therefore find WxGxxxx to be a matrimonial asset that should be taken into consideration when deciding how the matrimonial assets should be divided. 3) Fxxxxxx 52.The Husband owns 87% of the shareholding of Fxxxxxx and the Wife owns 13% of the remaining shares. Though the Wife owns 13% of the shares in Fxxxxxx, the parties do not dispute the Husband has sole control over Fxxxxxx’s operations and finances. 53.There are several issues raised by the parties relating to Fxxxxxx:
(i) Whether Fxxxxxx is a matrimonial asset and whether its debt of $3,200,000 should be solely repaid by the Husband. 54.Although Mr. Chow made various submissions about the independent finances of the parties and that the Wife has never been involved with the operations of Fxxxxxx, it is telling to note Mr. Chow never in his opening or closing submissions denied Fxxxxxx is part of the matrimonial assets. 55.I note the parties do not dispute the following salient facts:
56.The above matters clearly point to the fact that Fxxxxxx was responsible for generating income which financially benefitted the family. The earnings of Fxxxxxx paid off the mortgage payments of the Former Matrimonial Home for 15 years and the mortgage repayments for the 1st and 2nd Matrimonial Home. Furthermore, on the Wife’s own evidence, the Husband was earning more than the Wife in the initial stages of the marriage. At the time of marriage, the Wife was only earning a salary of $6,000 per month. It was not until after 2000, the Wife was able to earn a salary of $75,000 per month. Hence, for the Wife to claim that the parties have always been financially independent is misleading as it is clear that the Husband must have supported the family in the initial stages of the marriage. Furthermore, for the Wife to suggest Fxxxxxx should only be considered as the Husband’s asset because it had no role to play in the acquisitions of the various matrimonial homes, including the Former Matrimonial Home, is disingenuous to say the least. I am of the view Fxxxxxx is to be regarded as matrimonial asset for the purposes of considering the parties’ ancillary relief claims. 57.Since Fxxxxxx is a matrimonial asset, the liabilities of the Fxxxxxx cannot segregated from the calculation of the total value of the matrimonial assets. I therefore reject Mr. Chow’s submissions that the repayment of Fxxxxxx’s debts as charged against the Former Matrimonial Home should be the sole responsibility of the Husband. (ii) Whether Fxxxxxx is still in active operations. 58.There is no dispute the official records show Fxxxxxx became dormant since September 2021 and has ceased operations. This is confirmed by the single joint expert report dated 5 January 2024 (“the Fxxxxxx Expert Report”). According to the Fxxxxxx Expert Report, Fxxxxxx has a negative value of -$3,659,000. 59.The Wife claims that Fxxxxxx’s dormancy is a façade and in fact Fxxxxxx continues to operate via a company in Dongguan China referred to as “Txxx Hxx”. 60.I note the Wife never sought to join Txxx Hxx or its legal owner, Ms Shang, to the present proceedings. There was never any preliminary issue taken out by the Wife asking the court to rule on whether the Husband is the true beneficial owner of Txxx Hxx or that the value of Txxx Hxx is to be counted as part of the matrimonial assets. The Wife merely makes an allegation of diversion of business by asking the court to draw inferences based on two matters alone: 1) the relationship between the Husband and Ms Shang and 2) there are various business transactions between Fxxxxxx and Txxx Hxx. 61.Leaving aside whether it is even appropriate for this court to consider the said allegation without the proper parties before it and/or even any proper interlocutory application to deal with the same, I set out my analysis of the Wife’s allegation below. 62.Having considered the evidence, I do accept the Husband has not been forthcoming as to whether his relationship with Ms Shang is continuing and whether their relationship is as distant as the Husband tries to portray it to be. Given the Husband admits to seeing his daughter frequently and that his accommodation in China has been provided by Ms Shang and her family, I agree with Mr. Chow’s observations that it seems the Husband’s relationship with Ms Shang is likely to be continuing and that their relationship is not as distant as the Husband portrays. In fact, the existence of the continuing relationship would explain why the Husband admitted he would, at times, help out at Txxx Hxx. It would also explain why the Husband has been able to enjoy free accommodation when he was in China. 63.However, the mere fact the Husband continues to be in a relationship with Ms Shang does not mean that Ms Shang’s company automatically belongs to the Husband as well. 64.During the trial, Mr. Chow cross-examined the Husband extensively on various documents which purportedly show transfers of money between Fxxxxxx and Txxx Hxx. The Husband explained the transfers were due to business transactions between the two companies up until July 2021. Furthermore, the Husband explained the last payment made to Txxx Hxx was in October 2021 and was for payment of rent. I note the Wife has been unable to produce any evidence to show there were transfers between the companies after October 2021 or that the Husband has diverted all of Fxxxxxx’s business to Txxx Hxx. There is simply no documentary evidence or contemporaneous evidence to rebut the Husband’s explanation for the transfers. 65.Based on the evidence produced before me, I am not satisfied I can make any inference that Fxxxxxx continues to operate through Txxx Hxx. Moreover, I do not accept that the Husband is the beneficial owner of Txxx Hxx or that Txxx Hxx is one of the sources of his income. (iii) Fxxxxxx’s purported debt to the Wife of $1,794,694 and the Wife’s purported loans to the Husband in the sums of HK$721,781 and RMB¥906,382.20 66.In considering the abovementioned sums and whether such sums are loans as claimed by the Wife, it is important to consider the relationship between WxGxxxx and Fxxxxxx, and the parties’ marital financial arrangements. 67.Under cross-examination and in her affirmation, the Wife does not deny the parties shared marital financial responsibilities. The Husband was mainly responsible for making mortgage payments and the Wife was mainly responsible for all other household expenses. The Husband had made mortgage repayments for three of the matrimonial homes, save and except the mortgaged repayments for the Former Matrimonial Home after 2017 which were made by the Wife. 68.Although the parties are in dispute as to the extent of how and whether the Husband also contributed to other household expenses, the parties do not dispute the they mainly shared their marital financial responsibilities. 69.As for the relationship between WxGxxxx and Fxxxxxx, it is clear that even on the admission of the parties, there were business transactions between the two companies. On the evidence produced, WxGxxxx would issue purchase orders to Fxxxxxx on a frequent basis. In the financial year of 2021, WxGxxxx and Fxxxxxx had 28 business transactions as recorded in the document entitled “Balance transferred to director account extracted from ledger of Fxxxxxx [omitted] for the year ended 31 March 2021”. 70.The Wife also admitted that for the period from 2018 – 2021, WxGxxxx rented one room from Fxxxxxx’s office as its office space. In other words, the two companies were essentially sharing the same office space for a period of 3 years. 71.Furthermore, according to the Fxxxxxx’s Financial Statements for the year 2021, there is a loan facility extended to WxGxxxx through the Wife in her capacity as director of Fxxxxxx. The item reads: “Maximum liabilities of the company for guarantees or securities given at the beginning of the year $8,800,000; at the end of the year $8,800,000”. 72.It can be seen that the operations of WxGxxxx and Fxxxxxx were intertwined and both companies interact frequently. In such circumstances, I cannot rule out the possibility that at least some of the advances from the Wife to Fxxxxxx relate to business transactions between WxGxxxx and Fxxxxxx. Moreover, I note the purported loan sum of $1,794,694 is unsupported by Fxxxxxx’s Audited Report as compiled by the company’s auditors. 73.I therefore do not accept the Wife’s claim she lent a sum of $1,794,694 to Fxxxxxx and only accept the amount due to the Wife owed by Fxxxxxx is $993,450 as per the company’s audit report for the financial year ending 31 March 2021. 74.In so far as the Wife purports to have made loans to the Husband in the total sum of HK$1,718,801 (on the assumption the RMB:HKD exchange rate is 1.10:1), I note the following:
75.Having regard to the above, and the background between WxGxxxx and Fxxxxxx, I am of the view that even if the Wife made transfers to the Husband in the sums she alleges, there was never consensus between the parties that these were loans from the Wife to the Husband. Even taking the Wife’s case to its highest, there were never any loans intended to be created. There is no evidence the parties talked about repayment terms or lending terms. Summarizing the Wife’s evidence, the Husband requested the Wife to make monetary transfers and the Wife made them. There is no evidence there were conditions attached to the transfers or that there was a need to repay the same. Furthermore, it is clear that when the Wife made the said transfers, these transfers were intermingled with the finances between WxGxxxx and Fxxxxxx. 76.Spousal financial transactions cannot be considered akin to commercial transactions. In the family context, it is not uncommon for spouses to make unconditional monetary transfers to each other. This is because the parties usually pool their financial resources together and there is no clear distinction between their finances. Having considered the evidence, I am of the view that during the parties’ marriage, their finances, including the operation of their companies, were intermingled. As stated by the Wife, the parties considered themselves sharing the financial responsibilities. The Wife’s explanation of not having given much thought before the transfers were made is consistent with the parties’ arrangement throughout the marriage. 77.By reason of the matters set out above, I do not accept the Wife made loans to the Husband in the sums alleged. 4) Value of the Former Matrimonial Home 78.The Wife does not dispute that in 2022, substantial renovations were carried out in the Former Matrimonial Home. The total sum paid for the renovations was $1,843,226. 79.Mr. Chan argues that due to the extravagant renovations done, the value of the renovations should be added or reflected in the true value of the Former Matrimonial Home. 80.Under cross-examination, the single joint expert conceded that his valuation of $15,800,000 was made without doing internal inspections of the premises, and that the valuation was made on the assumption the premises was in reasonable condition. The single joint expert further agreed that if new and substantial renovations were done, the value of the renovations should be added back to the value of the Former Matrimonial Home. I accept his opinion on the same. 81.For reasons I have given above, I am of the view Fxxxxxx’s debt of $3,200,000 charged against the Former Matrimonial Home should be borne by the parties in equal shares. Hence, to reflect the true value of the same, the charge of $3,200,000 should be deducted from the value of the Former Matrimonial Home. 82.I therefore agree with Mr. Chan that the true value of the Former Matrimonial Home should be $17,643,226 minus the charge of $3,200,000 for Fxxxxxx’s debts. Hence, I find the correct value of the Former Matrimonial Home to be $14,443,226. 5) The Husband’s Assets and Liabilities 83.The Wife disputes the following matters regarding the Husband’s assets and liabilities:
84.Other matters purportedly in dispute as per the Updated Agreed Schedule of Assets and Liabilities have been abandoned by Mr. Chow’s calculation of the Husband assets submitted on the day of closing submissions. (i) Purported dissipation of $6,236,500. 85.On the day of closing submissions, I asked Mr. Chow to set out the Wife’s case on what the matrimonial pot should be and to provide his calculations on the same. Mr. Chow then submitted the Wife’s calculation of the Husband’s assets and liabilities and in the said calculation the Wife claims a sum of $6,236,500 should be added back to the Husband’s assets. 86.Mr. Chow in his calculation states that the sum of $6,236,500 is calculated as follows:
87.I reject the Wife’s claim for the following reasons:
88.I therefore find the Wife has not proved the said sum should be added back to the Husband’s assets for the purposes of calculating the division of matrimonial assets. (ii) The Husband’s loans from third parties 89.The Husband claims to have received loans from third parties in the total sum of $1,031,989. The break down is set out below:
90.The Wife disputes the authenticity of these purported loans. 91.Having considered the evidence, I do not accept the Husband’s claim of being in debt to the four persons and in the sums as set out above. 92.It is telling that none of the creditors have filed a witness statement in support of the purported loans. The Husband claims Wx is his nephew, Txxx is his brother and the rest are good friends (with Wxxx having been a friend for over 20 years). There has been no explanation as to why these creditors have not filed any supporting evidence to assist the Husband, especially given their respective relationship with the Husband. 93.I also note there are no contemporaneous documents provided to prove the existent of the loans purportedly made by Txxx, Lxx and Wxxx. When Mr. Chow cross examined the Husband and put to him that in fact the Husband is unable to say how the money was lent to the Husband, he said he had no further response. I found the Husband’s evidence relating to these loans to be evasive and lacking in important details. He is unable to recall how he received the loans from Lxx and Wxxx, and the repayment terms or details of each loan. I find it incredible for the Husband to be unable to recall the details of these loans given the substantial sums borrowed. 94.In so far as the loans from Txxx and Wx, the Husband has been unable to provide a reasonable explanation as to why there were IOUs written for previous loans but none for the present loans. The Husband claims there was no IOU for Wx’s loan because the Husband was not in Hong Kong he was in urgent need of money. As for his brother’s loan, the Husband also gave the same explanation about urgency and added that since they were related and the sum lent was a small sum, there was nothing special about not writing an IOU. 95.I find these explanations to defy common sense. Even if the money was lent on an urgent basis, there was no reason why a new IOU could not have been written after the money was lent. Moreover, the past IOUs given by the Husband to Txxx and Wx are simple and take no more than 5 minutes to draw up. There is no explanation why a similar simple IOU could not be drawn up for the present loans. 96.In so far as the Husband has provided two deposit slips to prove Wx had made a deposit of $600,000 into his bank account, I note there is no contemporaneous evidence to support these transfers were loans to the Husband. Wx’s deposits into the Husband’s account can be for a variety of reasons. Without any contemporaneous evidence to support the Husband’s claim that such sums were loans, I do not accept the sums were loans to the Husband. 97.I therefore do not accept the Husband’s claim that he is indebted to others in the sum of $1,031,989. 98.By reason of the matters above, I set out my findings of the parties assets and liabilities: 99.The Husband:
100.The Wife:
101.The total matrimonial assets of the parties is $1,375,068 + $31,051,750.40= $32,426,818.40. E. THE WIFE’S EARNING CAPACITY 102.The Wife claims WxGxxxx is no longer active and has been dormant. However, under cross-examination she admits that she is still working and that the company is not entirely dormant but is running at a minimum capacity. She admits that she is still maintaining her relationship with the customers and the banks. Although she claims she is not optimistic, she expressed she would continue her business operations if circumstances permit. 103.Hence, even on the Wife’s own evidence, she is not retired and still has earning capacity. 104.I have considered the Wife’s purported monthly expenditure of $94,219.66 as set out in her latest Form E. Although I am of the view some expenses are grossly inflated, even on the Wife’s inflated expenditure, I am of the view that the Wife still has the earning capacity to earn sufficient income to support her own financial needs. F. THE HUSBAND’S EARNING CAPACITY 105.I do not repeat my findings in respect of Fxxxxxx. In summary, I accept that Fxxxxxx has ceased operations and is no longer a source of income for the Husband. 106.The Wife asks the court to infer the Husband is operating some sort of trading business where it seems he is acting as a buyer for various clients. The Wife points to numerous payments made during 2023 to a network technology company by the name of上海XXXXXXXX有限公司 (“the Shanghai Company”). 107.The Husband admits the transactions are online shopping payments. He further admits that upon the request of his friends, he would help them buy various goods such as medicine. He denies operating a trading business or acting as a buyer. 108.Having considered the evidence before me, I am of the view that there is insufficient evidence to draw an inference the Husband is operating a new trading business. There is no evidence to prove what was purchased and the quantity of the items purchased. There is no evidence to rebut the Husband’s assertion that the purchases were for assisting friends. There is also no evidence to prove the Husband made any profit from assisting his friends. 109.Although I find Fxxxxxx no longer in operation and that the evidence does not prove the Husband is operating a trade business, this does not mean he has no earning capacity. 110.The Husband has been an entrepreneur for most of his working life. He has business connections in China and Hong Kong. It is clear Ms Shang, with whom he obviously shares a close relationship, is operating a business herself. In such circumstances, I am of the view that if the Husband wished to set up a new business or revive Fxxxxxx’s business using a new corporate vehicle, he would be capable of doing so. I am of the view that the Husband is not as destitute as he claims to be. 111.Having considered the Husband’s purported monthly expenses of $15,396 as set out in his latest Form E, I am of the view that the Husband is capable of earning enough income to support his own financial needs. G. CLEAN BREAK AND PROPORTION OF DIVISION 112.I shall not repeat the trite principles behind the “clean break principle” as enunciated in LKW v DD [2010] 6 HKC 528 and confirmed in the case of Mimi Kar Kee Wong Hung v Raymond Kin Sang Hung (No 2) (2015) 18 HKCFAR 210. 113.I note that both parties agree this is not a “needs case”. 114.The parties agree there should be a clean break. I also agree. The parties have been married for over 30 years and do not have children. Both parties have equal earning capacity and are able to meet their own financial needs. I am of the view that in considering the division of matrimonial assets, this court should adopt the clean break principle. 115.Mr. Chow submits that the Wife should be entitled to a 68% division of assets and asks this court to depart from the equal sharing principle. When I asked Mr. Chow what “good reasons” the Wife relied on to justify departure from the equal division, Mr. Chow he only relies in 2 factors: the nuptial agreement and the parties have separate finances. 116.For reasons I have already given in this judgment, I do not accept there was a nuptial agreement between the parties. Furthermore, I gave reasons as to why I did not accept the Wife’s claim that the parties were financially independent throughout the marriage or that they kept their finances separate during the marriage. 117.However, I do accept that the debts of Fxxxxxx and WxGxxxx should be equally shared between the parties since I have found both companies to be matrimonial assets. In so far as the Husband claims the loan by the Wife to Fxxxxxx should be written off due to Fxxxxxx illiquidity, I disagree. Since the Fxxxxxx is a matrimonial asset, it is clear the total matrimonial assets are sufficient to cover the Wife’s loan. It would be unfair for the Wife to have the loan counted as her asset but not have the repayment realized and for the Husband to reap the benefit of having the Wife’s share in the matrimonial assets depleted by the same sum. This is especially so when clearly the matrimonial assets are sufficient to cover Fxxxxxx’s indebtedness. The Husband’s reasoning that Fxxxxxx’s charge of $3,200,000 should be shared equally by the parties but other debts to the Wife should be written off is fallacious and logically incoherent. If the Husband agrees Fxxxxxx’s charge should be shared equally by the parties, its debts must also be shared equally. Hence, in this regard, I agree that there should be a slight adjustment to ensure proper equalization of the parties’ assets. 118.The same reasoning applies to the debt of WxGxxxx to the Wife. It would not be fair to count WxGxxxx as an asset but the liability to the parties be borne by the Wife solely. The equalization of the debts owed by WxGxxxx have been dealt with in my calculation of the proper value of WxGxxxx. As previously explained, by reason of the parties calculation of WxGxxxx debt to the Wife as part of the Wife’s current assets, the proper value of WxGxxxx should be the single joint expert’s value minus the debt owed to the Wife. 119.I set out my calculation of the parties’ respective share in the matrimonial assets:
120.By reason of the above, the Wife should pay the Husband a total of $14,341,616 (rounded down to the nearest dollar) in order to equalize the parties’ assets. H. WHETHER THE FORMER MATRIMONIAL HOME SHOULD BE SOLD 121.I have considered the submissions of the parties and the various proposals put forward. 122.I decline to make an order for sale of the Former Matrimonial Home for the reasons given below. 123.The Wife’s liquid assets (cash in bank account and stocks) amount to a total sum of $7,668,352. Hence, the Wife has sufficient liquid assets to pay the Husband a lump sum equivalent to almost half of the Husband’s share in the matrimonial assets. The other half of the Husband’s share can be easily raised by a mortgage of the Former Matrimonial Home since the previous mortgage has been discharged (save and except the charge relating to Fxxxxxx’s facility of $3,200,000). I do acknowledge that any order for payment of a lump sum must give sufficient time for the Wife to raise the funds and the time may be prolonged if she is to take out a mortgage on the Former Matrimonial Home. 124.The Wife has carried extensive renovations to the Former Matrimonial Home. This shows she does not intend to move out. Since she has sufficient assets to pay out the Husband’s share of the matrimonial assets, it is not necessary to sell the Former Matrimonial Home in order to attain equalization of assets between the parties. 125.I therefore decline to make an order for sale of the Former Matrimonial Home. I. SUMMARY AND ORDERS 126.By reason of the matters set out in this judgment, I order the Wife to make a lump sum payment to the Husband in the sum of $14,341,616 in the following manner:
J. COSTS 127.I have considered the open proposals by the parties. 128.I find the Husband to be largely successful in the present proceeding. Although I may not have adopted every figure proposed by the Husband as being accurate, his open proposal is in principle the same as the approach this court has adopted. 129.I therefore make a costs order nisi as follows: Costs of the Ancillary Relief Proceedings (including all costs reserved) be to the Husband, to be taxed if not agreed, with certificate for counsel. Unless any party applies to vary the costs order within 14 days hereof, the costs order shall become an order absolute.
Mr. Ken Chan instructed by Messrs Ng & Co. for the Petitioner Mr. Enzo Chow instructed by Messrs Cheung, Yeung & Lee, Solicitors for the Respondent | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment