Ly Aka Ylp v. Obc Aka Ocb

FCMC 4297/2021

[2025] HKFC 33

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 4297 OF 2021

________________________

BETWEEN

________________________

________________________

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

________________________

Introduction

1.This is the trial on ancillary relief of the Respondent Husband (“Husband”) against the Petitioner Wife (“Wife”) by his Notice of an Application for Ancillary Relief filed on 21 June 2021.  The Wife, by her Petition filed on 7 May 2021, did not ask for ancillary relief and no applications were made since in this respect.  Decree Nisi was pronounced on 26 August 2021.  The Wife filed a Notice to Act in Person on 3 February 2023 and subsequently became non-responsive and absent in all hearings and legal procedures since the hearing on 3 July 2023 when she last attended, and since 24 July 2023 when she last wrote to the Husband’s solicitors.  She did not appear for this trial.

2.On the date of trial, Mr. Clough who appears on behalf of the Husband under the assignment of the Director of Legal Aid, takes me through the relevant documents in satisfying me that the issue of service has been proved, that the Wife has been properly given notice of the trial dates and has been served with the relevant documents.  On that basis, and pursuant to O.35 r.1 RHC, the trial proceeded in the absence of the Wife.

3.When the trial commenced, there were other applications fixed together with ancillary relief, namely (i)  the Husband’s application under s.17 MPPO, Cap. 192 and (ii)  the Husband’s application for Mareva Injunction both filed on 28 August 2023.  For reasons to be explained below these applications do not add true value to the Husband’s claim here and were fully dealt with in the course of the trial.

Relevant Background

4.At the time of trial, the Wife is 65 years old and the Husband is 57 years old respectively.  The Wife was born in Taiwan and has been residing in Hong Kong for some 30 years.  The Husband was born in Nigeria.  They met online in about 2009, and later married in 2012 in Lagos, Nigeria.  Initially, notwithstanding getting married, the Husband remained in Nigeria where the Wife continued to live in Hong Kong.  It was in 2015 when the Husband relocated to Hong Kong to unite with the Wife and lived together since, until separation in 2019[1].

5.Both parties had previous marriages.  Of relevance to this trial is that for the Wife, she had purchased a landed property in Tuen Mun in 1993, holding the same under joint tenancy with her ex-husband.  They divorced in 2004 and 10 years later in 2014, her ex-husband transferred his interests to the Wife and at the same time the Wife paid off all mortgage payments.  Subsequently this property became the former matrimonial home of the parties between 2015 and 2019. (“the FMH”)

6.For the Husband, he has two sons from his previous marriage, born in 2001 and 2003 respectively.  His previous marriage came to an end in 2008.  Albeit both having reached majority, the Husband claims at trial that his needs include financially providing for his two sons, who are both studying at university in Nigeria.  The Husband in his oral evidence said he wanted to arrange them to live in Hong Kong upon completion of their studies in 2026 and 2027.  In his narrative affidavit filed on 14 August 2023, he claimed the expenses of the two sons to be HK$12,966 per month[2] and he confirmed at trial that this figure remained accurate as at the date of trial. 

7.From the above background, it is appreciated that the marriage lasted for 9 years, but in fact if one counts from the time the Husband came to Hong Kong up till separation, it is about 4 years.

8.The parties’ relationship turned sour in about 2019 with the Husband being evicted from the FMH and at the same time a hand-written document dated 20 January 2019 was prepared and signed by the Husband which reads as follows :[3]

“I [Husband name and signature] agree give up any property under [Wife name] her name if she dies one day or we divorce I [Husband name and signature] will agree will not get any property from [Wife name]. Here is my words I sign to prove under my signature.”

9.The Husband explained in detail in his affidavit the circumstances he was under when he wrote and signed the aforesaid piece of paper.[4]  In short, he stated he had been sleeping in a van for 21 days in cold winter and fell ill and he was pressured into signing it before the Wife allowed him back into the FMH.  Apparently the parties’ relationship improved but deteriorated again in May 2019, with the Husband having moved out of the FMH for a month before he travelled to Nigeria between June and October 2019.  However, upon his return to Hong Kong in October 2019 he was not allowed to enter the FMH and since, he never did.  The Husband stated during the few months he was in Nigeria he was still trying to save the marriage thus did not treat the said period as separation.

10.The Husband said since he was in dire financial situation, he had been living in a 20ft steel shipping container in a junkyard in Kam Tin with no bathing, shower nor toilet facilities, for a rent of HK$2,500 per month.  Notwithstanding the Husband subsequently found employment as a security guard earning HK$18,000 per month since September 2020, he had continued to live under such condition[5], until his lawyers helped him apply for maintenance pending suit (MPS)  on an urgent basis in these proceedings.  By the Order of HHJ I. Wong dated 12 July 2021, the Court ordered HK$9,000 per month payable to the Husband by the Wife as MPS to put him out of such misery. 

11.The Wife, in breach of the said MPS Order, stopped paying since April 2022.

Sale of the FMH by Wife

12.One of the background facts which is central to the issues in this trial is the dealing of the FMH by the Wife.  It is not disputed that the parties lived together at the FMH for about 4 years and that insofar as the Wife’s assets are concerned, she does not have any other landed properties in Hong Kong other than the FMH.

13.What is disputed though is the circumstances in the sale of the FMH.  While there is no dispute the Wife did not inform the Husband about the sale, the Wife contended that she sold it in 2021 out of financial constraint.[6]  On the other hand, the Husband contended the Wife kept pressurising him for a divorce in early 2021, causing him to engage lawyers and it was his lawyers who inadvertently found out through land search that the Wife had entered into a provisional sale and purchase agreement on 4 February 2021, with the sale price being HK$5.9 million.  The Wife then received HK$200,000 and HK$390,000 respectively as deposits for the sale in February 2021, and received the balance of HK$5,243,550 on 24 March 2021.  All these funds were deposited into her account with Standard Chartered Bank (SCB).

14.When these proceedings commenced and the Wife filed her Form E on 5 July 2021, it was revealed that (i)  she had made withdrawals totalling HK$1,247,121 out of her bank accounts between April 2020 and January 2021; (ii)  within three months alone, between February and April 2021, the Wife had further withdrawn a total of HK$2,432,619; (iii)  a further HK$600,000 were withdrawn as at June 2021.  In gist, the Husband contended that the Wife made withdrawals amounting to over HK$3 million over a span of four months, leaving a sum of HK$2,773,654.98 in her bank accounts by the time she filed her Form E.[7]

15.At the same time, the Husband believed that the Wife was plotting to withdraw monies from her bank accounts and then leave for Taiwan, her hometown country.  The Wife denied this and stated while she has Taiwan citizenship, she has lived in Hong Kong for some 30 years and did not plan to leave.  The Husband took out an urgent application on 16 June 2021 for (i)  a Prohibition Order and (ii)  a Mareva Injunction.  The Court heard these applications on 17 June 2021, granted the Prohibition Order in prohibiting the Wife from leaving Hong Kong, and declined to grant the Mareva Injunction.

16.The Wife applied to discharge the Prohibition Order on 22 July 2021, her application was heard and dismissed on 15 September 2021.  The Prohibition Order has since been extended on a monthly basis, as required under the relevant statutory regime, up till present and ongoing.  Mr. Clough confirms at trial that the Prohibition Order runs separate from the ancillary relief trial and that the Husband will likely continue to apply for the monthly extensions for enforcement purposes.

17.Since the Wife stopped MPS in April 2022, the Husband issued a Judgment Summons on 2 September 2022, but he later volunteered to withdraw the same on 12 October 2022, by reason of his success in finding employment by then.

18.As stated earlier, the Wife acted in person since February 2023 and failed to comply with certain court directions on disclosure and filing of evidence.  She did file an Answer on 22 May 2023 but the answers only led to further legitimate queries.  As a result the Court at a hearing on 3 July 2023 ordered, inter alia, the Wife to answer the Husband’s 2^nd Questionnaire by 26 July 2023.

19.The Wife never complied with the same[8]; rather, she sent a letter to the Husband’s lawyers on 25 July 2023 enclosing her then latest SCB bank statements, and to one’s astonishment, the balance revealed became HK$448.04 as of 15 July 2023.  This meant the entire sum of around HK$2.7 million which was sitting in this SCB account when she filed her Form E had by then vanished.

20.The above had caused the Husband to apply on 28 August 2023 for a Mareva Injunction against the Wife, as well as taking out a s.17 MPPO application.  On the returnable day on 11 September 2023, with the Wife absent, the Court granted the said Mareva Injunction and s.17 MPPO application on an interim basis, adjourning them to be heard together at trial.

The Mareva Injunction

21.By HHJ I. Wong’s order dated 11 September 2023, the Wife in gist was restricted on disposal of assets up to HK$1.75 million.  There is no dispute that such a figure was adopted by reason that as early as on 19 August 2021 the Husband had through his affidavit made an open offer of accepting HK$1.75 million in full and final settlement of his financial claims in these proceedings.  He has maintained this position in these proceedings throughout, even up to this trial under his document titled ‘Respondent’s Open Offer’, he asks for HK$1.75 million to reflect a clean break.

22.It is not difficult to see by this stage that despite the Mareva Injunction Order remains effective and has been continued at subsequent court hearings up to this trial, the practical relevance of this is not high given the limited assets remain on the table on the part of the Wife.  This is agreed by the Husband.

23.Mr. Clough confirms that what the Husband decides to do with the Mareva Injunction would depend on the outcome of this trial on ancillary relief, and that he may seek to continue the same post judgment for enforcement purposes.  The Husband therefore seeks at this trial for the Mareva Injunction to simply be continued until 6 March 2025, which I already stated my agreement at trial and made such order. 

s.17 MPPO Application

24.Similarly the situation applies to the Husband’s s.17 MPPO application, which technically is also fixed to be heard at this trial.  The Husband initially took out the application to seek an injunctive relief under s.17(1)(a)  MPPO, as well as to set aside four specific transactions identified under s.17(1)(b)  MPPO.  At the hearing on 11 September 2023, with the leave of the Court, the Husband withdrew the injunctive relief therein, namely paragraph 1 of his Summons, leaving the four alleged dispositions remain as live issue at trial.

25.However, upon further discussion at trial, it becomes apparent that out of the four transactions prayed for in the Summons, two are alleged to have made to ‘unknown third parties’ and the other two made to ‘the Wife’s aunt or other unknown third parties’.[9]  Mr. Clough conceded, which in my view quite sensibly, that the Husband’s s.17 MPPO application carries no practical purpose when the alleged disponees are either not identified and/or not joined into these proceedings.  There were at all material times no third-party applications in these proceedings.  I accept that as at the time of the taking out of the said s.17 MPPO application, one could not envisage to be met with a totally non-responding respondent litigant.  At that time, the Wife was acting in person and albeit already had signs of being absent from court hearings and not complying with procedural orders, she had at least responded as at July 2023.

26.Mr Clough confirmed on the second day of trial that the Husband seeks to withdraw his s.17 MPPO application with costs in the cause of the ancillary relief, which I granted leave for the same.

27.Thus, for the purpose of the discussion below, there is no need to focus on the Prohibition Order, Mareva Injunction and/or the s.17 MPPO application other than it is necessary as surrounding circumstances. 

Open Offer

28.The Wife, by her absence in these proceedings in the latter stages, fails to formulate any open offer.

29.The Husband’s open offer is filed on 14 May 2024 and I shall repeat here:

“1. The Respondent Husband (“H”)  maintains his open offer as set out in Paragraph 5 of H’s 5^th Affidavit dated 19^th August 2021 and seeks the Petitioner Wife (“W”)  to pay a settlement of HK$1,750,000 on a clean break bass which is less than his entitlement of 50:50.

2. In particular, H’s open offer of HK$1,750,000 represents less than 30% of the net sale proceeds from the Former Matrimonial Home of HK$5,833,550 that W had received in February and March 2021.

3. H needs a sufficient lump sum to meet his reasonable needs. H has limited earning capacity as he is 57 years old and nearing retirement age. H is also suffering from very high blood pressure which would occasionally restrict his ability to work as a manual labourer. While H is now earning around HK$46,000 per month, it is only because he works overtime everyday from Mondays to Sundays. H will only be able to work for another 3 to 4 years in his job as a manual labourer due to a leg injury he suffered at work in 2017.”   

Parties’ Financial Positions

30.By the Wife’s Form E, she put her positive assets to be HK$2,773,654.98 (bank accounts), HK$34.2 (stocks), HK$1,065,073.42 (debts owed), and HK$40,990.74 (pension).  Save from these, she put HK$0 for all other parts.  She claims HK$253,375.66 liabilities, all from bank loans.[10]

31.In conducting this trial, I was not assisted with a Table/Schedule of Assets and Liabilities.  Mr. Clough confirms with me at trial that the Husband is not seeking for distribution on the Wife’s items save from the sale proceeds of the FMH.  It was described to me that the other items of the Wife were negligible.  The only other large sum was debt owed to Wife, but upon a detailed look, the Wife listed out all these alleged debts (14 items)  being owed to her all by the Husband, spanning from as early as 2010 to 2018.[11]

32.As to the Husband’s Form E, it was in the negative in that save from $9,134.72 at banks, HK$1,000 for a mobile phone, and HK$40,000 pension he had no positive assets.  He had liabilities in the sum of HK$63,867.96 at the time of Form E.[12]

33.The Husband provided an update of his finance under his narrative affirmation with a net value of about HK$78,000 comprising of about HK$1,700 at banks, HK$27,000 MPS arrears owed to him by the Wife, MPF of about HK$110,000 and liabilities in finance company loans and legal aid contributions amounting to about HK$60,000.  There is no liquid asset at all.

34.I agree with Mr. Clough that under such circumstances, the Court should primarily be tasked with distributing the proceeds of the FMH only, if any, and to leave the other ‘negligible items’ untouched in the distribution exercise.  This is because, as Mr. Clough puts it, this is a ‘needs caps all’ case where the distribution of the FMH proceeds would not have sufficiently met the needs of the parties anyway.  In any event I will consider all the surrounding circumstances in my analysis below. 

Applicable Legal Principles

35.I shall not repeat the s.7 MPPO factors as well as the trite law enunciated in LKW v DD [2010] 13 HKCFAR 537, save that to list out below the 4 guiding principles :-

(a)  The objective of section 7 exercise is to arrive at a distribution of assets which is fair between the parties.

(b)  The concept of fairness requires the refutation of any gender or role discrimination.

(c)  In order to eliminate insidious discrimination and promote fairness, judges should check their tentative views of distribution against a “yardstick of equal division” which should be departed from only for good, articulated reasons.

(d)  The court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tend to deplete the parties’ (and the courts’)  resources and to increase antagonism and discourage settlement.

36.In the same case, the Court of Final Appeal has laid down 5 steps in determining ancillary relief applications: -

Step 1:  identification of the assets and to ascertain the financial resources of each of the parties calculated as at the date of the hearing;

Step 2: assessment of the parties’ financial needs;

Step 3:  if surplus assets would remain after the parties’ needs have been catered for, the next step in the exercise should generally be for the court to apply the sharing principle to the parties’ total assets, leaving the “needs” question previously considered to be dealt with under that principle;

Step 4: considering whether there are good reasons to depart from equal division; and

Step 5:  when deciding the outcome, the court is not bound to depart from equality in the division of the parties’ assets even if one or more of the factors considered are engaged on the facts.  The weight to be given to such considerations is a matter of discretion for the court.

37.I am guided by the same and shall adopt the principles to the present matter.  In particular, Riberio PJ states in LKW that s.7 MPPO confers a wide discretion on the Court that deal with financial provisions and they must consider the circumstances of each case and must be flexible, and emphasises that the s.7 provisions and past cases are guidelines rather than rules.[13]

Discussion

38.It is clear that the Court has to perform the s.7 MPPO exercise in the fairest manner to the parties, even when one party is by and large absent from the proceedings.  In this case, all that the Wife has filed were (i)  her Form E on 8 July 2021; (ii)  a 10-page affirmation on 9 July 2021 in support of setting aside the Prohibition Order; (iii)  a 3-page affirmation on 23 July 2021 in opposing MPS; (iv)  a Questionnaire (comprising 17 questions)  on 30 March 2023; and (v)  an Answer on 22 May 2023.  Suffice to say that I have considered all these evidence and I have no hesitation to find that the Wife’s own financial disclosure is rather poor.

39.Mr. Clough has invited me to make inferential findings against the Wife based on her failure to call evidence and/or produce documents and has cited some civil law authorities in support.  I shall not repeat them here, since it is trite that in family litigation, a party bears a positive and on-going duty to full and frank disclosure insofar as financial position is concerned.  By the quite overwhelming evidence before me regarding the manner of which the Wife has depleted her assets, including and not limited to the sale of the FMH and proceeds thereof (but since I am invited to only focus on the latter, I shall not go into the other fund flows, e.g. those withdrawal prior to the sale as seen from the Wife’s bank accounts), I find at the outset that the Wife has been, and with some planning too, evading these proceedings and thereby depriving the Court an opportunity to bring justice to both parties in this ancillary relief trial.  By not having a full picture due to the substantial lack of disclosure / participation on the part of the Wife in the manner described earlier, the Court is left in limbo with limited information and consequently an element of speculation will arise, especially when I am to assess the Wife’s needs.

40.Whether or not an adverse inference is to be drawn in favour of the Husband is, in my view, a technical term which carries little weight here when in truth there is simply nothing left in the pot in this case.  I put no blame on the Husband for having taken out all those interlocutory applications in trying to preserve the pot and to safeguard the interests of the Husband.  The fact that the Prohibition Order as well as the Mareva Injunction have been repeatedly renewed by the Court speaks for itself.

41.In the discussion I had with Mr. Clough regarding the practical value of the s.17 MPPO application, it was raised that under the present circumstances wouldn’t it be more appropriate to engage the Court’s jurisdiction to seek for an add-back, as opposed to rely on setting aside dispositions where disponees cannot be identified?  There is indeed a difference in these alternative routes to take when usually with the former, actual assets would be returned to the pot upon a successful set-aside; whereas with the latter, it is a notional exercise.

42.In this case, the fact remains that insofar as the disclosed assets are concerned, they are all of negligible amounts and upon the Husband’s confirmation that he does not seek any reliefs on those items, there is simply no exercise to be performed by the Court in that respect.

Issues

43.It means that, the singular issue I am tasked to investigate in this case is the FMH. I have considered the Schedule of Issues filed by the Husband on 2 January 2024 and have invited submission from Mr. Clough on certain matters :

(i)  The nature of the FMH – is there a pre-marital element by the fact that it is not disputed the Wife brought this asset into the marriage by her own resources? How does it balance against the fact (not disputed)  that it was used as the FMH?

(ii)  If, and only if, there is a non-matrimonial element in this asset, how should the Court account for the same? By the ‘telescope’ approach under PW v PPTW (Ancillary Relief: non-matrimonial property)  [2015] HKFLR 213, or otherwise?

(iii)  Since the Husband no longer relies on s.17 MPPO and wishes to ask the Court to add-back the sale proceeds to the pot for distribution, how should the Court approach this?

(iv)  When asked whether this is a needs or sharing case, it is submitted to me that while the Husband looks to share the FMH, it is clear that given their respective backgrounds, any such distribution would not satisfy the needs of the parties in any event, a situation Mr. Clough describes as the ‘needs caps all’ approach. Is this an appropriate approach in the circumstances? What are the needs of the parties? 

Issue (i)

44.Doing the best I can, by reading the Wife’s limited evidence, I can reasonably anticipate that the Wife, had she been present at trial and to litigate the matter, may rely on the following:[14]

(i)  The FMH is a pre-marital asset in that the mortgage was redeemed in 2014 by the Wife and her ex-husband transferred all his interests to her, prior to the Husband moving in in 2015;

(ii)  The Husband never made any financial contributions towards the FMH;

(iii)  Her marriage with the Husband was a short and childless one;

(iv)  She had to borrow money from banks during marriage to lend to the Husband, in support of his various business ventures;

(v)  The Husband signed a piece of paper acknowledging he would not claim against her assets in the event of divorce.

45.The Husband case on the above is that : [15]

(i)  It is not a short marriage where the parties are married for 9 years and lived together under the FMH for 4 years, rendering the FMH a matrimonial asset;

(ii)  He has actively helped out with household chores and was responsible for buying all the food and cooking, in addition he would sometimes give her money to pay for utilities bills;

(iii)  On top of the above, when he was in employment, he would pay around HK$10,000 per month to the Wife to cover, inter alia, household expenses;

(iv)  He denies owing the Wife debts as stated in her Form E. He views there were money transactions between them as a married couple which would be normal, and that some of the business ventures were made jointly by the parties; [16]

(v)  He was pressurised into signing the piece of paper when he was kicked out of the FMH for 21 days based on a jealous rage of the Wife where she thought he was having an affair with another female. The Husband became physically unwell sleeping in a van during the period and the Wife threatened him to sign it before letting him enter the FMH again. 

46.My view on the above is this. First of all I do not see this as a short marriage.  The parties actually lived together in Hong Kong for about a month in 2014 and then planned for the Husband’s relocation in 2015.  To me, it is reasonably clear that the Wife then made the financial arrangement she did to the FMH in 2014 with her ex-husband, whom they divorced in 2004, and to pay up the mortgage, in anticipation of the arrival of the Husband.  The FMH was in my view re-arranged for such purpose and was in fact used as the sole residence whenever the parties were in Hong Kong since 2015.  Whether they separated in April or October of 2019 is irrelevant to my finding that it is in any event not a short marriage.  I accept the Husband’s evidence that during the times they resided together, they have both contributed to the family by investing time, emotions and mixing their financial resources to the same.

47.The parties’ home is placed in a different category to other classes of marital assets.  Lord Nichols in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 put this principle very clearly and this proposition is adopted in LKW (supra.):

“98. It should be noted that these refinements are not generally applicable to the matrimonial home and other assets which have been intended for and devoted to family use. Lord Nicholls pointed this out in Miller/McFarlane as follows:

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

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

48.Applying to the present case, and with my finding that the marriage is not a short one (when even a short marriage would entitle a party to a share), the only other factor I may consider on behalf of the Wife is the relevance of that homemade document.  I accept the Husband’s evidence in relation to the circumstances giving rise to this document.  I also accept that this document was signed without any legal advice and that once he had legal representation, he had made it clear at a very early stage in these proceedings that the creation of this document was under duress and therefore not enforceable.  By reading the wordings, it is also unclear to me as to what ‘any property’ means in such context.  Further, when the Wife was earlier actively participating in these proceedings, if she had viewed this document amounting to an effective agreement, be it a nuptial agreement or otherwise, one would have expected her to put forward such claim at once, so that the Court would be alerted at the outset of her case and, if so, may for instance arrange for this to be determined as a preliminary issue for better case management.  The Wife never made such claims but even if she did so, it would in my view more likely than not be treated as carrying very little or no weight by reason of the various aforesaid vitiating factors.

49.For these reasons I am satisfied that the FMH ought to be accounted for as a matrimonial asset and subject to division at ancillary relief.  Accordingly, the sale proceeds thereof would be subject to distribution.

50.For the sake of clarity, I note that the Wife has produced a copy of the completion statement of the sale of the FMH and I adopt the figure therein, namely HK$5,243,550 as the final balance received[17], therefore making the total net sale proceeds of the FMH being HK$5,243,550 + HK$590,000 (deposits)  = HK$5,833,550. This is the same figure adopted by the Husband in his open offer. 

Issue (ii)

51.By reason of my above finding, there is no longer the need to venture into discussions on the various approaches to be adopted by the Courts when facing non-matrimonial assets.

Issue (iii)

52.The technique of add-back is very often, and perhaps too often in some cases, being advocated for in modern family litigation.  Indeed it is a technique available to the Court, but the reality is that it will be a notional exercise in cases where the amount to be added back far exceeds what is actually available in the pot.  In the recent case of LCC v LTLA [2024] HKCA 406, the Court of Appeal has delved into the history of such mechanism and has rightly set a threshold to guard against any abuse in advancing this line of argument in family litigation:[18]

“48. We find the Two Stage Approach helpful in cases where conduct is an issue in ancillary relief claims and we set out the Two Stage Approach (slightly modified)  as follows -

Stage (1)

A party asserting conduct must prove:

(i) the facts relied upon; and if established,

(ii) those facts meet the conduct threshold, which has consistently been set at a high or exceptional level; and

(iii) that there is an identifiable (even if not always easily measurable)  negative financial impact upon the parties which has been generated by the alleged wrongdoing. A causative link between act/omission and financial loss is required. Sometimes the loss can be precisely quantified, sometimes it may require a broader evaluation, but it is doubtful that the quantification of loss can or should range beyond the financial consequences caused by the pleaded grounds.

Stage (2)

If Stage(1)  is established, the court will go on to consider how the misconduct, and its financial consequences, should impact upon the outcome of the financial remedies proceedings, undertaking the MPPO section 7 exercise which requires balancing all the relevant factors.”

…

“61. To summarise, following GS v L , the line of “add-back” cases in England has consistently set the threshold for the conduct for the court to have regard to for the section 7 exercise at a high or exceptional level, namely so gross and obvious that it is inequitable for the court to disregard it. In cases where one spouse alleges the other spouse of misconduct of over-spending, there must be clear evidence of dissipation in which there is a wanton element. In considering whether there has been wanton dissipation, the court has taken into account matters including (i)  the extent, timing and nature of the alleged wanton dissipation; (ii)  the general assessment of the overspending party; (iii)  the motivation for the overspending such as whether the overspending was with the intention to reduce the other spouse’s financial claims, and/or whether it was bona fide; and (iv)  the negative financial impact upon the parties. Upon the misconduct being established, the court will then consider how the misconduct and its financial consequences should impact upon the outcome of the financial award having regard to all the relevant section 7 factors. “Add-back” is ordered in very limited circumstances even though it is recognized as an option, and the courts in England appear to be moving away from this option, with at least one judge pointing out that this technique does not re-create any actual money and is a process of penalisation. What is clear is that, there has been a constant reminder that the add-back has to be conducted very cautiously. No matter which route one pursues, the ultimate goal is to achieve fairness. ”

53.I have no hesitation to find that the extent, timing and nature of how the net sale proceeds of the FMH had been vanished in these proceedings amount to the clearest case of wanton dissipation on the part of the Wife.  In her affirmation to set aside the Prohibition Order in July 2021, she cited financial constraint as reason for selling the FMH in March 2021, but without particulars.  By then, she alleged she had to ‘repay loans owed by me and the remaining balance is around HK$3,000,000.00’[19]. Neither did she explain these alleged loans. Her explanation that she had to borrow from time to time to lend money to the Husband throughout marriage and thus had to repay them with the same proceeds of the FMH within months is not accepted, not to mention the figures do not match at all.

54.Further, in the same affirmation, the Wife offered ‘to give my undertaking not to siphon my assets pending the outcome of the ancillary relief issues in these proceedings’[20].  There were no subsequent court orders recording this as a formal undertaking, and unfortunately the Wife had done exactly what she promised not to do – siphoning her assets off leaving HK$448.04 in the SCB account where the entire net FMH proceeds once were.

55.My assessment of the Wife’s negative financial conduct is one of very poor in the circumstances, and that the timing and manner justify one to view it as having an intent to reduce – in this case to entirely defeat – the Husband’s ancillary relief claim.

56.The financial impact upon the Husband is that by his evidence, which I accept, he had been actively seeking various employment / business opportunities since he relocated to Hong Kong in 2015.  At all material times, he relied on the Wife providing the FMH as accommodation.  I have earlier described how dire his living circumstances could become at times when he was denied entry to the FMH. It is clear to me that even with his improved situation regarding his employment (as he has updated me at trial, to be discussed below), the taking away of the accommodation component would cause him some real negative financial impact.  In other words, but for the FMH being unilaterally sold and net proceeds thereof being siphoned off, he would have been entitled to a claim to the FMH, and/or a share of the actual net sale proceeds. 

57.Accordingly, and notwithstanding the high threshold set out in LCC, this is a case where I find the facts falling squarely in favour of triggering the Court’s jurisdiction for a notional add-back to achieve fairness. I would therefore notionally add-back HK$5,833,550.

Issue (iv)

58.Having ascertained the pot, namely the notional add-back of the HK$5,833,550 and without accounting for the other negligible sums in the parties’ assets/liabilities[21], I now proceed to perform the s.7 exercise and to me, this is a needs case where having ascertained the needs of the parties, there would be nothing left in the pot.

Husband’s Needs

59.At the time of trial, the Husband was earning HK$43,600 per month.  He explained that this was the reward for working overtime, well over and above the minimal working hours.  In short, he said given his age and medical issues, namely a bad knee resulting from an injury at work in 2017 as well as very high blood pressure and a hernia surgery scheduled in October 2024, he is expected to work less in future.  He provided his employment contract to show that the basic wage rate is HK$1,000 per day with 9 hours of work per day.[22]

60.As to his monthly general expenses, he stated it to be HK$17,400 in his narrative affirmation[23].  At trial, he confirmed that he continued to reside in a small subdivided flat in Yuen Long at $5,000 rent per month.  For personal expenses he stated it to be HK$23,506 per month.  He would send money to Nigeria for his sons as well as to his sister for taking care of his sons.  Those amount to about HK$13,000 per month, thus leaving about HK$10,000 for his own personal expenses. 

61.From the above, the Husband puts his total monthly spending at around HK$40,000 per month.

62.I accept the Husband’s evidence when he told me that his employer is currently engaging in major construction projects but facing a tendency of laying off workers.  He is 57 years old and is not expected to be employed beyond 60.  However, I do think he will still have some earning capacity.  He has a security guard licence; he testified that he is studying online to equip himself for some consultancy role after he leaves his current employer.  He confirms he wishes to remain in Hong Kong and wants to arrange his two sons to join him in future.

63.By the above, I find that the Husband will be able to satisfy his own needs in the upcoming three years until he reaches the age of 60.  After that, his earning capacity will face a downward alteration to around HK$20,000 per month before he completely retires.

64.I accept his monthly expenses to be reasonable, especially when supported by unchallenged evidence.  Going forward, while he may not be required to financially maintain his family members in Nigeria once his sons graduate from universities, on the other hand, I note that throughout marriage he was enjoying a living standard in Hong Kong with the FMH provided as accommodation.  That was a three-bedroom flat of about 700 sq. ft. Contrast that with his current accommodation, it is unfair to assume that the Husband’s accommodation needs have been met having regard to the marital standard of living.  This begs the very question – if the FMH were still available now, an order for sale would have been a legitimate option with the parties respectively entitled to a share of the same to reflect their future accommodation needs.

The Wife’s Needs

65.According to the Husband, the Wife used to work as a full-time tutor during marriage with 8 to 10 children to teach every day, earning about HK$12,000 to HK$16,000 per month. She had a hip operation during marriage and otherwise in good health.  She has three adult daughters from her previous marriage who could provide financial support for her.[24]

66.From her Form E disclosure, she had no income and monthly expenditure at HK$23,615.80, half of it being rent of HK$11,800 per month.  In her Answer filed, she alleged to have been distressed by these proceedings and therefore spent money on gambling, entertainment and health supplements, with no supporting documents provided.  The Husband challenged these allegations and said the Wife was never a big spender and certainly did not gamble.  He believed she was siphoning off resources and made up these as excuses.[25]

67.While I remind myself that the Wife has so chosen not to participate in these proceedings and her lack of sufficient disclosure has made this task a difficult one, on the other hand I am also aware that when assessing a party’s needs the Court should adopt a generous approach.  Doing the best I can, I find that the Wife being in her mid-sixties is not expected to work as a tutor for children especially if she has already stopped working as such for some time.  As to expenses, I would adopt her Form E figure and reject her so-called increased spending pattern in entertainments/gambling etc.  I view that her personal expenses of about HK$10,000 is reasonable and similar to my findings on the Husband.  Her accommodation needs of about HK$12,000 is also reasonable and this further reflects the Husband’s reasonable accommodation needs ought to be higher than his current arrangement.

The Outcome

68.As rightly submitted by Mr. Clough, The Husband asks for a lump sum of HK$1,750,000 as his ancillary relief and such figure does not even cover his reasonable needs.  By my above findings, that is correct.  Even if one is to equally split the net sale proceeds, with each party receiving about HK$2.9 million, it would amount to roughly HK$24,000 per month covering for the next 10 years only.  This is a clear demonstration that when taking a broad brush approach in dividing the pot equally, both party’s reasonable needs will still exceed the available assets.

69.I have considered all circumstances of this case, including but not limited to the source of the FMH, the Mareva Injunction amount, as well as the negative financial conduct of the Wife. I take on board the Husband’s open offer of HK$1,750,000 representing roughly 30% of the FMH net sales proceeds. I further take into account of the legal costs that have incurred in these proceedings, in particular with a wide range of interlocutory applications made.  I view prima facie those a result of the negative litigation conduct of the Wife, in her lack of disclosure as well as her lack of participation, in addition to siphoning off the net sale proceeds of the FMH.  There is a real chance that the Wife will have to bear all these legal costs of the Husband at the end of the day.

70.By the above reasons, I grant the relief sought by the Husband, namely a lump-sum order in the sum of HK$1,750,000.  I have considered Mr. Clough’s submission at trial that the Court is not bound by the Husband’s proposals and can give a higher award if circumstances justify.  While I agree the Court certainly has a discretionary power to depart from the parties’ proposals in general, in the present case, I take into account the fact that the Husband has always been advocating for HK$1,750,000.  I have not heard any submission on any subsequent change of circumstances justifying an increased offer, nor was there any specific figure proposed in substitution.  Nor is the Husband inviting the Court to consider a different type of relief, but merely a higher award of the same type of relief. Further, what is the purpose of the asking a party to file an open offer shorty before trial if that party would then come to Court and depart therefrom?  Lastly, and also importantly is the fact that this award of HK$1,750,000 is achieved by way of notional add-back, as opposed to distribution of any actual assets.

71.As to the timing of payment, I adopt the relevant part of the Husband’s List of Orders Sought at Trial dated 14 May 2024 and order such sum to be paid with 14 days of pronouncement of Decree Absolute.

Order

72.I shall grant a s.18 declaration and make these Orders:

(i)  The Petitioner do pay the Respondent a lump sum of HK$1,7500,000 on a clean break basis within 14 days of pronouncement of the Decree Absolute, with such lump sum being subject to the first charge of the Director of Legal Aid;

(ii)  Save from the above, the parties do retain assets/liabilities under their respective names;

(iii)  With the parties deemed having make an ancillary relief claim against each other in these proceedings, and subject to the above and upon the pronouncement of Decree Absolute, all parties’ claims against each other do stand dismissed;

(iv)  Liberty to apply as to the implementation of this Order.

Costs

73.The Husband is the successful party and I see no reason why the Wife should not bear his costs. I hereby make an order nisi that costs of ancillary relief, including costs of the s.17 MPPO application as well as costs of this trial, as well as all costs previously reserved, to the Husband, to be taxed under Legal Aid Regulations.  Unless any party applies to vary this costs order within 14 days here of, this shall become an order absolute.

74.I thank Mr. Clough for his helpful assistance in this matter.

The Petitioner, absent

Mr. Neal Clough instructed by Messrs. Oldham, Li & Nie for the Respondent