Hscc v. Swka
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FCMC 8766 / 2021 [2025] HKFC 71 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 8766 OF 2021 ---------------------------- BETWEEN
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------------------------- J U D G M E N T ------------------------- Introduction 1.This is the trial of the parties’ ancillary reliefs[1]. The Petitioner was the husband (“H”) and the Respondent was the wife (“W’”). There are 2 children of the family born out of the marriage whom I will refer to them as the elder child “A” and the younger child “B”. 2.Parties were legally represented by Counsel for the 6-day full blown trial. Apart from the parties themselves, H’s brother “JH” gave live evidence in court and W’s father “ST” gave evidence from Australia via video conferencing facilities “VCF”. 3.For logistics reasons, parties agreed H’s witness “JH” gave evidence at the beginning of the trial before H testified. Background 4.The parties were married in January 2009 in Hong Kong. There are two children born out of the marriage in 2010 and 2015. 5.At the time of trial, H was aged 49 working as an engineering manager at a reputable construction and engineering company in Hong Kong. H’s average monthly income (including bonus) was HK$109,250[2]. W was aged 48 and working as a supervisor of a leading toys company in Hong Kong. W’s average monthly income (including double pay) was HK$33,414[3]. The Divorce Proceedings 6.In August 2021, H filed a petition for divorce relying on the fact of “Unreasonable Behaviour”[4]. H’s Petition was later downplayed to “Mild Unreasonable Behaviour”. In November 2021, W filed a Cross Petition also relying on the fact of “Unreasonable Behaviour”[5]. 7.In May 2022, His Honour Judge S. Lo granted joint custody of the 2 children to the parties, shared care and control of the elder child “A” to the parties, and sole care and control of the younger child “B” to H with defined access to W[6]. 8.In June 2022, Decree Nisi was granted[7] upon the parties’ Petition and Cross Petition. 9.In preparation for the ancillary reliefs, parties filed 2 rounds of Form Es and with questionnaires and answers exchanged. The Law on Ancillary Relief 10.There is not much dispute as to the law on ancillary reliefs in family cases. Rather the dispute lies mainly with factual issues. For the sake of completeness, I set out below the statutory provisions on ancillary reliefs in family cases. 11.The jurisdiction of the Court in granting financial reliefs for a party and children of the family is governed by sections 4 and 5 and 6A of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) which provides:
12.Further, Section 7(1) of the MPPO sets out the factors which the Court has to consider in determining ancillary reliefs. It provides :-
13.In the leading case of LKW v DD[8] the Court of Final Appeal sets out 4 principles which the Court should bear in mind when determining ancillary reliefs.
14.The Court of Final Appeal went further to lay down 5 steps as to how the Court should do when considering the Section 7 factors.
The Former Matrimonial Home (”FMH”) 15.It was common ground that the main piece of assets in these ancillary reliefs proceedings is the FMH purchased in September 2015 under the sole name of W[18]. The purchase price of the FMH was HK$9.15 million[19]. 16.It was also common ground that there was a residential property together with a carpark registered under the joint names of W and W’s mother situated in Ting Kau, New Territories (“Ting Kau Property”) which was purchased back in July 2008, before the parties’ marriage in 2009. The Ting Kau Property was sold in August 2015 and the net proceeds of sale was HK$6.38 million. 17.This sum of HK$6.38 million was received by W and paid towards the purchase of the FMH which was mortgaged to Citibank by W as owner and mortgagor and H as borrower for a loan of HK$4 million. 18.The issue thus arises, amongst others, was the nature of the sum of HK$6.38 million given that W, apparently with the benefit of legal advice, did not pursue any case of common intention constructive trust but only confining her case of the cash sum of HK$6.38 million was a simple loan arrangement between family members. H’s case was that it was a gift made to them, or to the very least, to W by her parents which W had no obligation to repay in any event. Had this sum of money been a “loan” by her parents so alleged by W, H argued that it was a “soft loan”: with no liability to repay. W maintained that it was a loan which need to repay to her parents upon the sale of the FMH, as per the agreement with her parents at the time of the loan back in 2015. Agreed List of Disputed Issues 19.Parties signed a Joint Statement of Issues in Dispute dated 18 July 2023 (10 in total) which are set out below[20] :-
20.Against each of the items of disputed issues, parties’ respective positions and their comments have also been succinctly set out in the Joint Statement. The Parties’ Open Proposals 21.H in his Open Proposals dated 13 October 2023 proposed an immediate “clean break” and in the summary section therein, after setting out his proposals on the FMH, parties’ respective loans and parties’ joint bank and investment accounts, he somehow came up with the submission of a 50/50 split of the matrimonial pot and worked out a balance sum of HK$5,086,126.89 to be paid by W to him. 22.As for the FMH, H proposed :-
23.As for the other items, H proposed :-
(hereinafter called “H’s Open Proposals”). 24.At paragraph 81 of H’s Counsel’s Closing Submissions, he agreed that this was a “needs” case. 25.W’s latest Open Proposals dated 9 October 2023 are as follows :-
(hereinafter called “W’s Open Proposals”). A “sharing” case or a “needs” case ? 26.Parties accepted that given the size of the family pot, even with the disputed sum of HK$6.38 million determined either way, it would be insufficient to meet the needs of the parties for the “sharing” principle to apply in this case, let alone that there are financial needs of the 2 children. Hence, this was a “needs” case in any view and the court’s role in determining ancillary relief stops at Stage 2 of the process laid down by the Court of Final Appeal in LKW v DD (supra). Analysis of Evidence on the Disputed Issues 27.The answer to most of the disputed issues turned upon the findings of fact made by this Court over the parties’ evidence and credentials, some of which may be supported by contemporaneous documentary evidence. The remaining disputed issues would be determined in line with established legal principles and case law without much ado. Step One : Identification of Assets Issue (a) – the 6.38 million from W’s father “ST” 28.There was no issue that W’s father “ST” was the party who provided the HK$6.38 million to W despite the fact that, on the available evidence, such sum of money came from the net sale proceeds of the Ting Kau Property of which W’s father was not the legal owner, but the beneficial owner[21]. 29.According to “ST”, he purchased the Ting Kau Property in July 2008 (with the aid of mortgage from Wing Hang Bank Limited) for investment and at that time he also had had other landed property for investment[22]. The Ting Kau Property was then leased out after purchase until June 2010 when he decided to let W and her family to move in. In early 2012, he sold one of his property in Australia and decided to fully pay off the outstanding mortgage of the Ting Kau Property. On 28 May 2012, he paid off the then outstanding mortgage of the Ting Kau Property in the sum of HK$1,262,545.12[23]. 30.As per “ST” affirmation evidence, he provided 100% “free” accommodation to W and her family at the Ting Kau Property. In May 2010, W gave birth to the elder child “A”. By that time, “ST” was living only footsteps away from the Ting Kau Property. He then decided to end the lease with the tenant in the Ting Kau Property and let W and her family to move in and stay there “rent-free” so that he could help to look after his new born grandchild “A” given that both H and W were working full time. 31.This was the case notwithstanding that in June 2010 there was still mortgage repayment each month to Wing Hang Bank Limited (until the discharge of the mortgage in May 2012) in respect of which neither W nor H would have to pay. The parties did not even have to contribute to or share any portion of the mortgage interest of the Ting Kau Property. One have to bear in mind that “ST” was already retired in 2008. 32.This matched with “ST” VCF evidence during trial that he would assist W financially when W was in need and if he had the ability to do so. In his 2nd Affirmation, he deposed that in September 2020, he had also made a loan to the younger sister of W (whom I will refer to her as “MS”) in the sum of HK$9.70 million as down payment, renovation costs and stamp duty for “MS” property in Australia[24]. 33.Whilst I am impressed by the witness “ST” as a traditional elderly Chinese (he was aged 83 at the time of trial) and a caring and loving father who is always there ready and willing to offer help to his children whenever there is a need, I am not convinced that he was telling the truth in respect of the HK$6.38 million provided to W was a “loan” which need to be repaid. This may due to, more probable than not, the fact that by describing the HK$6.38 million as a “loan” which need to be repaid, this would help to protect the interests of his beloved children as opposed to “ST” saying this out of any dishonesty or his greediness. 34.Apart from having the benefit of observing “ST” via the VCF during his testimonies which drives me to such views on “ST” personality of a caring and loving father, there are other objective factors and circumstances which enhanced my finding that the HK$6.38 million was, more probable than not, a gift to W. 35.First, by giving up rental income of the Ting Kau Property (which he bought for investment in the year 2008 when he retired[25]) in return for allowing W and her family to move in and stay there 100% “rent-free” whilst he himself was the one to bear the 100% of the monthly mortgage instalments support my finding on “ST’ personality as a caring and loving father. This was so notwithstanding that in 2010 both H and W were working full time whilst he and his wife would assist in taking care of “A”. 36.Secondly, the evidence to support the HK$6.38 million was a “loan” only came from “word-of-mouth” of the father “ST” and the daughter W completely unsupported by any other corroborative evidence. Given my finding above on “ST” being a caring and loving father, there is a high propensity for his evidence to be in consonance with his daughter W. 37.Thirdly, for the 5 years between 2010 and 2015, the Ting Kau Property was used by W and her family as their matrimonial home on a 100% “rent-free” module, there was every reason or cause for “ST” to give to W the Ting Kau Property or its proceeds of sale, as in the present case, to enable W and her family of 3 having “a roof over her head”, a quite common colloquial amongst elderly Chinese meaning “一家大細有瓦遮頭” especially when there was a grandchild of tender years. The elder child “A” was only aged 5 in 2015. Further, it was W’s case that the FMH was close to the primary school where the elder child “A” would be attending. Still further, W was expecting the coming of the 2nd child later the year who was born in November 2015. 38.It was “ST”’s evidence that the Ting Kau Property was bought for investment, leased out to receive rental income, and that the mortgage was fully paid off in 2012. “ST” could always utilise the 100% rental income received from letting the Ting Kau Property to financially assist W (if he wished to do so) and have the benefit of “re-gaining” his investment of the Ting Kau Property. 39.Given the fact that “ST” had invested in property for rental income in the past, I believe such option must have occurred to him but he did not do so. Why was that was not explained in his evidence. The only reasonable inference to be drawn was his intention of making a gift to W rather than making a “loan” to W. 40.The difference between selling Ting Kau Property to obtain sale proceeds of HK$6.38 million and to lease out Ting Kau Property to obtain thousands of dollars of rental income is, in my view, how much down payment that W has to pay for when buying the FMH. 41.With HK$6.38 million as down payment for buying the FMH at HK$9.15 million, the down payment would be around 69.8% of the purchase price just leaving behind 30.2% for mortgage. It turned out that a mortgage loan of HK$4 million (around 43.8% of the purchase price) was obtained from Citibank to complete the purchase. Why the parties did not simply obtain HK$2.77 million (HK$9.15 million – HK$6.38 million) and to pay less interest on mortgage to Citibank given the fact HK$6.38 million from “ST” was interest-free. It further turned out that W was able to retain HK988,000 and HK$550,000 out of the HK$6.38 million to defray mortgage instalments and renovation costs, this suggested more probable than not the HK$6.38 million was a gift to W for her disposal in whatever way she decided rather than a loan for down payment. 42.There was no evidence from “ST” that he no longer wished to retain the Ting Kau Property as his investment in 2015 when the FMH was purchased. There was no evidence that “ST” was in need of a capital sum of money which he could only obtain by selling the Ting Kau Property, given that he had another property in the same residential complex of the FMH which he later sold in 2020 to receive HK$9.7 million to “loan” to W’s younger sister “MS”. All these objective factors drive me to the reasonable inference that the Ting Kau Property (or the proceeds thereof as in the present case) was a gift to W in 2015. 43.The full amount (100%) of the net sale proceeds of HK$6.38 million was said to be the “loan” (if it ever was) that W received from “ST”, instead of the net lesser amount of HK$6.039 million (after deducting those conveyance fees, agency fees, stamp duty for the sale which “ST” would have to bear), was nonsensical. Had “ST” loaned the net proceeds of sale, why it was not HK$6.039 million ? Why and how could those conveyance fees, agency fees, stamp duty build into the “loan” of which W as “borrower” should be liable to repay “ST” ? This inconsistencies was brought up by H’s Counsel during cross examination of W and “ST” and no reasonable explanation could be provided. 44.Fourthly, “ST”’s evidence as to the time of repayment of the “loan” is also nonsensical. “ST”’s evidence was that it would have to be repaid to him upon sale of the FMH or in 2021. “ST” also said he would demand for repayment in 2021 which was the time when W and her family planned to relocate back to Australia. He further said that given his age he might also need money for himself. 45.I find none of the answers spelt out by “ST” to be convincing. In 2015 when the FMH was purchased with the HK$6.38 million by W, there was no evidence as to the time frame when the FMH would be sold or how long the FMH would be kept (whether for self-use or investment). Hence, in 2015, the time for repayment upon sale of the FMH could never have arisen at all. In theory and in fact, sale of the FMH could happen anytime, it may be 5, 10, 15 years or even longer. The reality is, in 2015, nobody can tell when the FMH would be sold. 46.A sum of money to be qualified as a loan, in the strict legal sense (my emphasis), needs to come with (i) a fixed time or; (ii) a period/schedule of time or; (iii) an ascertainable time or; (iv) simply upon demand for repayment, let alone any other subsidiary factors such as consideration, security for the loan so on and so forth. These time-lines are the requisites for a loan to be accepted as such in the strict legal sense and, in the absence of these time-lines, the notion of “soft loan” comes into play if it could not be categorised as an outright gift. 47.Arguably, on the facts of this case, there was the ascertainable time for repayment which W and “ST” jointly said was the time when the FMH was sold. However, the absence of time as to when the FMH would be sold (my emphasis) renders such ascertainable time for repayment “academic” and hence become an unascertainable (my emphasis) time. 48.The other submission that the time of repayment to be around 2021 when W and her family planned to relocate back to Australia, in my view, was a non-starter. There was no evidence that W and her family would definitely (my emphasis) relocate in 2021. The situation might be different if it was a case of approved immigration case where there are fixed dates to arrive and “land in” Australia (my emphasis) to avoid cancellation of the immigration visas. W’s family are Australian citizens already and are free to enter, stay and exit Australia anytime they wish or prefer. Putting the case to the highest that there was a plan in 2015 for relocation in 2021 (no such finding of this Court), there are many other possibilities that the FMH would be kept as an investment or for other reasons. Hence the time for repayment of the HK$6.38 million would also become unascertainable. 49.“ST”’s submission that he might need the money for himself in 2021 was also a non-starter. “ST” deposed in his 2nd Affirmation that he had “loaned” HK$9.7 million to W’s younger sister “MS” in September 2020. Evidence also shows that “ST” has sent HK$2 million on 30 September 2020 to W’s OCBC bank account in Hong Kong. All these facts simply do not support “ST” submission. 50.With all the above analysis and findings, I find the sum of HK$6.38 million was, on balance of probabilities, not a “loan” but a “gift” or “soft loan”. Amongst the latter, I am inclined to say that it was a “gift” given my finding of “ST” character of being a caring and loving father and a traditional elderly Chinese who had retired in 2008 and having the financial capability of ability of spending around HK$18 million in total (HK$6.38 million + HK$ 2 million + HK$9.70 million) on her 2 daughters, W and “MS”, between 2015 and 2020. 51.Hence, the HK$6.38 million would count as part of W’s assets in her ledger. Issue (b) – the 2 million from “ST” 52.There are 2 versions as to the purpose of the HK$2 million, which undisputedly was sent by “ST” to W’s OCBC bank account on 30 September 2020. W’s version 53.On 10 September 2020, “ST” transferred HK$2 million to W’s OCBC bank savings account for her to help him in subscribing the “xxxx” IPO in Hong Kong[26]. On 30 October 2020, around HK$1.6 million was withdrawn[27] for the subscription but the IPO at the end had fallen through. On 4 November 2020, the subscription money was refunded to W’s OCBC bank savings account. This was undisputed by H. 54.According to W, “ST” asked her to keep the money refunded in case another investment opportunity arose. Subsequently she entered into an oral agreement with “ST” who allowed her to use the HK$2 million to pay the legal costs for these proceedings and also another set of criminal proceedings which she was facing at the time. The criminal proceedings involved an incident with H and that W was prosecuted. 55.On the records available, W spent legal fees in the region of HK$1,272,588 (HK$1,022,588[28] + HK$250,000[29]) out of the HK$2 million, leaving behind a sum of HK$727,412 (HK$2,000,000 – HK$1,272,588) which H contended to be a gift from “ST” to W with no liability for W to repay. When making such a submission, H agreed those sums spent on legal fees by W and also legal fees which his brother JH borrowed him both be deducted from their respective balance sheets as the same would normally be met by the parties’ own resources. Such suggestion was not accepted by W. 56.H made reference to the entries in W’s OCBC bank savings account between November 2020 (after the IPO subscription money was refunded) and September 2021 (before the alleged oral agreement for W to use the HK$2 million). there were already frequent transactions, most of which appeared to be sale and purchase of securities[30] made by W. In reply, W agreed and said the transactions were carried out for “ST”. H’s version 57.H in his 6th Affidavit[31], amazingly though, came up with a completely different version. He said between June 2020 and June 2021, there were discussions with W on options of using the FMH for re-financing to generate some cash for supporting the children’s expenses. The options discussed were either to sell the FMH which worth about HK$10 million with an outstanding mortgage of around HK$3 million at the time, and then to buy a smaller unit for HK$4 million under his name so as to yield extra cash of around HK$3 million. Another option was to settle the then outstanding mortgage of the FMH so that they could re-mortgage the FMH to obtain loan to buy a smaller size flat also under his name. 58.Suffice to say here was that the use of his name for the smaller flat to be purchased under whichever option, and according to H, this was also the reason for the FMH having W’s sole name, was to avoid the onerous “double-stamp duty” at the time levied upon purchases of residential properties. 59.H referred to some WhatsApp messages exchanged[32] with W which was exhibited to his 6th Affidavit to support such discussion of options. 60.H explained that when going through the WhatsApp messages, he recalled in around September 2020, W’s father “ST” told him and W that he would gift a lump sum of HK$2 million for the children’s education expenses[33]. W also told him later that she received the HK$2 million from “ST”. H then said it was the coincidence of timing that the sum of HK$2 million received was now said by W to become investing on behalf of “ST” and later changed to become “loan” for her to settle her legal fees. 61.H said he did request W to withdraw the sum of HK$2 million for settling the elder child’s school fees and to repay his brother “JH” for the school fees that ”JH” had paid earlier. This was, however, refused by W and she said the funds had been invested. “ST” evidence 62.“ST” filed his 1st Affirmations dated 22 November 2022[34] and supplemented by his 2nd Affirmation dated 13 September 2023[35]. To be fair to “ST”, the 1st Affirmation was directed to be filed by HHJ S. Lo in respect of the sum of HK$6.38 million and not this sum of HK$2 million. Hence, he could not be criticised for not making any reference of the HK$2 million at all in both of his 2 affirmations. 63.During cross examination on 22 May 2024 (Day 6 of the Trial), “ST” confirmed he had asked W to subscribe the IPO for him, letting W to keep the subscription refunded and the subsequent oral agreement with W in August 2021 for her to use the funds kept by W to defray her legal fees. My views on H’s and W’s versions 64.Comparing the 2 different versions of H and W, I tended to accept W’s version which was supported by “ST” evidence which had not been discredited in cross examination. The WhatsApp messages produced by H could only show some discussions having taken place on properties purchase/financing or re-financing, they are not sufficient or supportive for me to make any finding that the HK$2 million was aimed for children’s education expenses. Taking into further account that in September 2020 when the HK$2 million was transferred to W, the children are only at the age of 10 and 5 respectively. It was not a case that substantial sums were required for tertiary education for the children. Further, HK$2 million was indeed a substantial sum of money by any standard. Is this a gift then ? 65.“ST” during cross examination was unable to tell the terms of the oral agreement when he allowed W to use the HK$2 million for settling her legal fees, such as when the HK$2 million (if it was a loan) would have to be repaid to him, how he could believe W was able to repay such loan of HK$2 million to him with her meagre income of around HK$33,000 a month ? 66.Upon careful analysis and consideration, I find as a fact that the HK$2 million was first given to W for the specific purpose of “ST” personal investment in the IPO which had fallen through. When “ST” consented for the money to be kept by W awaiting another investment opportunity to arise, this was also for the specific purpose of “ST” personal investment. However, when it came to the time when he orally agreed and allowed W to use the HK$2 million (which all along was kept for the specific purpose of his personal investment) to settle W’s personal liabilities on legal fees, this was a completely different purpose both in terms of the usage and the user of the funds, that is to say, for the personal benefit of W rather than for the personal benefit of “ST”. 67.From such perspective, I find the HK$2 million was a gift to W at the time of the oral agreement in August 2021. 68.W’s evidence in reply to H’s contention that prior to the alleged oral agreement in August 2021, there were already several sale and purchase transaction of securities which W admitted was done for “ST”’s benefit. That said, such evidence of W further supported my finding that there was a “material change of purpose of usage of the HK$2 million” from “ST”’s personal investment to become settling W’s personal liabilities. 69.Hence, such sum would have to be included as W’s assets in her ledgers. Issue (c) – Loan from H’s brother “JH” 70.At paragraph 12 of W’s Counsel’s Closing Submissions, there was the comment that the witness “JH” was a reasonably straightforward witness who appeared intent to assist the Court although he had a tendency to anticipate questions asked of him and give defensive answers. “JH”’s evidence can largely be accepted. 71.At Part B4 (paragraphs 37 to 44) of W’s Counsel’s Closing Submissions, there was an attempt to suggest “JH” assistance to H on the elder child’s school fees started back in 2020 who had some 5 or 6 years remaining at school and hence this was clearly not a temporary solution. It went further at paragraph 44 to submit that those payments made for the elder child’s school expenses are properly characterised as financial resources of H, and not liabilities. 72.“JH” evidence was that he owned 100% a hedge fund “JCP” from which financial assistance was made out to H over the years with no documentation signed between H and “JCP”. It is common ground that those financial assistance was directly made out to H’s lawyers for settling legal fees and directly to the elder child’s school for the school fees. H had signed 2 Promissory Notes[36] acknowledging JH’s financial assistance in helping him out to settle his legal fees and the elder child’s education expenses. 73.“JH” in his Affirmation also gave an account as to the background leading to him to decide assisting H on the elder child’s school fees for switching over from a public school to the present private school. There was an imminent and real need to switch over school at the time. The school fees were substantial but not unaffordable to H and W. “JH” said he knew what H and W earned and also he believed if the parties adjusted their lifestyle, they would be able to afford the school fees themselves. 74.With respect, I failed to see how “JH” financial assistance could be considered as a form of financial resources which H was entitled to draw upon and not a form of liabilities that need to be accounted for. The mere fact of “JH” having provided financial assistance to H for a period of time, say, 5 to 6 years, could never displace H’s parental responsibilities to maintain his own child. Any such submission or conclusion must fail. 75.The other contention over validity of the Promissory Notes and the tri-partite relationship between H, “JH” and his hedge fund “JCP” could not displace H’s liability to repay his brother “JH”. It is trite that a liability to repay does not premise upon any demand having been made. Further, “JH” evidence that he had not put on any timeline or cap for the financial assistance out of his 100% owned hedge fund would not discharge or obliterate H’s liability to repay sums that “JH” had advanced via his hedge fund “JCP”. 76.Accordingly, I find the loans from “JH” arranged via his hedge fund “JCP” should be taken into account as liability in H’s ledger. Issue (d) – the payment of HK$36,312 77.In answer to H’s Questionnaires, W produced Annexure 7[37] in her Answers copy of a cheque dated 28 February 2021 issued by her from OCBC bank in the sum of HK$18,156 and an official receipt for the same amount where the address of a property at Flat D, 13 Floor, of the same residential estate as the FMH was recorded. The official receipt referred to Management fees and Advanced payment. 78.Given that no further documentary evidence was shown, only the sum of HK$18,156 would be taken into account. 79.I will deal with Issues (e), (f), (h), (i) and (j) at Step 2 of the process (Assessing the parties’ needs) after completing Step 1 of the process (Identification of Assets). Issue (g) – H’s bank accounts and liabilities 80.W referred to the loan taken out by H from HSBC in the sum of HK$1,000,000 in June 2023[38]. H has to repay HK$18,866.70 a month for 60 months. W challenged the purpose of taking out such loan was to drive up his liabilities to a negative asset position so as to reduce W’s claims and that there be no spousal maintenance. Given that neither “JH” nor “JCP” had requested repayment, and that there was no timeline or cap for the assistance, W considered H taking out such loan to repay “JH” was motivated rather than necessitated. 81.Although there was no evidence of demand for repayment by “JH” or “JCP” as confirmed by “JH” during cross examination, as I said earlier, a liability to repay a loan does not premise upon a demand having been made. 82.H in his evidence disclosed that “JH”’s wife had been pressuring him for repayment as their family (i.e. “JH”’s family) also have children to take care of. It was also H’s evidence that he felt that it was time for him to take back the responsibilities of paying the school fees of his own child. 83.I accept H’s explanation. Payments of HK$988,000 and HK$550,000 84.There are 2 payments made by W to H as follows :-
85.Given that it was W’s case that these 2 sums were made out respectively for defraying roughly 55 months of mortgage instalments and renovation costs of the FMH, which H does not dispute, neither of them would be taken into the parties’ ledgers. Parties’ respective ledgers 86.With the above analysis and findings, the parties’ respective ledgers are summarised, as per parties’ Schedule of Assets and Liabilities, as follows :-
87.Parties’ Liabilities are as follows :-
Step 2 : Assessing the parties’ needs Financial Needs of the parties and the Children 88.This deals with Issues (e) and (f) of the disputed issues. Issue (e) – Children’s Maintenance 89.For the elder child “A” who was living in Australia since 2020, his expenses as per parties’ evidence are as follows :-
90.Given that the elder child “A”’s school fees are paid by “JH” and not H, the item of school fees of HK$31,697 would have to be removed from the column of “H’s payment” in the table shown to avoid double counting. This makes the total amount of H’s payment under the table to read HK$1,250 (that is, HK$32,947 – HK$31,697) instead of the amount of HK$32,947. 91.For the amount in the table which W said she paid for the elder child “A”, I will deal with it at paragraph 102 below. Younger Child “B” 92.For the younger child “B” who has been under the sole care and control of H, all his expenses are paid by H and are as follows “:
93.I accept the children’s monthly expenses are fair and reasonable save and except the items of Entertainment/presented which I would assess at HK$1,000 and Holiday which I would assess at HK$1,000. With these adjustments, the monthly expenses of “B” would be HK$16,960 instead of HK$19,960. Issue (f) – Spousal Maintenance 94.H’s monthly expenses, as per his latest Form E dated 24 August 2023[41] are as follows :-
95.The Children’s expenses for “A” and “B”, as per paragraphs 90 and 93 above, are HK$1,250 and HK$16,960 respectively. 96.Upon review and consideration, I find H’s personal expenses are high which I would revise as per the following table. :- ** Revised Table :-
97.The total amount of H’s expenses including general expenses, personal expenses (revised) and children’s expenses added up to HK$114,676 a month (HK$48,300 + HK$48,166 + HK$1,250 + HK$16,960). 98.With the disposal of the FMH and conclusion of these ancillary reliefs, followed by repayment of his loan to “JH” and with his earning capacity higher than W in mind, I believe H would have the ability to pay spousal maintenance to W, if that was so decided to be necessary by this Court. 99.W’s monthly expenses, as per her latest Form E dated 4 September 2023[42] are as follows :-
100.H challenged W’s monthly expenses have either been grossly inflated or was not incurred as she so alleged[43]. H commented on various items and come to his personal calculation that W’s general expenses should be HK$7,111; personal expenses should be HK$8,560 and children’s expenses should be HK$1,325. 101.To a certain extent, I agreed with H’s submission that W was unable to come up with sufficient proof of evidence on her spending; especially for those expenses allegedly to have been spent on the elder child “A”. However, being the parent having shared care and control of the elder child “A”, I am minded to say that there might be occasions when W would have some spending on “A” even though there was no evidence that “A” had, or ever had, stayed for any lengthy period with W since 2020 when “A” started his studying in Australia. 102.That said, I am prepared to broadly assess the expenses on “A” by W at the modest sum of HK$3,000 a month on average to be a fair and reasonable estimate. I accept H’s evidence that he was solely responsible for maintaining the younger child “B” (who lives with H in Hong Kong) without contribution from W. 103.I would assess W’s reasonable monthly expenses as follows :-
104.Adding the above, W’s monthly expenses (excluding accommodation and related costs) would be HK$19,010 (HK$4,000 + HK$12,010 + HK$3,000), say, or round up to HK$19,000. 105.At the time of trial, it was yet to see whether, and if so, when W would relocate back to Australia but she had already claimed for housing needs of purchasing a property in Australia on mortgage and hence there would be mortgage instalments to follow. W also sought periodical spousal maintenance at HK$17,000 a month. 106.It would only be fair for me to consider W’s housing needs in Hong Kong at this stage rather than projecting into W’s housing needs in Australia. There are too many uncertainties and contingencies on W’s housing needs after her relocation. W could always come forward and apply as and when circumstances arise. 107.I would therefore assess W’s housing needs in Hong Kong for a rented place of, say, 800 square feet in size with 2 bedrooms to cater for the elder child “A” return and stay during vacation or otherwise; given that W is the shared care and control parent. This may also cater for access needs of the younger child “B” although it was defined access at this stage. 108.I have not been assisted on the rental market values but, even if I was so assisted, rental prices are highly sensitive depending on various factors. Having said, I would assess the rental in the region around HK$18,000 a month to be a reasonable estimate. I must add that with one extra bedroom reserved for access of the children would cater for their best interests. 109.In terms of other related housing costs, such as utilities and household expenses, I would broadly assess at HK$3,000 a month for both of them. I take judicial notice that management fees, government rent and rates for a rented property in Hong Kong would normally be paid by the landlord and not the tenant. The total sum of housing needs and related costs for W would therefore be assessed in the region of HK$21,000 a month. 110.Taking into account all the above, I find W’s monthly needs (including accommodation needs after disposal of the FMH) to be HK$40,000 (HK$19,000 + HK$21,000), which exceeds her monthly income of HK$33,414 at the time of her latest Form E. 111.I find this is a suitable case for spousal maintenance to be ordered. Given the fact that this is a medium long marriage with 2 children, the spousal maintenance would be generously assessed at HK$10,000 a month which I believe is fair and reasonable, covering W’s needs and within H’s ability to pay, meeting the ends of justice. Issue (h) – Elder child “A” school fees 112.At the time of trial, the elder child was studying in Australia. Over the years since 2020, H’s brother “JH” had been solely paying “A” educational costs in Australia. 113.I see no reason why “JH” would have to continue to discharge H’s and W’s parental duties for paying “A” educational costs and school fees. With the conclusion of these proceedings, apart from reimbursement (without interest) of the substantial sums of educational costs and school fees already paid, it is my finding that the parties H and W should be looking after “A” educational costs and school fees until “A” reaches 18 or ceases full time education, whichever is the later. With the disparity in their earning capacities, I decided that there be a sharing ratio of 2/3 (H) to 1/3 (W). Such sharing ratio also applies to the amount of reimbursement that need to be paid to “JH” over the portion of loan already paid for “A”’s education costs and school fees. The portion of loan by “JH” to H for settling his legal fees would remain as H’s personal liability to repay “JH”. Issue (i) – Mortgage payment for the FMH 114.During the trial, proceedings had been commenced by the mortgagee bank Citibank in the Court of First Instance under HCMP No.1620 of 2023 for foreclosure of the mortgage with demand for outstanding mortgage loan and possession of the FMH. 115.There was an interim Order for defraying the mortgage instalments by the parties using the funds in their joint name account with HSBC. H was directed to pay HK$12,000 a month towards the mortgage instalments with the balance to be met by W pending disposal of these ancillary relief proceedings. 116.As it was common ground that the FMH would be sold, the remaining mortgage loan of the FMH would therefore be paid out at the time of completion from the proceeds of sale. 117.Given that W was in use of the FMH by herself alone since H and the younger child “B” moved out in October 2021[45], I decided that the mortgage instalment of HK$18,115 a month and home insurance of HK$130 a month[46] from and between November 2021 be apportioned between the parties as per the sharing ratio of 2/3 (H) and 1/3 (W). The remaining balance of the mortgage loan at the time of completion of sale of the FMH be paid out of the proceeds of sale. Issue (j) – Post separation contribution 118.No such issue arises as it is common ground that this is a “needs” case in any view. Interim Order of HHJ S Lo[47] 119.At paragraph 80 of W’s Counsel’s Closing Submissions, it was said that the Order be varied to HK$0 and backdated to the time when it was granted. 120.The grounds of such submission was that following trial and with evidence heard, it revealed that H had gambled and lost HK$140,000 on high leveraged “bull” contracts from September 2022[48] to June 2023[49] and had also “topped up” his gambling account with HK$50,000 in March 2023[50]. 121.The other ground was that W had not been able to afford to pay in that she had repeatedly been left with meagre sum of around HK$1,000 after having defrayed her general and child “A”’s expenses. 122.I do not accept such submission made by way of Closing Submission and not in the usual manner of an application by way of summons. Further, the “complaint” on H’s gambling or engaged in high leveraged “bull” contracts, even if substantiated on a proper application being made, was not a ground for variation of the Order of HHJ S. Lo. The Order was an interim order for maintenance of the children and not maintenance pending suit for H. 123.The submission of W’s inability to pay was, with respect, misconceived. There had never been any appeal against such Order and the Order was completely “ignored” without any single dollar of payment since it was granted. Section 7 of the MPPO, Cap.192 124.Now I would deal with the Section 7 factors. Income, earning capacity, property and financial resources 125.At the time of trial, both parties had earning capacities and are working full time. W’s Counsel repeatedly emphasized and highlighted that H was earning about 3 times as much as W did. H was an engineering manager at a reputable listed company in Hong Kong with a monthly income of around HK$105,000. 126.In H’s latest Form E[51], H disclosed that he had enrolled in his employer’s 5-year management training program where he was required to attend various career development course. From the program, he had received bonus of 1.5 months’ salary per annum. H said the last bonus of this nature would be paid in the 2024 financial year (which must have been paid by the time of this Judgment) but it was unclear whether he would receive other types of bonus post 2024. 127.W was working as a senior manufacturing planner with a toys manufacturing company with a monthly salary income of HK$33,414[52]. W received a negative performance review in December 2022, stating that her “results” were below expectations and noting that due to personal matters, she had been struggling with analytical problem solving and clear thinking[53]. 128.On the available evidence, I tended to agree that H has a higher earning capacity than W who was earning around only 1/3 of H’s income. In terms of financial resources, however, it appears that W was in a better position than H. W had had the assistance of her father “ST” who was there ready and willing to help if there was any need. The arrangement of 100% “rent-free” accommodation of the Ting Kau Property for 5 years between 2010 and 2015, not to mention the subsequent proceeds of sale in 2015, strongly supported the fact that W’s father was a financial resource to whom W could rely upon and turn to. W’s sister once also financially assisted W with HK$460,000 which W had repaid. 129.On the other hand, evidence shows that H could only turn to his married brother “JH” for financial assistance but under the pressure of repayment from “JH”’s wife. Since “A” enrolment at the school in Australia in Spring 2020, “JH” has been settling “A”’s tuition, boarding, and educational costs directly with the school. Such financial assistance had accumulated to AUD 163,651 (around HK$924,204) from October 2020 to August 2023[54]. 130.As a matter of fact, “JH” loan to H also covered H’s legal fees for these proceedings by making direct payment to H’s lawyers. 131.On this factor, H’s income and earning capacity are better than W. W’s financial resources are better than H. Financial needs, obligations and responsibilities 132.Whilst the parties might be able to look after their personal financial needs, it is clear from the evidence that had emerged that H’s financial obligations over the 2 children “A” and “B” was more onerous than W. 133.The elder child “A” who was studying in Australia since 2020 whose educational expenses were taken care of by H’s brother “JH” where there was an obligation to repay. H did in fact raise a loan during these proceedings with HSBC for HK$1 million to repay but only able to repay part of (my emphasis) what was owed to “JH”. As at August 2023, the outstanding loan amount was HK$2,751,265.85[55]. 134.Besides, H was solely taking care of the expenses of the younger child “B” whom he had sole care and control. On the evidence, he needed to hire a domestic helper to assist him in looking after “B” whilst he was at work. There was no need of a domestic helper on W. 135.On the other hand, there was no evidence to suggest that W had to take care of the elder child “A” since the child left Hong Kong to Australia in 2020. As I found at paragraph 102 of this Judgment, W might only have contributed on average around HK$3,000 a month towards “A” expenses, not even on regular a monthly basis. 136.On this factor. I am satisfied that H’s financial needs, obligations and responsibilities are greater than W. Standard of living enjoyed by the family before breakdown of marriage 137.On the available evidence, I find the standard of living enjoyed by the family before break down of marriage was moderate to above average. Age of each party and duration of marriage 138.H was aged 49. W was aged 48. The marriage lasted for about 12 years up until separation in 2021 or 13 years up until Decree Nisi. 139.I am of the view that this is a medium long marriage. Any physical or mental disability of either of the parties to the marriage 140.There was no reported physical or mental disability on either party. Contributions made by each of the parties to the welfare of the family 141.This is a medium long marriage with 2 children born in 2010 and 2015. Both parties were working parents and the children are being looked after primarily by grandparents or domestic helper during their marriage. This was not a case where one parent was the sole breadwinner and the other parent taking up the role as a homemaker. 142.I would say the parties’ contribution to the welfare of the family was largely equal. Disparity in their work income would not affect their respective contribution to the welfare of the family. 143.From the perspective of monetary contribution, I find H’s complete withdrawal of the FMH mortgage instalments from 1 April 2023 on short notice (only about 17 days) to W, by way of a letter from his lawyers to W[56], reprehensible. This is particularly so when he was the party who was paying the full amount of the mortgage instalments over the years since the FMH was purchased back in 2015. The letter was dated 13 March 2023 and the complete withdrawal started on 1 April 2023 (that is, 17 days later). 144.Such sudden, abrupt and short notice (my emphasis) complete withdrawal of defraying the mortgage instalments disturbed the “status quo” which was there for 8 years and, to a certain extent, could have been “litigation driven” or “litigation conduct” to exert financial constraint on W to compromise in these proceedings given that there was a 2nd FDR coming up in 8 days’ time on 21 March 2023. This was certainly not a fair play of the game. 145.The complete withdrawal of defraying mortgage instalments had led to separate legal proceedings on foreclosure commenced by the mortgagee bank which posed a further financial constraint on W, who was in need and in use of the FMH but was on the verge of being evicted. On the record, W then engaged lawyers Messrs. Tsang, Chan & Woo on 21 August 2023 to represent her. A Summons was issued by W seeking interim reliefs against H to continue with defraying the mortgage instalments. 146.All the catastrophic consequences brought by the foreclosure proceedings must be, with the benefit of full legal advice, well within H’s knowledge who decided on the sudden, abrupt and short notice complete withdrawal. The degree of grievances and helplessness, having to face these proceedings and at the same time to handle the mortgagee proceedings under HCMP No.1620 of 2023 in the Court of First Instance, let alone the need to work to make a living, could not be underestimated. 147.At one stage I was further informed that H had not even attended to the foreclosure proceedings at the Court of First Instance. This was drawn to my attention by W’s lawyers at one of the hearings and, with my explanation, it then came up with a consent application and my Order dated 10 November 2023 to “salvage” the FMH from being re-possessed by the mortgagee bank before determination of these ancillary reliefs. Compensation 148.Had this been a “sharing” case, the above sudden, abrupt and short notice complete withdrawal of defraying mortgage repayments prior to FDR might justifiably call for the factor of compensation to be considered. Given the parties’ consensus and confirmed positions, with the benefit of full legal advice and Counsel assistance on both sides, to run and defend ancillary reliefs on a “needs” basis, there is no room for me to interject such factor of compensation. 149.In any event, I also noticed that the conduct of complete withdrawal of defraying mortgage instalments was not an item within the parties’ joint statement of disputed issues. I will only have to pause here and say no more. Deciding the Outcome 150.To summarise, I have made the following finding of facts :-
Decision and Directions 151.I now decided the parties’ ancillary reliefs. I also grant directions on implementation of my Decision as follows :- The FMH
Payment into Court
Spousal Maintenance
Children’s Maintenance
Other Assets
152.There be liberty to apply for further directions on implementation of the above terms of this Judgment. Costs 153.Having reviewed the parties’ respective Open Proposals and the Judgment, W failed in her case of the HK$6.38 million and HK$2 million “loans” received from her father “ST”, and was only able to succeed on her spousal maintenance of HK$10,000 until her re-marriage or during the joint lives of the parties, whichever is the earlier. 154.In the circumstances, I would say “H” is the overall “winner”. It is fair and reasonable for H to have his costs of the ancillary reliefs, including all costs reserved, to be taxed if not agreed. 155.I also grant Certificate for Counsel. 156.This is a costs order nisi which would become absolute if no application was made to vary the same within 14 days from the date of this Judgment. Section 18 declaration 157.I also grant Section 18 declaration. 158.Last but not least, I wish to express my gratitude to Counsel and the parties’ legal teams for their valuable assistance to this Court.
Miss Fiona Chong instructed by Messrs. Rita Ku & Ser, Solicitors for the Petitioner Mr Josh Baker instructed by Messrs. Tsang, Chan & Woo, Solicitors for the Respondent [1] A/11 and 15 to 16 [2] B/118 [3] B/143 [4] A/1 to 6 [5] A/7 to 10 [6] A/30 to 35 [7] A/36 to 37 [8] FACV No. 16 of 2008 [9] At §§56 [10] At §§57 [11] At §§58 to 61 [12] At §§62 to 70 [13] At §§71 to 73 [14] At §§74 to79 [15] At §§80 to 82 [16] At §§83 to 130 [17] At §§131-132 [18] C7/1533 [19] C7/1533 [20] A/62 to 65 [21] See 1st Affirmation of “ST” [22] See §4 of 1st Affirmation of “ST” [23] See §9 of 1st Affirmation of “ST” [24] See §6 of 2nd Affirmation of “ST” [25] See §4 of 2nd Affirmation of “ST” [26] C1/64 [27] C1/65 [28] C7/1746 [29] D2/402 [30] C1/65 to 67 [31] B2/227 to 244 [32] C8/1808 to 1815 [33] B2/236 (§36(d) of H’s 6th Affidavit) [34] B2/155 to 161 [35] B2/223 to 226 [36] C7/1599 to 1600 [37] C4/802 to 805 [38] C7/1632 [39] C4/774 to 775 [40] C4/776 to 777 [41] TB:B/120 to 121 [42] TB:B/145 to 147 [43] TB:B/239 to 241 [44] See §102 of this Judgment [45] See §10 of W’s 7th Affidavit [46] See §11 of W’s 7th Affidavit [47] A/45 to 47 [48] C5/1183 [49] C5/1214 [50] C5/1208 [51] B/118 [52] B/143 [53] B/194 (§11 of W’s 6th Affidavit) [54] B/172 (§14(b) of H’s 5th Affidavit) [55] B/237 (§38 of H’s 6th Affidavit) [56] See Exhibit “SWKA7-2” of W’s 7th Affidavit | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment