Ad (also known as At) v. Rt
Read the full judgment text of HCMC 1/2022 on BabelCite. This High Court CFI judgment was delivered on 26 August 2025.
1. This is the Judgment of the trial of the petitioner wife ( “W” )’s application for ancillary relief and of her summonses which raise issues on the beneficial interest of:
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HCMC 1/2022 [2025] HKCFI 3846 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MATRIMONIAL CAUSES NO 1 OF 2022 ____________________
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_________________ JUDGMENT _________________
A. INTRODUCTION 1.This is the Judgment of the trial of the petitioner wife (“W”)’s application for ancillary relief and of her summonses which raise issues on the beneficial interest of:
B. BACKGROUND B1. Basic family background 2.The respondent husband (“H”) and W were aged 42 and 38 respectively at the time of the trial. Both parties were born and raised in India. 3.H is the eldest of three siblings. The 1st intervener is his younger sister (“Sister”), and the 2nd intervener is his younger brother (“Brother”). The 3 siblings moved to Hong Kong in around 2002. 4.H and W married in April 2012 in India, and they separated in around 2020. 5.After the parties got married, W relocated to Hong Kong and lived with H’s family as part of a 3,000 sq ft multi-generational household located in the New Territories (“the Matrimonial Home”). The Matrimonial Home is owned by W’s father-in-law/H’s father (“Father”). 6.There is one child of the marriage, a girl born in 2013 (now aged 11) (“Daughter”). Pursuant to an order dated 15 September 2021, W was granted sole custody of Daughter. 7.H’s mother (“Mother”), Sister and Brother subsequently left the Matrimonial Home. Since then, Mother resides with H in a flat in the New Territories (“the 9A Flat”), while Father continues to reside in the Matrimonial Home with W and Daughter. 8.Sister was married in India on 23 November 2017. She lived with her husband in India until early 2018, when she returned to Hong Kong and lived in the Matrimonial Home. She subsequently moved to live in the 12D Flat with her husband. 9.Since October 2022, Sister has moved back to India. B2. Various companies 10.H has been working in the money transfer industry since about 2003, when he joined Father’s business. H subsequently started his own business in the same field. 11.In around 2010 and 2011, H set up __________________________ (“GECL”) which was subsequently re-branded to be known as ______________________________________ (“HH HK”) and ______________________ (“GCLHK”). There is no dispute that the shares in GCLHK and HH HK were initially held by Sister on behalf of H. 12.On 1 September 2013, Sister transferred 98.5% of the shares in HH HK back to H. H accepted that the remaining 1.5% interest in HH HK was a gift to Sister.13.When time went by, a number of subsidiary companies had been established under HH HK. 14.HH HK is a licenced payment service provider in Hong Kong. It, together with its subsidiaries, provides money remittance and foreign exchange services for businesses and individuals. 15.W joined HH HK in around April 2013, and worked there until April 2019. 16.In 2019, HH HK spun off its cash transactions operation to WIRE LTD. 17.WIRE LTD is a company incorporated in Hong Kong. It was formerly known as (“EMTL”), and only had its name changed to WIRE LTD in March 2019. It is a licenced money service business provider. Together with its subsidiaries (see below), WIRE LTD facilitates cross border payments, bank notes and foreign exchange transactions. 18.It is undisputed that Sister is the 100% legal owner of WIRE LTD.19.H and Sister are the directors of WIRE LTD. 20.WIRE LTD has had a number of subsidiary companies including:
21.SWYP was incorporated in UAE on 1 April 2020. Brother is the registered owner of 43% shares in this company. 22.xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx (“STH LTD”) was set up by H in October 2019. It was fully owned by H through XLTD (which is now known as BST) 23.BSP Limited was incorporated in India on 19 November 2020. Its shares are held by the 3rd Intervener (who is H’s maternal uncle) (1%) and the 4th Intervener (who is H’s best friend) (99%). B3. Family Loan Agreement 24.On 14 March 2019, H and Sister entered into a Family Loan Agreement (“the Family Loan Agreement”) (witnessed by W) which provided, inter alia, that:
25.Sister and H then entered into a “Family Loan Extension Agreement” dated 8 March 2021 (“the 2021 Extension Agreement”), under which they agreed to extend the due date for the repayment of the Sister Principal Amount to 13 March 2023. It was also agreed that all other terms and conditions of the Family Loan Agreement shall remain in full force and effect. 26.By “Family Loan Extension Agreement-II” dated 17 December 2022 (“the 2022 Extension Agreement”), the said due date of repayment was further extended to 13 March 2024. 27.By “Family Loan Extension Agreement-III” dated 8 March 2024 (“the 2024 Extension Agreement”), the loan repayment date was once again extended to 13 March 2025. 28.The 2021 Extension Agreement, the 2022 Extension Agreement and the 2024 Extension Agreement will be collectively referred to as “the Extension Agreements” below. 29.According to H, Sister had made a partial repayment of US$1,383,625.66 on 13 December 2023. B4. The 12D Flat 30.The 12D Flat was purchased in around August 2018 under the sole name of Sister. C. THE ISSUES 31.Parties have lodged an Agreed List of Issues, which apparently have been prepared with the well established principles as explained in LKW v DD (2010) 13 HKCFAR 537 in mind. 32.Even though the 2 legal teams have disagreements on the wordings (and the inclusion) of a number of issues, I do not think they really differ a lot on the substantive issues which this Court has to resolve. Their disputes are mainly on how to phrase the issues and whether some of them should be subsumed under some other issues. 33.I set out (and rearrange) the issues which will be considered by this Court in this Judgment as follows[3]:
D. CREDIBILITY OF WITNESSES 34.The principles for assessment of credibility and reliability of witnesses are trite (see, for example, Hu Lan v David Golden [2023] HKCFI 873 at [36]), and I do not think it is necessary to set out the matters to be considered in full here. 35.At this stage, I do not propose to discuss the credibility of all witnesses one by one. If necessary, I will consider their individual evidence under separate issues below. 36.However, I would like to express my general view on the credibility of H and W. 37.I regret to say that the credibility of H is particularly a problem in the present case. Although Ms Booth has tried to persuade this Court that H had not been able to recollect as well as before because of his medical condition, with greatest respect, that is not my impression of H. To me, H had been very sharp throughout the time when he was sitting in the witness box. He had been able to anticipate what W’s counsel was going to cross-examine him on, and gave his answers accordingly, in an attempt to avoid those forthcoming questions. He was also more interested in trying not to give answers which W’s counsel was looking for than to tell this Court the truth in relation to what he had been asked. The most vivid example that can be given is what H asked this Court in the course of his cross-examination:
38.As this Court reminded him right away, what he should do was not to second-guess what purpose W’s counsel wanted to achieve, but to tell the truth and nothing but the truth. Unfortunately, H apparently did not take heed of what the Court told him. 39.From what I observed, H did not have any real difficulty in understanding the cross-examination questions. He only used his “English ability” as an excuse. Whenever he was cornered by W’s counsel to the extent that he did not know how to answer his questions so as to suit his own purpose, he would ask counsel to repeat the questions so as to buy more time to think what to say. 40.In my view, all these are consistent with his attitude since the commencement of the divorce proceedings in the Family Court. This can be seen from the messages which H sent shortly after those proceedings had begun. Those messages were sent to _ (“SSP”), the then Chief Operating Officer of HH HK, whom H still trusted at the time. In those messages, H stated:
41.Therefore, I find that, generally speaking, H is not a credible witness. I would not accept his evidence lightly in the absence of documentary evidence in support. 42.W was a better witness, and generally I think she is more reliable and credible than H. However, she was not always truthful. The most obvious example is her evidence on the malicious emails[6]. I will come back to this later. 43.Having said the above, I do have to make it clear that even if a witness has not given truthful or reliable evidence on one matter, it does not necessarily mean that the evidence of such a witness on another matter must be equally untruthful or unreliable. It is particularly important for this Court to bear this in mind in the present case, when so many issues have to be resolved. E. DISCUSSION 44.Following the guidance given by the Court of Final Appeal in LKW v DD (supra), I would now firstly identify the assets of H and W. E1. Beneficial ownership of WIRE LTD (Issues 1, 2 and 5) E1.1 W’s case 45.It is W’s case that H is the beneficial owner of WIRE LTD. Her case may be summarised as follows:
E1.2 H’s case 46.H maintained that WIRE LTD’s beneficial owner is Sister but not him. In gist, it is his case that:
E1.3 Discussion 47.The law is trite. The starting position is that equity follows the law. There is a presumption that the beneficial interest follows the legal interest. The party who asserts that the beneficial interest of the property does not lie with the legal owner bears the burden of proving it. In other words, in the present case, W has to prove positively that there was an agreement between H and Sister at the time of the incorporation of WIRE LTD that Sister would be holding the company for H. 48.W’s difficulty in relation to this claim is that she cannot give direct evidence on the alleged agreement between Sister and H at the material time because W was not involved at all. Indeed, she was yet to be introduced to H at the time. 49.Be that as it may, it does not mean that W’s claim is bound to fail. This Court should still take into account all the relevant matters, in particular, the contemporaneous conduct of H and Sister (especially before the time the relationship between H and W turned sour), when deciding the matter. In this regard, I am of the view that the Court should bear the following matters in mind:
50.For the following reasons, I have come to the conclusion that W has failed to prove on the balance of probabilities that the beneficial interest in WIRE LTD is owned by H. 51.First, the most forceful factor which this Court should place weight on is the fact that when Sister in effect transferred the legal ownership of HH HK and GCLHK back to H in around September 2013 (i.e. after the HCA Action was concluded), she did not do the same as far as WIRE LTD was concerned. This is inconsistent with W’s whole case theory. There was no reason why WIRE LTD had to be treated differently if it was beneficially owned by H like the other 2 companies. Insofar as there is any suggestion that H intended to distance himself from WIRE LTD, it cannot hold water at all because of the fact that H was a director of WIRE LTD. 52.Second, although Sister’s evidence gave the impression that she did not know much about WIRE LTD’s business, for example, she had no business plan, she had not identified prospective customers, not considered revenue and expenses in the first year of operation, she could not recall the dates of some of the important company decisions, etc., I am of the view that these do not matter much because, after all, it cannot be disputed that Sister had to rely heavily on H in the running of WIRE LTD, and that does not necessarily mean that H is the beneficial owner thereof. Put it in another way, that is not enough to tilt the balance to such an extent that the Court could infer that H had beneficial ownership in WIRE LTD. 53.Third, the same logic applies to W’s argument that Sister was not involved in major business decisions of WIRE LTD. 54.Fourth, if WIRE LTD did not belong beneficially to Sister, there was no need to register her as a director at all, and it can be seen that, as a director, she had signed numerous audited financial statements of WIRE LTD. This step could have been avoided if she was not appointed as a director at all. The question is: If the only function for Sister was to hold WIRE LTD on H’s behalf, why was it necessary to appoint Sister as a director at all? 55.Fifth, W relied on numerous messages between herself and H in an attempt to show that she had been involved in the rebranding and re-structuring of WIRE LTD in 2018. Even if that is the case, I do not think that is inconsistent with Sister’s case that WIRE LTD is beneficially owned by her, because after all, this is a company owned by a member of the family. Given the close relationship among the family members at the material time, it is not surprising that H had also involved W. 56.Sixth, W submitted that H had clearly benefitted from keeping WIRE LTD in Sister’s name as it gave HH HK access to WIRE LTD’s DBS account with reduced risk. I do not think this argument would assist W, because:
57.Seventh, I do not accept W’s argument that WIRE LTD did not receive the annual fee of $96,000 from HH HK until 2019, as such payments are supported by documentary evidence such as the account statements in 2017 and 2018, and WIRE LTD’s annual financial statements from 2016 onwards. If H was the beneficial owner for both HH HK and WIRE LTD, there was no need for him to cause the annual financial statements to be prepared in such a way back in 2016. 58.Eighth, W referred to the account opening form of EMTL and drew this Court’s attention to the fact that, on the form, 2 email addresses had been provided by H, and both email addresses (one of which was “re********@****.com.hk”), it was said, belonged to H. It was therefore submitted that that shows that WIRE LTD was actually owned by H. This argument is not accepted because it is noted that the domain name of both email addresses belong to GECL. If both email addresses were exclusively used by H, there was no need for H to give 2 email addresses at all. 59.Ninth, W referred to an email dated 30 May 2013 issued under the name of H, and submitted that this email shows that H was the one using the email address of “re********@****.com.hk”. With respect, this argument is misconceived. That email account was printed after the words “Remittance Query”. That must be taken to mean that anyone who has query on remittance matters should send an email to that email account instead of to H directly. If anything, that tends to suggest that H is not the person who is primarily responsible to answer messages sent to that email address. 60.Tenth, it is not clear whether W maintains that H’s beneficial ownership in WIRE LTD is supported by his receipts of dividends from WIRE LTD, as this point was not made at all in W’s narrative affirmation nor in her closing submissions (but only in her reply submissions in response to the submissions made by Sister). In any event, this allegation is not made out because it is not supported by the audited financial statements of WIRE LTD. W submitted that H’s explanation on his receipts are not credible. However, the rejection of H’s evidence in this regard does not mean that the Court is bound to accept W’s oral evidence as to the nature of the payments, which is unsupported by documentary evidence. 61.W asked this Court to draw adverse inference against H for his failure to provide any contemporaneous documents as to the underlying purpose of the said payments to him. However, W should at least have established a prima facie case in this regard before the Court may consider drawing such inference against H. In my view, W has failed to do so. 62.Eleventh, W also relied on the fact that Sister did not withdraw any money from WIRE LTD. However, as pointed out by Mr Leung appearing for Sister, she was not cross-examined on this aspect at all. It is therefore unfair to Sister if this argument is allowed, given she has not been given any chance to explain in Court. 63.Twelfth, W further submitted that H’s injection into WIRE LTD (US$2.5 million and HH HK’s banknotes business) only makes sense if WIRE LTD belongs to H. However, given the fact that these companies are owned by members of the same family and the close relationship between H and Sister, I am of the view that one should not approach the matter from the angle of strict commercial sense. Furthermore, it should be noted that W accepted in Court that the Family Loan Agreement reflects a genuine transaction and that H had indeed lent money to Sister accordingly. That being so, there is actually no injection of funds by H into WIRE LTD. 64.Thirteenth, the same logic applies to H’s grant of the US$2.5 million interest-free loan to Sister. Strict commercial sense should not apply. 65.Fourteenth, talking about the Family Loan Agreement, I am of the view that it supports H’s case that Sister is all along the beneficial owner of WIRE LTD. This is because:
66.It must be borne in mind that W had signed as a witness to the Family Loan Agreement and she also accepted in Court that this is a genuine transaction. 67.Fifteenth, W relied on H’s email to his consultant (RD) dated 22 April 2019, with his “proposed company structure” under a holding company, and in such a structure, he showed himself as the ultimate 100% shareholder of WIRE LTD. H explained in Court that the email was sent after the Family Loan Agreement was made and at the material time he was considering the company structure in the event Sister could not repay the loan. This explanation is consistent with the fact that Sister had indeed not repaid the Sister Principal Amount at the time. 68.Sixteenth, W also relied on the fact that H was made director of the WIRE LTD’s subsidiaries in Singapore, Australia and New Zealand, and that he was also made the shareholder of Wire NZ. 69.As far as directorship of those subsidiaries are concerned, I do not think any argument can be made out of it. As aforesaid, Sister had to rely on H in the management of WIRE LTD. It is not surprising nor inconsistent at all for H to be named as a director of those companies. 70.Perhaps more can be said in relation to the shareholding of Wire NZ. H had denied that he was a shareholder as such. On the other hand, Sister claimed that it was a mistake that H had been registered as a shareholder, and those shares had been transferred back to WIRE LTD subsequently. These matters arouse concerns as to whether H and Sister had anything to hide. Having said that, I do not agree that these matters, even if they are looked at together with the other arguments made by W, would be enough for the purpose of proving W’s case. After all, an important matter which must be borne in mind is that Sister was all along the legal owner of WIRE LTD. Furthermore, Wire NZ had never commenced operation. 71.Seventeenth, I have not lost sight of the fact that some of the evidence given by H is not credible at all. For example:
72.Be that as it may, I do not think W should be taken to have proved her case by successfully discrediting H on some matters. In this regard, it should be borne in mind that it is not for H to prove that he is not a beneficial owner of WIRE LTD. 73.Eighteenth, I should make it clear that little weight should be placed on Father’s evidence, as it is demonstrated that he was willing to give evidence for the purpose of boosting W’s case even though he did not have knowledge on the matter. He had also tried to exaggerate his evidence. For example:
74.Nineteenth, neither would I place great weight on W’s oral evidence unless such evidence is supported by documentary evidence, as there are times when W was apparently not telling the truth (or at least not the whole truth) in Court. Further, “suspicion” is inadequate in proving a case. 75.To conclude, I hold that Sister is the beneficial owner of WIRE LTD and its subsidiaries (namely, Wire Australia, Wire NZ and Wire Singapore), and that WIRE LTD is not a financial resource available to H. 76.The declarations and orders sought by W by virtue of her Points of Claim filed on 7 July 2021 are therefore dismissed. E2. Extension of the Family Loan Agreement (Issue 3) 77.A brief background of the Family Loan Agreement and its extensions has been set out in Section B3 above. 78.As aforesaid, W does not take issue with the Family Loan Agreement itself. She accepts that this is a genuine transaction and that there was indeed a loan granted by H to Sister. 79.What W challenges are the Extension Agreements. 80.The Extension Agreements are similar. They basically provide that the due date for repayment of the Sister Principal Amount (or the outstanding amount, as the case may be) would be extended, and apart from that, the original terms and conditions in the Family Loan Agreement shall remain in full force and effect. 81.In W’s Points of Claim filed on 7 July 2021, she asked for an order that:
82.The aforesaid relief is claimed pursuant to section 17(1)(b) of MPPO which provides that:
83.Section 17(4) of MPPO further provides that:
84.The first question which this Court has to decide is whether the extensions of the repayment date of loan can be regarded as a “disposition” in the sense of section 17(1)(b) of MPPO. 85.In my view, it cannot be so regarded. 86.This is because the extensions themselves do not amount to disposal of any of H’s rights or assets. They only defer the time upon which H could exercise his rights (in requiring the transfer of the WIRE LTD shares). 87.This alone would be enough to dismiss W’s claim in this respect. 88.Even if I am wrong, I do not think this Court is able to find that the Extension Agreements were made for the purpose of keeping the WIRE LTD shares out of W’s reach so as to defeat her claim for financial provision. 89.W argued otherwise, by suggesting that there was no commercial reason at all for the Extension Agreements to be entered into, and that Sister had not provided any consideration. 90.However, as I have emphasised above, one has to bear in mind that the financial arrangements were made between 2 family members who are all along very close to each other. 91.Further, it is not right for the Court to look at the “commercial reason” of the Extension Agreements when there is equally no “commercial reason” for H to grant Sister such a large amount of interest-free loan for 2 years in the first place, which agreement was entered into under the witness of W who has no objection against it for the purpose of this trial. 92.That being the case, H’s conduct of entering into the Extension Agreements cannot amount to “gross and obvious” conduct which warrants an “addback”. E3. Alleged transfer of the family loan (Issue 4) 93.This issue raises the question of whether H has transferred the family loan / Family Loan Agreement to HH HK, and if so, whether the value of WIRE LTD should thereby be added back as conduct which the Court should have regard. 94.This issue is in fact not understood. 95.As pointed out by counsel for H, if the loan had been transferred to HH HK, it would have the effect of offsetting H’s director liability to HH HK. It would be treated as a receivable to HH HK and correspondingly would reduce H’s liabilities owed to HH HK. In other words, the net financial position of H would remain the same. 96.The transfer of the loan was also reflected in the audited statements reviewed by the single joint expert’s valuation expert, and thus factored into his valuation of WIRE LTD and HH HK, which W has accepted for the purpose of this trial. 97.In such circumstances, there is simply no room for W to argue for any “addback”. E4. Beneficial ownership of the 12D Flat (Issues 6 and 7) 98.W’s pleaded case on the 12D Flat may be summarised as follows:
99.On the other hand, it is H’s case that:
100.Sister’s pleaded case is similar to that of H, save that the followings have been added:
101.It can therefore be seen that the crux of the matter was: why was the 12D Flat registered under Sister’s name – was it because it was a wedding gift to her given by H, or because she was asked to hold the flat as a trustee only, for the purpose of avoiding extra stamp duty? 102.Having considered the evidence and the submissions carefully, I find on the balance of probabilities that Sister was indeed only holding the 12D Flat on trust for H and W who are the real beneficial owners thereof, and that the flat was not a wedding gift as alleged by H and Sister. The reasons are as follows. 103.First, Sister admitted that on as late as 19 July 2018, she was still asking Estate Agent Kit to look for suitable flats for rental purpose. This is inconsistent with her pleaded case that Father had told her in around end of June/early July 2018 that she should consider buying an apartment of around HK$6 million as wedding gift. 104.Second, according to the evidence of Sister’s husband, Sister did not tell him about Father’s promise until July 2018. However, Sister said Father had already made his promise in as early as November 2017 (if not earlier, as Sister had also mentioned in her evidence that the promise was made in mid-2017). That being so, it is incredible that, if there was indeed such a promise, Sister would withhold it from her husband for such a long time, particularly when her husband was about to move over to Hong Kong, and accommodation must be one of the matters which the couple would have to consider carefully. 105.Third, according to Sister’s pleaded case, Father told her in end of June/early July 2018 to look for a property which costs around $6 million. Then Father “renege on his promise” on 25 or 26 July 2018 because, it was said, he had spent his money on the renovation of the Matrimonial Home. However, it is noted that such renovation started in early 2018. Father’s alleged change of mind within such a short period of time long after the commencement of the renovation does not make sense. 106.Fourth, W’s case is consistent with H’s own message sent on 20 July 2018 to W that he had proposed to Sister that he would buy a flat which could be rented to her and that Sister had agreed to this proposal. 107.In this regard, Sister and H relied heavily on a message which was sent by Sister on 20 July 2018 at 12:09pm to Estate Agent Kit. It reads:
108.It was argued by H and Sister that when this message was sent, H had not brought up the topic of “buying a flat for rental to Sister” with W. Therefore, it was said, Sister’s instruction to Estate Agent Kit could not be caused by anything proposed by H. I reject this submission because:
109.Fifth, Sister said that while H had asked her in July 2018 whether she would be interested in renting an apartment from him, she had rejected H’s proposal because H’s proposed rent was as high as HK$30,000 per month. 110.I do not accept Sister’s evidence that H had proposed a monthly rental of HK$30,000. This is because, given the fact that her then monthly salary was only HK$20,000, and that his husband was yet to have a job, it is inherently improbable that H would have proposed such a high rent to her. This is particularly when it cannot be disputed that the relationship between H and Sister was always very close. I do not believe that H would have made a proposal which would bring great financial burden on Sister’s shoulder which she might or might not be able to afford. 111.Indeed, even Sister admitted in Court that:
112.H explained that HK$30,000 was not particularly high since he was looking for a job for Sister’s husband, and the job would provide him with a monthly salary of around HK$60,000. Again, this evidence is rejected. The fact remains that when H made the rental proposal to Sister, such a job was not secured. 113.Furthermore, if H considered that the monthly rental of HK$30,000 should be affordable for Sister and her husband in light of the prospect of him getting a lucrative job for Sister’s husband, it would be strange to the extreme that H would have concealed such an important information from Sister and her husband at the time. However, it can be inferred that they knew nothing about it[11]. 114.In such circumstances, it is incredible that H would have made the alleged proposal to Sister. 115.Sixth, H’s discussion with Estate Agent Kit on loan agreement, promissory note and power of attorney also supports W’s case that the 12D Flat was held by Sister on trust. 116.In this regard, it is H’s pleaded case in his Points of Defence that:
117.It can be seen that the pleaded purpose for the loan agreement, promissory note and/or power of attorney was to protect H’s own interest because he would be the one who would pay for the property which would be registered under W’s name. 118.However, Estate Agent Kit’s WhatsApp messages to H (by which the estate agent advised H on the use of the said documents) do not support H’s case. Estate Agent Kit stated on 30 July 2018:
119.It can be seen that Estate Agent Kit was talking about transferring the flat back to W after “7 years” (it is inferred that that means when she obtained her Hong Kong permanent resident status). If the flat was already registered under her name (such that it was necessary to protect H’s beneficial interest in the flat by asking W to execute the aforesaid documents), then it made no sense for the estate agent to say “change back to your wife”. 120.Furthermore, the discussion between H and Estate Agent Kit appeared shortly after H was informed by the estate agent that since W was not a Hong Kong permanent resident, 30% stamp duty would be payable. H then said that, in that case, he “think[s] need to change” “The property name”, which is inferred to mean that “in that case, he thought it was necessary to change the name of the buyer of the property”. 121.It is therefore more likely than not that the need for “loan agreement, promissory note and/or power of attorney” arose because W’s name could not be used as the buyer of the 12D Flat. 122.Moreover, the truth can be even more clearly seen by reference to the WhatsApp messages exchanged between H and W on the same day. 123.Shortly after H received the aforesaid messages from Estate Agent Kit, H forwarded the same to W, and then W replied immediately:
124.If the documents were signed for the protection of H’s interest (as against W’s legal title), then it was really not up to W to say that it is a waste of money for such documents to be executed. 125.Last but not least, H said in court that the documents were necessary because W wanted to give him a sense of security. In my view, this is a blatant lie which H made it up when he was in the witness box. The reason is simple: As aforesaid, by the time the matter related to these documents was brought up, it was already known that the property would not be purchased under her name because of the extra stamp duty payable. 126.Seventh, according to H’s case, he was always only thinking about buying one flat for investment purpose, and the other flat (the 12D Flat) was not bought by him as such. He only paid the deposit thereof for Sister as a wedding gift. 127.This is inconsistent with what H and W discussed on 3 August 2018 by WhatsApp. On this day, H informed W that the bank would charge HK$18,000 for a pre-approved loan of $18 million. W then said:
128.It is apparent from the above messages that H was planning to buy more than one property, otherwise W would not have tried to persuade H to get only one property. Again, this is more consistent with W’s case. 129.Eighth, on 5 August 2018, W sent another message as follows:
130.If the relationship between H and Sister in relation to the purchase of the flat was only donor and donee, why was there any need to have an agreement signed between H and Sister? 131.On the other hand, this would be more consistent with the scenario where Sister was holding the 12D Flat for the benefit of H and/or W. 132.Ninth, on 5 August 2018, H sent the following WhatsApp messages to W:
133.There is no evidence as to why H did not want Father to know that he had purchased landed property/properties. However, that is not the point. If H was telling the truth that he was actually only standing in Father’s shoes in giving Sister a substantial wedding gift according to Indian tradition, there is no reason why H had to specifically ask W not to discuss anything about it because this, according to Sister and H, was a matter which was discussed in the family (even if Father was not told about this beforehand). 134.Tenth, I do not accept H’s argument that if Sister was indeed holding the 12D Flat on trust, then there was a conspiracy to defraud the tax authorities of the HKSAR, and as a result the Court would not grant any equitable relief. This is because, as pointed out by W’s counsel, W’s case was that Sister was also holding the 12D Flat for the benefit of H. If this Court accepts H’s argument and refuses to recognize that the 12D Flat is part of the family asset, H would be benefitted from this illegality argument even though he was part of the arrangement (indeed, he was the one who started it). That cannot be right, and this Court would not allow this to happen. 135.Eleventh, this Court has been reminded that when H texted Estate Agent Kit on 29 July 2018, he stated that:
136.It was therefore argued by H that he had indicated his intention that the 12D was a gift to Sister. 137.I do not accept this argument. 138.In my view, the Court should not place too much weight on the exact wordings of the messages as such, as if they are statutes. 139.Twelfth, this Court has not lost sight that W herself had described the 12D Flat as “[Sister]’s property” even after she had separated with H. However, as aforesaid, I do not think the Court should place too much weight on such wording, which is also compactable with, for example, “the property used by Sister”. In my view, the overall circumstances which I have analysed above are much stronger indicators which show where the beneficial interest lies. 140.Thirteenth, it has been argued that if it is indeed true that the 12D Flat was owned by H and/or W beneficially, then once these proceedings started, there is no reason why [Sister] should still continue to pay for the mortgage instalments, as there is always a risk that the Court would determine against her case. 141.That may be so. However, when the Court considers the conduct of the parties, I am of the view that much more weight should be placed on the conduct of the parties at the time when disputes were yet to arise. 142.Fourteenth, it was argued by Sister’s counsel that there could not be any common intention constructive trust among H, W and Sister because there had never been any direct communication between W and Sister in relation to the purchase of the 12D Flat. 143.With greatest respect, this argument is misconceived. In the circumstances of the case, I have no doubt that H had the authority to discuss the matter in relation to the 12D Flat with Sister on behalf of W. 144.Fifteenth, I have not lost sight of the fact that the trust arrangement is not evidenced by any document. 145.However, I do not think that matters. After all, this is an arrangement within the same family. More importantly, it is evident that H and Sister have always had a very close relationship. That explains why even though H initially had made enquiries with Estate Agent Kit on the preparation of such documents, they were not prepared accordingly for costs concern. Indeed, even W persuaded H not to incur costs on those documents. 146.Sixteenth, this Court had been reminded that Sister and her husband had paid $250,000 expenses on fixtures and furniture used in the 12D Flat, as well as management fees and government rates. However, I do not think this factor would be enough to tilt the balance. After all, since Sister and her husband were living in the 12D Flat, it is not surprising for them to bear such expenses. 147.Seventeenth, Sister’s counsel took a pleading point, and submitted that:
148.With greatest respect, this point is misconceived, for W has always pleaded that the beneficial owner(s) was/were H and/or W. 149.Eighteenth, I do not accept H’s case that nothing was agreed upon between H and W on the purchase plan on 20 July 2018. From the WhatsApp messages, it can be inferred that H must have accepted W’s suggestion that 2 flats be bought, as H stated that:
150.It can be seen that H must be talking about 2 different flats at that time, in the space of 7 minutes. 151.Finally, Sister’s counsel argued that:
152.With respect, this submission was made in disregard of the undisputed fact that the relevant communication with Sister in relation to the purchase of the 12D Flat was done exclusively by H. Indeed, this feature was made use of by Sister’s counsel himself in his argument (see above). W has also explained in Court (which I accept) that the mortgage application was coordinated by H. In these circumstances, I do not think much argument could be made out of the rebate. 153.To conclude, I find that the 12D Flat has been held under Sister’s name on trust for H and W. For the avoidance of doubt, I should also clarify that, in my view, it was intended all along that both H and W would be the beneficial owners despite the fact that, but for the stamp duty issue, the 12D Flat would have been registered under W’s sole name. This is because:
E5. The alleged dissipation of HK$4.75 million via SWYP (Issue 10) 154.This issue asks the question of whether H has dissipated HK$4.75 million through SWYP, and whether such a sum should be “set aside” under section 17 of MPPO and/or added back. 155.Although Mr Marwah for W has confirmed at his oral opening submissions that he is not seeking to “set aside” anything in this regard under Issue 10, he has still referred to this issue in his closing submissions. Hence, for the sake of completeness, I will deal with this issue according to its original form. 156.I regret to say that there are quite a number of problems in relation to W’s claim in this regard. 157.The first problem arises from a pleading point which in my view is fundamental and fatal to W’s claim. 158.On 31 May 2021, Her Honour Judge Melloy ordered, inter alia, that the beneficial ownership of “shares of and in [SWYP] or any part or portion thereof” be tried as preliminary issues. W was also directed to file and serve her Points of Claim for the said purpose. 159.In W’s Points of Claim filed on 7 July 2021, one of the reliefs claimed was:
160.Despite the inclusion of such a relief, not only the figure of HK$4.75 million was nowhere to be found in the body or the prayer of the Points of Claim, there is also nothing in the Points of Claim which amounts to any allegation that H had ever dissipated his funds through SWYP. 161.In this regard, it must be emphasised that, once the Court has ordered the parties to matrimonial proceedings to file and serve Points of Claim, Points of Defence and Points of Reply, these documents will form the pleadings in relation to the particular issue(s) raised. The general principles on pleadings will apply. I do not think I have to quote any authority other than Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663, in which Chief Justice Ma reminded at [21] thereof that:
162.It may well be that W was only aware of the figure of HK$4.75 million upon her perusal of a letter dated 9 September 2022 sent by H’s solicitors to her solicitors (i.e. more than a year after she filed her Points of Claim). However, that would not make it permissible for her to rely on an unpleaded issue. If she so wished, she should have applied for amendment of her pleadings, which she did not. 163.Her claim to “set aside the dissipation” should therefore be dismissed for this reason alone. 164.Even if W is allowed to rely on this unpleaded issue, this claim is bound to fail. 165.Firstly, it appears from W’s section 7 MPPO Affirmation that the basis of her claim is that “[HH HK] put HK$4.5 million into [SWYP]” and that “no logical reason has been provided as to where that amount has disappeared to”. 166.However, it is trite that:
167.Therefore, the sum of HK$4.75 million (or HK$4.5 million) cannot be the subject matter of a section 17 application. 168.Secondly, W submitted that the timing of H’s investment into SWYP is suspicious. However, as pointed out by H’s counsel, since H has not been cross-examined on such timing, W should not be allowed to rely on this argument. 169.Thirdly, I do not think it is correct for W to describe the HK$4.75 million as an investment, because it was recorded as a receivable amount due to HH HK (see SWYP’s audited financial statements for the period of 18 months ended 30 September 2021 in which a sum of AED2,120,159 was recorded as a “borrowing” from HH HK). 170.Fourthly, even if there was any “dissipation” as such (which I do not think so), such dissipation was related to HH HK’s asset, which apparently would have an impact on the value of HH HK. However, it is noted that the single joint expert engaged by the parties had come to his conclusion on the value of HH HK, having taken into account the aforementioned SWYP’s audited financial statements, and more importantly, W has for the purpose of this trial accepted the expert’s valuation. That being so, I do not think it is now still open to W to query the loan of HK$4,750,000. 171.Fifthly, W admitted in her oral evidence that she could not challenge the expenses incurred by SWYP as illegitimate or fake, nor could she challenge the financial statements of SWYP which had been audited. As such, there is no basis for W to allege that there was dissipation or hiding of funds. 172.It follows that W’s submission that there should be “added back” of HK$4.75 million should also be rejected. There is simply no basis for W to allege that there was any “obvious and gross” misconduct on the part of H. E6. Beneficial ownership of BSP Limited (Issues 11 and 12) 173.The issue here is whether BSP Limited belongs to H or the 3rd and 4th Interveners. 174.It is undisputed/indisputable that:
175.It is also indisputable that the BSP Services Agreement provides, among other things, that:
176.Mr Shah has not been called to give evidence at the trial. 177.It is the common case of the 3rd and 4th Interveners that the 4th Intervener has been the sole beneficial owner of BSP Limited since November 2021, and that the 3rd Intervener only held 100 shares in BSP Limited as his trustee. That being the case, the 4th Intervener’s evidence has to be scrutinised closely. 178.As far as the 4th Intervener’s evidence is concerned, I regret to say that many parts thereof do not make sense. I also observed that he always answered questions by asking a question, rather than answering the cross-examination questions directly. For example, he refused to answer the question of whether the BSP Services Agreement was important to him. It was only after quite a few follow-up questions that he eventually stated that the said agreement was not important. This is an extremely strange answer because this agreement represented the only business project of BSP Limited which, he alleged, was wholly owned by him beneficially. 179.The 4th Intervener’s evidence is also self-contradictory on very important matters. For example, in paragraph 11 of his 1st Affirmation, he stated that:
180.However, in his oral evidence, the 4th Intervener told this Court that:
181.When the 4th Intervener was cross-examined on this discrepancy, he blamed the translation. 182.I do not accept his explanation which is totally unbelievable. 183.Hence, generally speaking, I do not accept his evidence. 184.It is my finding that H is the beneficial owner of BSP Limited. 185.My reasons are as follows. 186.Firstly, the following matters, when they are considered together, clearly point to the conclusion that BSP Limited was H’s company:
187.Secondly, as aforesaid, after Mr Shah’s employment with HH India was terminated in around November 2021, he was replaced by the 3rd Intervener as director of BSP Limited. Mr Shah also transferred 8,900 shares in BSP Limited to the 4th Intervener on around 22 November 2021, and the remaining 100 shares to the 3rd Intervener (who at the material time was employed by HH India) on around 16 November 2021. This supports W’s case that Mr Shah was only a nominee of H, otherwise there was no reason why, upon termination of his employment, he would have to cut his connection with BSP Limited. 188.Thirdly, the 4th Intervener pleaded that when Mr Shah left his employment with HH India, Mr Shah “was keen on closing [BSP Limited]” but the 4th Intervener “persuaded him to sell the shares”. 189.The said plea was not covered by the 4th Intervener’s affirmations or oral evidence at all. Hence, there was no evidence explaining the circumstances under which Mr Shah’s shares in BSP Limited were transferred to the 3rd and 4th Interveners. 190.Fourthly, even if the 4th Intervener did include his plea in this regard in his affidavits, such evidence would be rejected. This is because such evidence does not sit well with his own admission that he did not ask for a copy of the BSP Services Agreement until October 2023 when W served a section 17 summons on him. If the 4th Intervener was the real beneficial owner of BSP Limited as such, it is beyond imagination that he would not have asked for a copy of the BSP Services Agreement right away given such an agreement represented the only business venture of BSP Limited. 191.Fifthly, the 4th Intervener stated in Court that he only knew that BSP Limited was obliged to work for HH HK exclusively after 3 October 2023 when he obtained a copy of the BSP Services Agreement. If that is so, it is inherently improbable that he has been a beneficial owner of BSP Limited as alleged. 192.Sixthly, I do not accept the arguments made by H and the 4th Intervener that the joinder of the 4th Intervener was made by W with ulterior motive. 193.I therefore make a declaration that H was at all material times and remains the beneficial owner of 100% of the shares in BSP Limited which are held by the 3rd Intervener and the 4th Intervener on trust for him. E7. The INR51,635,727 transferred to BSP Limited (Issue 13) 194.The issue here is whether the total sum of INR51,635,727 (approximately HK$4,847,036) transferred to BSP Limited was dissipated by H and whether the same should be added back to the matrimonial pot. 195.The sum of INR51,635,727 was made up by 2 parts:
E7.1 INR49,935,727 196.The aforesaid figure of INR49,935,727 is shown in the Annual Return of BSP Limited for the period ended 31 March 2022 (“the 2022 BSP Annual Return”) as “GST Turnover”. W’s counsel accepted that this represents BSP Limited’s revenue during the period covered by the said Annual Return. 197.W’s counsel pointed out that, while the audited reports of BSP Limited indicate that the total revenue in 2021 and 2022 was under INR38.5 million, the March 2022 tax return indicates that the revenue in that year alone was INR49.9 million, (i.e. INR11.5 million more). It was therefore said that there was a discrepancy. 198.However, even if that is the case, it is not understood how it could be said that the said sum of INR49,935,727 was “dissipated”. The expenses have been recorded in audited accounts. W has not proved any basis upon which this Court may find, despite the fact that the relevant accounts have been audited, that the revenue amounts are false or are made up for the purpose of “dissipation of H’s funds”. 199.Furthermore, the single joint expert who had been appointed to assess the value of BSP Limited had had sight of all those documents, and he was clearly aware of the so-called “discrepancies”. He had explained the “discrepancies” in the following way:
200.In these circumstances, nothing can be made out of the so-called discrepancies. 201.It should of course also be borne in mind that the revenue amounts were supposedly paid by HH HK (which was BSP Limited’s only client). Those monies do not belong to H at all. 202.To conclude, W has failed to establish that there was any misconduct on the part of H in this regard. E7.2 INR1,700,000 203.In relation to the loan of INR1,700,000, it should be pointed out immediately that it is regrettable that this claim in the entirety of the sum of INR1,700,000 is made, because, in HH India’s audited report for the period ended 31 March 2021 (the report from which the figure of INR1,700,000 was obtained), it can be seen right below the line of “17,00,000” that a sum of “14,00,000” had been repaid, and the outstanding amount owed by BSP Limited was only “3,00,000”. In other words, if any, the claim could only be no more than INR300,000. 204.The said sum of INR300,000 was classified as “short term borrowing” and can still be seen in BSP Limited’s audited report for the period ended 31 March 2022 as such. However, this sum was no longer there in BSP Limited’s audited report for the period ended 31 March 2023, and there was no figure shown under the item “short term borrowing”. It can therefore be inferred that this remaining loan of INR300,000 had been fully repaid. 205.W’s claim in relation to the sum of INR1,700,000 must therefore fail. E8. The alleged dissipation of HK$3,545,000 & HK$3,950,000 (Issue 14) 206.This concerns the question of whether H has dissipated a sum of HK$3,545,000 as HH HK’s IT expenses and a sum of HK$3,950,000 as HH HK’s marketing / branding expenses for 2021, and whether such sums should be added back. 207.The easiest way to explain W’s argument in this respect is to quote the following paragraphs from W’s closing submissions:
208.I must say at the outset that the claims here seem to me to be quite arbitrary. Take the marketing expenses as an example. W has adopted the average of the expenses in 2019 and 2020 (HK$0.83 million), treated it as the reasonable or acceptable level of expenses, and then claimed that the difference between this average figure and the 2021 figure (HK$3.545 million) is the “abnormal” figure which had been “hidden”. That would necessarily mean that W has no complaint against the 2020 figure (HK$1.48 million). If that is so, then why shouldn’t the claim be only HK$3.26 million (HK$4.74 million – HK$1.48 million)? 209.In any event, these claims must be rejected for the following reasons. 210.First, the most fundamental problem with W’s claims here is that the expenses were incurred by HH HK but not H himself. 211.Second, insofar as it is said that there is no commercial sense for H to incur so much expenses for HH HK, this matter has already been raised by the single joint expert who has expressly dealt with the same in the valuation report. Most importantly, he has not commented that the IT expenses or the marketing expenses had been incurred improperly. 212.Third, having taken into account the alleged unreasonable IT and marketing expenses, the single joint expert has come up with a figure as the value of HH HK which W has accepted for the purpose of this trial. In my view, W’s attempt to “add back” the IT and marketing expenses is equivalent to challenging the valuation of the single joint expert. This is not a course open to her now. E9. The alleged dissipation of HK$4,750,000 via STH LTD (Issue 15) 213.This Court is asked to resolve the issue of whether H has dissipated HK$4,750,000 through STH LTD, and whether such a sum should be added back. 214.In gist, it is W’s case that:
215.In her 16th Affirmation, W had the following to say at paragraph 54:
216.It can therefore be seen that the “investment” was actually made by HH HK, rather than H himself. 217.Furthermore, as it has been made clear by H’s solicitors in the said letter dated 9 September 2022 (which was the very basis of W’s claim in relation to this amount of HK$4.75 million), the money was actually not an investment but a “receivable”. 218.Moreover, W has accepted in court that, according to the statements which she had been provided, the expenses incurred by STH LTD were legitimate. With that evidence, it is not open to W to maintain her claim that the sum transferred from HH HK to STH LTD was “dissipated” in the sense that it was “hidden” by H. 219.To conclude, there should not be any “adding back” as claimed by W. E10. Judgment debt of AED8,003,214.49 owed to H (Issue 17) 220.It is undisputed that, on 16 March 2021, the Court of Cassation in Dubai granted judgment against a MM in favour of H for a sum of AED8,003,214.49 (“the Dubai Judgment Debt”). MM’s appeal to the Dubai Court of Appeal had been dismissed on 28 December 2022. 221.W contended that the full value of the Dubai Judgment Debt should be counted as part of H’s asset, on the basis that H has obstructed the Court and W to get a full picture of the value of this asset. 222.On the other hand, H stated in the Scott Schedule dated 28 June 2024 that there is little to no prospect of recovery of the Dubai Judgment Debt from MM. H therefore suggested therein to write off the judgment debt entirely from the family assets. 223.The position has since then become clearer by virtue of further discovery made by H shortly before the commencement of the trial:
224.The result of MM’s application to stop the selling process is not apparent from the court documents produced. H’s counsel referred this Court to page 842 of bundle E4 and alleged that MM’s request has been allowed. However, the alleged content cannot be found on the page. 225.On the other hand, according to a letter issued by H’s legal representative in Dubai dated 16 December 2023, MM’s application had been rejected by the Dubai Court, and as a result, H’s lawyer had applied to the Dubai Court to restart the auction of MM’s Landed Property. At the time of the letter, the lawyer was waiting for the Dubai Court’s approval to continue with the sale process. 226.Since no reason has been suggested by anyone as to why the Dubai Court would not allow the resumption of the sale process of the said property (which had been halted solely because of MM’s objection that has now been rejected), I find that it is more likely than not that H would be able to recover part of the Dubai Judgment Debt accordingly from such a sale. I assess the recoverable amount as AED1,170,000 (AED2,670,000 – AED1,500,000), which is equivalent to around HK$2,486,250[16]. 227.According to the said letter dated 16 December 2023, while an execution proceeding had been filed on 28 December 2022 against MM for his arrest and for attachment of his bank account in order to recover the Dubai Judgment Debt, the bank had replied to the court that there was no money in the MM’s account. 228.I therefore find that the value of the Dubai Judgment Debt should be HK$2,486,250. 229.I do not consider it appropriate to take the full value of the Dubai Judgment Debt for the purpose of this trial given the evidence obtained. I also reject W’s submission that H had failed to give full, frank and timely disclosure of the Dubai Judgment Debt, since it is evident that H had indeed referred to his potential claim against MM back in October 2020. The only complaint which W may make is that H failed to inform W and this Court upon the issuance of the “Final Ruling” in December 2022. However, the fact is that H did make the disclosure in the Form E which he filed subsequently (even though it was already in December 2023). E11. Jewellery and valuable personal items (Issue 17) 230.H alleged that W has kept jewellery and valuable items which she has failed to disclose. H believed that she has HK$1.75 million worth of jewellery, as well as his personal watches, gold chains, bracelets, rings and gold bars which worth HK$800,000. 231.In H’s reply closing submissions, all he could say was that since W had lied on other occasions, her explanation given in court should not be accepted. Apart from that, H could not put forward any further argument to prove his case in this regard. 232.Insofar as it is H’s case that W is currently keeping some jewelleries owned by Mother and Sister, it is up to them to sue W for the recovery of the same. Those claims are therefore bound to fail here, not to mention that H had failed to produce a single message from Mother or Sister which chased W for the return thereof. Neither did they give any witness statement in support of such claims. 233.On the other hand, W’s arguments and evidence are much stronger:
234.I therefore reject H’s claim. E12. H’s liabilities (Issue 18) 235.Under this issue, I will consider a number of H’s alleged liabilities which W does not accept. E12.1 The purported loan from Mr JGS 236.H alleged that he owed Mr JGS a sum of HK$2 million. He explained that this loan was for the purpose of financing his purchase of the 9A Flat. 237.This loan was purportedly supported, among other things, by a loan record signed by Mr JGS on 11 April 2019, and it was said that the loan was drawn down in cash on the same day. 238.H also produced the following WhatsApp messages in support of his case. In those messages, he stated:
239.In reply, the other side simply stated “Ok”. 240.H explained that he has spoken to Mr JGS and that the message was the only written proof which he had of the loan. 241.H also produced a voucher dated 11 April 2019 in support. 242.I do not accept H’s evidence. 243.His explanation that he had received a loan from HH HK to purchase the 9A Flat and that the loan from Mr JGS was used to repay the loan from HH HK is incredible:
244.The WhatsApp messages do not appear to support H’s case that he was asking Mr JGS for a loan at all. I do not believe H’s evidence that he had had a conversation with Mr JGS beforehand. 245.Neither would I place weight on the subsequently-added comments at the right-most column of the account statements, as they are all self-serving. H even accepted in court that those comments may be wrong. An obvious example is the payout of HK$3.2 million by HH HK to H. While it was stated in HH HK’s letter dated 26 March 2019 that it was an annual bonus, it was remarked in the comments column against the same amount dated 28 March 2019 as “Loan taken Property Purchase […]”. 246.I therefore will not take this alleged liability into account when I calculate the value of family assets. E12.2 The purported loan from NMG LTD 247.In H’s 1st Form E dated 24 June 2020, he claimed that he owed NMG LTD US$2.5 million. This case was maintained in his 2nd Form E dated 18 February 2022 and his Schedule of Assets dated 16 September 2022. According to H’s internal vouchers, this sum was borrowed on 26 August 2019 (US$2.2 million) and 28 August 2019 (US$300,000). 248.However, in H’s 3rd Form E dated 21 December 2023, the debt owed to NMG LTD was increased to US$4.7 million, equivalent to HK$36,723,685 (after taking into account a repaid sum of US$300,000). It is alleged that H had mistakenly omitted to mention in his earlier Form Es another loan granted by NMG LTD on 4 January 2019 in the sum of US$2.5 million. 249.He explained in his Answers dated 5 October 2020 and 22 February 2024 that the loans obtained from NMG LTD in August 2019 were for the purpose of repaying the funds (US$2,502,230 (HK$19,394,284.28)) which were borrowed from HH HK for the purpose of lending to Sister (i.e. the Sister Principal Amount). 250.I do not accept H’s case on this liability nor his explanations. 251.Firstly, by any standard, US$2.5 million is a lot of money. It is inconceivable that H would have forgotten to mention such a large amount of debt in his Form E if such loan really existed. This is particularly incredible if H’s litigious attitude in these proceedings is taken into account. 252.Secondly, H alleged that no loan agreement had been signed at all for the alleged loans. It is incredible that such large loans were made without loan agreements. 253.Thirdly, in H’s Answers, he alleged that even the terms of repayment had not been settled. Again, this is incredible, if those were really loans. 254.Fourthly, as explained above, I would not give weight on the “comments” which were entered in HH HK’s account statements as they are self-serving. 255.Fifthly, H had not produced NMG LTD’s account statement until May 2024, and even then most of the narratives had been redacted. 256.Sixthly, when he was cross-examined by H’s counsel as to why he had to redact the statements, he alleged that it was because he had not sought consent from his client. However, that explanation is contradicted by another document in relation to NMG LTD’s account, which was unredacted. 257.Seventhly, when H was asked why he did not disclose the “Know Your Client” documents in relation to NMG LTD, he explained in court that it was because he was in a dilemma in that he did not know whether the documents would end up be disclosed to the public. However, when he was asked to clarify on this, he admitted that that reason was not in his mind at the time of non-disclosure. In my view, H is simply the sort of witness who would say whatever he could think of to defend his own position without caring whether such evidence is the truth or not. 258.To conclude, H has failed to establish that he owed NMG LTD the alleged sum of US$4.7 million. E12.3 The purported loan from Mr AK 259.H alleged in his 1st Answers dated 5 October 2020 that:
260.I do not accept H’s evidence. 261.Firstly, it is inherently improbable that a large loan of the sum equivalent to more than HK$17 million would not be backed up by any written loan agreement. Even though H alleged that Mr AK is his close friend, he also accepted that Mr AK is a pure businessman, and would not lend H money without benefit[17]. 262.Secondly, H’s evidence on this alleged loan is self-contradictory:
263.H alleged that he could not recall clearly because he had had a few loan agreements with Mr AK. However, that actually reinforces my view that if there were indeed loan agreements as such, H and Mr AK would have put them down in writing. 264.Thirdly, I agree with W’s counsel that H’s evidence on profit sharing with Mr AK is more consistent with the latter being an investor rather than a lender of a personal loan to H. This is supported by H’s own record dated 2 September 2018 in which there was a description of “total investment by [AB] and Me”. If Mr AK was purely a lender, there was simply no need for his name to be mentioned there. 265.Fourthly, H alleged that, after the 1st extension of time of repayment, the due date was December 2020. If that is the truth, then it is unbelievable that, 4 years since then, there was not a single letter or written message from Mr AK chasing for repayment. 266.Even if H had lost all his data in his mobile phone as alleged, given his alleged close relationship with Mr AK, it should not be difficult for him to ask for a copy of such message(s). I do not accept that the email dated 16 January 2023 issued by NMG LTD to him was related to the alleged loan as it did not say so. Further, as mentioned, the email was issued under the name of NMG LTD rather than Mr AK himself. Even if Mr AK is the beneficial owner of NMG LTD, I do not think Mr AK, a “pure businessman” as described by H, would have mixed up his own capacity when he issued that email. 267.Fifthly, H admitted that Mr AK had paid him a sum of US$246,997 on 5 September 2018, and that this sum was related to PIE. That is totally inconsistent with his case that he was owing Mr AK money at the material time. 268.Sixthly, while on one hand, it was alleged by H that “H’s Form E lists the loan to (sic) [Mr AK] as a total of AED8 million. This corresponds to the amount invested in [PIE]”[18], H also alleged that he had borrowed AED8 million from HH HK for the same purpose[19]. Again, his case was contradictory. 269.To conclude, I do not accept that H is indebted to Mr AK as alleged. E12.4 The purported loan from HH HK 270.H alleged that he owed a sum of HK$8,538,789.25 to HH HK as on 13 December 2023[20]. 271.W relied on a number of reasons to argue that the Court should not take this alleged amount of liability into account. To summarise, it was said that:
272.H’s counsel argued that:
273.I am of the view that, since H is the CEO and 98.5% shareholder of HH HK, he has all along been at liberty to withdraw money from HH HK whenever he wished. The only constraint on the withdrawal is, of course, the financial circumstances of the company at the time of withdrawal. 274.Be that as it may, if he had indeed taken money out of HH HK as loans, there is no reason why such liability should not be taken into account when his net assets are ascertained. 275.I would tend to think that the figures and the original descriptions of the entries in the HH HK’s account statements are accurate, even though I maintain that the comments which were added subsequently in the right-most column thereof are unreliable and as to which I would not give any weight. 276.The “year end reversals” as shown in the account statements in fact support my finding that the figures in the HH HK’s account statements are accurate. Take 2018 as an example. On 31 December 2018, it was recorded that H owed HH HK the sum of HK$16,880,326.39. Then on the same day, there was a credit entry for a sum of HK$19,585,000. The balance thus became a positive one, in the sum of HK$2,704,673.62. On 2 January 2019, there was a “reversal of voucher” in the sum of HK$19,585,000 (i.e. identical to the credit amount on the previous working day), and as a result, the outstanding amount which H was indebted to HH HK on 2 January 2019 rose to HK$16,880,326.39 again. It is obvious that H was manipulating the entries so as to achieve the purpose of bringing down the 2018 year end balance in his account, and as a result, no loan was recorded to be owing from H to HH HK as at 31 December 2018 in HH HK’s audited financial statements. The same operation was conducted at the end of 2017 and 2019[21]. In my view, if the account statements were inaccurate, H did not have to do such “reversals” in such statements, as he could have made some inaccurate entries therein so that his debit balance would not rise to sky-high in the first place. 277.I also agree with H’s counsel that, as a matter of principle, if the Court simply wipes out the liability which H was said to owe to HH HK on the basis of W’s argument, that would be quite unfair, because the single joint expert had valued HH HK with the receivables recorded, which would have a consequential effect on HH HK’s value, which has been agreed between the parties for the purpose of this trial. 278.However, even if the Court should not disregard the entirety of H’s alleged liability owed to HH HK, should the Court accept the entirety of it? 279.In my view, the reverse of the argument of H’s counsel is also true. It must be borne in mind that, as the account statements show, the amount of loan which H obtained from HH HK fluctuated a lot. Therefore, if H’s liability to HH HK is taken to be much more than the level of receivables at the time of the valuation, then that would also affect the agreed value of HH HK. As H’s counsel put it, H “cannot have it both ways”[22]. Hence, in my view, it would not be right for the Court to take H’s liability to HH HK as HK$8,538,789.25 which is the figure as at 13 December 2023. 280.The figure which the Court should adopt should be the amount of H’s liability at the time of the valuation. 281.The valuation done by the single joint expert reflects the value of the HH Group as at 31 March 2022[23]. According to the calculation table of the single joint expert, the “amount due from H” as at that date was taken to be HK$1.8 million[24]. That more or less matches HH HK’s account statements, which show that H was indebted to HH HK for the sum of HK$1,791,800.94[25]. 282.I therefore conclude that the amount of liability which H owes HH HK for the purpose of this trial should be taken to be HK$1.8 million. E12.5 The purported liability from PIE to HH HK 283.In H’s 3rd Form E dated 21 December 2023, he stated that PIE owed a sum of HK$14,514,163.66 to HH HK which was guaranteed by him. 284.As W’s counsel pointed out:
285.It should be borne in mind that, according to H’s own evidence, PIE had been wound up in April 2019 already. Therefore, any loan obtained by PIE must have been granted before that date. The same logic applies to any alleged guarantee in relation to PIE’s debt. 286.In other words, the alleged liability under the guarantee must, if it really existed, have been there already at the time when H filed his 1st Form E. Yet, as aforesaid, it was not mentioned at all. 287.In fact, even H accepted in his Answers dated 22 February 2024 that “PIE did not owe HH any funds prior to liquidation”[26]. 288.H’s counsel did not deal with this “guarantee” at all in H’s closing submissions. Neither did H reply to W’s closing submission in this regard. 289.On the other hand, it seems that, confusingly, H alleged that the liability in the sum of HK$14,514,163.66 was arrived at in the following way:
290.The so-called liability of HK$14,514,163.66 stated above and the alleged guarantee in the same amount must be referring to the same thing. However, it is a mystery as to how it can be said that H is liable to HH HK by virtue of a guarantee. It is also beyond imagination as to how it can be said that PIE was indebted to HH HK in such circumstances. 291.It is therefore my conclusion that such an alleged guarantee should not be taken into account in the present exercise. E12.6 The purported loans from Sister 292.H alleged that he had obtained 2 loans from Sister: HK$500,000 in June 2021 and HK$200,000 in March 2022. 293.In his 5th Affirmation, he explained that:
294.H’s evidence is totally incredible, and I do not accept the same. 295.At the material time, Sister was still admittedly indebted to H for the Sister Principal Amount. It is therefore inherently improbable that H would have asked her for loans in 2021 and 2022. 296.Furthermore, it can be seen from HH HK’s account statements that by 20 December 2023, H had a debit balance in his HH HK account for more than HK$6.1 million. It shows that it was not a problem for him to owe HH HK for the sum of more than HK$2,024,655.94. 297.In fact, H’s counsel did not advance a single argument in H’s closing submission on this alleged liability. Neither did H respond to W’s submission in H’s reply written submission in this regard. 298.For the above reasons, I refuse to accept H’s case on his alleged liability to Sister. E13. W’s liabilities (Issue 19) E13.1 The judgment debt owed to Standard Chartered Bank 299.It is evident that, on 5 May 2023, Standard Chartered Bank commenced an action at the District Court against W, and subsequently obtained judgment on 1 August 2023 (“the DCCJ Judgment”) for the sum of HK$386,770.68 with interest and costs. 300.W now claims that she is indebted to Standard Chartered Bank for a total sum of HK$463,640.48. 301.In H’s closing submissions, he did not challenge the aforesaid sum. The only argument which he made is that W has “financially irresponsibly prioritised ‘repaying’ family and friends above a genuine debt, despite the significant interest accruing daily”, and therefore “H should not be responsible for this liability which W has irresponsibly allowed to accrue”[28]. 302.There is simply no reason why the Court should exclude such liability when it is a genuine debt. E13.2 The outstanding legal fees to W’s former solicitors 303.W claimed that her legal fees owed to her former solicitors in these proceedings amounted to HK$479,168.8. 304.As a matter of principle, I do not think legal fees incurred in these proceedings should be taken into account as W’s liability. 305.Indeed, W has not claimed that the fees which she owes her current solicitors should be treated as her liability for the present purpose. That being the case, why should the fact that she has changed solicitors make a difference? 306.I would therefore disregard this item. E13.3 The purported loan granted by Father 307.W alleged that she has had to borrow from Father since these proceedings started, and she now owes him HK$280,000. She has provided the receipts from her former solicitors to show that the sums had been paid to them. 308.If the loan from Father had been used to pay off her former solicitors’ fees, then I do not think that loan should be taken into account for the present purpose, for the same reason as explained under Section E13.2 above. I do not agree that the Court should treat the legal fees of W’s former solicitors differently merely by reason of the fact that the expenses had been paid by virtue of a loan which W obtained somewhere else. E13.4 The purported loan granted by W’s sister 309.It is W’s case that she owed her sister for the sum of HK$745,000. As W explained in the letter dated 27 June 2022, she received the loan through money transfer service and through a friend (SZ). She had provided related cheques, transfer record, and messages in support. 310.It is evident that HK$411,000 out of the said loan was obtained to settle the outstanding fees of W’s former solicitors. This sum should therefore be excluded. 311.I do not accept H’s argument that this was a soft loan. As H’s counsel accepted, W had indeed repaid part of the loan in the past. 312.I will therefore take the sum of HK$334,000 as W’s liability to her sister. E13.5 The purported loan granted by W’s friend D 313.W’s case is that her debt to D amounts to INR 300,000 (approximately HK$30,000). 314.W explained that the debt was used to pay off outstanding maintenance fees of the Spaze ITech property and electricity bills in December 2022, and she has provided a bank transfer slip dated 19 December 2022 in support, on which the transaction was remarked as a loan. In my view, this is not a soft loan, otherwise D would not have made such a remark on the transfer record. 315.I therefore accept that this sum of HK$30,000 should be included as an item of her liability. E13.6 The purported loan granted by W’s friend SR 316.W stated that she still owes HK$5,000 to her friend SR, and she has provided the relevant bank records showing the payments. 317.I accept that this sum of HK$5,000 should be included as an item of her liability. It is not a soft loan, as it can be seen that W had asked her brother for another loan for the purpose of repaying SR. E13.7 The purported loan granted by W’s friend SS 318.W claimed that she owed her friend SS for the sum of HK$45,000, and she has provided some transfer records and bank statements in support. 319.This is not a soft loan, as W has made some repayments. 320.I accept that this sum of HK$45,000 should be included as an item of her liability. E13.8 The purported loan granted by W’s brother SD 321.W alleged that, in order to pay property tax and maintenance fee, and to partly repay SR, she had borrowed from her brother for a few times. Having repaid him for INR800,000, her outstanding debt to him currently stands at INR195,000 (approximately HK$18,269). She has produced the relevant bank statements, payment receipts, cheques, and no dues certificates in support. 322.I accept that this sum of HK$18,269 should be included as an item of her liability. I do not think this is a soft loan, as it is evident that W had repaid his brother for a large sum of money. E13.9 The outstanding legal fees in India 323.It is W’s case that she has incurred legal expenses in defence of several sets of civil and criminal proceedings brought by H against her in India. 324.Her outstanding legal fees in India are in the sums of HK$21,079 (in Gurgaon and Chandigarh) and HK$7,026 (in Allahabad). 325.W has not produced any documentary proof in support of these claims at all, which is quite unusual, because she must have received invoices for the legal fees from her lawyers in India. 326.I would therefore disregard these claims. E14. The total assets (Issue 20) 327.Having taken into account the Agreed Scott Schedule dated 28 June 2024 as well as the findings above, I summarise the total assets of H and W as follows:
328.The total amount of net assets owned by H and W is therefore HK$106,422,513. E15. Parties’ standard of living (Issue 21) 329.From this issue onwards, I will move to step 2 as explained in LKW v DD (supra), that is, assessing the parties’ financial needs. 330.H is 42 and W is 38. They married in April 2012, and separated in around 2020. That means their marriage lasted for around 8 years. 331.It is my finding that the parties enjoyed a very good standard of living during their marriage:
332.H stated that the parties rarely travelled as a family, which they had done less than once a year, and that the trips which the parties did take were predominantly for H’s business, where W tagged along. 333.In my view, it is meaningless to distinguish strictly whether a particular trip was a business trip or a family (holiday) trip. A trip could serve dual purposes. Be that as it may, it does not mean that the Court should disregard those business trips when, as a matter of fact, H brought his family along which the family members must have treated as their holiday. 334.The absurdity of H’s case may be demonstrated by quoting what he stated in his 9th Affirmation as follows:
335.In fact, H accepted in his oral evidence that Daughter also joined on practically every trip. He said it was because she was too young at the time. I do not accept that was the real reason. This is because there was no evidence that W was obliged to travel with H for business purpose. In other words, W did not have to join at all, if she was required to take care of Daughter at home. They obviously had a choice. In such circumstances, the participation of Daughter shows that the parties treated the trips as family trips (even though H would also work during the trip). 336.H also disagreed with W’s counsel during cross-examination that he travelled on first class in the trip in April 2018 to Dubai, saying in Court that he could not recollect:
337.In a way, by what he said, he had made an admission that he had at least normally travelled on business class, rather than economy class which he would like this Court to believe (which I do not). 338.Further, in my view, it is more likely than not that if someone had rarely had a chance to travel on first class, he/she would have a strong impression about that experience. To say that he could not recollect whether he was travelling on first class during that trip tends to show that it was not a rare experience for him. 339.H also stated that they travelled economy class and would at times redeem miles for business class tickets. This, I am afraid, is just another lie which H had no hesitation to tell:
E16. W’s and Daughter’s needs (Issues 22 and 23) 340.In this and the following section, I will consider the parties’ financial needs. While doing so, I will bear in mind what Ribeiro PJ stated in LKW v DD (supra) at [79]:
341.I set out the parties’ respective cases on W’s and Daughter’s needs as follows:
342.I will deal with parties’ differences below one by one. 343.Rent: W put forward property advertisements of flats in Lohas Park of around 1,000 sq ft which were asking for monthly rental from around HK$27,000 to HK$30,000. On the other hand, H suggested that H and Daughter should opt for flats which are only around 500 sq ft, which would cost only around HK$15,000 to HK$17,000 monthly. 344.W’s counsel emphasized that the Matrimonial Home is around 3,000 sq ft and it is a house. I agree that that is a factor which this Court has to bear in mind. However, it should also be remembered that the family did not live there alone during the marriage, but together with H, his parents and his siblings. 345.I hold that a reasonable figure should be HK$28,000. 346.Utilities: I adopt the figure of HK$3,500 as the reasonable figure. 347.Management fee: Management fee is normally paid by the landlord of the rented property. I would therefore not allow this item. 348.Food (wet market): I am of the view that the reasonable monthly figure should be HK$6,000. 349.Household (including food from supermarket): I agree that the Court should guard against double-counting of the expenses covered by this item and the preceding item. Be that as it may, I am of the view that the figure of HK$1,000 as proposed by H is way too low. 350.I would take HK$3,000 as the reasonable figure. 351.Dependent family member: I do not think it is reasonable for the Court to treat Father as a dependent family member of W. Indeed, she accepts that there is no need for her to pay this item once she has moved out of the Matrimonial Home. 352.Domestic helper: There is no dispute that it is reasonable for W to hire one domestic helper. I will adopt W’s proposed figure of HK$5,063. 353.Other: Repair / maintenance: W made reference to the repair work to the Matrimonial Home in support of this item of expenses. However, if she lives in a rented property, she should not be responsible for repair work. I would therefore not take this item into account. 354.I will now deal with W’s personal expenses. 355.Transport: In support of her claim of HK$4,000 per month as transportation expenses, W produced an invoice to show that it would cost her HK$320 to travel from Kam Tin to Central and HK$240 to travel from Kam Tin to Tsim Sha Tsui. 356.However:
357.I will therefore take only HK$2,000 as her monthly transportation expenses. 358.Clothing/shoes: The difference between the parties in relation to this item is HK$1,000: W proposes HK$2,000 whereas H suggests HK$1,000. 359.I would take the figure of HK$1,500. 360.Personal grooming: This is for W’s haircut, facials, manicure, pedicure and waxing. In my view, the figure of HK$1,000 as proposed by H is unreasonably low. 361.On the other hand, it seems HK$5,000 as proposed by W is slightly on the high side. 362.I would adopt the figure of HK$4,000. 363.Entertainment: This item should include “presents”. I would take the figure of HK$1,500 as the reasonable amount. 364.Holiday: W said she intends to travel with Daughter regularly again after these proceedings. Even so, the proposed monthly figure of HK$10,500 (i.e. HK$126,000 per year) per person is obviously excessive. 365.H argued that W has not travelled on business class in her recent 2 trips, including a long haul trip to Australia with Daughter, so as to justify a monthly provision of HK$2,000. I do not accept this argument. It should be borne in mind that this Court did not provide for a large figure on holiday when the MPS Decision was made because that was meant to be an interim budget. 366.I hold that the reasonable figure should be HK$4,000. 367.Medical: W and Daughter enjoyed private medical insurance during the marriage. 368.From H’s email dated 2 September 2018, it can be seen that he had at the time budgeted HK$1.22 million for premium expenses for Daughter (for 5 years). That amounts to more than HK$20,000 per month. 369.W has produced a quotation to show that, for a CEO hospitalisation plan, with annual deductible set at HK$16,000, the premium would be around HK$36,800 per year. 370.I would therefore take HK$4,400 as the reasonable figure. 371.Tax: W has produced documentary proof to show that she had to bear property tax in relation to her property in India for the sum of around HK$31,300 annually back in 2022. 372.As W is only proposing HK$500 for this item, I would adopt the same in full. 373.Insurance: W stated that she has to pay premium for the life insurance policies which she had taken out before the marriage. She is asking for HK$1,000 per month. 374.She has produced some documents in support. Although those documents are quite old, I accept W’s evidence. I will therefore take the full amount as the figure under this item. 375.Safe deposit box: According to W’s oral evidence, she is going to cancel the safe deposit box. I will therefore ignore this item. 376.Others: This item covers miscellaneous items such as phone bills, toiletries, cosmetics, mobile phone subscriptions, etc. W claimed HK$4,000 on paper, but she stated in Court that she could accept HK$2,000, whereas H suggested HK$1,000. 377.I agree with H that HK$1,000 is what W needs. 378.I will now deal with Daughter’s expenses. 379.School fees: W stated in her latest Form E filed in December 2023 that Daughter’s monthly school fee was HK$14,750. H had no objection to pay for this sum. 380.H has given an undertaking to the Court (which was recorded in Her Honour Judge Melloy’s Decision on MPS dated 11 September 2020) that he shall pay Daughter’s school fees. As I noted in my Decision dated 3 July 2023[31], the undertaking given by H was without an end date. 381.When H applied to adjust the MPS downwards in July 2022, he did not apply to be released from the said undertaking. For the present purpose, H has not indicated that he would refuse to continue with this obligation. All he said through counsel was that he should not be writing blank cheques for Daughter’s costs and that W has an obligation to discuss with him on Daughter’s schooling. 382.I can see why H had that concern, as Daughter will be graduating next year, and she will have to move to a secondary school. 383.However, it is trite that, despite W having sole custody of Daughter, she is duty bound to consult H on Daughter’s choice of secondary school. 384.For the present purpose, W suggested that the monthly needs for Daughter’s education should be assessed at HK$22,674, based on the school fees and capital levy of Harrow International School, which is around HK$8,000 more than the current sum of HK$14,750. 385.This is a reasonable amount when one considers that H himself had budgeted HK$1.5 million for Daughter’s school fees payable for 5 years back in 2018/2019[32]. 386.School meal: There is just a small difference of $100 between the parties. 387.W produced a bank statement to show that the meals cost HK$3,900 per term. Assuming that each term would last for around 3 months, it seems that the figure of HK$1,300 as proposed by W is more reasonable. 388.Transport to school: School bus services between the school and Nam Cheong Station cost around HK$9,200 per term (i.e. around HK$3,100 per month). 389.I do not think it is necessary for Daughter to take uber between home and Nam Cheong Station everyday as proposed by W. 390.I have not lost sight of the fact that once W and Daughter have moved to a rented place at Lohas Park, Daughter will not need to take the school bus anymore. However, it will apparently take a while before they can actually move to their new home. Further, as mentioned, Daughter will graduate after this academic year, and she will then study in another school. Her target school, as discussed above, will be quite far away. 391.I will adopt the figure of HK$4,000. 392.Medical: I refer to the insurance quotation which W obtained for Daughter, which shows that the annual premium payable is around HK$24,000, with annual deductible amount of HK$16,000. 393.I will therefore adopt the figure of HK$3,300. 394.Extra-curricular activities: W has produced invoices to show that ECAs offered by Daughter’s school would cost around HK$29,000 per year. Daughter also attended art classes and drumming classes. 395.I assess needs on ECAs at HK$3,500. 396.Entertainment: While W has produced some receipts in support, it is difficult to understand what sort of entertainment W would like Daughter to enjoy after the conclusion of these proceedings. 397.I therefore only assess this item of needs at HK$1,000 as proposed by H. 398.Holiday: I adopt the figure of HK$4,000 as in the case of W above. 399.Clothing: I assess such needs at HK$1,500. 400.Vaccinations: Daughter is getting to the age by which she would no longer be required to take compulsory vaccinations. However, it is accepted that she would still need to take vaccinations from time to time. H proposed the sum of HK$200. I am of the view that this is reasonable because in total Daughter would have a budget of HK2,400 for this item the whole year. 401.Uniform: W proposed HK$200 per month, which only amounts to HK$2,400 annually, which is a reasonable figure. 402.Play therapy: It is evident that Daughter is attending play therapy which would cost HK$1,600 per session, and that she would have to take 2 sessions per month. 403.H objected against this item, saying that Daughter should not be attending play therapy indefinitely. 404.However, the Court has to assess needs at the time of the trial. 405.I would therefore adopt the figure as proposed by W. 406.Others (e.g. haircut, meals out, etc): W claimed for HK$3,200 under this heading. This is excessive. I assess this item at HK$500. 407. To summarise, my findings on the needs of W and Daughter are as follows:
E17. H’s needs (Issue 24) 408. H’s expenses, after removing legal costs and maintenance payments, are HK$111,585 per month. Such expenses were not challenged by W’s counsel at the trial. Neither did W make any submissions on H’s expenses in her closing submissions. 409.I will therefore take that as H’s needs. E18. W’s earning capacity (Issue 25) 410.It is undisputed that:
411.W agreed in her oral evidence that she should start looking for a job immediately. The question is how much she would be able to earn. 412.According to her evidence, she had been the Chief Strategy Officer of HH HK. She had also been the Head of its Human Resources, IT and Business Development Departments. She had received a monthly salary of HK$45,000 from HH HK. 413.For the above reasons, it was submitted by H that W’s earning capacity is at least HK$45,000. In fact, H’s counsel suggested further that she could earn as high as HK$70,000 per month since she had applied for a job which offered such level of salary. 414.In my view, the level of monthly salary which W earned in HH HK should not be used as reference as to how much W can earn in the market, because H was the owner of the company and could have a say on how much his wife should receive as salary. In fact, according to H’s evidence, W was not supposed to use the entire amount of the salary of HK$45,000 as the same was deposited into their joint account[33]. Whatever that means, that illustrates why such level of salary should not be relied upon. 415.It is also unrealistic to suggest that W could earn as high as HK$70,000 simply because she had applied for such a job, as the indisputable fact is that she did not get that job successfully. As W said, which I accept, she had applied for every job she could find in the human resources area, but in vain. 416.A more reliable yardstick is the monthly salary which W received when she worked in 2023 in a recruitment firm. At that time, she earned HK$21,000. 417.In my view, it is not at all easy for W to get a job at all. It is not helped by the fact that she cannot speak Cantonese. 418.I would therefore take it that, even if W can find a job, she would not be able to earn more than HK$21,000 per month. 419.H further suggested that the soft loans which W obtained from her family members serve as an indication that she will have ongoing financial support from her family. With respect, I disagree. First of all, I have found that they are not soft loans. Secondly, I am not surprised, and it is totally understandable, that financial assistance has been given to W by her family members at her difficult time out of their love towards her. That does not mean that H may take advantage of this, which actually was caused, at least for a certain extent if not solely, by his failure to comply with the court’s order on MPS and litigation funding. E19. H’s earning capacity (Issue 26) 420.It is H’s case that:
421.Although I accept that HH HK’s business in recent years had been adversely affected by various matters, the Court should not place too much weight on the monthly salary which H received from HH HK. This is because it is his company. He could decide how much to get from HH HK as his “salary”. Further, from HH HK’s account statements, it can clearly be seen that he could freely withdraw from the company and treat it as his “piggy bank”. In other words, it is evident that he did not get his source of funds merely in the name of “salary”. 422.This can be easily demonstrated by reference to the account statements of HH HK in 2023. It should be noted that, by 2023, all the negative factors which affected the company’s performance had already surfaced (including the defamatory emails – see Section E22.2.1 below). Yet, H could still withdraw money from HH HK frequently. At the beginning of the year, he only owed the company for around HK$2.4 million. However, during the year, he kept withdrawing money from the company for various purposes, including settling his solicitors’ bills, paying tax, and even as cash advance. In November 2023, the debit balance had already gone up to HK$6.1 million. 423.To conclude, it is my finding that H has much stronger earning ability than W. 424.I also find that, apart from H’s own evidence, there is nothing which supports H’s allegation that his health conditions have affected his ability to earn. However, as I stated in Section D of this Judgment, I do not find him a credible witness at all. Insofar as this particular area is concerned, I only need to refer to his evidence given in his 9th Affirmation for demonstration purpose:
425.The above evidence did not state clearly since when in 2019 that H had been suffering from his medical problem. However, according to the medical evidence produced, it is shown that he was already suffering from L5/S1 spondylitic spondylolisthesis on 13 March 2019, and as a result he was referred to have physiotherapy. 426.Despite what H said, what we can see from his travelling records is that:
427.H has apparently exaggerated his inability. E20. H’s available financial resources (Issues 27 and 32) 428.In relation to HH HK, H submitted that:
429.I have no doubt, and there is no dispute, that HH HK is H’s prime financial resource. 430.I also accept that HH HK would probably be worthless if H leaves the company. After all, he is the soul of the company – he established and built it up from day one. He could not be replaced easily, unless the buyer is having the same connection in the market. 431.Be that as it may, it does not mean that the Court, when calculating the value of H’s assets, should not take HH HK’s full value into account, when:
432.As to whether the liquidity of HH HK would have an impact on the financial resources which are available to H for satisfaction of any payment order which this Court will make, this will be taken into account when the Court decides on the schedule of payment. 433.As for the alleged defaults of the 5 companies:
434.Taking into account H’s lack of credibility, I do not think the Court should accept his argument that the liquidity of HH HK had been severely affected by reason of those alleged defaults. The fact is that HH HK had been able to extend loans to various companies owned by H and Brother even after the alleged “difficult times”. 435.In relation to DIS, H also submitted that the Court should take into account its lack of liquidity and poor financial prospects. 436.These matters have already been considered by the single joint expert in his valuation report when he arrived at the value of HK$7,200,000 (for 75% equity). In particular, he had already applied a 15% marketability discount to reflect, inter alia, the company’s poor liquidity position. 437.The longer time which would be required to seek potential investors in this company would, if necessary, also be taken into account when this Court considers the timing of H’s lump sum payment to W. 438.In relation to BTHKL, it was submitted that its value is theoretical rather than practically realisable. 439.However, it should be noted that, according to the expert’s view, its financial performance has improved significantly since incorporation. E21. Applicability of the sharing principle 440.Having undertaking steps 1 and 2 as explained in LFW v DD (supra), I am of the view that this is a case in which the sharing principle should apply. 441.Indeed, it can be seen that the parties’ submissions and the open proposals have in essence assumed that this is a sharing rather than a needs case. E22. Departure from equal sharing (Issue 29) 442.In [81] of LKW v DD (supra), Ribeiro PJ quoted Hughes LJ’s judgment in B v B (Ancillary Relief) [2008] 2 FLR 1627 at [24] as follows:
443.His Lordship continued:
444.H relied on a number of reasons which he submitted are good enough to justify a departure from the principle of equal division. I will consider those matters in turn below. E22.1 HH HK (Issue 31) 445.H raised the questions of whether HH HK was derived from H’s sole endeavours and therefore should be regarded as a non-matrimonial asset, and how much of the value should be included in the pool of assets for division between the parties under this issue. 446.It is undisputed that:
447.I hold the view that HH HK should not be treated as non-matrimonial asset as such by reason of the so-called sole endeavours. 448.Firstly, HH HK was started only shortly before the parties’ marriage, and it had strived during the marriage. 449.Secondly, when HH HK was transferred back to H, the parties had already got married. 450.Thirdly, and the most important of all, I am of the view that whoever might have made a greater contribution to the family business can have little bearing on the outcome of this trial, as the Court of Final Appeal has made clear that there is no place for any role discrimination: LKW v DD (supra) at [57]. 451.The above analysis is applicable to DIS and BTHKL as well, especially when both these companies were established during the marriage. 452.It should also be remembered that H had admittedly treated HH HK as his prime financial resource, and such financial resource had been used to support his family including W. In other words, the company had been treated as a family asset. Indeed, despite H’s alleged dissatisfaction of W’s work performance, he had given her high-rank title in HH HK as well as paid her high salary, all using HH HK’s resources. 453.The above reasoning would have been enough to deal with H’s arguments in this regard. However, if it is still necessary, I have no hesitation to find that it is unfair to say that HH HK’s success had been down to H’s sole endeavours as if W had no contribution thereto. This is because even according to H’s own evidence, W joined HH HK as Senior Manager in April 2013 (i.e. not too long after she had moved to Hong Kong). She subsequently became the Head of HR and Administration of the company and was promoted to the post of Chief Strategy Officer in January 2019. I do not believe that W’s performance was as bad as that portrayed by H, which is quite inconsistent with how H treated her in the company. H’s evidence that her promotion to the post of Chief Strategy Officer was out of W’s own request is also incredible, in light of his own message dated 8 November 2018 sent to W that “I am thinking to make u CSO”, which obviously shows that this promotion was H’s own idea. In any event, there was no similar allegation made by H on W’s promotion to Head of HR and Administration. E22.2 W’s conduct (Issue 16) 454.Section 7(1) of the MPPO provides that, when the Court exercises its power under sections 4, 6 and 6A, it is duty bound to have regard to, inter alia, the parties’ conduct. 455.In LKW v DD (supra), it has been held that negative conduct should only be regarded as a material factor if it is “obvious and gross” in the sense explained in Wachtel v Wachtel [1973] Fam 72 or if it is such that it would in the opinion of the court be inequitable to disregard it. 456.In OG v AG (Financial Remedies: Conduct) [2021] 1 FLR 1105, Mostyn J identified 4 situations where conduct is relevant in financial remedy cases, and they are[35]:
457.The Court of Appeal in LCC v LTLA (Ancillary Relief: Add-back) [2024] 2 HKLRD 1177, [2024] HKCA 406 found that, where conduct is an issue in ancillary relief claims, the two-stage approach set out by Peel J in Tsvetkov v Khayrova [2023] EWFC 130 is helpful. The slightly modified approach has been set out by the Court of Appeal in [48] of LCC v LTLA as follows:
458.With the above in mind, I will now consider the individual allegations in turn below. E22.2.1 Malicious / defamatory emails 459.H relied heavily on the malicious and defamatory emails which were allegedly sent by W to his business associates. 460.In H’s 9th Affirmation, he explained that:
461.H then instructed Ms ZB, an advocate in India who has practised for 38 years to obtain evidence of the source of the defamatory emails. H further instructed Ms ZB that:
462.Ms ZB told this Court that:
463.Relying on the above, H submitted that W was involved in the defamatory emails. 464.This was denied by W in Court. I am of the view that she was lying when she told this Court expressly that she had nothing to do with the defamatory emails:
465.The next question is whether there is any identifiable negative financial impact upon the parties which has been generated by the alleged wrongdoing. In other words, was there any causative link between the act and the financial loss? 466.I have no hesitation in finding that there was such financial loss, as it was so opined by the single joint expert, who stated in his report that:
467.As a result, it is my view that the equality principle should be departed by reason of W’s involvement in the sending of defamatory emails. It would be fair in the circumstances for W to share less in the family pot in light of the damage caused to H’s business. I hold that a 10% deduction is appropriate in these circumstances. E22.2.2 Disclosure of documents 468.Another matter relied on by H as negative conduct on the part of W is her disclosure of confidential information and documentations from the matrimonial proceedings in Hong Kong in court proceedings in India (“the Indian Proceedings”). 469.In the Indian Proceedings, HH HK claimed against W and her brother for the purpose of preservation of assets of Global Compliance Private Limited (“GCPL”) which was an Indian subsidiary of GCLHK, a company beneficially owned by H[36]. 470.It was said that the following documents had been disclosed in the Indian Proceedings:
471.There is no dispute that the above documents had indeed been disclosed in the Indian Proceedings. 472.However, W alleged that she was not aware that her solicitors in India had disclosed those documents. 473.With respect, I do not accept W’s evidence in this regard. The nature of the Indian Proceedings is totally different from the proceedings herein. There is simply no reason for W to send copies of the Disclosed Documents to her legal representative in India in the first place. 474.Be that as it may, H’s counsel has not even started to identify any negative financial impact upon the parties which has been generated by the alleged wrongdoing. 475.I find that there is none. 476.Hence, this is not a matter which the Court should take into account. E22.3 Length of the marriage 477.The marriage here lasted for around 8 years. I do not agree that this should be described as a “short marriage” as suggested by H. E23. Fair outcome (Issue 28) 478.As aforesaid, I am of the view that the Court should depart from equal sharing and that a fair outcome is that H should be entitled to 60% of the family assets, whereas W should be given 40% thereof. 479.Under Section E14, I have found that the total assets amount to HK$106,422,513. Hence, W should be entitled to HK$42,569,005.20. 480.As W has net assets which worth HK$898,591, H should transfer assets which worth HK$41,670,414.20 to her, subject to the views to be expressed below. I would round this figure up to HK$41,700,000. 481.In my view, H should retain his private companies, as I agree that he is the key-man of his business. Letting him hold the companies would facilitate the raising of funds. 482.Although this would result in him getting the illiquid and risk laden assets, I do not think the Court should (further) depart from equality for that reason. H was 42 at the time of the trial, and has now just turned 43. Despite his medical condition, there is nothing which shows that he cannot continue to run his business. 483.I also hold the following views:
484.H shall pay W the balance of HK$41,700,000, after taking into account the value of the above transfers. 485.As the parties have indicated that they wish to address the Court on payment schedule, I will give further directions in this regard. E24. Maintenance to W (Issue 33) 486.W seeks an order that H shall pay her over HK$70,000 per month for her maintenance until full payment of the lump sum which the Court shall order. 487.I have assessed that W’s monthly needs should only be HK$44,681.5 (HK$45,563/2 + HK$21,900). I would round that up to HK$45,000. 488.It will be seen below that this Court will order H to make a lump sum payment to W. However, that unavoidably would have to be satisfied by instalments, and it may take a while before the final order may be made, since parties have requested to have the chance to make further submissions on payment schedule upon their perusal of this Judgment. 489.I am of the view that, in the meantime, W’s needs have to be provided for by H’s monthly payments. However:
E25. Maintenance to Daughter (Issue 34) 490.W seeks an order that H pays, until Daughter reaches 18 or ceases full time education, whichever is later:
491.According to this Court’s assessment (see Section E16 above), putting aside Daughter’s school fees, her monthly needs should be around HK$46,681.5 (HK$45,563/2 + HK$23,900). I would round that up to HK$47,000. 492.Taking into account the respective earning capacities of the parties as well as W’s own needs, I am of the view that H should be ordered to be solely responsible for the whole sum. 493.I therefore order that H shall pay W for Daughter until she reaches 18 or ceases full time education, whichever is later or until further order:
494.I have limited the education expenses to school fees and capital levy because the other educational items have already been taken into account when this Court assessed Daughter’s needs and when the figure of HK$47,000 was arrived at. F. DISPOSITION 495.I make the following orders:
496.Parties shall seek to agree on the precise wordings of the above orders. They shall also seek to agree on the necessary further order/directions to bring the above orders into effect. They have liberty to apply. 497.Parties shall use their best endeavours to agree on the schedule of payment. In case they cannot reach consensus on such schedule, they shall agree on the directions to be sought from this Court for the purpose of the determination of the schedule of payment. 498.Parties shall lodge the draft order and draft directions for approval within 28 days from today. 499.In the event the parties are unable to agree on the order and/or the directions, each party should submit his/her respective draft order/direction within 7 days after the said 28-day period, giving reasons for disagreeing with the other party’s draft. I will thereafter determine the matter on the papers, unless a party raises an objection to such a course, with supporting reasons. G. COSTS 500.Having taken all the circumstances into account, I hold the preliminary view that I should make no order as to the costs in all the proceedings herein. 501.In relation to the AR trial, the following circumstances are relevant:
502.As between W and Sister, there were 2 issues, namely, WIRE LTD and the 12D Flat. Both of them succeeded in one issue and failed in the other. 503.As between W and Brother, the issue is the beneficial owner of SWYP. W’s counsel agreed during closing submissions that the Court does not have to resolve the issue as initially proposed, because of the nominal value assessed by the expert. However, when the Court decides on the costs issue, it would need to take into account the merits of the claim. 504.In this regard, it is noted that Brother accepted in his oral evidence that all the monies of investment in SWYP actually came from H. There is also an email sent by Rajeshwer Singh by which H was informed that SWYP was formed. However, Brother was not one of the recipients of the email. While he said he should have got a similar email covering the same matter, he had never produced it for the purpose of these proceedings. 505.I therefore consider that W has a very strong case against Brother. 506.At the end of the day, W has decided not to pursue this claim, because of practical reason. However, that decision should have been made much earlier, since the valuation report had been available back in August/September 2022. 507.In these circumstances, I am of the tentative view that there should be no order as to costs between W and Brother. 508.As between W and the 3rd and 4th Interveners, even though W has succeeded in her claim, it is noted that BSP Limited has only been valued at HK$46,000. Taking into account the total value of the family pot, I hold the view that W should not have proceeded with this claim at all long time ago. 509.To conclude. I make a costs order nisi that there be no order as to the costs among H, W, Sister, Brother, the 3rd Intervener and the 4th Intervener (including all costs reserved). 510.The above order nisi shall become absolute in the absence of application to vary (which, if any, will be disposed of on paper) within 14 days hereof.
Mr Shaphan Marwah, instructed by Hugill & Ip, for the petitioner Ms Madeleine Booth, instructed by Haldanes, for the respondent Mr Eric Leung, instructed by Oldham, Li & Nie, for the 1st intervener The 2nd intervener’s attendance had been excused The 3rd and 4th interveners were not represented and appeared in person [1] The full address thereof has been set out in paragraph 1 of W’s Points of Claim filed on 7 July 2021 [2] W agreed during closing submissions that this issue needs not be resolved [3] Parties agreed during closing submissions that the Court need not make any findings on the beneficial ownership of 43% shares in SWYP despite the fact that this was initially included under Issue Nos. 8 and 9 under the Agreed List of Issues [4] Numbers as per the Agreed List of Issues [5] H’s proposed issue in relation to misappropriation of funds has been excluded by this Court at the stage of Opening Submissions for the reason that it has not been properly pleaded in Form E (see LCC v LTLA [2024] 2 HKLRD 1177, [2024] HKCA 406 at [47]). [6] See Section E22.2.1 below [7] Except 1.5% in HH HK which was retained by Sister as a gift [8] While Sister’s husband had mentioned in his oral evidence about Sister having told him about Father’s instruction, he said he could not remember when Sister told him so [9] This is accepted by Sister’s counsel: see his closing submissions at paragraph 96(4)(b)(i) [10] Sister’s case is that she had never had direct communication with W at the material time on the purchase of the 12D Flat [11] Paragraph 9 of Sister’s Affidavit: “[H] asked me whether we would be interested in renting the property they were going to purchase, and proposed for me to pay him in return a sum of HK$30,000 per month, so that I could live there as a tenant and pay him rent as the landlord. Initially, I said I would consider it. However, I later discussed with my husband, who was very concerned about us not being able to afford the rental. This was because he only just planned to come to Hong Kong, and was still looking for a job. I was the only breadwinner in the marriage at that time. We therefore agreed to reject [H]’s proposal and instead decided to rent Tower 5B in the sum of HK$15,000 per month.” [12] [2005] 2HKC 638, at 643G-H (para 6(1)). [13] i.e. the average for 2019-2020 was (1.88+0.93) / 2 = HK$1.405 million [14] i.e. the average for 2019-2020 was (0.18+1.48) / 2 = HK$0.83 million [15] It seems that the actual figure should only be around HK$3.6 million as H corrected in Court. This “3.6 million” figure was also adopted by H’s counsel in relation to HH HK’s liquidity – see Section E20 below [16] In the Agreed List of Issues, it was agreed that AED8,003,214.49 was equivalent to HK$17,006,568.52. The exchange rate is therefore taken to be HK$2.125 = AED1 [17] Paragraph 69 of H’s 10th Affirmation [18] Paragraph 255(i) of H’s closing submissions [19] Paragraph 259 of H’s closing submissions [20] H’s 3rd Form E dated 21 December 2023 [21] The reversal was not done on the 1st working day of the new year [22] H’s closing submissions, at paragraph 254(iv) [23] Paragraph 1.2.2 of the valuation report dated 30 August 2022 [24] Paragraph 2.3.4.14 of the valuation report dated 30 August 2022 [25] [D2/10313] [26] Answer to Question No.133 [27] Paragraph 66 of H’s 9th Affirmation [28] Paragraph 261(v) of H’s closing submissions [29] HK$89,600,000 x 98.5% [30] For the sake of convenience, the balance of India Overseas Bank Joint accounts is taken to be owned by H and W at HK$844 each [31] A decision on MPS and litigation funding [32] H’s email dated 2 September 2018 [33] Paragraph 40 of H’s 9th Affirmation [34] Page 21 of the single joint expert report [35] At [34] – [39] [36] See [11] above | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCMC 1/2022