Chan Chuck Wai v. Chan Chan Yin Kwan Alice
Read the full judgment text of FCMC 245/1979 on BabelCite. This Family Court judgment before Judge Jones.
Divorce – Ancillary Relief – Lump Sum – Squandered Assets – One-Third Rule – Inherited Estate – Costs – Whether squandered assets to be taken into account – Yes – Whether one-third rule applies – Yes but Section 7 factors must be considered – Whether daughter's share of estate retained – No – Appeal allowed in part; lump sum increased to $200,000; estate interest varied to 1/2 wife and 1/2 husband; costs to appellant
Legal issues: Calculation of lump sum considering squandered assets · Application of one-third rule · Allocation of inherited estate interest · Costs of appeal
Outcome: Appeal allowed in part; lump sum increased; estate interest varied.
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FCMC000245/1979 IN THE DISTRICT COURT OF HONG KONG HOLDEN AT VICTORIA DIVORCE JURISDICTION ACTION NO. 245 OF 1979 -----------------
----------------- Coram: Judge Jones Date of Judgment: 27th February 1981 ----------------- DECISION ----------------- 1. This is an appeal from a decision of Mr. Registrar Ryan made on the 16th January 1981 in respect of an application for ancillary relief. There is also a cross appeal by the respondent. 2. The parties were married on the 15th March 1972 when the wife was aged 21 and the husband 22. 3. There are two children of the family, a sun who will be 9 next month and a daughter aged 5. 4. The parties separated on the 14th November 1978. 5. The wife was granted a decree nisi to dissolve the marriage on the 19th April 1980 on the grounds of irretrievable breakdown based upon the fact of behaviour. The petition was undefended. The decree was made absolute on the 9th June 1980. An order for custody of the daughter was made in favour of the wife on the 9th June 1980. Although there is no court order the husband has de facto custody of the son. 6. The following orders were made by the Registrar:-
7. This is clearly a case where the husband has neither the ability nor the intention to discharge his obligations to maintain his wife or daughter by way of an order for periodical payments unless secured. However, the husband has substantial capital assets arising from his inheritance of a one sixth share in the estate of his grandfather who died in 1976. The son of the parties who is also a beneficiary under the grandfather's will has been well provided for financially. 8. The Registrar made his awards based upon the sum of $405,656.00, to which the husband is entitled under the estate. It is not in dispute that the husband is a gambler, and has squandered large sums on this pursuit. On his own evidence he appears to have frittered away at least $80,000, but a more realistic figure would be $180,000. Miss Leong for the wife contended that the basis for assessment was wrong for account should have been taken of the assets received and squandered by the husband. Mr. Wong for the husband submitted that the figure of $405,656.00 was correct. 9. It is clear that in calculating the lump sum regard must be had to the net assets of the husband not the gross assets. See Dennis v. Dennis(1). Nevertheless when the husband has behaved irresponsibly by dissipating the assets that is a matter to be taken into account by the Court. In Martin v. Martin(2) Cairns L.J. at page 629 said "Such conduct must be taken into account because a spouse cannot be allowed to fritter away the assets by extravagant living or reckless speculation and then to claim as great a share of what is left as he would have been entitled to, if he had behaved reasonably." 10. Miss Leong also submitted that the notional reduction from one third to one quarter because the wife made no contribution towards the capital was incorrect. 11. Wachtel v. Wachtel(3) is authority for using as a starting point the one third rule or ratio to capital assets in assessing a lump sum payment. 12. Section 7(1) of the Matrimonial Proceedings and Property Ordinance sets out the matter to which the court is to have regard in deciding what order to make. Section 7 is the equivalent of Section 25 of the Matrimonial Causes Act 1973.
13. In considering the amount to award as a lump sum in Trippas v. Trippas(4) Scarman L.J. at page 146 said "There is nothing either in the so-called one-third rule or in the language of the Act of 1970 which precludes the Court from doing rough justice on the basis of approximate equality, provided it is, on the whole just to both parties." 14. In Page v. Page reported in The Times 30th January 1981 a lump sum payment of £165,000 awarded by the trial judge to be the sum required to bring the wife's capital up to one half of the total assets was held by the Court of Appeal to be wrong in principle and was reduced by £75,000. Ormrod L.J. in his judgment said "The judge did not exercise his discretion in accordance with Section 25. There was nothing in the section which lent any support to the arithmetical approach to such cases, although in Wachtel v. Wachtel(3) the Court of Appeal suggested that the one third "rule" provided a convenient starting point. The Court must perform its duties under Section 25 and consider each of the factors therein set out, bearing in mind the result of applying the one third rule." 15. Mr. Wong for the husband cited O'Donnell v. O'Donnell(5) in support of his argument that in a case where the capital assets have been inherited the proportion should be modified. 16. The essential need of the wife in this case is to have some capital to assist her to buy a home for herself and her daughter. 17. In considering the matters set out in Section 7 I am quite satisfied that the Registrar adopted the correct approach in reaching his decision upon the awards that he made. I diverge from the order as I consider that the wife should receive the entire lump sums awarded at a slightly increased figure so that she may use the money towards the purchase of a home. 18. I shall therefore vary the order by increasing the lump sum payable under paragraph (ii) from $100,000 to $200,000. Paragraph (v) of the order will be deletod. I found no merit in Mr. Wong's argument that the order for periodical payments of the daughter that has been capitalised should be reduced so there will be no variation of paragraphs (iii) and (iv). With regard to paragraph (vi) I am of the opinion that a fairer proportion to award is one half for the wife and one half for the husband. The daughter's share is therefore deleted. 19. The appeal is allowed to that extent. Costs will be to the appellant on the upper scale with a certificate for counsel. Costs to be paid out of funds held by K.F. Wong & Co..
Representation: (1) [1975] 6 Fam Law 54. (2) (1976) 3 ALL E.R. 625. (3) (1973) Fam 72 (4) (1973) Fam 134 (5) (1976) Fam 83 |