C v. M

FCMC12162/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 12162 OF 2003

BETWEEN

Coram: Deputy District Judge S. D’Almada Remedios in Chambers (Not open to public)

Dates of Hearing:  8 –10, 22 November 2006

Date of Delivery of Judgment:   22 November 2006

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J U D G M E N T

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1. This is an application by the petitioner wife for ancillary relief.

2. Prior to the commencement of the trial for ancillary relief, the court had dealt with an application by the respondent husband for a variation of maintenance order made on 16 June 2004.

3. After the hearing of the variation of maintenance, I gave judgment and I granted the husband’s application to vary the maintenance order from the date of his application, that is May 2006, from $6,800 to nil.

4. I shall reiterate the background of the case in respect of this ancillary relief application.

5. The petitioner wife and the respondent husband were married in Hong Kong on 30 October 1995, and on 22 February 1999 a son was born to them.  In June 2001, the parties separated and on 9 October 2003 the wife petitioned for divorce on the ground of two years’ separation.

6. On 28 June 2005, an order was made by consent that custody of the child be granted to the father with reasonable access to the mother.

7. The wife appears before me today legally represented by Mr Ho of Messrs Au Yeung, Cheng, Ho & Tin and the husband appears before me today in person.

8. The application for ancillary relief for the wife as submitted by Mr Ho in his submissions in writing and submitted to the court on 20 November 2006 was for a lump sum to be awarded to the wife in the sum of approximately $1,099,000.

9. Having heard his oral submissions, I believe that that sum should now be adjusted as it is conceded by the wife that $200,000 should be set aside for the son.

10. The petitioner’s claim now amounts to $592,000. This figure is arrived at from the following calculation.  The sale of the two assets of the parties, at approximately $1.570 million. After the deduction of the husband’s outlay for the properties of $570,000-odd and estate agent’s fees the balance is about $1 million.

11. From the $1 million $200,000 should be deducted as a lump sum for the child, which would leave a balance of $800,000.  The wife claims half of the balance which is $400,000.  She also claims $192,000 in periodical payments for two years. $400,000 plus the $192,000 makes her total claim of $592,000.

12. The husband agrees to sell the family assets, which are the matrimonial home and the car park. He asks that from the proceeds of sale there should be a deduction of $570,000 sales proceeds of a previous property he accrued prior to marriage and $380,000 his liability for the family expenses. He agrees to $200,000 being set aside for the child. After all the deductions this would leave a balance of $418,800.  He agrees to divide that figure equally between him and his wife, which would be a balance of $209,400. However he requested for a further deduction of what he says is secret money kept by the wife of $125,000, which leaves the wife with approximately $84,400.

13. The only principal asset amongst the parties are two properties in the sole name of the husband.  The first property is a flat in Tin Shui Wai, New Territories.  The other property is a car-parking space in Tin Shui Wai, New Territories.  There is no mortgage outstanding on these two properties and the properties have been fully paid up.

14. It is not in dispute by the wife that the down payment of the property was paid wholly by the husband from a sale of a previous property that he owned prior to marrying the wife.  It is also not in dispute that the husband has paid all the mortgage payments.  It is also not in dispute that the deposit paid in respect of the two properties by the husband of $571,200 was money he had prior to the marriage of the parties.  This sum is made up of $445,200 as down payment for the flat and $126,000 for the car park.  The flat in Tin Shui Wai, New Territories was the matrimonial home.

15. In applications for ancillary relief, the court must have regard to the factors as mentioned in section 7 of the Matrimonial Proceedings and Property Ordinance.  I turn now to consider the factors mentioned therein.

16. The husband was working as an engineer. Prior to April of 2004 he was a shareholder and a director of a company which employed him.  Those companies were H (E & M) Company Limited, M Limited and H Limited.  The address and nature of these three businesses were the same place and they were for plumbing and fire service contractors.

17. Prior to June 2004 the husband was earning an income of some $24,000 a month.  His basic income was $19,000 a month, with bonuses of about $1,500 and other allowances at $4,000.

18. As the company was in some financial difficulties, he was asked to inject further moneys into the company.  The husband found that he was unable to do so.  He then ceased working for this company in April 2004 and sold his shares in the company to the existing shareholders.

19. On 6 April the same year, the husband had a heart operation.  After his operation, he was unable to work.  He was given sick leave for a month.  He continued to see a doctor but as he was not working the doctor did not give him any further sick leave certificates.  The husband did not work for the next four months and commenced working again in August 2004 as a part-time election manager and earned a sum of $10,000 per month.  In October he started to work part time as a plumbing consultant to various incorporated owners and earned about $4,000 to $5,000 a month.

20. Despite his income, the husband stated that he took out a personal loan in May 2003 to provide for himself, the wife and the child for their daily living expenses.  This loan is supported by a personal instalment loan repayment schedule whereby he was loaned a sum of $90,000.  The first payment to commence for repayment was 29 May 2003.

21. It is the husband’s case that since his operation he has not been gainfully employed and he has had to borrow money from friends.  Despite him receiving $122,000 as severance payment from M Limited in the same year as he stopped employment, the husband has said that this sum was used partly to pay towards his operation costs and partly towards his daily expenses.  At the present time, he is working as a part-time licensed plumber earning approximately $3,000 a month.

22. It is his evidence that he is only able to work part-time as he is now a single parent looking after the son and, as a result of his heart disease, he cannot work for long hours and cannot accept a job which requires him to climb up and down.

23. When the father was granted custody in June 2005, he stated he made his application for CSSA to top up his income.  This was, however, refused as he was at that time holding two life policies with a value of about $33,000.  However, in March 2006, the Social Welfare Department approved his application for Comprehensive Social Security Allowance and he was granted a top-up from December 2005 to March 2006 and received a sum of $19,614.  At present he still receiving Comprehensive Social Security to top up his income.

24. It is the husband’s hope that after the conclusion of these ancillary relief proceedings and after receiving some moneys after the sale of the properties that he can start up his own building services company and start afresh.  In the meantime, however, as a result of his under-employment and low income, he has had to borrow money from banks and friends and is in debt to the tune of about $380,000.  He seeks for this sum of $380,000 to be deducted from the sale proceeds of the property.  He also seeks for the down payment made in respect of the two properties to be returned to him.

25. The husband is now 47 years of age. 

26. I turn now to the wife.

27. It is not in dispute that since the marriage to the husband she has not been employed and she has been wholly reliant upon the husband.  Just prior to her marriage, however, she was working in the garment industry as a clerk and in 1995 had an earning capacity of about $15,000 per month.

28. It is her evidence that she suffers from fibroid disease and joint disease.  As a result thereof, she is unable to find employment and her disease affects her ability to work.  Furthermore, she is now aged 41, middle-aged, of a humble educational background and has no marketable skills.  She therefore suffers a huge disability in the labour market.  Over and above, she has been unemployed and been out of the job market for approximately 11 years.  In the circumstances, she is reliant upon the husband for financial support.

29. She has, until May 2006 when the order for maintenance was varied, been supported by the husband.  He had been paying her $3,000 per month.  On top of that, he was paying for the utilities, management fees and all other expenses in relation to the matrimonial property.

30. The wife states that the maintenance paid to her was insufficient to maintain her standard of living.  Hence, she had to borrow money from her father to support her living.  The amount she has borrowed from her father is in the sum of some $300,000.  On top of that, she has even had to sell jewellery, which the husband gave her, which she sold for $45,000.  As she borrowed money from her father, she is indebted to her father in the sum of $300,000.

31. Turning to the jewellery, the husband states that the jewellery she had in her possession was purchased by him and had a value of about $170,000.  She sold it at a very low price and he does not believe she had sold it for that sum.  He therefore believes that she kept the difference of $125,000 (that is $170,000 less $45,000), as secret money and this should be added as part of the family assets or deducted from a net amount obtained from the proceeds.

32. The parties to the marriage did not lead a high standard of living.  The wife took care of the child with the assistance of the husband’s relatives at times and they have travelled once a year overseas.

33.  The parties are now in their 40s; the petitioner in her early 40s and the respondent in his late 40s.

34. The marriage in question lasted for approximately six years.  This cannot be described as a long marriage but, on the other hand, a short marriage.

35. Both parties at the conclusion of these proceedings will be required to find a job and find housing for themselves and the child.  The husband is now co-habiting with another lady and has been doing so for some years.  The wife still lives on her own in the matrimonial home.

36. The parties, as I have mentioned earlier, both claim to suffer from medical disabilities.  They both claim that they are not 100 per cent fit for work.  It is argued on behalf of the wife that the doctor’s report does not state that the husband’s heart disease has affected his work.  It is argued on behalf of the husband that there is no evidence to prove that the wife’s illnesses has affected her work.  There is, of course, evidence before the court that she suffers from these medical illnesses.

37. I accept that both parties’ medical illnesses may affect their ability to work.

38. During the marriage, the husband was the sole breadwinner of the family.  After the son was born in 1999, the wife took care of the baby.  In those circumstances, the parties had contributed to the family during the marriage equally.

39. At the present time, the husband/father has custody of the child.  He will be required to support the child.  In respect of the child, the parties have agreed that they should set aside $200,000 from the proceeds of sale of the assets as a sum to be used for the son’s maintenance.

40. The husband will have to support himself and the child.  I must consider the wife’s reasonable and just needs and balance that against the husband’s ability to meet such needs, having regard to his needs too.

41. It is the wife’s case that she led a very high standard of living.  She states in her Form E that her expenses amount to some $18,000 a month.  Those include $7,000 on food, $5,000 on personal grooming, $2,000 on clothes and shoes, $1,600 on transport, $2,000 on entertainment and presents.  This, of course, is to be exclusive of any outgoings that are to be paid for the matrimonial home. 

42. As of the most recent Form E filed by the husband on 8 May 2006, it states that his expenses are about $12,000.

43. Having looked at the expenses of the respective parties, I find that the expenses of the wife are unreasonable.  $7,000 claimed for food is too extravagant for one person.  The wife’s explanation of $5,000 for personal grooming, because women still need to look good and feel good, I do not accept.  The amounts of $4,000 for clothes, shoes and entertainment is also too high.

44. I consider a sum of about $6,000 to be appropriate as her reasonable and just needs. This, I must state, is not far off from her own solicitor’s suggested amount of $8,000 a month.

45. I find the husband’s expenses to be reasonable as claimed.

46. Mr Ho has submitted that there should be a clean break in this case.  I agree with him.

47. This was, as stated earlier, a short marriage.  Since the separation of the parties in 2001, the husband has continued to maintain the wife.  He has paid for the outgoings of the matrimonial home and he also paid maintenance to her in the sum of $3,000.

48. The wife has lived in the matrimonial home rent free.  She has enjoyed that benefit to today of approximately five years.  The marriage itself was only six years.  The husband has more or less supported her after separation for the duration of the marriage.

49. To achieve a clean break, sums can be raised from the sale of the properties.  Mr Ho suggests periodical payments of about two years so as to provide a period of time for the wife to acclimatise herself in her new life and to seek a job.  I consider a time of about two years to be appropriate.

50. In respect of the wife’s debts to her father, she says she owes him $300,000.  She called her father to give evidence to prove that the sum of money was owed to him.  The father is a retired civil servant and has an income of $2,289 from his pension and old age allowance from the government.

51. Upon cross-examination by the husband, he refused to answer relevant questions as to his financial status.  When asked how he was able to provide $300,000 to his daughter on his income, he gave evidence that some of it was made on gambling from horses.  He had no proof he had loaned his daughter $300,000. His bank account submitted was not proof of any moneys loaned.  He further did not make any record of any loans to the daughter. He stated all payments were made to her in cash.

52. In refusing to answer questions put to him by the husband, the court had warned him that if he did not answer these relevant questions, the court could draw an adverse inference and/or reject his evidence.  Despite warning by the court, he refused to answer questions.

53. I found the petitioner’s father to be a very evasive, unco-operative and unreliable witness.  On that basis, I reject his evidence.  I do not accept that the wife borrowed $300,000 from her father whose income was only some $2,200 a month.  If she was able to sustain her living as she advances, she may only have done so by the sale of the jewellery.

54. As mentioned, the only principal assets that the parties have  are the properties.  Both parties agree to sell the properties.  Valuation reports were called for on the two properties and there was no dispute as to the value of properties being estimated at $1.330 million for the flat and $240,000 for the car park. Both parties agree that $200,000 should be deducted from the sale price as a lump sum for the child and that this $200,000 should be paid into court and that an amount of $1,000 should be paid out monthly to the custodian parent.  If there is any balance remaining when this child is 21 years old, that balance shall be released to the son unconditionally.

55. It is further accepted by the wife that the $571,000-odd towards a down payment was from moneys prior to the marriage should be solely for the benefit of the husband.

56. In respect of the debts that the husband owes of some $380,000, he says those were and are for living expenses of the family.  I accept that this is so as there is proof that he had taken out loans and that he continued to provide for the wife and also paid all outgoings in respect of the matrimonial home despite the reduction of his income.

57. I do not however consider a deduction of the whole of $380,000 from the sale proceeds.  I allow a deduction of $300,000 to be made from the sale proceeds.  The balance thereof after deduction of estate agent’s fees, solicitor’s costs of sale and disbursements shall be shared equally between the parties.  This should leave approximately $200,000 to be left between the parties.  This would be approximately, in respect of the wife, three years’ of maintenance at $6,000 a month.   This should provide for her to get herself back into the workforce and to set up a new life.

58. In those circumstances, it can also achieve a clean break by the parties as I consider that amount paid to the wife plus the last five years that the husband has been supporting her since separation to be sufficient cause for a clean break in this short marriage.

59. In the circumstances, I make the following orders.

60. I order the sale of the two properties, that is the property in Tin Shui Wai and car-parking space in Tin Shui Wai. That order for sale is to be made under section 6(1)(e) of the Matrimonial Proceedings and Property Ordinance.  That is to be done within three months from the grant of the decree absolute.

61. From the proceeds of sale of the properties, there is to be a deduction, firstly, for any estate agent fees, solicitor’s costs of sale and disbursements and any other expenses in relation to the sale.  Then a deduction of $200,000 as a lump sum for the child of the family, such sum to be paid into court and thereafter payment of $1,000 is to be made to the parent who has custody, care and control of the child as periodical payments for the maintenance of the child of the family.  The first payment to be made upon the grant of the decree absolute and thereafter on the first day of each succeeding month.  That shall be until the child reaches 18 years of age or completes full-time education.  Should there be  any balance remaining of the $200,000 when the child reach 21 years of age that balance should be released to the child unconditionally.

62. Thereafter from the sales proceeds, a deduction of $571,200 is to be paid to the respondent husband and thereafter a sum of $300,000 to be paid to the respondent husband, that is a total of $871,2000 to the respondent husband.  The balance thereof of the net proceeds is to be shared equally between the petitioner and the respondent. 

(Submissions on costs)

63. Costs are all discretionary when it comes to the court’s jurisdiction.  A successful party is usually awarded costs.  In this case, I can say that neither party has been wholly successful.  The wife claimed for a lot more than she was awarded and the husband’s offer was less than what the wife was awarded.

64. In the circumstances, I consider neither party to be successful in their application.  Therefore, neither party should bear the other’s costs and that each party, therefore, should bear their own costs.

65. I make no order as to costs of the ancillary relief application, including all costs reserved.

66. I grant a section 18 declaration.  I am satisfied the child’s arrangements are the best as can be devised.

Representation:

Mr I Ho of Messrs Au Yeung, Cheng, Ho & Tin, for the Petitioner

Respondent, in person, present