K v. C
Read the full judgment text of CACV 339/2008 on BabelCite. This Court of Appeal judgment was delivered on 14 July 2008 before HH Judge Bruno Chan.
Matrimonial Causes – Ancillary Relief – Short Marriage – Needs – Compensation – Sharing Principle – Asset Disclosure – Federal Hill Property – Lump Sum – The case involved a short childless marriage of less than three years following a long pre-marital relationship since 1985. The Petitioner Wife sought a lump sum and property transfer based on needs, compensation for lost career as a concert pianist, and sharing of assets. The Respondent Husband argued for needs only, claiming assets were pre-marital and liabilities included family loans. The Court addressed whether pre-marital cohabitation should count towards marriage duration, finding it did not due to lack of permanence. The Court rejected the compensation claim for lost career as speculative without proven track record. Allegations of gross and obvious conduct were dismissed as not meeting the threshold. The Court found the sharing principle not engaged due to pre-marital wealth and lack of marital acquest. Wife's needs were assessed at $55,000 per month. The Court ordered the Husband to transfer the Federal Hill property and pay a lump sum of $4.25 million, resulting in a total package of approximately $9.2 million for the Wife. The judgment highlights the distinction between needs and sharing principles in short marriages with pre-marital wealth. Disputes over asset valuation included loans to the Husband's father and brother, with only the brother's loan accepted as a liability. The Court emphasized that the Wife's claims for high standard of living were exaggerated compared to actual spending records. – Whether pre-marital cohabitation counts towards marriage duration – Whether compensation for lost career available – Whether conduct gross and obvious – Whether sharing principle applies – Wife's needs assessment – Wife awarded Federal Hill property and lump sum of $4.25 million; sharing principle not engaged; compensation claim rejected.
Legal issues: Pre-marital cohabitation · Compensation for lost career · Gross and obvious conduct · Asset valuation · Sharing principle · Wife's needs
Outcome: Wife's claim for ancillary relief granted in part.
|
FCMC 5508 OF 2005 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES SUIT NO. 5508 OF 2005 ----------------------
---------------------- Before : HH Judge Bruno Chan in Chambers. Date of Hearing : 12-15 November 2007, 5-9, 13-14 May, 26 June 2008. Date of Judgment : 14 July 2008. ---------------------- J U D G M E N T ---------------------- 1.This is the Petitioner Wife’s application for ancillary relief against the Respondent Husband upon the dissolution of what appears to be a short childless marriage which lasted less than 3 years as far as post-marital cohabitation as husband and wife is concerned. It was however a wealthy marriage and hence raises important issues over division of capital assets where the marriage was short-lived but with a pre-marital relationship of some length, as well as the concept of compensation as the Wife is said to be severely handicapped so far as her own earning capacity is concerned when she allegedly gave up the prospect of becoming a classical concert pianist in anticipation of her marriage to the Husband, who is said to have given her, which is denied by him, a legitimate expectation that she would be able to live at a very high standard in terms of accommodation and spendable income. 2.The Wife was born and raised in Malaysia and is now aged 43. She presently lives in a house owned by her parents in Kuala Lumpur and works as a part-time lecturer in a school of music there, while the Husband was born in Hong Kong and is now a 41 year old director of various companies and family business founded by his father Mr C, a well-known entrepreneur and magnate in property-development, banking and finance, hotels construction and management, as well as entertainment business in Hong Kong and South East Asia. 3.The battle lines are drawn in the parties’ respective open proposal made shortly before the start of the final hearing, in which the Wife in hers of 31st October 2007 computed her living expenses at $124,000 to $150,000 per month for her next 46 years or so for which she seeks a lump sum between $25.6 million and $31 million on the Duxbury calculation, plus additional funds to purchase a detached house in Malaysia at between $6.4 million to $11.85 million for her accommodation, $3 million for its decoration and furnishing, and about $1 million for a BMW car. The total sum required to meet her future needs therefore amounts to between $36 million and $47 million. 4.She put forward this proposal on the basis that the standard of living during their lengthy relationship and marriage was substantial and significant without the need or the application of a budget, as by virtue of the Husband’s wealth their lifestyle was luxurious, and that she does not accept that he has made full and frank disclosure of his means which he updated at only $11.87 million in his latest Financial Statement (Form E) on 15th October 2007, whereas his 1st Form E filed on 17th August 2005 disclosed net assets of $38 million, which then increased to $58 million in September 2006, and at a hearing of her application for maintenance pending suit on 22nd January 2007 further increased to $73 million. On the advice of her accountant, she believes his net assets are now between $83 million and $95 million excluding his residence or his possible inheritance of his family wealth which she puts at $1.78 billion, and hence on the basis of the lengthy relationship which “locked in” with their marriage, her future needs as calculated above, and other relevant matters including compensation for her lost career and the concept of sharing, she puts her case at 50% of the total assets of $95 million which equates to a lump sum of $47.5 million for her, or alternatively 50% of $83 million which is $41.5 million. . 5.The Husband’s open proposal dated 9th November 2007, on the other hand, is to transfer his interest in a 1,700 sq. ft. town house in Federal Hill, Kuala Lumpur (“the Federal Hill property”) then worth about $2.39 million (Malaysia Ringgits $1 million) to the Wife for her use or benefits, and to pay her a lump sum of $4 million, hence a total package of $6.3 million, which together with a shares portfolio worth about $1.5 million that he has allowed her to retain in Malaysia, he says should fully satisfy her needs and requirements for a very comfortable life in Malaysia, and at the same time sufficiently reflect the peculiar features of this short childless marriage lasting only 31 months which should be distinguished from a long, unsettling, unstable and demoralizing boy-friend-girl-friend relationship between the parties prior to the registration of their marriage. At the hearing he updated the net total value of his assets at just slightly over $12 million after taking into proper account of his various debts and liabilities including those owed to his father and one of his brothers, and hence he says his offer would have given the Wife more than 50% of their total assets. 6.Not surprisingly, the gulf which reflects a difference of over $40 million between the parties’ respective proposal means that their only common ground is that both want to have a clean break over the financial claims, and so the hearing took place over 12 days between November 2007 and June 2008 during which both parties, who were represented by counsel namely Mr Robin Egerton for the Wife and Ms Anita Yip for the Husband, gave extensive oral evidence, as did their witnesses including professionals such as accountants. The Background 7.The parties first met in 1985 in London, and shortly thereafter formed a relationship when the Husband was then doing A-Level at Davies’ College and the Wife in her first year of a degree course in music at King’s College. Soon she moved in to stay with him and his 2 adopted dogs in his residence in Sydenham Hill in south east London, a property owned by his family, during which the Husband was mainly responsible for their household expenses and would also pay for everything whenever they went out together, while the Wife would pay for the grocery when she did the shopping herself as well as some of the utility bills, the fact is that both were then financially dependent on their own family. They would also frequently travel together and had met each other’s parents and family members over the period. 8.In September 1988 the Husband went on to study in Cambridge University, while the Wife, having graduated from King’s College in the same year, rather than pursuing the master degree in music either in Oxford, Paris or New York, instead stayed in London and worked as a part-time music teacher and studied piano performance privately, for which she claims as one of the main reasons that she was needed to stay in the Sydenham Hill residence to look after the property and the dogs. During this period the parties would continue to meet each other when the Husband came down to London during weekends or holidays, or at times when she visited him in Cambridge. 9.Upon his graduation in the summer of 1991, the Husband left London for Singapore to join his family business there, while the Wife also left several months later to return to Malaysia with the Husband’s dogs, initially staying at her parents’ home in Ipoh, and subsequently moved to her present home in Kuala Lumpur, when she gave up her aspiration to become a concert pianist and instead worked as a part-time music teacher and to look after the 2 dogs. The parties would continue to see each other by meeting up at various places, and the Wife would accompany the Husband in many of his business trips. 10.In 1993 the Husband returned to Hong Kong for good and became involved in his family business mainly in the development of certain property project in the New Territories. He was also appointed a director and allotted shares in some of his father’s companies over the next several years during which the parties would continue to visit each other, in Malaysia where the Husband would stay at the Wife’s place, in Hong Kong where the Wife would similarly stay in the house of the Husband’s parents, and elsewhere when they travelled together during the Husband’s many business trips. At times there were talks of marriage and on 2 occasions they even booked an appointment to register their marriage in Hong Kong (1992/3) and London (1995) respectively but which for various reasons, one of which was when one of the dogs was dying of cancer, had either been put off or not materialized. It is not in dispute that there had also been many break-ups and reconciliation between the parties in particularly between 1995 and 1997 during which they would date or had had relationship, at least on the part of the Husband, with other persons. Eventually they got back together sometimes in 1997 and subsequently registered their marriage on 21st September 1997 in Las Vegas, USA but without informing their respective family until much later afterwards. 11.After the marriage the parties resided with the Husband’s parents in their 20,000 sq. ft. 4-storey mansion known as the C’s Garden in Tsuen Wan, New Territories, while the Wife never worked and, in her own words, mainly kept her mother-in-law and sisters-in-law company, dining and shopping, as well as travelling with the Husband. She was also given one of his ATM bank cards and 2 credit cards for her personal use and expenses. 12.During the next 3 years or so of the marriage the parties continued to travel together from time to time including the Husband’s business trips, and there were also talks about moving out of the C’s Garden into their own home, which were unfortunately punctuated by the many quarrels between them with the Wife accusing the Husband of infidelities and use of violence on her, and him of her being emotional, impulsive, unstable and could not get along with his family members, often resulting in the Wife packing up for her maiden home in Malaysia, only to reconcile later and to return to Hong Kong. Matters finally came to a head in April 2000 when she left Hong Kong for Malaysia purportedly to renew her passport but did not return thereafter, and the Husband subsequently had a brief affair with another woman. 13.Despite several attempts for reconciliation during the next few years when the Husband spent a considerable amount of time trying to plead with the Wife in Malaysia, on some occasions stalking her every movement and literally camping outside her home wanting to speak to her, but inevitably the Wife did not return to Hong Kong and the parties never resumed cohabitation. The Husband has since also moved out of the C’s Garden into one of the houses in a project known as GV Villas developed by him for one of his father’s companies, about which no doubt much more will be said later in this judgment. In 2004 the Husband suggested to have a divorce in Guam and there were discussions between the parties through their lawyers but did not lead to any result, nor did the Guam divorce materialize. 14.Finally on 1st June 2005 the Wife came to Hong Kong to institute these proceedings for divorce based on the Husband’s unreasonable behaviour after he had cancelled her credit cards. The petition was subsequently amended to one based on 2 years’ separation since April 2000 and the decree nisi was granted on that basis on 7th February 2007. 15.Meanwhile the parties had exchanged their Form E and questionnaires, and on 1st December 2005 the Wife obtained an order by consent for the Husband to pay her a monthly sum of $25,000 by way of maintenance pending suit, which sum was later increased to $35,000 on 5th July 2007 when she unsuccessfully applied for a much more substantial increase to include the Husband’s contribution towards her legal costs when she still had her share portfolio then worth about $2 million, which was originally funded by the Husband as an investment in the Wife’s name and managed by one of her brothers in Malaysia, and which the Husband agreed that she could use to meet her costs first. 16.By further agreements in November 2007 and May 2008 the Husband made advanced payments of $400,000 and $840,000 respectively to the Wife when her share portfolio had by then become fully charged for her legal costs, without prejudice to his right to set them off against whatever lump sum or sums the court is to award her in the end. 17.The Wife’s case is that her resources are relatively simple, as apart from the said share portfolio which has since devalued to only $1.5 million, she has no valuable assets save for a BMW 520i purchased by the Husband for her in 1999 and some wrist watches worth no more than $300,000 in total, and has very little earning or earning capacity of about $1,500 per month only. 18.Rather her said proposal is on the basis that from the start of their relationship since 1985, the Husband impressed upon her that she was not to have a career of her own, that her role in their relationship and in their future family was that of a full time homemaker and mother, that she was to be free and available to travel with him and generally accompany him anywhere, and that he would provide for her in accordance with their luxurious lifestyle and high standard of living both before and after their marriage, with no limits of expenditure on any aspect of their lives nor any limit on her own spending. All these are of course denied by the Husband. 19.The Wife further asserts that had their marriage continued, they would have lived in a large house provided by the Husband, with cars and service of maids and chauffeurs readily available for their use, that they would have continued to travel on holidays extensively, travelling at least on business class and staying in 5 star hotels, and that she would not have been required to work at any time. However divorce at this time of her life would mean that she is now unlikely to have children even if she remarries, and her chances of any career are practically nil. She claims to have foregone offers for the purchase of jewellery and property for a financially stable and prosperous future with the Husband, a future in which he promised to share with her equally but is now no longer through no fault of her own, she should however still be provided for as promised by the Husband. She therefore seeks compensation for the loss of her career opportunity, and an award commensurate with being his wife and the high standard of living and luxurious lifestyle that they had during their long relationship and which she had been promised for the rest of her life. 20.It is also part of her case that throughout their relationship and marriage, the Husband was so abusive and violent to her that such conduct should be reflected in the award. 21.The Husband’s case on the financial provision for the Wife, on the other hand, is straightforward in that because of the brief duration of the marriage, her claim should be determined by reference to the principle of needs alone, as this is not a case where the principle of sharing of the “marital acquest” is engaged, nor is it a case where the principle of compensation will arise, and that the Wife’s needs fall to be fairly assessed not just by reference to the standard of living during the marriage, which he asserts as much more modest than what the Wife claims, but also on what is reasonable in the circumstances of the case and in her situation in Malaysia. The Applicable Principles 22.When considering the Wife’s claims, the court is of course required to undertake the inquiry of all the circumstances of the case including those matters as set out in section 7 of Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”), with the over-arching objective to reach a fair outcome between the parties, and there is no place for discrimination between husband and wife and their respective roles : White v White [2001] 1 AC 596, Miller and McFarlane [2006] 2 WLR 1283, Charman v Charman [2007] 2 FCR 217, and DD v LKW [2008] 2 HKC 134. 23.A fair outcome or fairness can be achieved by applying the 3 principles of need (generously interpreted), compensation and sharing : Charman, DD v LKW. 24.In cases where the parties only have limited financial resources, the focus of the inquiry on fairness is to divide the assets of the parties so as to make provision for their housing and financial needs, and it may be necessary to augment the available assets by making orders for periodical payments : Miller, DD v LKW. 25.Where there are assets which are available beyond satisfying the immediate housing and financial needs, equality in division of the assets should be made unless there is a good reason to the contrary : Miller, Charman, DD v LKW. 26.The principle of fairness is to apply to all properties of the parties, both matrimonial and non-matrimonial, while the equal sharing principle applies to both long and short marriages, but in case of short marriage, the non-matrimonial property may be a good reason for departing from equality : Miller, Charman, DD v LKW. 27.Where a spouse has given up a lucrative career for the benefit of the family, this may justify an award for compensation : Miller, DD v LKW. 28.The court’s inquiry should therefore start with the computation of the assets of the parties, then distribution of the assets by reference to the 3 said principles and those matters under section 7 of MPPO. 29.In the present case, the huge divergence between the parties’ proposals, as I have earlier noted, is due in large measure to serious disputed factual issues as to the history of the parties’ relationship, rather than their conflicting views as to the applicable law, which I have identified as follows : First, whether there was any cohabitation prior to the date of their marriage, which is relevant to the length of their relationship and the Wife’s possible contribution. Second, whether the Husband did constrict the Wife’s career during their relationship/cohabitation which is relevant to the issue of compensation for the alleged loss or restricted career of the Wife. Third, whether the Husband did exhibit violent and other gross and obvious conduct during such relationship/cohabitation that should be reflected on the award. I therefore propose to deal with these 3 issues first before undertaking the section 7 exercise, which is no less contentious either when it comes to the Husband’s assets, the Wife’s needs or their standard of living enjoyed during the marriage. Pre-Marriage Relationship/Cohabitation 30.It is necessary to first state that pre-marital cohabitation is not a factor which the statute specifically requires the court to have regard under section 7, even though it has been increasingly common for parties to live together prior to marriage. In Foley v Foley [1981] Fam 160 at 167, [1981] 2All ER 857 at 861, CA, the English Court of Appeal stated that the cohabitation and the marriage period were not to be viewed in the same light, the weight to be given to matters which occurred during the pre-marital period of cohabitation will be for the judge to decide in the exercise of his discretion, and that in the great majority of cases public opinion would readily recognise a stronger claim founded upon years of marriage rather than years of cohabitation. 31.That decision is now some 27 years old, and a more liberal public view on cohabitation has since been reflected in judicial opinion with more weight being given to the period of pre-marriage cohabitation, especially if a child is born during that period, or the parties pool their finances or jointly acquire assets. 32.This is recognised by Hartmann J in F v F [2003] 1 HKLRD, when he said that there may be occasions when it would be unjust not to take cohabitation into account, that it is the nature of cohabitation that will dictate whether it should or should not in the exercise of a court’s discretion under section 7, but that cohabitation per se is not sufficient. 33.In that case the parties first met in 1971 and cohabited when they were students at university in Canada. They met again some 17 years later in 1991 and began an affair when the wife was living in Canada and the husband in Hong Kong. In December 1992 the wife sold her home and gave up her business in Canada to come to cohabit with the husband in Hong Kong where they eventually married in November 1994 after he had ended his previous marriage. They separated in February 1999 and the wife filed for divorce 2 years later in 2001. When considering her application for ancillary relief, Hartmann J refused to take the earlier cohabitation into account when he said at p.875 :
34.His Lordship also refused to take into account the later cohabitation immediately prior to the marriage when he found that its nature was as a “trial period” to test whether there was any basis for the marriage, and which the parties themselves had chosen to define as being distinct from the marriage. 35.However, in the English case of GW v RW (financial provision : departure from equality) [2003] 2 FCR 289, [2003] 2 FLR 108, where the parties were married in 1989 after living together for 18 months. There was a period of separation from 1995 to 1997, after which they were reconciled. They were finally divorced in December 2001. It was held that where a relationship moves seamlessly from cohabitation to marriage without any major alteration in the way the couple live, it would be unreal and artificial to treat the period differently, the period of 18 months of pre-marital cohabitation was therefore included as part of the duration of the marriage, but not the pre-reconciliation period of separation. 36.While it is not in dispute in the present case that the parties did cohabit during their London years, although I think the term “student romance” as used by Hartmann J in F v F in similar circumstances would seem more appropriate, it nevertheless did not continue or move into a marriage as in those cases mentioned above, but instead came to an end after the parties left London in 1991, and that even though they did maintain a relationship, albeit on and off, up to their marriage in 1997, there was a lack of permanence or commitment in that relationship which was in fact wrought with uncertainties and instabilities that it cannot be said to have moved seamlessly to marriage, and certainly not without any major alteration in the way they lived, as they were then living with their own respective family or at least in the case of the Husband, in 2 different cities separated by a 4 hours flight, but that there was in fact nothing to prevent them from entering into a more permanent or committed cohabitation had they really wanted to do so, certainly not for financial reasons, nor in my view for the Wife’s reason of having to look after the dogs in Malaysia. 37.The fact is that, no matter how close that relationship might have been, or how often the parties might have seen each other or travel together during that intervening period, there was simply no common household to share, and in my view no common intention to do so prior to the marriage which could be described as cohabitation, let alone one that should be included as part of the duration of the marriage. At best, it had been a long but unstable, turbulent and tumultuous relationship that eventually led to a shorter but equally unstable and turbulent marriage. Constriction of Wife’s Career and Compensation 38.The Wife is actually seeking compensation not just for the loss of a career as a concert pianist, but also for the loss of all the benefits and luxury of a non-working wife married to a wealthy husband, but I propose to deal with the former point here first, leaving the latter for the section 7 exercise later. Her case is that in the summer of 1985, around the time when she first met the Husband, she was taking an intensive course in French in anticipation of applying to the Paris Conservatoire and I’Ecole Normale de Paris to pursue piano performance in order to fulfil her aspirations to be a concert pianist. However, as the Husband was not supportive of her aspirations by ridiculing her performance and discouraging her from composing film music, and had instead reminded her that her duty as a woman was to concentrate on being a wife and a mother and to look after her future family, she therefore decided to undertake the responsibility to stay in the Sydenham Hill property to look after his dogs after the Husband had gone to Cambridge so that he would not be distracted from his studies. Had she not met him, she asserts, she would have gone to Paris or New York to pursue her music studies and focus on her piano performance (Pleading Bundle 1 : 202). 39.Whether or not the Husband was indeed unsupportive of the Wife’s music career at that period of time, and which he denies, whatever being said between them and whatever promises that he might have made to her, they happened in what I have already described as a “student romance” when the Wife was merely 20 year old and the Husband still a teenager, with both still financially dependent of their family, and no doubt with their university education at the very forefront of their mind and their whole future ahead of them, that relationship simply cannot in my view be regarded in the same breath as some serious long term commitments made between mature and financially independent adults, but was instead more like a case of an innocent and naïve young girl been swept off her feet in her admittedly first romance by what must be a smart-looking Cambridge-bound young man from a very wealthy and prominent family that she simply decided, there and then, to devote herself to him instead of her music career. In other words, it was simply her own choice of choosing romance over her future career. I must stress that it is not my intention to pass any judgment over her choice, as there is no right or wrong to it, and many young girls in her position may well do the same thing, but it is unfair in my view for her to now put all the blame or responsibility entirely on the Husband. 40.While I have no doubt of the Wife’s ability and talents as a pianist, as evidenced by the glowing appraisals from her professors (Exhibits Bundle 4 : 1175 - 8), nor do I have any cause to question her desire to go to Paris or New York to pursue her career, there is however no evidence before me to suggest that it was absolutely essential for her to do so, or that she could not have pursued her career in London, which was, and obviously still is, a major city in Europe with top musicians and orchestras and no doubt ample facilities and opportunities for aspiring musicians. While it may not be in the European continent, it would certainly not have caused any problem for her to travel to other parts of Europe to perform or participate in competitions, as she has admittedly done so during her London years. 41.Her claim that she had to spend time house-keeping the Sydenham Hill property for the Husband and looking after his dogs while he was in Cambridge which interfered with her career is simply unacceptable, as clearly the house-keeping duty would not have taken up her time any much more than if she were living elsewhere on her own, and that apart from feeding the dogs on a daily basis and cleaning them from time to time, I fail to see how much more the Wife would have to do for them, in particularly when the property had front and back gardens where the dogs could roam by themselves and hence it was not necessary to walk them regularly. The point is that they were only dogs and no matter how close or important they might have been to the parties, and I note that both did refer to them as their “kids”, it is simply not tenable for the Wife to rely on an argument that she had been so burdened as if they were small children. 42.Furthermore, after they left London in 1991, she could still pursue her career had she wanted to do so, as she was then aged only 26 and some 6 years before reaching what she said to be the cut-off age for launching into the world of concert artists, even though it might mean some difficulties to fit into the Husband’s schedule when she would be a lot more busy with her career than simply looking after his dogs. 43.Her case is however that from 1992 onwards, the Husband would travel extensively, both for leisure and for work, she therefore became his constant companion, and in order to accommodate his lifestyle and to spend time with him and to share a life with him, coupled with his demand not to pursue a career, she therefore gave up her lifelong aspiration of becoming a concert artist. 44.As aforesaid the Husband denies ever stopping the Wife from pursuing her career or did anything to discourage her, but admits that he was concerned that their relationship could not be maintained if she had to travel extensively for her concert performance and that he might lose her. He also admits that he did object to her engaging in the composition for film music not because he was being unsupportive to her but because of his own negative impression on the film business which his family was once involved in the past. He insists that he was completely supportive of the Wife in pursuing her interest in music in those years prior to their marriage. 45.While the Husband might not have insisted or demanded that the Wife gave up her career, neither did he insist that she should have one, as he believed that he should be the bread-winner of the family in the event of their marriage. It is also plain from his evidence that he was then concerned about the effect of the Wife’s career as a concert pianist would have on their relationship, in particularly when he clearly preferred that she kept him company during his travelling, which must in turn have affected the Wife’s decision over her own career. 46.The Husband may of course argue that it would still not have prevented the Wife from pursuing her career as she could continue to practice at home and perform at competitions in Europe or USA when she was not with him, and that it was nonetheless her own free choice to pursue a relationship rather than continuing with her development in music. 47.However, despite the ups and downs of their relationship at that time, it is not in dispute that they were then also seriously contemplating marriage between 1993 and 1995, and that if in anticipation thereof the Wife decided to forego her career as a concert pianist, which may have been an “embittered” decision as Ms Yip for the Husband has put it, and which may be criticized as naïve or unwise but it certainly pleased the Husband and probably had his tacit approval, and if as a result she is now handicapped as to her earning capacity, shouldn’t she be allowed to argue that some element of compensation for relationship-generated disadvantage may be necessary to achieve a fair result between the parties in her application? 48.The principle of compensation was first expressly recognised should be taken into account by the court when exercising its statutory powers by the English Court of Appeal in the case of SRJ v DWJ (Financial Provision) [1992] 2 FLR 176, and subsequently propounded by the House of Lords in the combined appeals of Miller v Miller andMcFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618, [2006] 1 FLR 1186, when Lord Nicholls of Birkenhead, having identified the principle element of fairness for the court’s consideration as that of needs, went on to state :
49.Baroness Hale of Richmond then dealt with the same principle of compensation as follows :
50.These are clear statements of an underlying principle falling for consideration in cases where it is clear that the parties have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife very considerably handicapped in the terms of her own earning capacity, and that the husband is a high earner with a substantial surplus of resources over what is required to meet the needs of both parties. This strand of relief, as pointed out by Ms Yip for the Husband, is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage. Cogent evidence as to the spouse’s loss of career is therefore required before the court can find there has been such loss suffered and thereafter consider the appropriate compensation, and that it is not a matter for speculation, as expressed by Lord Nicholls in McFarlane at p.1303 :
51.In that case Mrs McFarlane was a successful lawyer who gave up a lucrative and valuable career to look after the children of the family, pursuant to an agreement with her husband. She had a proven track record of a successful career, in fact unmatched by the husband at the time of their marriage. Ms Yip for the Husband however argues that the Wife’s claim for compensation here cannot even be said in the same vein as none of the factors required in a compensation case are present, such as firm evidence of her abilities and earning capacity, proven track record of a career, and an agreement, tacit or express, to give up a career for the common good of the family, for example, to look after the children of the family. 52.It is the absence of the first 2 factors that in my view puts the Wife’s case as highly speculative at best and ultimately fatal to her claim for compensation for loss of career, as it is plain from the evidence that she had not even begun to seriously work at any stage of her life, let alone to have a career, and that unlike most other jobs such as teaching, engineering or medicine, just to name a few examples, which one can assume with some certainty will develop into a career after obtaining the necessary qualifications, skills and experience, the aspiration to become a performance artist such as a painter, an actor, or a concert musician is however something so intangible that, as submitted by Ms Yip, there were so many more uncertain grounds to tread with so much uncertainty, even assuming the Wife had participated and won important competitions, before she could call herself a concert pianist, let alone a renowned or famous one who can command lucrative recording contracts and endorsements as well as handsome performance fees. On this even Mr Egerton has conceded for the Wife in his final submission when he said : “It is difficult to put a monetary value on (her musical career); would the Wife have been successful? And even if successful this does not necessary to mean financial success.” 53.In conclusion, even assuming the Wife would become a concert pianist, renowned or otherwise, had she not decided to give it up for the relationship, there is simply no evidence before me as to how much she would have been able to earn from giving concerts, let alone other sources of income such as recordings and endorsements. In other words, there was simply no career as a concert pianist upon which she can base her claim for compensation. Gross and Obvious Conduct 54.The Wife has set out in details of what she described as the Husband’s gross and obvious conduct in her 1st and 2nd affidavits, which Mr. Egerton has helpfully summarised in Annex B to his final submission, and which he argues as relevant and should be taken into account by the court bearing in mind its duty “to have regard to the conduct of the parties and all the circumstances of the case” as required by s. 7(1) of MPPO. 55.The statute of course does not say what sort of conduct that fall into the category of “gross and obvious”, the guidance of which was laid down by the case of Wachtel v Wachtel [1973] 1 All ER 829, CA where Ormrod said :
56. The effect of this guidance is that, short of the conduct being “both obvious and gross”, so much as that to order one party to support another whose conduct falls into this category would be repugnant to anyone’s sense of justice, the court should not decline to award any financial support or to reduce its order for financial provision merely because of what was formerly regarded as guilt or blame. To do so would be to impose a fine for supposed misbehaviour in the course of an unhappy married life. Criminal justice often requires the imposition of financial and indeed custodial penalties, but in the financial adjustments consequent upon the dissolution of a marriage which has irretrievably broken down, the imposition of financial penalties ought seldom to finds a place : per Lord Denning MR in Wachtel. 57.Following the amendments to their MCA 1973 in 1984, the courts in England are now required to have regard to the conduct of each of the parties if that conduct is such that it would in the opinion of the court be inequitable to disregard it. While there is no such amendment to our section 7 of MPPO, it appears to have been accepted as a valid test by our Court of Appeal in DD v LKW, and that as a matter of both language and logic, it would seem inequitable to disregard conduct which is “both obvious and gross”, and accordingly the approach the courts took according to the Wachtel guideline still seem relevant. 58.The word “gross” in this context does not carry any sort of moral judgment : it means “of great importance”, and in assessing the gravity of a party’s conduct in the context of financial provision, a party’s conduct is of sufficient gravity to affect the issue if the facts are such that, after making all allowances for his disabilities and for the temperament of both parties, the character and gravity of his behaviour are of such a nature that it would be repugnant to anyone’s sense of justice to ignore it in deciding the provision to be made by one party for the other or what should be their appropriate share in the family assets : West v West [1977] 2 All ER 705, CA; J(HD) v J(AM) [1980] 1 All ER 156, [1980] 1 WLR 124; S v S [1982] 12 Fam Law 183, Anthony v Anthony [1986] 2 FLR 353, CA. 59.Some of the conducts complained of by the Wife here such as forcing her to give up her dreams of a music career or prohibiting her to be a concert pianist have already been dealt with above and are in my view not relevant here, others such as treating her as a housekeeper and dog sitter or his many affairs are, even if proved, clearly not the type of conduct that the court would take into account under section 7 of MPPO. 60.What remain of the conducts that may be said to be relevant, as far as I can see, are those of physical violence and abuse allegedly inflected by the Husband on the Wife regularly during their lengthy relationship, including throwing her violently on the floor, kicking and punching her body at will, slapping her face more than 20 times in one incident, trying to break her fingers in another, and causing her mental anguish as well as physical injuries such as cuts, bruises and strains to her body. In all she has painted a picture of a victim long suffering in silence of her husband’s regular verbal abuse and physical violence without defence, and that he is to blame for all her sufferings and the loss of her career. 61.The Husband denies being violent to the Wife and argues that she has merely presented a one-sided story seen through her biased eyes and expressed in diatribes. He however accepts that they did regularly argue and quarrel and sometimes even fight, and that during which he might have used physical force in self-defence to push her away or fend off her blows, but never being violent in the ways or manners described by her, and that no matter whose fault it was, he would always apologise to her afterwards. 62.As in most cases where domestic disputes took place behind closed door, there is no witness’s account from either side, nor is there any police report or medical evidence, the absence of which the Wife explains because she did not want to put the Husband in trouble with the law, but it may also show that the incidents might not be as serious as alleged. She did produce some letters and cards written by the Husband apologising to her and promising never to “hit” her again, which suggest that there might indeed be violence in some of the incidents, but at the end it all boils down to the credibility of the parties as to the extent and frequency of such violence. 63.Having seen and heard the Wife in evidence for more than 4 days in court, I share Ms Yip’s observation that she is a smart, intelligent, fluent, eloquent and determined person, and has a “strong and likeable character” as described by one of her teachers. On the other hand, I also found her prone to exaggeration, as will be apparent when I come to examine her evidence on her spending, for example, later in this judgment, and that I would not disagree with the Husband when he described her in one of his affirmations as “very stubborn and domineering”. In my view she just did not strike me as someone who was weak or submissive to the Husband, or would put up with him all these years if indeed he was as violent and abusive as she has alleged, as she could have easily walked out of their relationship during the 90s when they were not cohabiting together and actually residing in 2 different cities. 64.On the other hand, the Husband appeared to me as a calm, mellow and courteous person, less determined than the Wife and cannot be said to have a strong character by comparison. He gave his evidence in a straightforward, truthful and balanced manner without any hint of exaggeration or self-serving. It is plain from his evidence that he still had very strong feelings towards the Wife and had tried hard to be fair by avoiding to lay any blame on her for the breakdown of their relationship. He just did not strike me as a violent person or someone capable of the kind of behaviour as alleged by the Wife. 65.There is no question in my mind that it had been a volatile and turbulent relationship during which the parties fought and quarrelled with each other, sometimes with violence, but I find it difficult to accept that it was all one-sided against the Husband as alleged by the Wife, and I tend to accept the more balanced view of the parties’ mutual friend CKF, whose evidence I found as frank and truthful and basically impartial, that they were both nice and decent individuals, but “when they got together, all hell broke loose.” 66.However, according to Mr Egerton, the Wife’s case on conduct is further than that, as he argues that conduct in this case is an illustration how interlocked the parties were both physically and emotionally throughout their relationship, and that it gives credence to and demonstrates the nature and length of the parties’ relationship which the Wife says, in terms of the length of the relationship it would be inequitable to disregard, and that neither party was able to move on their life due to the “emotional connection” preventing them from doing so, as emotionally they were ‘locked together’. I do not disagree but in which case the conduct considered in such context should more appropriately be viewed as part of the background and circumstances, of which I have done. 67.Above all, even if all the alleged violent behaviours of the Husband were proved to be true, they do not in my view amount to such gross and obvious conduct that the court should take into account, or that it would be inequitable to disregard them. I therefore do not accept the Wife’s case on this issue either. 68.I shall next proceed to ascertain the parties’ assets, or the “pot” as Ms Yip called it, which is normally the first step in the inquiry to be conducted by the court. The Assets 69.The asset position of the Wife is simple, as aforesaid her share portfolio has been re-valued at about $1.5 million after a recent slide in the stock market, which together with some savings, insurance policy, pension and other personal items add up to no more than $1.8 million in total. The main dispute between the parties on the size of the pot is clearly over the Husband’s assets in particularly his following debts and liabilities according to the schedule of assets produced by the Wife’s accountant (Corresponding Bundle 6 : 2084), which the Husband claims he owes his father and others that should be taken into account when computing the net value of his total assets :
70.It is plain that the huge amount of these loans, more than $70 million in total, which if taken into account would no doubt reduce the Husband’s net worth very substantially, which in turn would have a serious impact on the Wife’s claims, and naturally raise her suspicion over them as well as the Husband’s credibility in the disclosure of his means, or rather his non-disclosure of them in his first Form E of 16th August 2005 (P 1 : 82, 83) when he put his total liabilities, mainly credit card and bank loans, at a then insignificant $2.7 million, with a net asset of $38 million. 71.That was however according to the Wife blatantly untrue as by September 2006 the Husband had increased his assets by more than 50% to $58 million by adding his interest in the Federal Hill property, his Goldman Sachs account and his Pacific Club membership with a total value of more than $20 million, of which she argues as simply incredible for him to blame it on his oversight or his previous solicitors for failing to disclose them in his 1st Form E. 72.Furthermore, Mr Egerton argues, some of the said loans and liabilities, namely the $10 million from brother D and the $22.3 million from his father were acquired way back in 1997, but the first time the Husband referred to them was only in his Answer of 27th October 2005 to the Wife’s Questionnaire when he disclosed that they have to be repaid with interest, and that further information about them were only given later in yet another Answer on 20th January 2007 with no documentation when he stated there were no explicit terms or conditions about these loans but principal and interest would be payable, and that in respect of the father’s loan, it would be repaid “at such time that (the Husband) was in a position to do so”(P2 : 368 - 369). 73.It was only on 22nd June 2007, Mr Egerton submits, when the Husband finally disclosed the full details of all these loans in his Answer ( P2 : 430 – 449 ), almost 2 years after his 1st Form E, which shows that he was prepared to lie on oath to mislead the court, and that such attitude of ‘catch me if you can’ continued right up to the trial when he made further disclosure about his alleged loan due to DH International, bringing his total liabilities from a mere $2.7 million then in 2005 to a staggering $70 million over a period of a little more than 2 years. 74.In summary the Wife’s case is that these loans to the father and brother should not be taken into account as they have only “emerged” during these proceedings, that no repayments have been made all these years save for the $32 million during these proceedings, that they are sufficiently large that if real and repayable now should not have been “forgotten” by the Husband when he made his 1st Form E, and that there is no prior empirical evidence that that the monies ‘loaned’ have to be repaid. 75.Mr Egerton submits that the court should therefore draw the conclusion that the Husband has sufficient resources available to him to meet any award the court considers fair for the Wife, notwithstanding these loans which in reality may not be repayable, implying that as they have remained outstanding all these years, they should now not be included as part of the Husband’s liabilities when deciding on his ability to meet the Wife’s claims. 76.Much has been made of the Husband’s failure to include the value of his Goldman Sachs account or Federal Hill property in his 1st Form E which is however in my view not fair and ultimately invalid. While it is true that he or his former solicitors should have clarified the former better in the summary of his net worth in his Form E, I do not think it was any attempt on the part of the Husband to conceal these assets, as after all, he did disclose the Goldman Sachs account in the same Form E with a clear assertion that its statements would be forthcoming, and that the funds in the account were in fact only recently transferred from another account already disclosed, I fail to see how that could be interpreted as an attempt to conceal the Goldman Sachs account account, as otherwise he would not have mentioned it in the first place. 77.As for his Federal Hill property, I accept his explanation given at the trial that at the relevant time it was not yet registered in his own name but that once it was done he did disclose it at the first opportunity, and in view of its relatively insignificant value in his portfolio, the same of which can also be said about his Pacific Club membership which he did disclose in his 1st Form E but without giving its value, I do not find anything suspicious about the way they were disclosed either. 78.I do however agree that the Wife is entitled to raise her eyebrows over the Husband’s subsequent disclosure of his various debts and liabilities due to his father and brother, some of which incurred years before his 1st Form E, and that they warrant thorough investigation in each and every one of them in particularly over the necessity of their repayment with interest, which seems to be the Wife’s main dispute rather than their factual existence, but before that it would be appropriate to first make some observations by way of relevant background about the Husband’s relationship with his father and his position in his father’s business empire. 79.The Husband came from a big traditional Chinese family of 9 children, 8 sons and 1 daughter, and ranks 8th with a younger brother below him. This is what he said about his family and his father in his 2nd affirmation (P 3 : 999 - 1000) :
80.In the same affirmation it is also relevant to note what the Husband said about his current main business investment in Shanghai since dropping out of his family business (P3 : 1001) :
81.These evidence were never challenged by the Wife at the hearing, and while it is not the Husband’s case that the court should take into account of the effects of the breakdown of the marriage on him as one of the factors against the Wife’s claims, it would be relevant in my view to consider the issue over his liability in respect of these loans against this background. I shall now start with the JS loan. JS 82.It is a company originally owned by the Husband’s parents for the sole purpose of holding a property at DD 3XX Lot No. 2XX, Yau Kom Tau, Tsuen Wan, New Territories which his father financed with a director’s loan of $5,698,624 to the company, a fact not disputed by the Wife. 83.On 26th April 2005 the parents transferred all their shares in JS to the Husband as a gift, thereby making him the sole owner of the Yau Kom Tau property valued by agreement at $10.5 million. The issue between the parties as aforesaid is whether the father’s said director’s loan of $5.69 million should be included in calculating the net asset value of the company, and hence the Husband’s net worth. 84.The Husband’s case is that it was a gift of just the shares, not the property, on which there was no cross-examination by the Wife, and that there was no waiver of the loan which has always remained in the books of the company, as according to the evidence of his accountant that it was a normal practice that any debt or liabilities would be assigned at the time the transfer of the company shares took place if it was so intended, which was not challenged by the Wife either. 85.The Wife on the other hand argues that the gift of the company shares and hence the property to the Husband would become meaningless if he had to repay his father. I tend to agree with her, as according to the Husband’s 1st Form E, which was made some 4 months after the transfer, the property was then valued at $8 million but with an outstanding mortgage at $2.76 million, its net value would therefore come to $5.23 million, which is some $461,000 less than the father’s loan, and hence it would indeed be meaningless as a gift if that loan had to be repaid, in which case it would not have been called or regarded as a gift by the Husband at all. 86.Furthermore, if it were foreseen by both the Husband and his parents that the value of the property would easily go up substantially and hence he would still stand to gain from the transfer even if he had to repay the loan, and I have to stress that there was no evidence to that effect either in affirmation or testimony at the trial, one would expect that at the time of the transfer the loan would either have been repaid, or that there would be something in writing evidencing any agreement or requirement as to its future repayment. As the matter stands before me, there is simply nothing to suggest that the loan has to be repaid to the father, nor has there been any request or demand for its repayment over the past 3 years since the transfer, other than its mere existence in the company’s books, which can be argued that it is there just for accounting or tax purpose. 87.The Husband may of course ultimately have to repay his father in the event of the sale of the property with a profit, but until that happens, and there is no suggestion that it is going to be sold anytime soon, I am not convinced that he has to repay the loan. For these reasons I do not propose to treat this loan as part of the Husband’s liabilities for the calculation of his net assets available to meet the Wife’s claims. The MC Loan 88.The same can also be said about this loan, the details of which were set out in the Husband’s accountant report (P3 : 577). Essentially the Husband was entrusted by his father in the mid-90s after his return from Singapore, in a project to change the “land use status” of some agricultural land in the New Territories owned by a company MC Enterprises Ltd. (“MC”) with the Husband and his father as the only shareholders each holding 50% of the shares, in order to maximize the value of the land by exchanging it for a New Grant from the government, and which the Husband regarded as a test by his father of his competence. 89.The land in question was in fact originally injected into MC by his father from his private land “bank”. After the Husband successfully negotiated with the government for the New Grant and the necessary finance for the resultant land premium payment of $16.23 million by means of a loan of $10 million from his brother DC and from his own funds, the land was then sold in 1997 and yielded a net profit of $44.77 million, of which the Husband was allowed to retain his father’s half share of $22.38 million as working capital for his other business pursuits and investments. The company was then dissolved on 25th April 2003. 90.The Husband’s case is that interests are payable on this loan and that there is an agreement with his father that the loan is repayable upon his father’s request or when he is able to do so, and although it has not been put in writing, which he says not necessary as his father’s words would count for everything in the family. There was however a set-off against a sum of $4,490,926 due to him by his father’s company DH Company Ltd., hence the balance of the MC loan due to his father should be $22,385,000 - $4,490,926 = $17,894,074 as stated in his up-dated Form E filed shortly before the hearing on 16th April 2008 (P3 : 960, 965), the repayment of which is now said to be imminent upon his father’s request through his solicitors’ letter dated 2nd May 2008 for both the said principal sum and the interest thereon at 1.5% below prime rate calculated from 1997 and accrued up to April 2008 at $13.98 million, making a total sum of more than $31.87 million to be repaid within 30 days (C6 : 2317). 91.Although neither the Wife nor her accountant appear to dispute the loan or the set-off arrangement, the fact that this demand came just 3 days before the re-start of the hearing and that the Husband was expected to come up with more than $31.87 million in cash, which he did not have, to repay his father within such a short time, when the loan has been outstanding for more than 10 years, it is not surprising that she suspects that it was all part of the Husband’s attempts to mislead the court about his true financial situations. 92.There is no question in my mind about the loan given its amount and the circumstances under which it arose, and having heard and seen him in evidence and found him a truthful witness as I have earlier in this judgment, I do not believe that the Husband has deliberately misled the court as alleged, and I accept Ms Yip’s submission that the loan and interest arrangement between father and son, which may not be said to be unusual even for an average family, must be viewed in the context of the unique circumstances of this family. 93.I however believe that the letter from the solicitors, rather than to really demand immediate repayment, was actually meant to state clearly and unreservedly on behalf of the father that the loan is a very real and significant amount and not something to be lightly ignored or disregarded as far as the father is concerned, and is repayable but only when the Husband is in a position to do so. In other words, while this loan may form part of the Husband’s liabilities, at least for the principle sum, albeit more flexible in terms of the schedule of the repayment than it may appear, similarly I do not propose to include it in calculating his net worth for meeting the Wife’s claims. DC’s Loan 94.This sum of $10 million as aforesaid arose out of the MC project, and again there does not appear to be any dispute from the Wife, and having heard DC in evidence which was not challenged by the Wife, I accept that it was a genuine loan lent through one of his offshore companies F Investment Corp. to the Husband (P3 : 875 – 877). Here the Wife’s position is the same as with the other loans, that it has been outstanding for more than 10 years and the inference is that it is not repayable and should not be taken into account in calculating the Husband’s assets. 95.DC’s evidence is that he was at first hesitant about lending the money but was asked by his father to help a younger brother. He also admitted that at the time of the loan, interest was mentioned but no fixed rate was agreed, as he expected a quick repayment but it turned out that he had to keep reminding his brother either personally during their weekly family gathering, or to get his accountant to issue the reminder, copies of which he has produced as evidence. He expects it to be repaid by the Husband soon, and has since learnt about his divorce been pressing harder to the extent that the interest rate has also been worked out by his accountant similarly at 1.5% below prime rate to give a total sum of $11,254,014 for interest accrued up to 1st April 2008 (P3 : 968 – 971). 96.I find DC a truthful and convincing witness and have no reason to doubt his evidence that he expects this loan and interest to be repayable soon, after all, it is a very significant amount by any standard even excluding the interest, and there is no reason why it should be simply written off or ignored between the brothers even though it has remained outstanding for years. I agree that this loan and interest should be included as part of the Husband’s liabilities when calculating the net value of his assets. The Loan Repayment to DH International Ltd. 97.Ms Yip for the Husband has very helpfully set out a chronology of this company in her final submission to explain the issue over the Husband’s repayment of $32.85 million to the company. Essentially in 1991 a new grant of certain piece of land in Tsuen Wan was made by the government to DH Company Ltd. (“DH”), a company owned and controlled by the Husband’s father since the 70s with a current 99% shareholding with the other family members including the Husband making up the minority shareholders. 98.In 1993 the Husband became involved in the development of this land for DH with constructions of 18 unit houses which later came to be known as the GV Villas Project. Construction continued into early 2000 and there were talks between the parties at one time about moving into one or two of these units as their matrimonial home but did not materialize before the Wife left Hong Kong in April 2000 for Malaysia. 99.In 2001 an agreement was made between DH as vendor and its subsidiary DH International as purchaser for the project for a sum of $200 million in order to facilitate the sale and lease of the villas by DH International. The Husband was then appointed a director of DH International and was given 1 share, his evidence being that because he was in charge of the project, with the other 1 share being held by DH. Construction of the project was completed with the occupation permit issued on 30th May 2001, sometime thereafter the Husband moved into one of the units (House No.X), and still resides there when he is in Hong Kong. 100.On 5th January 2006 the Husband on behalf of DH International signed an agreement to sell GV Villas to EM Ltd. for $144 million upon receipt of a deposit payment of $28.8 million with the completion to take place on 28th February 2006 on payment of the balance of $115.2 million. 101.On 12th January 2006 the Husband received the said deposit of $28.8 million from DH International by means of a cheque signed by him for the company which he said was a loan made to him with the permission of his father for his leasing business in Shanghai. 102.However before the scheduled completion of the sale, the board of director of DH International passed a resolution that the agreement entered into by the Husband with EM was made without the board’s knowledge or consent and that no board resolution had been passed for the sale of the properties, which was required by the company’s memorandum and article. 103.DH International accordingly informed EM Ltd. through its solicitors by a letter dated 22nd February 2006 that the agreement for the sale of the GV Villas was not binding on DH International and offered to return the deposit of $28.8 million plus interest to EM. As a result the completion of the sale never took place as scheduled. 104.On 2nd March 2006 EM issued a writ in the High Court under HCA No. 4XX of 2006 against DH International for specific performance/damages in respect of the said agreement (C6 : 2212). The litigation was subsequently settled when EM withdrew its claims and cancelled the said agreement with the refund of the deposit of $28.8 million by DH International. The cancellation agreement between EM and DH International was signed by the father (C6 : 2220 – 2222). 105.The financial statement of DH International for the year ended 31st March 2007 then stated that the Husband owed the company the sum of $28,784,219 (C6 : 2305), and on 20th February 2008 the Husband repaid $32,855,577 being $28,800,000 + $4,055,577 interest to DH International, which was then disclosed in his last Form E of 16th April 2008 (P3 : 965 – 967 including copy of the cheque and the computation of the interest). 106.The Wife’s case appears to be that there was in fact no such loan as she believes that the Husband is the alter ego of DH International apparently on the basis that it was the Husband who signed the cheque that paid him the said sum of $28.8 million, that he refused to disclose the full terms of the settlement between DH International and EM, and that he only disclosed the repayment of the sum with interest shortly before the hearing. 107.I used the word “ appears” as the Wife has never specifically put her case to the Husband during cross-examination, but much has been made of his blanking out the details of his signature on the copy of the said cheque produced to her lawyers upon discovery, or his refusal to disclose the terms of the settlement agreement due to its confidential clause, which she puts as another example of him being less frank about his means, and that it shows that he has access to very substantial funds well in excess of what he purports to be his available resources in his Form E’s, as while he says he has debts to his father and brother of more than $42 million, he could still raise a loan of $28.8 million to repay DH International. She therefore questions why did he not repay them first and instead allowed interest to run on those loans and has chosen to repay DH together with interest when no interest was payable. 108.However, quite to the contrary, not only was the Husband as aforesaid never cross-examined on the issue, I find his evidence on his repayment to DH International clear and straightforward and well supported by documentary evidence. 109.The evidence clearly shows that the Husband was only put in charge of the GV Villas development by his father who owns the company and the project, and that it was with his father’s permission that he sold the development in December 2005 for $144 million, intending to borrow the incoming deposits to do something to “prove himself” with his leasing business in Shanghai in view of his unsatisfactory performance in the eyes of his father and his family over his marital problems with the Wife, but when the other family members were unhappy with the sale price and raised objection to the sale, his father, in the interest of maintaining “equilibrium” within the family, decided to go along with the majority and cancelled the sale. 110.As I have noted above, all these were well supported by documentary evidence including those from independent third parties that were not and could not be challenged by the Wife, and against this background and context nothing suspicious can in my view be read into the blanking out of Husband’s signature on the cheque or the refusal to disclose the settlement agreement as they are irrelevant to the real issues over the ultimate ownership and control of DH International and the Husband’s loan due to the company, or his ability to make repayment thereof as he simply returned the money from the capital of his Shanghai investment which he said has little activity. Nor do I find anything suspicious over the requirement of interest payment either given the amount of the loan and the fact that it was owed to a family company. In conclusion I do not agree with the Wife that the Husband’s repayment of $32,855,577 to DH International should be added back to his assets. HR Asia Ltd. 111.Before coming to my conclusion of the total assets of the Husband, it is necessary to resolve still one more issue over the Husband’s interest in a company known as HR Asia Ltd. in Bangkok which holds the franchise for HR School in London, which the Wife claims to have signed a deed of trust to hold certain shares in the company on behalf of the Husband during one of their trips to Bangkok in 1999 but which is denied by both the Husband and his brother DC who was then and still is the company president. Apart from running a school, the Wife’s evidence is that the company also actively invested in real estate, and that the Royal Family of Thailand as well as the (Husband’s) family had shareholding in the company. Save for her own testimony, the Wife has given no further details or documentary evidence in support of her case. 112.The Husband’s evidence is equally sparse when he admitted that HR Asia was DC’s project in which he was involved only for a few years and was at one time interested in taking a stake but never materialised. So it all boils down to the evidence of DC which confirmed that at the end the Husband did not take on any shares in his company and eventually dropped out of the picture altogether because DC preferred not to involve any member of his family in his own business. As aforesaid I find DC to be an honest an truthful witness and accept his evidence that the Husband has no interest in HR Asia. 113.I shall now come to the Husband’s net worth. It is of course first necessary to bring in those further adjustments set out in paragraph 78 of Ms Yip’s final submission in the total sum of $1,233,284.40, as well as the Husband’s Pacific Club membership which has since been sold for $93,000, neither of which is disputed by the Wife and give a total adjustment of $1,326,284.40. 114.By adopting the schedule produced by the Wife’s accountant (C6 : 2084) but rounding out the figures to million, I find the Husband’s assets and liabilities as follows : Assets:
Liabilities :
115.As I have stated above, I agree that the Husband’s liability over his loan to brother DC is both real and repayable soon and hence should be set against his assets, but cannot not say the same about the repayment of the MC loan to his father, as clearly he does not have the means to repay both at the same time, and I do not expect his father to do anything further other than to send him a reminder from time to time, as he might have done for the past 10 years, until the Husband has the resources to do so, and there is no evidence to suggest that his leasing business in Shanghai is going to turn around anytime soon. For the purpose of these proceedings, I am prepared to treat this repayment as a long term liability, and do not propose to set it against the Husband’s current assets and resources to meet the Wife’s claims, I therefore arrive at his total net worth at $35.8 million being $57.057 million less $21.254 million. I shall next consider the Wife’s earnings and earning capacity. Wife’s Earnings and Earning Capacity 116.The Wife’s case is that she has virtually nil income or earning capacity, earning the equivalence of only about $1,500 per month on average as a part-time music lecturer in a university responsible mainly for some one-on-one piano lessons and group lessons, and sometimes preparing students for their examinations. This is of course not acceptable to the Husband who believes that she is merely unwilling to earn for a living, as the options of full-time lecturer at school or giving private piano tuitions were both rejected as not open to her, who claims that she does not have the required Master or higher degree in music for the former, or the means to put a grand piano at home for the latter. 117.The Wife’s evidence during cross-examination was that if she were to give piano lessons to diploma students at home, she could charge MR300-400 per hour, but it would mean having to purchase a grand piano which costs MR80,000 or more in Malaysia which she says she cannot afford, and which would also be too big for her present house in any event. She however agreed that if she had to look for a career after these proceedings, it would probably be in the field of interior decoration, such as buying properties, renovate and re-decorate them and then selling them for profits, but would not be able to place any financial figures to it at this stage. 118.Ms Yip however submits that if the Wife were to stay in music by giving piano lessons for say a relaxing 5 hours per day for 20 days per month, she could have earned MR40,000 or the equivalence of almost $100,000 per month, and still have time to pursue other development, interests and hobbies, as it would not be fair for the Husband to sign a life-long ticket for the Wife without requiring her to tap into her own potentials and earning capacity. 119.At the Wife’s age of 43, it has been generally recognised that it would be difficult, if not impossible, for a wife with no particular skill and who has not been gainfully employed during the marriage to go out to find work upon the breakdown of the marriage, nor would it be fair or just to expect her to do so if the husband has the means or resources to support her :Rose v Rose [1951] P 29, [1950] 2 All ER 311, CA; Le Roy-Lewis v Le Roy-Lewis [1955] P 1, [1954] 3 All ER 57; M v M (Financial Provision) [1987] 2 FLR 1; A v A (Financial Provision) [1998] 2 FLR 180. 120.These must however be read in the light of the specific statutory guidelines requiring the court to have particular regard to the earning capacity which each of the parties has or is likely to have in the foreseeable future, and that the court would now expect a wife who is not encumbered by pre-school age children to take, over a reasonable period of time, such steps as are necessary to acquire or increase an earning capacity in order that she should not be financially dependent on her former husband in perpetuity, as Singer J said in T v T (Financial Relief : Pensions) [1998] 1 FLR 1072, 1080E :
121.The same can in my view be said about the Wife in this case. There is no question in my mind that she is a smart, intelligent and impressive person with great talent in music, and it is therefore all the more difficult to fathom why she has virtually put her working career on hold for the past 8 years since separation with almost no income at all, when she did not have to keep the Husband or his family company or to look after any dogs, if it were not, as the Husband argues, for her unwillingness to work. I agree with Ms Yip that the Wife, with her talent in music, should be able to earn much more than her present monthly income of $1,500 by giving piano lessons, as even at a more comfortable and manageable 2 hours per day on average at the rate of what the Husband believes she would be able to earn should get her an income of at least $30,000 per month, or better still, that she should return to pursue her Master degree which she had planned to do during her London years, so as to improve on her prospect of working as a full-time university lecturer in music which should not in my view interfere with her plan to invest in the real estate, if she is indeed serious about it. The Wife’s Needs 122.This is another major issue between the parties which took up a substantial part of the trial, and I can say at the outright that I agree with the Husband that it is a much inflated and exaggerated aspect of the Wife’s case. 123.The basis of her claim is that the Husband should provide her in accordance with her very high standard of living and luxurious lifestyle during the marriage, which she detailed in her first affirmation and gave more details at the trial, including living in the 20,000 sq.ft C’s Garden with 8 bedrooms, a swimming pool and big gardens in an one acre site, with the service of several domestic helpers and drivers and the use of fine cars, dining in expensive restaurants and private clubs, frequent holidays with travelling in first/business class and staying in 5 star hotels, and unlimited shopping in luxurious brand names/high end boutiques. 124.Ms Yip for the Husband however submits that the Wife’s claim misses one fundamental point : that she was married to the son of a rich man, and not to a rich man. 125.There is no dispute that C’s Garden, and everything that came with it such as all the services, helpers, drivers, cars, etc. were owned and provided by the Husband’s parents or more specifically the father and his companies. The same is said of the Husband’s present residence at one of the houses at GV Villas owned by DH International, one of the many companies owned or controlled by the father. The Husband’s evidence is that while the parties might have discussed during the marriage to move into one or two of these houses, permission would have to be obtained from his father first, and that the development was intended for the company’s investment rather than for their own use in the long run. 126.The Husband agrees that it would be unrealistic and pretentious to ignore the fact that he is the son of a magnate and has been able to enjoy many benefits from his father’s generosity, as had the Wife as a result, but he argues that it is wrong for her expectation and exaggerated claims to a great extent hinge on what the rich man has been providing for his son, as the law on this is clearly established in the authorities. 127.In Thomas v Thomas [1996] 2 FCR 544, 546; [1955] 2 FLR 668, 671, CA, Waite LJ stated :
128.These principles were summarised by Nicholas Mostyn QC sitting as a deputy High Court judge in TL v ML (Ancillary Relief : Claim Against Assets of Extended Family) [2006] 1 FLR 1263 when he said at p.1285 :
129.The Husband’s case is that, as I have referred to above, his father as the head of the family has retained full control over the family’s business, and in order to balance equilibrium and harmony within the family, meritocracy is one of his dominant principles, as for example, where one of the Husband’s elder brothers DC and himself were once the managing director and deputy managing director of one of the family’s parent companies FE Holdings, but have since been replaced by the youngest brother DCC, as they failed to reach the level of performance required by their father. 130. As a result of his marital problems and the litigation over the sale of the GV Villas, the Husband claims that he has become a decimal shareholder in the family’s companies, as evidenced by his being replaced by DCC as director of another family’s company DH Company Ltd., and that apart from the services within C’s Garden and the gift of the JS’s shares, there is no evidence of him receiving much bounty from his father that the Wife can validly base her claims on. 131. Ms Yip submits that no regard should therefore be given to tapping from a rich third party to pay the Wife in this case, and that any attempt to dry up the Husband’s resources in the hope that his rich parents would take care of him is an encroachment to the third party’s “prerogative” to do things in ways they see fit, and will be putting undue and improper pressure on the parents. 132. I agree that the evidence before me not only support the Husband’s case as above, but also show that the standard of living enjoyed by him and the Wife during their relationship/marriage was nowhere near as claimed by the Wife. While there is no question that such standard must have been well above average and comfortable given the Husband’s background, social status and available resources, but the Wife’s alleged high-end extravagant lifestyle and brand names shopping, whether at home or on trips, are simply not borne out by documents such as their credit cards or bank statements, usually amongst the most revealing tools of spending patterns. In fact they show a surprisingly relatively modest spending and lifestyle, with none of those brand names purchases claimed by the Wife, but instead many purchases were well below $1,000 in many cases, while the Wife’s allegation that the Husband might have done his expensive and extravagant purchases in cash is totally unsupported by his ATM card records or any other evidence, and is in my judgment extraordinary and incredible in the circumstances. 133. Furthermore, many of their overseas travelling in business class and staying in expensive hotels were in fact for the Husband’s business which were paid for by his family business or companies or when the parties stayed in hotels owned by his family. Like many of her evidence on their pre-marital relationship or the Husband’s conduct, I find the Wife’s evidence about the standard of living and lifestyle during their relationship/marriage smacked on inflation and exaggeration, and unsustainable on close scrutiny. 134. The Husband however does not dispute that the Wife should have her own accommodation, even though there is no suggestion that she is required by her parents to move out of their house in Kuala Lumpur, but certainly not the kind of mansions that she suggests, and that if she does not want to move to the Federal Hill property for security reason, which is in fact not an issue as according to CKF’s evidence Federal Hill ranks only next to the Wife’s favourite area Kenny Hills, he suggests that she can either sell it for about MR950,000 ($2.25 m), or let it out for rental income. 135. The house which she has been residing for a number of years since separation is a 2,000 sq.ft town house with 3 bedrooms, gardens and car parking space. At present she has the use of a part-time domestic helper, and she drives her BMW purchased for her by the Husband in 1999. The Husband believes that with the sale proceeds from the Federal Hill property and the lump sum from his offer she can easily buy a decent house of similar size and standard in her preferred area for MR650,000 or about. Taking into account of the value of the Federal Hill property, I believe a house within the range of about MR1.0 - 1.25 million ($2.5 – 3.0 m) would be of comparable size and standard of his own residence and would suitably and comfortably accommodate the Wife. 136. She will of course need some capital for decoration and furnishing her new house, but not as much as $3 million as she detailed in her open proposal which was made on the basis of a much more expensive house and to be completely renovated and decorated with new furniture. It certainly does not make any sense that the costs of decoration would be as much as the costs of the house. I believe that a more reasonable and realistic sum of $500,000 should suitably fulfil the requirement. 137. There is of course the claim for $1 million for a new top model of BMW. The one that the Husband purchased for the Wife in 1999 was no where near this level, and I do not see why the Wife would need that now. I believe $500,000 for a somewhat lesser model would serve the purpose equally well. 138. As for her claim for monthly living expenses of $120,000 to $150,000, the Wife has given the details and breakdown in her open proposal and which she puts down as anticipated expenses on the basis of what she believes she is entitled to, rather than on her actual expenses which were in fact much more modest at slightly over $31,500 in her 1st Form E of 2005, and somewhat higher at $41,220 in her last Form E filed in April 2008, but still paled by comparison with her anticipated expenses. 139. Also by way of comparison with the Husband’s monthly living expenses at GV Villas which he disclosed in his 1st Form E of the same period at a similar sum of about $30,000 exclusive of mortgage payment, and somewhat higher at about $50,000 excluding again his mortgage payment and his interim maintenance payment for the Wife in April 2008. While accepting that his car and transportation expenses are provided for by his company, his total monthly expenses then and now, which were never challenged by the Wife at the trial, are also far less than what she claims in her open proposal. These actual expenses of the parties are in my view far more accurate and realistic indicia of the parties’ respective needs and requirements, and more in line with the standard of living which they used to enjoy in the past, bearing in mind that for a lengthy period after her return to Malaysia in 2000, she was content to receive a monthly sum of $25,000 from the Husband to meet her living expenses, which sum was subsequently made an order of the court by consent shortly after these proceedings, and was only increased to $35,000 in 2007. 140. The Wife’s tendency to exaggeration was once again ruthlessly exposed during the extensive cross-examination of her anticipated monthly expenses in many items in particularly as to her personal expenses such as almost $19,000 for clothing, shoes and accessories, $14,220 for grooming, almost $6,000 for entertainment and dining out, $47,400 for travelling, and more than $10,000 for medical, dental and insurance, just to name the most eye-catching items, none of which were even close to what she used to spend during the marriage, or what she actually now spends. For all the reasons given I reject her claims that she needs $120,000 or $150,000 per month for her living expenses as unreasonable and unrealistic, and not what the Husband had ever been able to provide. 141. I wish to stress that it is not the items which she says she needs that the Husband finds objectionable, as most appear to be either necessary or reasonable for the former wife of a husband from a very wealthy family, but rather the amounts that have been put forward as necessary and reasonable that the Husband disputes. While considering the Wife’s needs, I am mindful that they should, where appropriate, be generously interpreted : DD v LKW, in particularly as against the background of this case and the Husband’s resources. 142. I agree that it would be reasonable for her to have the service of a maid and a driver as well as a part-time gardener as part of her general expenses set out in her open proposal, and while there were some justifiable disputes by the Husband over the amounts claimed for her other general expenses such as for the driver, utility, household upkeep and pets, I believe a somewhat adjusted figure of $20,000 for expenses relating to the house would be reasonable. 143. As for her anticipated expenses relating to her new car of more than $7,200 including petrol and maintenance as well as road tax and insurance, I note that her such expenses for her present 8 year old BMW were some $2,000 less in her last Form E, and if she intends to purchase a new BMW which may well require less maintenance, a sum of $5,000 would seem a more reasonable amount for this item. 144. I now come to her most contentious item : personal expenses which she claims as aforesaid almost $120,000 in total which I have already rejected as not supported by facts or evidence and not justifiable in particularly on clothing, grooming and travelling, and should therefore be reduced substantially to reflect the true picture. I do however accept that her credit card spending during the marriage would not have included those expenses paid by the Husband, for example, during their holidays or when they were dining out together, while other items such as club and sports activities, medical and insurance while still seem high but acceptable with some minor adjustment given her tinnitus problem and the background of her case. 145. Taking into account of the standard of living and lifestyle she used to enjoy during the marriage and the subsequent separation, as well as the evidence before me, and with proper adjustments made to various items as aforesaid, I propose to around up the Wife’s personal expenses to a generous $30,000, bringing her total needs and requirement to $55,000 per month. This would give an income needs of $660,000 per annum which translates roughly to a capitalised requirement of $11.3 million using the Wife’s Duxbury calculation but substituting for the above figures. Contribution 146. Ms Yip submits that this case is unique in that there is almost nothing to say about contribution in kind or in monetary terms, with the Wife contriving to cast a role of a “mother” who contributed by looking after the dogs which is therefore negligible or unmeritorious, while monetary contribution was also unremarkable as the turbulent relationship had consumed all the energies of the Husband who had achieved nothing to increase his personal portfolio, having let know his father’s expectations and had been unable to deliver standard performance, and at the end there was just a mutually destructive relationship with hardly any positive aspect, let alone positive contribution by either party to this marriage. 147. Mr Egerton while acknowledging the Husband’s contribution as a financial provider has conceded that the Wife was never expected to be anything other than as a wife at home. Both submissions I agree just about sum up the uniqueness of this case as far as contribution, or the lack of it, is concerned. Length of Marriage 148.There is no question that this marriage lasted less than 3 years when the Wife left in April 2000, and any attempts to stretch it to 2007/2008, as she appears to be doing so with her argument that it was only until then when the Husband finally realised that there was not to be any reconciliation and started to take these proceedings seriously, must in my view fail, as not only was it the Wife’s evidence that in her mind the marriage was finished when the Husband told her sometimes in 2000/2001 not to return to their home in Hong Kong, but it was also on this basis that the court made the finding of their separation in April 2000 that led to its granting of the decree of divorce to her petition. It is therefore not permissible in law to allow her to now say otherwise of the length of the marriage when there was in fact no resumption of cohabitation since April 2000, and no evidence to suggest any form of marital life between the parties since then that can be said to remotely resemble a marriage. Conclusion 149.Having considered all the matters in section 7 of MPPO which the court is required to take into account, I shall now come to the over-arching objective to achieve a fair outcome between the parties in the light of the relevant authorities referred to above by applying the 3 strands or principles of needs (generously interpreted), compensation and sharing. 150.There is no question that the principle of needs applies to the case, while given my findings above the principle of compensation is simply not engaged. But is the principle of sharing engaged? In cases such as Miller where it was a short marriage but with a very substantial increase in the asset base, the sharing principle may certainly be engaged. 151.However, in a short marriage where the assets were all in place prior to that marriage and where the assets have not increased by reference to the “partnership” activity or contribution, as was pointed out in McCartney v McCartney [2008] EWHC 401, the wife should get a needs-based award as the principle of sharing is simply not engaged. 152.This is of course the guidance from Miller when Lord Nicholls said the following about short marriage :
153.Clearly premarital wealth is an important factor that can act to displace the sharing principle altogether. In other words, there can be a departure from sharing in a case where virtually all the assets are pre-marital or derive therefrom, as held by Baroness Hale of Richmond in Miller in connection with premarital property, inheritance and gifts :
154.The Husband has demonstrated that there was virtually no marital acquest accumulated during the marriage, and has produced a schedule (Exhibit Bundle 13 : 4429) comparing his portfolio before marriage, i.e. September 1997 with $59.6 million, and after their separation in May 2000 with $49.65 million, of which Ms Yip submits as a most uneventual and insipid character of the assets, consisting of only passive investments at banks which required no acumen, brainwork or any input at all. 155. The evidence, which was not challenged, was that at the time of the marriage the Husband’s only asset was his share of the profits from the MC project plus his father’s half share which he borrowed, and when the parties separated, the portfolio in fact dropped by $10 million. There was simply nothing much that could be called marital acquest. 156. Ms Yip submits that this is therefore primarily a “needs” case, the principle of which I would just refer to the speech of Lord Nicholls in Miller :
157.Given my findings I agree with Ms Yip’s submission and need only echo Bennett J in the McCartney case, when he said at p.311 :
158.I have earlier already capitalised the Wife’s income needs at $660,000 per annum, which must now be set against my findings of her earnings and earning capacity of $30,000 per month ($360,000 p.a.), giving a net annual sum of $300,000 which she would require from the Husband to meet her needs (generously interpreted), and hence a capitalised income needs by using the same Duxbury calculation to arrive at roughly $5.16 million which I would round up to $5.2 million. Adding her housing needs, decoration, a new car and a new piano as I have found above will give a total capital sum of about $9.2 million, but taking into account of the $1.5 million of her share portfolio, I arrive at a net sum of $7.7 million which she would require from the Husband. Given his offer of the Federal Hill property valued at $2.25 million, this would mean a lump sum of $5.45 million against which should be set off the $1.2 million which he has earlier advanced to her, giving a net sum payable of $4.25 million. 159.Accordingly I order that the Husband shall within 3 months from the date of this order, or such longer period as may be agreed, transfer his interest in the Federal Hill property at his costs to the Wife, and to pay her a lump sum of $4.25 million whereupon any interim maintenance payment shall cease and its order be discharged. This is to be in full and final settlement of the parties’ claims against each other, which claims shall stand dismissed. 160.I am convinced that this is a fair result between the parties in all the circumstances of the case and for the reasons I have given. In the end the Wife will exit the marriage with properties and funds of some $9.2 million, which should generously provide her with a suitable accommodation and a comfortable lifestyle, and at the same time enable her to enhance her earning capacity and/or launch an appropriate career. It is of course much lower than what she claims in her open proposal, but if she considers it to be unfair, I only need to quote Bennett J from McCartney :
161.I shall next wait for the parties to restore the hearing on the question of costs, but would in the mean time like to express my gratitude to counsel for both parties for their valuable assistance given in this long and difficult hearing.
Mr Robin Egerton instructed by Messrs Stevenson, Wong and Co for the Petitioner. Ms Anita Yip instructed by Messrs Chaine Chow and Barbara Hung for the Respondent. Appeal allowed: see CACV339/2008 dated 22 July 2009 |
Further hearings and rulings under CACV 339/2008