W v. S
Read the full judgment text of FCMC 5382/2006 on BabelCite. This Family Court judgment was delivered on 6 February 2009 before Deputy District Judge T Chan.
Divorce – Ancillary Relief – Matrimonial Proceedings and Property Ordinance (Cap 192) s.7 – Sharing Principle – Special Contribution – Conduct – Property Distribution – Clean Break – Computation of family assets – Distribution of assets – Husband's conduct regarding Order for Sale – Ancillary relief granted. Clean break order. Husband transfers Begonia to Wife, pays $2.7m lump sum, transfers 1/2 CCB shares, sells Hoi Tan, Wife transfers Bowen to Husband, transfers 1% A.T. Ltd shares, splits K Property proceeds. Husband pays Wife's costs. Marriage lasted 4 years, no children. Dispute over investment properties (Bowen, Begonia, etc.). Husband accused of hiding income and assets. Wife claims joint venture. Court found Husband dishonest about income and conduct regarding court orders. Equal sharing principle applies to matrimonial properties. Husband's refusal to sell Bowen and Hoi Tan despite court order was inequitable.
Legal issues: Computation of family assets · Distribution of assets under s.7 Cap 192 · Husband's conduct regarding Order for Sale
Outcome: Ancillary relief granted. Clean break order.
Cites 1 case
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FCMC 5382 /2006 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION NUMBER 5382 OF 2006 ----------------------
---------------------- Coram : Deputy District Judge T Chan in Chambers (Not Open to Public) Date of Hearing : 9, 10, 11, 13, 14 April, 3, 4, 5, 8, 9 September, 6 October 2008 Date of Written Final Submissions by Petitioner : 20 September and 14 October 2008 Date of Written Final Submissions by Respondent : 2 and 29 October 2008 Further application by Respondent : 29 December 2008 Date of Handing Down of Judgment : 6 February 2009 ---------------------- J U D G M E N T ---------------------- Introduction 1.The Petitioner wife ("the Wife") asks for ancillary relief from the Respondent husband ("the Husband"). She asks for half of the family assets but the Husband refuses her claim. She asks for $9.3m whilst the Husband offers $3 m for a clean break. (I) Background 2.The Husband is now 39 years of age, a medical practitioner, brought up in Hong Kong. The Wife is now 38, she emigrated to Canada with her family in 1989 and attended high school and college there. Having graduated in 1994 in business studies, she stayed and worked in Toronto as an administrative assistant in a real estate company. In 1995, she came back to Hong Kong for holiday. She first met the Husband when he came into the shop owned by her father. They since met a few times in the neighbourhood as the Husband's clinic was situated nearby. Courtship started two years after when the Wife returned from Canada to Hong Kong for good. 3.Although there was a short period of separation during their courtship due to the involvement of another woman, the two eventually got married on 28 November 2001. The Wife filed a petition for divorce on 11 May 2006 on behaviour of the Husband ("the Petition"). Although the Husband had once filed an Answer and Cross Petition, the Petition was eventually listed in the Special Procedure List and a decree nisi was pronounced on 6th February 2006 on facts pleaded by the Wife. The parties have no children. 4.The Wife has no income at the moment. She has been paid maintenance pending suit at the amount of $15,000 per month from the sale proceeds of K Property since May 2007. The Husband was ordered to pay 75% of the costs incurred by the Wife's application for this interim order on maintenance. 5.There have been a number of properties acquired by the parties before and during the marriage and these properties formed the crux of dispute between them in this application. The history of their acquisition will be set out in detail when ownership is to be decided. A brief note on the background of each property will be helpful at this stage. Purchase and Sale of S Centre 6.The S Centre was purchased in 1991 for $872,000. It was purchased by A Limited. The Husband, his sister and brother-in-law are shareholders. The Husband holds 50% shares, his sister and brother-in-law each holds 25%. The Husband says that he only holds the 50% shares of A Limited on trust for his mother. S Centre was eventually sold in June 2006 for $1.36m. Purchase of W Building 7.In 2006, A Limited purchased another property at W Building in San Po Kong with the sale proceeds of the S Centre and it is now being used by the other two directors as office premises. The Husband maintains that he has no interest in A Limited or W Building. Purchase of the M Property 8.The M Property was purchased in March 1996 in the name of SA Development Ltd for $3.5m. M Property has been and still is occupied by the Husband whilst his partner, S, uses the place for storage. The Husband has 50% shares of SA Development Ltd. Purchase and Sale of O Property 9.The O Property was purchased in 1997 at $8.08m by H Ltd of which the Husband holds 50% shares. S, holds the remaining 50%. O Property was sold for $5.65m in December 2007. The parties rented O Property from H Ltd as their first matrimonial home for a short period of time. Purchase and Sale of the F Mansion 10.The F Mansion in Apliu Street was purchased in the sole name of the Husband for $326,000 in 2002 and was sold in August 2007 for $610,000. Purchase and Sale of B Property 11.The parties purchased their matrimonial home at the B Property in February 2003 for $3.1m as tenants-in-common in equal shares. It was sold in February 2004 for $4.5m. Purchase and Sale of Fa Po Street Property 12.One month after the sale of B Property, the parties bought another property at Fa Po Street ("the Fa Po Street Property") for $6.12m as their matrimonial home. The parties held this property as joint tenants. The Fa Po Street Property was eventually sold in 28 September 2005 for $13.08m. Purchase and Sale of Hoi Tan and K Property 13.Hoi Tan and K Property were purchased in March and April 2005 respectively. They were held by A. T. Ltd. A. T. Ltd. was set up also in 2005. Both the Husband and Wife are directors. The Husband holds 99% whilst the Wife holds 1%. The only business undertaken by A. T. Ltd. since its incorporation is property trading. The purchase price for Hoi Tan was $600,000. K Property was purchased at $520,000 and was sold for $660,000 in April 2005. As mentioned earlier, the proceeds of K Property are now being stakeheld by the solicitor of the Wife from where her maintenance pending suit is paid out every month since May 2007. Purchase of Bowan and Begonia 14.In October 2005, shortly after the Fa Po Street Property was sold, two other properties were purchased, one in Bowen Road ("Bowen") and one in Begonia Road ("Begonia"). Bowen was purchased in joint names of the parties at $8.3m with a mortgage of $4.5m. Begonia was purchased in the name of A. T. Ltd. at the price of $7.28m, after payment of $4.18m, there was a mortgage taken out for $3.1m. 15.At present, Bowen is occupied by the Husband with his girl friend and their children (the second baby expected in December 2008 should have been born by now). The Wife says that she has always been and is still living in Begonia but this is disputed by the Husband. Tropicana 16.This is a property held in joint name of the Wife and her father. It was purchased in February 1999 and is now being occupied by the parents of the Wife. The mortgage loan was fully paid in 2003. The Wife says that she only holds the property on trust for her father and she has no beneficial interest in it. This is disputed by the Husband. Breakdown of the Marriage 17.After the sale of the Fa Po Street Property and before Bowen was ready for occupation, the parties lived with their respective families separately because neither of the temporary accommodation arrangement could house both of them at the same time. The Wife had never stayed in Bowen because during renovation of the same, she discovered that the Husband had an affair with a woman and the parties lived apart after some vain attempts to reconcile. Position of the Parties 18.The Wife says that she is entitled to 50% of all family assets. It is the Wife's case that the wealth of the family was created during the marriage through a wise and flexible strategy adopted by the parties over investment in properties including their matrimonial homes. Instead of insisting on having a steady accommodation for the family, she together with the Husband adopted a strategy of "invest while living-in". The parties would locate a property with good investment prospect, have it renovated and live in it for a while waiting for a good offer, when an offer comes, have it sold for a profit, then look for another property and the cycle repeats. She would not deny the financial contribution of the Husband in these property investments, she however emphasises that her efforts and contribution should not be ignored. She regards herself as having a joint-venture with the Husband and therefore should be entitled to an equal share of the family assets. 19.The Wife also alleges that the Husband has hidden income and that his assertion on holding assets on trust for his mother is a sham. 20.The Husband's case is that he has made special contribution to the accumulation of wealth, he denies any contribution of the Wife. He says that all properties held in joint names of the parties or by A. T. Ltd. are all his; he has no beneficial interest in those assets held in joint-name with his family members or in his sole name held on trust for his mother; his admits that he has an interest in those properties held in joint name with his business partner. He denies the Wife's claim for equal share in any of his assets. Further he is adamant that the Wife has hidden assets. 21.To sum up, there is huge difference between the parties on the size of the family assets and the way such assets should be distributed between them. Main Issues for Trial 22.The main issues are therefore:
23.The parties have disputes over most aspects of the other's case and there are quite a number of sub-issues under each of the above-mentioned main issues. The Law 24.In considering the applications for ancillary relief, I will need to have regard to the matters set out in s. 7 (1) of the Matrimonial Proceedings and Property Ordinance (MPPOL), which I set out as follows :
25.It is not disputed that the principles set out in DD v LWK should be considered. The parties however hold different views on how the principles should apply. To adopt the two-stage approach as suggested by Cheung JA in DD v LWK in my investigation, I shall work out the size of the family assets first. In paragraph 69, Cheung JA said this: (3) The inquiry should be conducted in two stages :
Property and other financial resourcesof the Husband A. Landed Properties acquired before and during the marriage 26.Apart from the two former matrimonial homes in B Property and Fa Po Street as mentioned above, there are still quite a few other properties acquired by the Husband either in joint-name with the Wife or with others, or in his sole name. I have already mapped out a sketchy outline of the properties owned or alleged owned by the parties above. I now set out the facts of each of the property transactions for discussion on ownership. I list them out in the order of the dates they were acquired. M Property 27.As mentioned this is held by SA Development Ltd. The Husband and Mr. S incorporated SA Development Ltd in 1996 and H Ltd formerly known as FS Limited in 1997 respectively. The Husband holds 50% of the shares in each of the companies. M Property was purchased for $3.5m in 1996 and has been in use as the Husband's clinic whilst Mr. S would just keep some medicine therein. The Husband paid half a million as his share for the downpayment. M Property was subject to mortgage and the monthly mortgage payment was about HK$40,000. The mortgage had been discharged upon full payment of the mortgage loan. The Husband is now paying a rental of HK$25,000 a month to H Ltd which then pays to SA Development Ltd a sum of $20,000 for same purpose. 28.The value of M Property is agreed by the parties to be HK$4.6m for purpose of trial. O Property 29.O Property was purchased under the name of FS Ltd (now H Ltd) in 1997 for HK$8.08m. According to the Husband, the purchase money came from the profit he had made through real estate transactions undertaken by SA Development Ltd. He claims that such profit amounted to $1-2m. O Property had been occupied by the Husband and Mr. S together and separately at different times. As mentioned earlier, it was also the first matrimonial home for the parties. There was also a time the property was leased out for rental. It was sold for HK$5.65m eventually in December 2007. The Husband's share of the net proceeds amounted to HK$1.85m. According to the Husband, after repaying debt owed to Mr. S, SCL and LTC; paying mortgage payment for Bowen and Begonia and paying bank loans and legal fees, the closing balance of the bank account keeping these proceeds was HK$653,135.88 as at 11 March 2008, and $365,146 as at 26 August 2008. He is about to pay costs to his lawyers and he anticipates that the balance would not stay long in this account. F Mansion 30.This was a property wholly owned by the Husband. He purchased this for $326,000 in September 2002 in his sole name and had it sold for $610,000 in August 2007. The Wife said that she had no knowledge about this asset until the affair between the Husband and with his current girlfriend came to light. It is the Wife's belief that the Husband used this property to keep his girlfriend(s). The Husband said that this was his personal investment and he saw no need to disclose it to the Wife at the material time. He said it was like his investment in shares and stocks in which case he would not let the Wife know. The position of the Wife over this asset is that it should be part of the family's worth because the purchase was made after their getting married and the purchase fund must have come from their joint assets. B Property 31.The parties purchased this property as their matrimonial home in February 2003 for $3.1m. It was acquired in the name of the parties as tenants-in-common in equal shares. It was sold in February 2004 for $4.5m after the parties stayed there for about 11 months. According to the Husband he had paid HK$220,000 on renovation. Further the Husband denied that he had made a profit of HK$1.4m upon sale of B Property. He asked that the expenses in the sale and purchase and the mortgage repayments together with interest be accounted for when the profit is worked out. 32.The Husband's case is that B Property belonged to him solely and he stated in his 6th affirmation that
33.The Wife denied such assertion. She said that the understanding was that it belonged to them as husband and wife. At trial, the Husband was asked if it was meant to be for his sole interest only, why had he joined the Wife as tenant-in-common. His answer was that by such arrangement, if he were to die first, his own family would at least get 50% of the interest and the Wife would not get the whole of the property. He went on to say that by such arrangement he could control his share, his share meant 50%. He was further questioned by Ms. Tsui that why he would say his share meant 50% if he insisted that all net proceeds belonged to him. In reply he said that he had not thought about his share carefully. Ms. Tsui put to him that there was an understanding that they had equal shares in it and that was because both were contributing to the family. The Husband said he had not thought about that. When further questioned, he said that the understanding that all net proceeds belonged to him derived from conduct of the parties because he paid for the investment but there was no express agreement between the two. The Fa Po Stree Property 34.About one month after the sale of the B Property, the parties bought the Fa Po Street Property as their matrimonial home. The Fa Po Street Property was bought in the name of the parties as joint tenants. The purchase price was HK$6.12m and was eventually sold on 28 September 2005 for HK$13.08m. Before sale, it was pledged for a second mortgage for about $2m. 35.Ms. Tsui on behalf of the Wife asked the Husband why he would name the Wife as a joint tenant if he said the property belonged to him solely. The Husband said that being one of joint tenants, he would take all the interest if the Wife were to die first because here the Wife could not assign her interest to others as in the case of tenants-in-common. Hoi Tan and K Property 36.These two properties are held also in the name of A. T. Ltd.. The parties are shareholders and directors of A. T. Ltd.. As mentioned in the above, the Husband is holding 99% while the Wife is holding 1% of it. The Wife alleges that she has always thought they were equal partners and that it was only when preparing her claim for ancillary relief she was informed by her lawyer that she held only 1% of the shares in A. T. Ltd.. Hoi Tan was purchased in March 2005 where K Property was purchased in April 2005. The Wife said that the purchase was funded by a second mortgage loan acquired with Fa Po Street Property whilst the Husband said that he himself had provided for the purchase. K Property was sold for $660,000 in June 2007. The sale proceeds are now kept by the solicitor for the Wife for her maintenance at the amount of $15,000.00 a month. For the purpose of trial, the agreed value of Hoi Tan is $600,000. The Wife complains that the Husband has refused to accept an offer to purchase Hoi Tan at $800,000, she asked me to take the value of the Hoi Tan at HK$800,000. Bowen 37.Two properties were bought shortly after the sale of the Fa Po Street Property, Bowen and Begonia. Bowen was purchased in the name of the parties as joint tenants. 38.The case of the Wife is that Bowen was meant to be the matrimonial home for them after Fa Po Street Property was sold. Unfortunately they had never moved in together as the extra-marital affair of the Husband came to light before Bowen was ready for occupation. 39.Now Bowen is being occupied by the Husband, his girl friend and their children. In fact he has stayed there since October 2007. The Wife complains that the Husband has refund to sell Bowen for $15.5m on "as is" basis, so she asks me to take $15.5m as the value of Bowen. Begonia 40.Begonia was held in the name of A. T. Ltd.. It is now occupied by the Wife. There is dispute between the parties on whether Begonia was meant to be a matrimonial home. For the purpose of trial, the agreed value of Begonia is $9m. B. Properties allegedly held by the Husband on trust for his mother or his sister i. S Centre and W Building 41.These two properties were held in the name of A Limited. The Husband holds 50% whereas his sister and brother in-law each holds 25%. The issue in this property is whether it is trust property as claimed by the Husband. Evidence of the Husband 42.The Husband said that he only holds the 50% for his mother and that he himself had no interest in the company. He emphasised that at the time A Limited was incorporated, he was still at school and he could not have the fund. It was his mother who asked him to execute some documents on her behalf and all he knew was that a company was incorporated for property transaction. Eventually S Centre was purchased. He said he had no idea why his mother did not ask his brother who was 6 years older than him to hold the interest in A Limited for her. 43.He said that S Centre was purchased in the name of A Limited in August 1991 for $972,000 and sold in June 2006 for $1.36m. W Building was purchased also in June 2006 for $2.38m. It was at the suggestion of his sister that a place be looked for. Although he helped in searching for a suitable property at the request of his sister, the Husband said that he had no beneficial interest in the property or in A Limited and had always been and still remained a trustee of his mother. Evidence of SLH 44.She is sister of the Husband. She is one of the shareholders of A Limited. Under cross-examination she denied that the half interest held in the name of the Husband was in fact a gift from their mother. Although she was the one who suggested that a property be purchased, she did discuss about it with her mother before hand. She agreed that after the purchase of W Building, there was still some money left from the sale proceeds of the S Centre, that amounted to about $165,000. She said that the amount was being kept by A Limited. She said that she and her husband were running A Limited and that the Husband seldom got involved except that he helped in looking for a suitable property to buy. Evidence of HF 45.HF is mother of the Husband. She is now 79 years old and she is illiterate. As to the interest in A Limited, she said she was not aware of a company called A Limited but she knew she bought an industrial unit in San Po Kong. She said she put in $100,000 for part-payment, the rental income then covered the mortgage payments. She did not say much about W Building but said that her daughter had consulted her about the sale and purchase of the two industrial units. My Finding on the Husband's Interest in A Limited 46.After hearing all witnesses, I find that the Husband has no beneficial interest in A Limited and the properties held under it's name. I note that the mother of the Husband might not have played an active role in the property transactions, she was not even aware of A Limited, this did not undermine her credibility given her age and lack of education. I accept the Husband's saying that at the time A Limited was set up, he was still at school and did not have the fund to set up A Limited for the purchase of S Centre. I accept that the mother paid part of the down payment. I note that Madam Ho was not given any dividend when there was rental income received by A Limited, I note also the comment of Ms. Tsui that Madam Ho was not given any share of profit when S Centre was sold. I find it only consistent with the style the mother in her investment in securities where she asked for bonus to be paid in the form of shares and not in cash. There was no evidence before me that the Husband was given any share of profit either. In the situation of A Limited, she did not oppose to the income be reinvested at appropriate time on appropriate project at the discretion of her children. The submission of Ms Hui that there was in fact no booked profit for distribution is also noted. I find that the Husband was only carrying out the transactions for his mother. I find that the Husband have no beneficial interest in A Limited nor any properties held under its name. ii. Account with Bank of America (Macau) now known as China Construction Bank (Macau) ("the CCB Macau Account") 47.This account is in sole name of Husband. As at August 2008, the stocks in the CCB Macau Account were worth $1,376,500. It is the case of the Wife that all the money and investment in the CCB Macau Account belong to the Husband. She said that during the marriage, the Husband told her that he had put part of his income away and kept it in Macau. There were occasions where the Husband would go to Macau over lunch time to deal with his money matters. This was denied by the Husband, he said he held the CCB Macau Account for his mother and he had no interest in it. Evidence of the Husband 48.His evidence given in court was that in or about early 1990 (in his Answer to questions raised by the Wife, he said it was in about 1987 when he reached the age of majority), her mother bought some shares of the Hong Kong Bank in his name. In 1994, his mother bought another 10,000 shares again under the name of the Husband. When 80% of those shares were sold in 1998, the proceeds of about $2m were put in the Husband's sole name account. According to the Husband, at around that time, many brokerage firms in Hong Kong closed down due to the adverse investment climate after 1997, the securities trading in Hong Kong became less convenient. He was informed that if he had an account with the Bank of America in Macau, he could trade by phone and he found this practice very convenient. It was his evidence that if he traded through the CCB Macau Account, those bank staff could recognise his voice and therefore would not ask for password or proof of identity before processing the order placed by him. 49.When cross-examined by Ms. Tsui, the Husband said that he could not remember how much he had put into this account in Macau for investment. The balance went up and down depending on the performance of the investment. At the highest, there was about $3m, there was about $1.2m-$1.3m left as of August 2008. 50.As to the Wife's allegation that he had taken long lunch breaks to go to Macau to handle his savings kept there, his answer by affirmation is this (p2684 paragraph 19d)
Evidence of HF 51.She said she bought share of the Hong Kong Bank long time ago she could not remember when. She remembered that it was before the execution of splitting 1 share into 3. She agreed that she transferred the shares to the Husband when he was only 18. She said it was because he was the youngest among his siblings and he listened to her. She said that in 1998, she had this idea of selling the shares, so she asked the Husband to do that for her. About $2m was cashed in by the sale. She knew that the Husband had invested the money through an account in Macau on her behalf. She agreed that there was once HK$2.8m in the Macau account for trade, but now only about HK$1.3m was left. She said that she would not ask for compensation even if the Husband lost all her money. My finding on the True Owner of CCB Macau Account 52.After hearing the Husband, I find his explanation as to why he opened the CCB Macau Account unbelievable. According to him, the reason why he opened an account in Macau was for convenience, i.e., the bank staff would recognise his voice and would not ask for proof of identity before processing a deal for him. He said although such service could be provided by brokerage firms in Hong Kong, it is not rendered by banks. As he found a bank more save to deal with his investment, he opened this CCB Macau Account. I find this reason far from being convincing. Without supporting evidence, it is difficult to believe that there is no comparable services offered by banks in Hong Kong. His denial on the Wife's allegation that he had been to Macau to deal with his money matters was without any substance at all. His denial of going to Macau over lunch could be easily proved by documents but there was no evidence before me apart from his bare assertion. 53.He was evasive when asked about how he handled the so- called proceeds from the sale of Hong Kong Bank shares for his mother. First he said he was not sure about the total amount he had put in, he kept saying that it was about $2m. In any event, whether it was $2m or $2.8m, it was not a small amount that would skip one's mind. Again, I do not see why the Husband could not resort to bank records to find out. Moreover he could not tell which account he had kept this large amount of money and traded in securities for his mother before he used this CCB Macau Account. He could not remember which year he opened the CCB Macau Account for his mother. The only time reference he mentioned was after 1997. He said it was after 1997 many brokerage firms closed down in Hong Kong. However, the CCB Macau Account was according to record and Ms. Hui's submission opened in 2002, some 4 years after 1997. In the meantime, he had been trading "for his mother" with an account in Hong Kong he did not disclosed. There seemed to have no inconvenience in doing so. Finally, the Husband has his own stock investment account in Hong Kong, he has not complained that it was inconvenient, nor has he moved this investment to Macau for convenience. Further, when giving a reply to the question raised in this regard by the Wife on 27 July 2007 (A4 926) he explained why the proceeds of the sale of HSBC was remitted to the CCB (Macau) Account. Instead of saying that such move was for convenience, he said he acted upon his mother's direction for doing this. This reply was not prepared by his former solicitors who allegedly was so inadequate that the Husband had to change to Ms. Hui who now acts for him. 54.In her final submission, Ms. Hui argues that if he was to bring money to Macau, it could not explain why there were no deposits in the CCB Macau Account after his visit there and why he would still need to go to the deposit box after going to Macau and why would he choose to go on 26 March 2006 which was a Sunday. It was never the Wife's allegation that he went on those days to handle his money business. It is not disputed that his two visits to Macau in those 5 months were carried out during holidays, first on the New Year Eve and then during Easter holidays. But I could not agree with Ms. Hui's argument. It seems she meant that if the Wife alleged that the Husband kept money in Macau, she must prove that each and every trip the Husband went over there was for money matters. This could not be right. One must not forget that Macau has always been a nice place for short vacations for busy professionals. 55.I do not accept the Husband's saying that he has no beneficial interest in the money and investment in CCB Macau Account. I find that the stocks in that account belong to the Husband. iii. HSBC bank account A: 56.The Husband said that this was an account he held in joint name with his brother for a sum left behind from the sale of a property of his mother in Canada. He and his brother traded with this account for his mother. They did not have to consult each other nor would they consult their mother. The value of stock in this account as at March 2008 was HK$64,244.28 57.Madam Ho when giving evidence said that she had no idea about any money held by the other son. She remembered she had a property in Vancouver which was sold at a loss. She said that there was no money left for investment from the sale. She denied having asked the two sons to put those money in stock trading. This is not consistent with the evidence of the Husband. I see no reason I should resolve the inconsistencies in favour of the Husband especially when I have found him not believable over a few other areas. I find that the Husband has an interest in this account. iv. Joint Venture in land projects in Canada 58.This represents contribution to a land banker for a joint venture scheme in a land development project in Canada. The Husband said that he held this on trust for his sister. This was purchased in 1997 and her sister's share was about CAD19,376 with a loan of CAD14,269.51 and the net worth of the land as at July 2007 was CAD 5,107. As the amount involved was relatively small and the transaction took place prior to the marriage, the Wife did not seriously pursue on this at the end. C. Other Assets of the Husband i. HK Securities Clearing Ltd: 59.As at February 2008, the Husband had these stocks in his name with the HK Securities Clearing Ltd. Total value of them being $168,000 at that time.
ii. HSBC bank account B: 60.The Husband said that this was his own investment account. He is holding 200,000 shares of 921 in this account. The value of this as at February 2008 was $178,000. On record the position remained the same since. According to the Husband, this stock had been suspended from trade since June 2005. The value booked was meaningless. The stock has not resumed in trade yet. I take the booked value as the worth of this stock. iii. Account with TF 61.The Husband has an account with TF. The amount of investment was relatively small therein. As the time of trial, the value of stock held in this account was about $40,000. iv. Bank Accounts 62.Apart from his interest in the above landed properties, companies and securities, he claims he has the following bank accounts:
63.The total balance in the bank accounts from (i)-(vi) above as at February 2006 was about $1,185,000. Such savings has been depleted through time as the Husband said he had been spending more on his daily living since he had got a child with another expected after the trial. Liabilities of the Husband 64.The Husband said that he had borrowed a debt of $400,000 to meet his legal costs from a Mr. LTC and that he would expect to incur another $123,000 on the birth of his second child. He is expected to pay tax for $215,131. He further pointed out that he expected to spend quite a handsome sum on the repair and maintenance on both Begonia and Bowen. 65.I am of the view that the Husband's liability on a debt to pay legal costs should not be reflected in the family assets but to be borne by the party's own assets after distribution depending on the costs order to be made. The funds to be paid for the new born son should be borne by the Husband and not to be shared by the Wife. As to the repair costs on Begonia, I say that it is negligible as compared to the value of Begonia and should be borne by the party who is to take it as a share of the family asset. In regard to the repair and maintenance costs of Bowen, since the Husband has failed to sell at a good price on "as is" basis, such costs, if any, should not be borne by the joint family assets. 66.In summary, the liabilities of the Husband bear no weight in my decision on how the family assets are to be distributed. Income, Earning Capacity which each party has or is likely to have in the foreseeable future Income / Earning capacity of the Husband 67.As said above, the Husband is now 39. He is a medical practitioner. He claims in his last Form E that he was making $725,757 from his practice in 2006-2007. He produced his tax return for the relevant year in support of his assertion. The Husband's evidence on his income met with vigorous cross-examination by Ms. Tsui representing the Wife. The case of the Wife is that the Husband has been making more than he has claimed. The Husband has two clinics. The one in Cheung Sha Wan is for his practice as a general practitioner ("the CSW clinic") and the other one in Jordon ("the Jordon clinic") is for his "specialized" practice on patients with emotion problems or those who need skin treatment. 68.The Wife complains that the Husband has been most uncooperative in disclosing his patients' records as he is hiding his income. She is adamant that the nurses in the clinics are to keep daily records for the number of patients and the amounts of medical fees paid by them in detail. She produces as P6a, P6b and P7a, P7b some documents she claims to be records on patients visiting the clinic and their respective charges. The relevant period was November and December 1999 respectively. Her case is that those were the forms used by the Husband in his clinic previously and similar practice should have continued since. She suggests that P6a and P7a were genuine daily records on the number of patients visiting the clinic and their relevant charges. P6b and P7b were records after manipulation showing less number of patients visiting the clinic on the same day and such manipulated records would be used for tax purpose. According to the Wife, the fees and charges collected as recorded in the manipulated version represented only a portion of the number of patients visited the clinic but not all. She said that whilst P6a shows a record of $262,180, P6b shows 191,150, and whilst P7a shows a record of $325,530, P7b shows $194,520. 69.She has subpoenaed the two nurses now working in the clinics of the Husband to give evidence in this regard. I shall deal with their evidence in due course. 70.The Wife also alleges that the Husband has three safe-deposit boxes in banks to keep cash income from his practice. It is also her case that the Husband would from time to time go to Macau to hide his income. She is adamant that the assets in the CCB Macau Account, cash or shares, all belong to the Husband. According to her, the obvious purpose for such practice is tax-evasion. She insists that the income as shown in the Husband's account with Hang Seng Bank shows only a portion of his income but not all. Evidence of LWS 71.She works in the CSW clinic as a nurse and has worked there for about 5 years. Her monthly salary is $5700. She would sometimes go to the Jordon clinic to relieve the nurse there. There are only two nurses running the two clinics. Her duties at the CSW clinic include making registration for new patients, checking their names on the ID cards, jotting down their correspondence addresses, getting the medicine according to the prescriptions made by the Husband, and after the medicine has been verified by the Husband, she would handover the medicine to the patients and then collect payments. 72.It is her evidence that when a patient visit the CSW clinic, she will get the medical record of the patient, attached two blank tickets for the Husband to fill in the fees to be charged after consultation, one ticket to be kept by him and one ticket to be passed to her together with the prescription, then she will collect the payment accordingly upon medicine is being issued. At the end of each day, she will add up the total in charges stated on the tickets she has taken back from the Husband for the day and check the cash she has received from patients. At the end, both the tickets and the cash will be given to the Husband for disposal. 73.According to her the CSW clinic operates from Monday to Sunday, two sessions on a day during the week, one session on weekends and public holidays. In the court, when asked by Ms. Tsui, she said she could not tell the number of patients the Husband had on a day as the number of patients varied everyday. She said that the charge for usual patients was about $190, but for the underprivileged, the charge was about $100-$110. 74.She confirmed that there was a book to keep a daily record of patients who attended or should attend the clinic for the day. The record was however not particularly accurate because she would not always delete the name of the patient who had made an appointment but failed to show up. Further the charge was not recorded on the list and there was no other record kept for the charge collected from patients. She used one book for each month and would return the book to the Husband after it being closed. This practice was there before she joined the CSW clinic. She said she had never seen forms or documents like that as produced in B1p110, or copies of P6 - P7. As to issue of receipts, she said she was the one who prepared the receipt for the Husband to sign, but there would not be any copies of the issued receipts kept by her for the CSW clinic. The receipts were not numbered and not in the form of a book but just in the form of a stack of sheets. There was no material she could rely on to tell how many receipt had been issued. She remembered there was a time receipts were put in together with the tickets for the Husband to handle. This practice ceased when it was found that only few patients asked for receipts. 75.She said that the Husband sometimes asked her to deposit cash into the bank account of the Husband but she did not know whether he had given her all cash received from patients to be put into the bank. She could not remember how often she was asked to go to bank and she would not know the source of the money she was asked to put in the bank account. Evidence of LPC 76.She is also a nurse employed by the Husband. She now works in the Jordon clinic which was started in September 2006. She works for the Husband since 2003. She joined earlier than LWS and she first worked for S for two years. Her salary is now $7,300 a month. She said when she worked in the CSW clinic, she was not supervisor of LWS but they shared duties of similar nature. 77.At trial, she was asked to see the sheets produced at B1p110-474 copies of P6-P7 by Ms Tsui, she said she could not remember having seen them before and could not remember having used similar forms to record patients attending the clinic. She confirmed the practice of attaching two tickets to the patient record and put them in for the Husband before the patient was attended by him. She said that she would not keep the tickets after giving them back to the Husband with the cash. She said she had no impression on the amount of cash she would handover to the Husband for one session. She had no impression how often she would go to the bank as instructed. She said when she did, she would not count the cash but just put whatever was given to her to the bank staff over the counter. 78.According to her, the operation hours of the Jordan Clinic are also two sessions in a day on weekdays and half a day on Saturdays. Some of the operation hours overlap with that of the CSW clinic. 79.When questioned by Ms. Tsui, she was adamant that there was never ever any appointment book used in the Jordon clinic. She agreed that the patients visiting the Jordon clinic would have to make appointment before hand and there would not be service rendered for walk-in patients. She explained that as there were not many patients, it was not necessary to keep an appointment book or registration book like the one in CSW clinic. She said when a patient asked for an appointment, she would call the Husband for him to pick a time, then she would go back to the patient but she herself would not keep any record for that appointment in whatever form. 80.In evidence, she said that the charge for the patients in CSW clinic was about $190 per patient, but the charge in the Jordon clinic was decided by the Husband individually. The tickets system did not work in the Jordon clinic, the Husband would give her a receipt showing how much she should collect from the patient. The charge for consultation ranged from $200-400, for medicine it was about $1,000. She did not keep any record for the charge and money collected by her. Receipts were prepared and printed out by the Husband. Payments made by patients would be kept in a drawer inside the Jordon clinic and the Husband would collect them once a month. Everybody working there including LWS, the Husband and herself had a key to the drawer. She had no idea as to the amount kept in the drawer. She could not remember how much the Husband would make for a busy month in Jordon clinic. She could not tell when the Husband last collected the cash from her before she came to court to give evidence. She could not tell the average number of patients attending the Jordon clinic in a session. She could not remember the total number of patients records kept in the Jordon clinic so far. She agreed that there were more patients calling Jordon clinic recently for appointments as compared to the time when it was started. 81.Under cross-examination by Ms. Hui she said that it had happened that there was not even one patient in a day or even none for a few days in Jordon clinic. Evidence of the Husband 82.The Husband claimed that his income was those he deposited into the account of Hang Seng Bank and as he had stated in his tax return. The Husband agreed that he made no response to the Wife's request for patients' records up to his 5th affirmation. He confirmed that upon request made in April 2007 he refused to disclose the same saying that it might be in breach of the Personal Data (Privacy) Ordinance. He explained that it was because the request made was vague and unclear. To him, records means records for diagnosis on a patient, medicine and treatment given. He said in court that although there were records on the medical history of a patient, there was no such patient records in relation to charges. He admitted that there was registration book in the CSW clinic as mentioned by his nurses. He said that the registration book would be discarded after one or two months time. During cross-examination, he agreed to produce the registration book of CSW clinic for the month of August and he produced it on the following day as R10. From R10, it could be seen that he usually had 20 odd patients if he opened for one session and 30 odd if opened for 2 sessions. No record was made on charges collected on R10. 83.The Husband confirmed what had been said by his two nurses about the operation in the two clinics. He insisted that there was no appointment book in the Jordon clinic. Reason being that there were only few patients attending the Jordon clinic before May 2008. Since then he had more patients like several patients in a week. He said when a known patient called, the relevant record would be taken out and that would be sufficient for the nurse to remind him of the appointment. He would only go there when there was an appointment. He said he had once forgotten an appointment because even he himself was not taking note for appointments made. 84.When asked whether he would ask a patient to make appointment for follow-up treatment at the end of a consultation and if so how the future appointment was to be booked if there was no appointment book. He said he would not ask a patient to make appointment with the nurse for follow-up consultation before the patient left but would ask him/her to call back for further appointment. When asked what if the patient wanted to make an appointment before leaving, he said he would only ask them to call back for an appointment. 85.He insisted that there was no appointment book in the Jordon clinic nor had he got a private diary for himself to mark the appointments. When asked whether there were any reasons hindering him from operating on appointment books like what he had always been doing in CSW clinic, he said nothing, there being just not too many patients. 86.In his Affirmation dated 2 September 2008, he said that the business of the Jordon clinic had improved. The Jordon clinic is now reaching the break even point. There were deposits of $16,600, $52,900 and $52,970 representing income from his practice in the Jordon clinic for the months of May, July and August 2008. 87.It is the Wife's case that the Husband has hidden his income from his practice by putting cash not only in the designated or any bank accounts but in deposit boxes. The Husband does not deny that he once had deposit boxes with the Hang Seng Bank at Tokin Street but since it's closure, he moved to Bank of China at Tokin Street. In his reply to a question asked by the Wife (Bundle 5 1329), he disclosed the particulars of deposit boxes and content therein. The Answer was dated 25 September 2007. According to the Husband, at that time, he was holding 3 deposit-boxes with the Bank of China. Two of them in his sole name and one in joint name with the Wife. A schedule was attached listing out the items inside the three boxes with photos. According to the list, inside Box A, he kept the Certificates of Incorporation relating to all companies held by him, documents of his car, foreign currencies for about HK$9,000, HK$11,290 for the alumni. Inside Box B, he kept A. T. Ltd. documents, deeds of Hoi Tan, certificates for his education at all levels and the birth certificate of his son. In court, he denied categorically having put money in the deposit boxes. He said the reason he needed two deposit boxes was that apart from his annual practice certificate, he was still keeping in there documents of 3 properties, court documents for the divorce and some watches. 88.It was put to him that the reason why he had deposit boxes near CSW clinic was for him to keep his income from practice. It was shown to him at the trial that according to bank records, he visited the two deposit boxes quite frequently. The Husband denied and said he could not remember why he visited one box more often than the other. He said that he might have been going there more frequently than before as he might need to change the watch to wear. If he went there a few times in a day, that would mean that he had forgotten something so he had to go back again. If he could not find what he wanted in one deposit box, he might have to go to the other. But he said these were his guess only, in fact he could not remember the particular reason he went there on each occasion. He also said that sometimes, he was there to read the deeds of the properties, he might also need the certificate of incorporation of the company when he bought a car, to retrieve and put back his curriculum vitae etc.. These were the reasons he went there in the past 12 months. He said that he had started operating deposit boxes since his practice. He said that the value of his watches was HK$3,000 for the Cartier and HK$9,000 for Rolex. He said that he did not want to keep the watches in the residence because there was a live-in maid. 89.When cross-examination on him progressed into the third day, the Husband was asked about the source of fund he claimed he had put into renovating the Fa Po Street Property. In reply, he said that it was from the "lucky money" he had won from the casinos in Macau. About the "lucky money" he said that he had a hobby of gambling in the casinos in Macau and if he won he would keep the "lucky money" in the deposit box in Hang Seng Bank. When asked whether there was any reason he kept such money in the deposit boxes rather than in an interest-bearing account, he said he had a habit of keeping money from different source in different place and not to mix them up. Another reason was that he would not like to queue up in line for 15-20 minutes when he wanted some cash for personal use. 90.He was asked why he had not mentioned this reason for going to the deposit boxes in his evidence given earlier. He said when he answered the question put to him, he was referring to the period of time just a few months prior to the trial. He repeated the same answer when Ms. Tsui pointed out to him that the table showing his visits to the safe-deposit boxes covered a period of more than 2 years, including his visits to the safe-deposit boxes in Hang Seng Bank. He admitted that there was a total of HK$1.7m from 4 occasions he took money for the deposit boxes to pay the renovation of various properties. My Findings on the Income of the Husband 91.I find the Husband dishonest about his income. His saying that there is no registration book in Jordon clinic is not worth to be believed for one moment. It is not disputed that the Jordon clinic is a clinic operated on consultation by appointment only. Walk-in patients would not be received. The Husband confirms that such setting would project a professional image and the charge in the Jordon Clinic per patient is on average higher than those patients visiting the CSW clinic. In the circumstances, a registration book is a basic tool to support such practice. His saying that he would not ask patients to make follow-up appointment before leaving the clinic but to call back later is an insult to the intelligence of all present in the court. I do not accept his evidence. I find his assertion that there is no appointment book in the Jordon clinic a blatant lie. 92.Further, from the evidence of the Husband and the two nurses, there was virtually no record of his income made for the two clinics except the bank statement. In summary, he did not keep any records or copy of the tickets on which he put the charges to be collected by the nurses on individual patients, there was no record of receipt issued, the registration books in CSW would be disposed of after one to two months' time. I find such saying entirely unbelievable. If he was telling me the truth, which I do not believe, the only reason for him to discard all possible records of his income is to hide his income from the Inland Revenue before and now from the Wife and the court. 93.I do not accept the Husband's saying that the money he kept in his safe deposit boxes was his lucky money. He changed his position. He once denied there was money kept in the safety boxes, except some small amount of money, then he claimed that in fact he did keep his lucky money at a total sum of $1.7m there. Further, I do not accept his explanation on going to the boxes so frequently as recorded because he wanted to read the deed of the properties or to change his watches. Moreover, if he found waiting in line for cash for 15-20 minutes a waste of time and that was one of the reasons why he kept cash in his safety boxes, I could not accept his saying that he would take the time to go to the bank to change his watches for daily wear whilst he says that the total value of the two is about watches HK$12,000. I do not accept his explanation as to why he visited the two boxes in Bank of China 64 times altogether between April 2006 and February 2008. I find his saying that he went there to read the deeds of the properties beyond absurdity. I find that the frequency he visited the deposit boxes supports the Wife's saying that he kept part of his income in deposit boxes and such income would not be included in his tax return. 94.To sum up, I would not believe the evidence of the two nurses on the registration system in Jordon clinic. They both lied to support the Husband. Both were particularly evasive on the amount of cash they dealt with as part of their duties. I reject their evidence. Further, as I go through the evidence, I see that the Husband has left no traces for computation of his income arising from his practice in the two clinics. No tickets nor copy of receipts issued were kept. The registration book of CSW clinic was according to him not kept for more than one month, similar practice was adopted in the Jordon clinic except that there is not even an appointment book. I see no reason for not keeping records. In fact he gave no reasons for discarding all of such information. I find that he lied in court, and he did so because he wanted to hide his income. I draw an inference that he has been making more than he has claimed. I find the $1.7m in the safety boxes part of his income from practice and not from casinos. From PS-1, the deposits into the bank account showed an average income of about $170,000 per month in the past 4 years, I find that this only represents a portion of his income. Financial needs, obligations and responsibilities the Husband has or is likely to have in the foreseeable future 95.The Husband is now living with his fiance and their children. (The second child should have been born in December 2008). He said they would need a place to stay. He said by affirmation in March 2008 and updated in September 2008 that his monthly expenses would be about $170,000 a month. He provided details as follows: -
96.To conclude, I accept that the Husband would have his basic needs in housing and living expenses in accordance with a standard not far from that the parties have had during the marriage which was a comfortable one although not luxurious. I agree that the Husband may have to spend more than the Wife because he now has a fiance and 2 children to support. Such needs, however, in my view, could be well covered by his income and should be shouldered by himself. I see no reason for the Husband to look to the Wife for share of responsibilities in this regard by giving her a smaller portion of the family assets she should otherwise be awarded. Any physical or mental disability of either of the parties 97.The Husband says that he is now suffering from back pain and gastritis. An endoscopy report dated 30 April 2007 recorded a diagnosis of gastritis and duodentitis with 5 small gastric polyps removed by hot biopsy forceps. An MRI of lumbar spine dated 10 May 2007 showed some mild degenerative changes at L4/5 and L5/S1. The Wife does not have any complaint in this regard. I do not find any evidence before me under this head that I should pay heed to when distributing the assets between the parties. Property / Financial Resources of the Wife 98.The Husband alleges that there are hidden assets of the Wife, namely,
99.The Wife says that all of (i) to (iv) belong to her family and she has no hidden interest in C. K. Co. and L. C. Co.. Tropicana 100.Tropicana was purchased in February 1999 at $4.3m. The agreed value now is $6.5m. The Wife and Mr. K, her father, hold Tropicana as joint tenants. The Wife said that Tropicana was purchased because her father would like to make it more attractive for his children to stay in Hong Kong. At that time, only she had returned to Hong Kong, her brother and sister were about to come back for vacation. Her sister was still thinking whether to stay in Hong Kong. She was adamant that she had no beneficial interest in it because she made no contribution to the purchase price nor the mortgage. In fact, she said, at the time she returned to Hong Kong from Canada, she did not have much money with her. She said that although she was the one who accompanied her father to view Tropicana, her name was added on days later because her father, who was retired and of old age, might not satisfy the bank's requirement for a mortgage loan; or even if he could get a mortgage loan, a joint tenant of a younger age would help to get a mortgage with a longer repayment period. She insisted that she had no beneficial interest in it. 101.She referred the court to the Provisional Agreement for Sale and Purchase at p1777 of A6. She pointed out that one could see from the document that her name and ID card number were written with a different pen because they were added on at a later date. Tropicana was then occupied by the Wife and her sister since June/July 1999 before the Wife got married. Thereafter her sister and mother stayed there whilst her father would spend some time there but stayed mainly in Po On Street. It is now being occupied by the parents of the Wife since end of 2007. The mother of the Wife was diagnosed to have cancer and her parents decided to move into Tropicana and lease out Po On Street to raise some income. 102.The Husbands' position is that the Wife is holding 50% of the interest of Tropicana; the Wife has been living in it after parties separated and not at Begonia as claimed. 103.It was put to the Wife that the repayment of mortgage instalment was paid by auto pay and the payment was made from her account. The Wife did not dispute that but said she could not remember the repayment arrangement. Tropicana, according to her, was fully paid in 2003. She made enquiries from the bank and was informed that the account to make mortgage payment belonged to her. She however could not get the record until trial. 104.The Husband produced R4, a home instalment loan application form. It was pointed out to the Wife that in the manager's recommendation, it was mentioned that she had $2m in her two bank accounts. The Wife said that the money might have come from her father. She denied she ever had $2m for her own. My finding on ownership of Tropicana 105.Upon hearing evidence and submissions and viewing relevant documents, I find the Wife truthful to the court about the ownership of Tropicana. I see that her version is consistent in many occasions. Even on the viewing of the flat by a property agent accompanied by a private investigating agent posing as customers sent by the Husband, she mentioned that she had to seek the view of her father on the sale. I find that her name was put down there for convenience by her father as said. There is no evidence before me to explain why out of the siblings, the father chose the Wife to give her a gift of half or the whole of Tropicana. I also accept the Wife's saying that she did not have the fund to buy Tropicana at the time it was purchased. 5000 shares of Hutchison Whampoa held in the name of the wife 106.The Wife disclosed that she was holding 5000 shares of Hutchison, but she said the shares belong to the father. The Husband denied this. It is the position of the Husband that the 5000 shares of Hutchison belong to the Wife and should be taken as part of the Wife's assets. 107.The Wife said that upon the sale of a property in Tsuen Wan held by her father in December 1999, her father transferred to her $1m to invest on his behalf. She bought 5,000 shares of Hutchison Whampoa for her father in September 2000 with $543,416. She later transferred the shares into her own securities account and is still holding the same for her father. The father of the Wife gave evidence to similar effect. 108.Ms Hui in her written submissions elaborates on the Husband's Affirmation and says that the Wife's case was not to be believed. She submits that first there were withdrawals of two sums of same amount, i.e. $1,078,797.49 on same day from same account; secondly, the money allegedly transferred to the Wife was in odd cents and therefore the conclusion one could draw was that a sum of $1,078,797.49 was transferred to the Wife as a share of profit and the other sum of $1,078797.49 was withdrawn for the purpose of investment to invest; thirdly the time for the purchase of shares and the transfer of sums does not correspond with each other. My Finding on the ownership of 5000 shares of Hutchison Whampao 109.I must say that the evidence produced by the Wife is not of good quality to prove that the shares belonged to her father. I am not satisfied that she has proved her assertion on balance of probability. USD110,000 110.The Wife transferred USD110,000 on 4th October 2005 from her own account with DBS to set up a term deposit for her father in the same bank. The Wife said that her father had transferred a sum of $800,045.55 from his Dao Hang Bank Account into the Wife's Dao Heng Bank account in 2001 for the Wife to make some investment for him on securities. The Wife eventually bought for him SG 110% Guaranteed Notes Series II on his behalf. The investment was matured in October 2005 and the Wife eventually transferred the whole sum back to his father. Her father then invested the same in a term deposit account. My Finding on ownership of USD 110,000 111.I believe in the Wife and her father's evidence. On the contrary, I found the suspicion of the Husband without genuine ground. CAD 94,044 112.The Wife and her father said with supporting bank statement that it was a sum withdrawn from the father of the Wife to deposit in the Wife's account for her to invest the same on his behalf in fixed deposits. I accept their evidence. Again I found the suspicion of the Husband without reasons. Alleged Hidden Assets of the Wife in L. C. Co. 113.The Husband alleges that there was no genuine reason for L. C. Co. to be deregistered. He said that the only purpose for it to be deregistered was for the Wife to wipe out the debt owed to her, which amounted to $1,342,286. Further, the Wife she had injected $384,125 into L. C. Co. between 1 April 2006 to 19 May 2007. The Husband asks that this $384,125 to form part of the Wife's assets. 114.I do not agree with the argument of the Husband. The suggestion that the Wife ceased business of L. C. Co. only to set off the debt owed to her could not stand on evidence before me. According to the financial statements, L. C. Co. was run at a loss before 2004. The loss accumulated was $599,626 as reported in the Financial Statement for 2004/2005. It continued to suffer loss in the years that followed until its deregistration. According to W, the auditor of L. C. Co., the amount of $1.3m over owed to the Wife was due from the fund put in by the Wife at the beginning plus the director's remuneration owed to her since the year ending 2004. She explained to Ms Hui representing the Husband the reason why the amount owed to the Wife did not increase although the arrears of director's remuneration continued to accrue. She said it was because the Wife also took cash from time to time from L. C. Co.. This served to set off the amount owed to her. The Wife would make record for money she took for Ms Wong to account for. She as auditor would set off like amount from money due to the Wife. 115.As stated in the Financial Statement ending May 2007 L. C. Co. owed to the Wife a sum of $1,348,986. This amount also included a sum of $302,058 owed to L. C. Co. by TW, the other director of L. C. Co., the brother of the Wife. W explained that the debt owed by TW was transferred to the Wife's current account to satisfy the procedures for the application to deregister L. C. Co.. According to the rules, W informed the court that, there could not be any debt owed the company at the time of deregistration. If the debt was owed to a director, then the director could issue a letter waiving the debt. She therefore enquired with the Wife whether it was likely that TW would settle the debt owed to L. C. Co.. The Wife informed her that it would be unlikely and she asked that the debt be accounted for as due to her under her current account. That is why in the Financial Statement ending May 2007, it was reported that there was nothing due from a director. 116.I note that under cross-examination, the Wife could not quite answer the questions put across by Ms. Hui. I do not find her dishonest in this regard. I find that it was only because she was not familiar with the accounting rules. I find the explanation of the auditor acceptable and I rely on her evidence. 117.From the history of the debt L. C. Co. owed to the Wife, and the fact that L. C. Co. had not been making any profit since 2004, I have no reason to suspect that the deregistration of L. C. Co. was to enhance the Wife's claim in the divorce as alleged by the Husband. 118.Ms. Hui, relying on the Balance Sheet for the year 2006 and 2007 (pp1496 and 405), put to the auditor that the Wife had injected $180,000 ($231,819 - $50,610) into L. C. Co. to pay off the Trade receivables due in 2007; further the Wife had injected another $204,125 as operation costs reported in the Profit and Loss Account for the period ended May 2007 (p1502), putting the two together the Wife had to have injected a total sum of $384,125 into L. C. Co.. 119.I am asked to decide whether the Wife should account for the amount of $384,125 she allegedly injected into the business and whether the Wife had undisclosed assets because there was no traces in her disclosed bank accounts showing the flow of this $384,125 from her to L. C. Co.. The Wife did not admit she had any injection by cash into L. C. Co. in 2006-2007. According to W, the auditor, the apparent increase in cash flow in L. C. Co. was due to the fact that it received more credits from suppliers and not by injection of cash. Relying on the Balance Sheet at p405, she pointed out that the account payable increased from $7,326 to $231,819 in the year ending 2005 to the year ending 2006. Further L. C. Co. had less receivables in 2006 as compare to 2005 by a difference of about $40,000. Putting the two factors together, L. C. Co. had an increase of $260,000 in cash flow. 120.After hearing evidence from W, the auditor, I accept her evidence that the Wife had not actually injected such money into L. C. Co.. Out of the $384,125, $302,058 came from a set off from the debt owed to her by his brother TW without actual cash injection, and there was sufficient fund to top up the remaining balance of about $80,000 because there was a balance of $86,918 in the bank account as at 31 March 2007. After an outgoing of $69,000, a balance of $17,917 still remained in the account as at 19 May 2007. I find the two allegations as mentioned in paragraph 113 made on behalf of the Husband in this regard unsustainable. Income / Earning capacity of the Wife 121.The Wife said she did not have much working experience. She had worked as an administrative assistant in a real estate company after her graduation in Canada. She returned to Hong Kong in March 1997. She set up L. C. Co. with his 2nd elder brother, younger brother and her mother in June same year. The 4 of them held equal shares. The Wife and her younger brother were directors of L. C. Co.. The core business of L. C. Co. was to trade in wooden floor panel. She said she did not work in L. C. Co. since December 2005 when she found that the Husband was having extra-marital affairs. According to her, she could not compose herself and concentrate on her work. 122.The Wife said that when she was working in L. C. Co., her monthly salary was around $9,000. But she had not received her salary for the three years prior to its closing down. The company was indebted to her for a total amount of $108,000 arising from her director salary. Apart from that she paid her sister on behalf of L. C. Co. and therefore L. C. Co. was indebted to her for another $96,000. 123.She is interested in interior design and is now attending courses in this area. She said if she worked in this area without qualification or experience, she could make about $9,000 to $15,000 a month. 124.The Husband's case is that the Wife should be making more than she claims. She is still working in C. K. Co., business of her maiden family. The Husband hired an investigator to stalk on the Wife and filmed her activities on certain days in September 2007. In cross-examination, Ms. Hui put to the Wife that she went back to C. K. Co. almost everyday and spent the best part of the day thereat and therefore it proved that she worked in C. K. Co.. 125.The Wife admitted that she went back to C. K. Co. very often although may not be on daily basis. She denied she worked there. She explained to the Court that after the separation she was very sad and she went back to C. K. Co. more to spend her time by playing with her nieces. C. K. Co. was not only a shop for a family business but a gathering place for the family. There was a living room in the mezzanine floor or the cockloft with kitchen where the whole family would have meals together. Since she was not working there she only went there at around 11:00am and not at earlier hours when the shop opened. She agreed that she would at times helped out when others were busy. She would answer phone calls, receive payments and issue invoices, bank in cheques etc, but she was only helping out whilst she was there. 126.The Wife agreed that she had placed advertisement for C. K. Co. to hire delivery workers, casual workers and drivers and had paid for advertisement. She said that the request form to place advertisement had been filled out by her and put inside a drawer long time ago. When it was needed, someone would just have to take it out and have it faxed to the newspaper. She also said that C. K. Co. would eventually pay her back for the fees. 127.Ms Hui also relied on R4, the loan application form submitted by the Wife and her father at the time of applying for mortgage loan for Tropicana in November 1998. The Wife was asked to explain why in the form she said she was working for C. K. Co. and she was making $15,000 per month. The reply of the Wife was that since the bank asked for income proof, there might have been a letter from C. K. Co.. 128.Further, Ms. Hui asks me not to accept the Wife's evidence that she did not receive any income from L. C. Co. for 2004 to 2007. Ms Hui says that the Wife's evidence was contradicted by her tax return and the record of T&W's account with BEA. The Wife's tax return showed that she had an income in the relevant period and the said bank statement showed that there was a time deposit of USD 120,000. So it was not a situation that there was a cash flow problem with L. C. Co.. 129.Having heard and reviewed all evidence before me, I find no sufficient evidence showing that the Wife was having any gainful employment by C. K. Co.. No doubt she was there regularly, but I accept the Wife's saying that she was only there because that was a place for the family members to get together and at times, she would help out in the business. I have considered R4, the mortgage loan application form, I refuse to rely on it to say that the Wife is not telling the truth in the court when she said she did not have any earnings from C. K. Co.. I refuse to draw an inference as invited by Ms. Hui that she now has earnings from C. K. Co. from an application form dated 10 years ago which was compiled for a purpose not relevant to the present hearing. 130.I also accept the Wife's saying that she did not receive any payment from L. C. Co. as supported by the Balance Sheet that L. C. Co. in fact owed her money. The debt owed to a director, i.e. the Wife, included the due and unpaid director remuneration and money she had put in. It was also an undisputed fact that L. C. Co. did not make profit since 2004. As to the allegation that there was a deposit of USD 120,000 in the bank account of T&W, I do not see how the Husband could rely on this to attack the Wife's saying that she had not been receiving director's remuneration except that she may retrieve some cash from time to time. First the Wife was not cross-examined on this bank account, secondly, the money did not stay in the account for more than 1 day. The reasons for the sum to be withdrawn was not explored by the Husband. I refuse to draw an inference from this to say that there was sufficient fund to pay the Wife when there was evidence from the Balance Sheet and the accountant saying that she did not take director's remuneration. As to the complaint about her such saying was contradicted by her tax return, again, I say that I could not accept this argument because the Wife was not cross-examined on this. Without giving her a chance to explain, it would be unfair to draw an adverse inference against her credibility especially when her saying was supported by the auditor. 131.As to her earning capacity, I accept the Wife's evidence that for a start she would be able to earn a monthly income of $15,000 to $20,000. I found this also commensurate with her education level and her limited employment record and experience in Hong Kong. Financial needs, obligations and responsibilities the Wife has or is likely to have in the foreseeable future 132.It is submitted that the Wife would need a place to live with reasonable amount of money for daily expenses. In her 5th Affirmation, the Wife updated her monthly expenses as follows:
133.The Husband did not challenge the Wife's expenses but said that she should be self-sufficient and would not require any financial needs of the parties. Liabilities of the Wife 134.The Wife has stated in her Affirmations that she has liabilities amounted to $350,000 owed mainly to her father. She has also incurred $275,500 legal costs up to February 2008. She said she had total liability of $700,000 over. I find that the debt owed to her father is one that she could deal with by the distribution of family asset if she really has to pay her father back. Again, the legal costs should be dealt with by each party dependent on my order on costs. Computation of family Assets Landed Properties
Applicable Legal Principle: Principle of sharing 135.Upon computation of the size of the family, I should determine the distribution of family assets between the parties. Cheung JA said in DD v LWK that although the principles set out therein are not exhaustive, the following is recommended in paragraph 69 (3):
136.Cheung JA set out the factors to be considered under the Principle of Sharing at paragraph 69(6):
137.The Wife asks for equal sharing of all matrimonial properties. Ms Anita Yip takes over the argument on applicable legal principles and how these principles should apply in the present case. In her written final submission, she takes the stance that :
138.It is suggested by Ms Yip that it is reasonable to follow the guideline in Charman with a division of 70% : 30% of the net value of the investment properties as at March 2006 (on the Husband's valuations) less the Husband's liabilities. According to her calculation, the sum to be awarded to the Wife should be in the region of $2.88m 139.I shall consider the relevant factors in turn. Duration of the marriage 140.Their marriage lasted for about 4 years at the time of separation in March 2006. Ms Yip submits that in this case, there are exceptions which as decided in Miller should be good reasons for departure from the overarching objective to achieve fairness. She identifies the duration of marriage, which according to her to be "a very short one", as one of the exceptions. 141.The parties got married on 28 November 2001 and the petition of the Wife was filed on May 2006 on behaviour of the Husband. The parties have dispute over the date of separation. The Wife said that it was on 25 March 2006, the very same day when some simple religious ceremonial was carried out by the mother of the Husband for the parties to move into Begonia, that the Husband left after they had a heated argument on his extra-marital affairs thereat. The Husband said that they separated since they moved out of Fa Po Street Property which was some time in September 2005. I could not agree that the separation date was September 2005 when parties lived with their own family only as a temporary arrangements. There was no intention to separate at that time. In any event, be it a marriage of slightly under 4 years or slightly over 4 years, I agree that it is a case where it is clearly stated by Baroness Hale that non-matrimonial properties which were not generated by the joint effects of the parties may justify a departure from equal sharing. 142.In paragraph 152 of Miller, Baroness Hale said this:
143.Cheung JA in paragraph 55 in DD v LKW discussed this issue when he dealt with the duration of marriage and its effect. Deriving from the reasons given by Lord Nicholls as set out in paragraph 24 in Miller, he said,
144.Cheung JA set out in paragraph 69 (9) the principle and effect of the duration of marriage, it is clearly stated by Cheung JA that the equal sharing principle applies to both long and short marriages in matrimonial properties:
145.The principle is therefore that the source of assets may tilt the balance of the scale if the marriage is short only in non-Matrimonial property or assets not generated by the joint efforts of the parties. It is therefore important to investigate whether the assets in question are matrimonial or non-matrimonial. Matrimonial and Non-Matrimonial Properties 146.According to Ms. Yip, as Matrimonial Properties in the instant case comprise of those properties acquired during the marriage, including those the Husband claimed to be investment properties. The Matrimonial Properties according to Ms Yip include Bowen, Begonia, Hoi Tan and K Property. The others would be categorised as Non- Matrimonial Properties. 147.The distinction between Matrimonial and Non-Matrimonial Property may be found in the judgement of Lord Nicholls in Miller, at paragraph 22, where he defined matrimonial assets as being "all property acquired during the marriage otherwise than by inheritance or gift". Lord Nicholls noted that matrimonial property was the financial product of the parties' common endeavour. 148.From these guidelines, I do not see any reason not to include F Mansion in the Matrimonial Property as it was acquired after the marriage. Although the Wife had not made contribution financially to this property because she only found it out at the verge of their separation it does not necessarily means that this undisclosed asset of the Husband is not a Matrimonial Property. 149.The F Mansion was not paid off at the time of purchase in 2002 but was on a mortgage loan of $228,200. The downpayment was $97,800. At the time the Husband filed his Form E on 12 September 2006, he stated that as at the time of sale, the outstanding mortgage still amounted to $81,000. In other words, he paid off $147,200 plus interest during the marriage. The Husband took the entire duration of the marriage paying off a good proportion of the mortgage loan. There was no evidence that the payment for mortgage came from a source other than his income. I find the F Mansion a Matrimonial Property. 150.After considering all evidence before me, I find M Property, O Property and the joint account with SW which were purchased or set up long before the marriage and without evidence before me on contribution from the Husband after the marriage Non-Matrimonial Assets. Same applies to the 5,000 shares of Hutchison Whampao held by the Wife. 151.Having heard evidence with reasons set out above, I have the following findings on the nature of properties :
Proceeds of Properties sold 152.The Wife has asked me to take into account the proceeds of K Property, F Mansion and O Property in computation of the assets either of the family or of the Husband. 153.First, I have found O Property a non-matrimonial assets, it should not be included here. In relation to proceeds of F Mansion, after considering the whole of the circumstances I accept the Husband's saying that these proceeds were applied to paying mortgage of Bowen and Begonia since separation of the parties. If they should be accounted for when determining the size of the Matrimonial assets and to allow the Wife eventually to take a share of interest in Bowen and Begonia, that is double counting and the Wife would be unjustly favoured by such exercise. Contributions made by each party to the welfare and the wealth of the family 154.The parties submits that contribution is a relevant and crucial factor to be considered. Both the Husband and the Wife worked throughout their marriage. It is submitted on behalf of the Husband that he has made greater, if not all, financial contribution to the family. In reply, it is submitted by the Wife that although the Husband has made apparently greater contribution it was because he earned more. Further the Wife has done the best she could towards the welfare of the family. On this basis, she says she has made equal contribution to the welfare and the wealth of the family. Her position is denied by the Husband who said that her share of contribution could only be about one-third or one-fourth. Financial Contribution to the Purchase of properties where the Parties have apparent interest 155.In regard to the contribution of the parties in purchasing the 6 properties (3 held in parties' joint-names, namely B Property, Fa Po Street Property, and Bowen Road; and 3 held in the name of A. T. Ltd., namely Hoi Tan Property, K Property and Begonia Property) in which the Wife apparently has an interest, the Husband says that he was the only person who paid for the purchase price for all properties and therefore all the 6 properties or their proceeds belong to him. 156.The Husband's position is mainly this. First he said that the money necessary to fund the purchase of B Property, their first owned matrimonial home, was all from his earnings and lucky money which had started to accumulate before the marriage. Such savings be it income from practice, lucky money or profit from stock trading were earned by the Husband singlehandedly without any contribution from the Wife. Secondly, the three properties held by A. T. Ltd., namely Hoi Tan Property, K Property and the Begonia, were simply investment projects of his own. Although the Wife held 1% of A. T. Ltd., she had no beneficial interest as she made, again, no contribution at all to the purchase of these three properties financially and non-financially. He said he funded the purchase of Hoi Tan and K Property single-handedly. 157.In a nutshell, the Wife said that although the Husband had financed the best part of the purchase of the B Property, she had also contributed financially to this property. Further, the property was held in joint-name of the Parties. As one of the tenant-in-common, she definitely had half interest in it. She said that the sale proceeds of B Property was the seed of fund for all other property transactions that followed, be it held in joint-names of them or by A. T. Ltd.. To elaborate, the Wife said that B Property was their first owned matrimonial home, after its sale, the sale proceeds were applied to pay the downpayment of the Fa Po Street Property. The Fa Po Street Property was once remortgaged and the fund so raised was used to buy Hoi Tan and K Property. After Fa Po Street Property was eventually sold, they bought Bowen and Begonia with the proceeds. Unilateral Assets 158.Ms. Yip in her final submission on law, emphasises that "the source of the assets in a short marriage may be a pointer prompting departure form equality". Relying on Charman and Miller, Ms Yip suggested that unilateral assets generated substantially or solely by one spouse, even though they may be matrimonial in character, may disapply the full force of sharing principle. She further argues that whilst it is not disputed that the Matrimonial Properties were acquired during marriage, the investment properties including Bowen, Begonia, Hoi Tan and K Property are unilateral assets which the Wife should not be entitled to have equal share with the Husband in them. To support her argument, Ms Yip submits that
159.I am of the view that this argument is not borne out by evidence before me. One must not forget the Husband purchased B Property in joint name with the Wife as tenants-in-common. The Husband has made an attempt to say that the Wife had agreed not to claim her interest in proceeds if B Property was to be sold. Such saying could not stand as the truth for one moment. The fact that he put the name of the Wife in the deed as a co-owner showed a clear intention of his that the Wife's interest was recognised by him. Similar arrangement was made when the Fa Po Street Property was purchased with the proceeds of B Property except that the Wife was joint tenant with the Husband this time. 160.Roughly speaking, the source of fund for all properties acquired during marriage were funded by the profit of a serial property transactions since the sale of B Property which was a property jointly owned by the parties. The Husband paid closed to $1m as down payment for the B Property. At its sale, he received proceeds for over $2.5m. He purchased the Fa Po Street Property with downpayment of $2.5m. Upon a loan of about $2m raised with a second mortgage of the Fa Po Street Property, K Property and Hoi Tan were purchased of a total $1.12m without any mortgage. At the sale of the Fa Po Street, the proceeds of about $8m were used to pay the downpayment of Begonia and Bowen in total of close to $8m. As one of the tenants-in-common in B Property, the Wife has an interest in the seed of the fund providing for the subsequent purchase of the properties. This is not a situation where the family assets fall within the scope of unilateral assets. Non-financial Contribution to the Purchase of the properties during marriage 161.As to the accumulation of the wealth through property investment, the Husband held the position that it was all done through his efforts apart from his financial input. The Wife had only minimal contribution. He said he was the one who managed the property investment, including the sourcing of properties, negotiation on the price, design and renovation etc. 162.The Wife had a lot to say in this regard. In her affirmation, she set out in detail how she ran about for the renovation of the properties. She worked on the design, sourced for materials, bargained with renovation contractors and material suppliers, she monitored the progress and inspected the works done throughout the project. With her family's connection in building and renovation work, she managed to get wholesale price from suppliers which the Husband could never have done. Further she had earned her experience in real estate investment, interior design and home decoration when she was in Canada. These experience made her design very much welcomed by buyers and that helped the parties to get good sales price from buyers. 163.Last but not least, she said since she was so involved in property investment for the family, she did not spend much time in L. C. Co. and that explained why the company was not making money in the last few years before cessation. 164.Ms Yip also submits in law that the court should not take into account the Wife's contribution with her experience and so-call expertise in real estate investment and interior design as claimed by the Wife. Quoting paragraph 169 of Miller, Ms Yip submits that Lord Mance was aware of the danger of measuring the immeasurable such as experience and acumen and the daunting job of having to find who has what at the beginning of the marriage. 165.Reading the passage itself, I do not think the Wife in this case is taking a similar stance as the husband in Miller who attempted to discount the claim of the wife therein relating to the matrimonial acquest from 50% to 37% by asking the judge to take into the account that the husband had "brought very valuable acquired expertise and acumen to the marriage". In the present case, what the Wife asks for is equal share of the matrimonial assets. She asks the sharing principle to stand and not a departure from it. It is true that she mentioned about her experience in relevant area, but her claimed experience was only one of the many factors she relied upon to resist a departure from equal sharing as suggested by the Husband. Her emphasis is that the property investment was a common endeavour of the parties. Her engagement in the property investment is to support her such saying. I do not think she is asking the court to measure her involvement or contribution in a mechanical or calculative way. 166.Relying on the same passage and the application of "durational theory", Ms Yip argues the other way round for the benefit of the Husband. She submits that unfairness arises if the Husband's experience and knowledge which benefits the Matrimonial Property in this very short marriage is ignored. It seems to me that she is asking the court take the risk "of measuring the immeasurable such as experience and acumen and the daunting job of having to find who has what at the beginning of the marriage" that Lord Mance has given his warning. Contribution to the welfare of the family 167.All in all, the Husband said the Wife made little contribution to the family, if there was any. They do not have children. They had simple life and she did not even cook or have to cook for him. 168.The Wife said that she had always given support to the Husband whole-heartedly. She also helped in the Husband's clinic as and when required. She would assist whenever she could, for example, she asked her family to help in removing the waste after a renovation to deal with a water leakage. Special Contribution 169.The Husband is also claiming special contribution to justify his position that the equal sharing principle does not apply in the instant case. Ms Yip sets out the following argument for the court to consider that the Husband has made special contribution to the welfare of the family:
170.She goes on to submit that no matter how one looks at the case, the Wife's contribution cannot be regarded as of the same league as the Husband's. 171.Ms Yip quantifies the unmatched contribution as 99:1. With respect, this is the approach Lord Mance in Miller had given a warning. 172.Further, in Charman at paragraph 79, when the House discussed the issue of special contribution, it is said that:
The discussion went on in paragraph 80
173.I do not agree with Ms Yip's saying that the Husband plays multiple and pivotal roles in the marriage. It is a simple family. There were no children. The Husband was busily engaged in making advancement in his career, for example, taking courses and examinations. He made investment with spare money he earned from his practice. I must say that he is hard working and was probably good in property investment. But these qualities of the Husband could not be said to be those which deserve special treatment. There is no evidence before me showing the Husband's "genius in business or some other field". Property investment is probably one of the most popular modes of investment in Hong Kong. In my view the profit made in the property investment is more a windfall due to the fluctuation in the property market and not due to his genius in it. 174.Further he was not the only one running this venture. The Wife at least went along with his plan. I reckon that she must have to make decisions on the fitting out and renovating the properties. She was running errant in the hope of making their matrimonial home(s) a nice piece of commodity for good profit at the same time. She agreed to move about instead of enjoying a steady family environment. I find that the Wife is an equal partner to the investment of the family. 175.For these reasons, I reject the Husband's saying that he has made special contribution to the family. Conduct 176.The Wife alleged that the marriage broke down due to the Husband's unreasonable behaviour and in particular his relationship with a woman. The Husband does not deny that he is cohabiting with his girl friend and that they should have two children by now. It is trite law that unless the conduct is one that is "inequitable to disregard it", it would not be taken into account by the court when considering ancillary relief matters. I do not find conduct of the Husband in regard to his relationship with another woman "inequitable to disregard" and therefore I would not allow it to carry any weight in my decision. 177.The Wife also put forth a complaint about the Husband's refusal to sell Bowen and Hoi Tan despite being ordered by Deputy Judge Remedios, as she then was, for these two properties to be sold. By consent and undertaking of the parties HH Judge Remedios made an order on 27 April 2007 that within 6 months from the date of order, Bowen be sold at a price not less than $10m; Hoi Tan and K Property be sold at a price not less than $0.6m and $0.66m respectively ("Order for Sale"). 178.The Wife complained that the Husband had deliberately refused an offer to sell Bowen at HK$15.5m. This offer was first made in early 2008 and was still open during the trial. It is further submitted on behalf of the Wife that the purchaser offered to buy Bowen on "as is" basis, that means, the new purchaser will take on the liability and responsibility on the repair requirement under a building order or otherwise. She therefore asks that the value of Bowen be fixed at no less than $16.5m. 179.According to the Wife, the same should apply to Hoi Tan. In breach of the Order for Sale, the Husband refused to sell to a potential purchaser at an offer of $0.8m whilst the value agreed by parties upon professional advice was $0.6m the Wife asks that the value of Hoi Tan be fixed at $0.8m. 180.At the trial, the Husband's explained why he did not accept the offer in relation to Bowen which was still open then. First, he needed a place to stay as he had a "family" now. His son studied in the vicinity so he wanted to keep the Bowen Property for the convenience of his son. Secondly, if he moved to another place, whether to buy or to rent, he would have to spend on renovation and other related expenses. As to his refusal to sell Hoi Tan despite the Order for Sale, he said he was waiting for a better price. 181.Ms Hui acting for the Husband has in her written final submission dealt with this complaint of the Wife. She submits that the Wife has misconceived the situation when she asked the court to take the offered price as the true value of Bowen and Hoi Tan. First, she says these offers were subject to all kinds of uncertainties that no one could say for sure that the sale would be materialised at the end. More importantly, the refusal of the Husband did not cause any damage to the interest of the Wife because the price eventually agreed by the parties were not lower than sales price set down by the Order for Sale. For the purpose of the trial, the parties adopted agreed value for the two properties, as mentioned, Bowen at $12.5m and Hoi Tan at $0.6m where as in the Order for Sale the price for sale were not lower than $10m and $0.6m for the two properties respectively. She says that had the Husband not refused to sell, Bowen could not have reached the agreed price of $12.5m in any event. 182.After hearing the Husband and considering Ms Hui's submission I find that the Husband's refusal to comply with the Order for Sale a conduct that "it would be inequitable to disregard it.". I reject his reasons for refusing to comply with the Order for Sale. Bowen is definitely not the only property available to house his family in the vicinity. His refusal reflects only his selfishness and his arrogance even when faced with a court order. When he first refused to sell Bowen, he said it was because the agent failed to disclose to the potential buyer that there had been a building order. A more reasonable way to deal with this should have been just to give the agent a clear instruction on disclosure and not refusing to sell. Further, the uncertainties were not the reason given by the Husband for his refusal. I find such "uncertainties" far fetching in any event. The offer was made to him for a last time during the trial, he refused without giving much consideration but insisted that he would need a place to house his family. If there was a drop in price after the Husband's refusal to sell, it is unlikely that the balance should not be shouldered by the Husband. Now there is an increase in price I do not see how and why the Wife should be deprived of the benefit. I find that the Husband's refusal to comply with the Order for Sale without good cause. He should bear the consequence. I would take it into account when I distribute the family asset. 183.The Husband also complained that the Wife had refused to put Begonia on lease, and he had been losing at least $40,000-$45,000 a month as rental. It seems that the Husband is of the opinion that since he has been getting steady with his girlfriend and that they now have children, his housing need is more justified, even to the extent of paying no heed to the Order for Sale. On the other hand, the Wife, who has to face the breakdown of the marriage, not having new partner nor children should go back to stay at Tropicana or elsewhere at her own expenses. I do not agree with this. On facts, I do not find that the Wife had been taking Tropicana as a regular place of abode. I accept her evidence that she only went back there to stay after a burglary. I also accept that Tropicana was eventually taken up by her parents until today. I refuse to take the Wife's staying in Begonia a conduct which is inequitable to disregard. Equal Sharing Principle applicable in this case? 184.The size of the family assets is more than sufficient to cater for the parties' immediate need. In my Judgment, the equal sharing principle applies at least to all the Matrimonial Property in the present case in the light of the relatively short duration of the marriage. This is a case where both were relatively young when they got married. It was a time when the Husband was also not very well established. He did not as he said brought into the family a huge and substantial wealth. It was because he had an attractive income from his practice that he had some spare cash to invest. No doubt he had some investment in properties before getting married. But from evidence before me such investment did not cause him any lucrative savings he could bring along into the marriage. His investment in M Property was for self-use. There was no plan to put this on sale for profit and in fact this did not happen until today. He is still using it to run his medical practice. His investment in O Property caused him a loss of over $1m if not $1.5m upon its sale in 2007. The Husband did not tell the court that he was making handsome profits in other investment like the K. P. video game shop and the medical services operated in the name of W. H. Consultant Ltd. They ceased to be in business one after the other as they failed to produce any profit according to the Husband. It is true that the Husband had put in $1m on the downpayment of B Property, the source of it, could not be verified. This purchase took place in 2004, over one year after their getting married. It is probable that a good portion of if not all $1m was his income since his married. As mentioned, Wife was named as a co-owner in B Property. All the matrimonial properties were acquired during the marriage with joint endeavour of the parties, and the fruit of success should be shared equally between the parties. 185.Ms Yip submits that even if the equal sharing principle applies, the court should only share the profit of the investment, that is, the Husband should be reimbursed of the costs. I do not agree. I find the costs including renovation, mortgage payment and expenses come mainly from what the Husband got during the marriage, this is part of the matrimonial properties to be shared. As mentioned earlier, I do not accept that the $1.7m was lucky money. I find that they were their hidden income. I find that but for the conduct of the Husband, the equal sharing principle applies to all matrimonial properties. CONCLUSION 186.The parties in this case had a marriage of about 4 years. Both are of relative young age and should have a good career before them in future. The Husband is a medical practitioner and the Wife with good education background and is no doubt, able and competent. Having said that I believe that it would take longer time for the Wife to establish herself as compared to the Husband due to her lack of work experience and formal record of employment in Hong Kong. 187.The Husband had tried every means to reduce the share the Wife should get from the wealth of the family. He tried to hide his own resources and income from the court. He lied. He challenged the financial position of the Wife in every aspect he could. He disregarded the Order for Sale of two properties just to serve his own interest. In any event, I do not find the resources and need of the parties determining in the present case. As said, this is a case where there are assets available beyond satisfying the immediate housing and financial needs. 188.Having heard and viewed evidence and submissions, I find no reason in this case for me to depart from the sharing principle when distributing the family assets between the two. As mentioned, I would take into consideration the Husband's breach of the Order for Sale. I find that the Husband should pay to the Wife an extra $1.5m being her share of the difference in the agreed value and the price offered for Bowen ($15.5m - $12.5m Цnbsp;2). 189.I understand that the Wife would like to keep Begonia and the Husband would like to keep Bowen. I see no reason why I should rule in favour of one and not the other. I rule that they should keep their favourite property but there should be payment made to top up the balance if necessary. 190.In the case of Wife, she is getting Begonia which is worth about $6.6m net whilst the Husband is getting Bowen which is worth $9m net of mortgage loan. The total value of the two amount to $15.6m. By equal share, each should be getting $7.8m. Since the Wife is getting a property at the worth of $6.6m, the Husband should pay her $1.2m as a round-up figure in order get the whole interest of Bowen. With the additional payment of $1.5m mentioned above, the Husband should pay the Wife a total of $2.7m as lump sum. 191.Hoi Tan should be sold at a price not lower than $0.6m with the proceeds split equally between the two save and except that the Husband should compensate the Wife for his non-compliance with the Order for Sale. The Husband should also transfer one half of the shares held in the account of CCB (Macau) to the Wife. The balance of the proceeds of K Property now being kept by the solicitor of the Wife should be split equally between the two. The Wife shall transfer the 1% of A. T. Ltd. to the Husband at nil consideration. 192.I understand that the Wife is not pursuing the Husband's interest, if any, in the land in Canada, KP Multimedia Ltd and W. H. Consultant Limited. I make no finding in regard of these assets. I find that both have some investment in stock (other than those in CCB Macau Account) and cash in bank account, I rather make no order for transfer as the amount is relatively small. 193.I find it a suitable case for a clean break between parties. Order 194.The Husband shall carry out the following terms in full and final settlement of the claims of the Wife for ancillary relief:
Costs 195.My award is closer to the open proposal of the Wife,the Husband shallpay the costs of the Wife. This is an order a nisi which shall be made absolute and final within 21 days.
Ms. Jennifer Tsui instructed by Chain Chow & Barbara Hung for the Petitioner Ms Hui of Messrs. Wong, Hui & Co for the Respondent Ms. Anita Yip instructed by Messrs. Wong, Hui & Co for the Respondent (for legal submission) Appeal by the respondent allowed by the Court of Appeal. Please refer to CACV162/2009 dated 7 June 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under FCMC 5382/2006