K v. D

FCMC 8732/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 8732 OF 2007

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BETWEEN

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Before : HH Judge Bruno Chan in Chambers

Date of Hearing : 11 – 14 May & 16 June 2009.

Date of Judgment : 15 July 2009.

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J U D G M E N T

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1.This is the Petitioner Wife’s application for ancillary relief, mainly for an order for equal division of the matrimonial assets between her and the Respondent Husband upon the dissolution of their marriage, and also for his contribution towards the support of her daughter born to her former marriage but has been treated as a child of this family and is now a 19 year old university student in St. Andrews, Scotland.

2.The parties first met in 1987 but only commenced a relationship in 1996, married in 1999, and separated in 2006. The Wife is now a 52 year old event organising/managing consultant residing in Hong Kong, while the Husband is aged 58 and a retired civil servant receiving his pension in Canada.

3.There is no major dispute as to the income of the parties or their assets, rather the focus of the disputed evidence has been on when exactly did they commence cohabitation or become committed to each other, and when exactly did they separate, with the perceived forensic purpose of the focus being first to seek to identify those dates or moments, and then to seek to identify what assets did they each bring into the marriage, what value should be assigned to those assets for the purpose of their distribution, and how should they be distributed between the parties now that their marriage has come to an end.

4.The Wife blames this forensic exercise on the Husband for taking the wrong approach towards the distribution of their assets, which she says should instead be a simple equal division taken at the time of their separation, with the relevant valuation being their current values other than those already realised then when they were realised, hence with the total assets currently valued at HK$18,167,558, an equal share would give an entitlement of HK$9,083,779 to each party, as their marriage had essentially been an equal partnership in terms of assets, contributions and every other sense.

5.The Husband however argues that the valuation of all the assets should be taken at the time of the trial at only about HK$11,772,799 in total, and that this is a proper case to depart from equality, with both parties married late in life and with no child from the marriage, and as the Wife did not put her case on the basis of need, it is therefore necessary to consider the financial position of the parties at the time the relationship began and now, as his initial contributions were more significant than the Wife’s and should not be disregarded, but his position has since declined, hence her proposal for an equal distribution of assets in the circumstances would be manifestly unfair. ^.

Background

6.The Husband was born in Canada on 14^th April 1951 and received his education up to university in engineering in Ontario. He came to Hong Kong in early 1981 to join the civil service as a geotechnical engineer in the then Public Work Department. In 1988 he was transferred to the Environmental Protection Department and was promoted to Senior Environmental Protection Officer in 1990, a position he had held up to his retirement on 28^th December 2004 when his pre-retirement income was about HK$120,000 per month including salary and various allowances.

7.In 1996 he purchased a property at Woodland Gardens, Conduit Road, Hong Kong (“Woodland Gardens Property”) for HK$7,800,000 by means of a mortgage of HK$5,350,000 from Hang Seng Finance and a government loan of HK$1,732,000 as his home up to the time of the marriage and thereafter as the parties’ matrimonial home.

8.The Wife was on the other hand born in England on 2^nd August 1956 and after completing secondary education, she went on to train as a nurse. She then decided to develop her career in business and in 1987 came with her first husband Mr. MK to Hong Kong where she subsequently gave birth to their child E on 23rd March 1990 who would later become a child of this family.

9.In or about 1993 the Wife separated from her first husband and moved to Manila with E. In 1996 the parties commenced their relationship and it was then agreed that the Wife and E should relocate back to Hong Kong to be with the Husband and also in time for E to commence her new school term in September 1996, which they did in about August of the same year.

10.As noted above it is an issue between the parties as to when exactly that they commenced their relationship, with the Wife claiming that it was in about August 1996 when they began their commitment to each other and when she would stay over at his Woodland Gardens Property from time to time, while the Husband’s case is that it was only in March 1997 when they actually started cohabiting together as a family. In any event their decision was for the family to first reside in his Woodland Gardens Property, with the intention to sell it and to buy another property for the family, but the subsequent Asian financial crisis in 1997 made the sale impractical, and so the property became their matrimonial home. They eventually registered their marriage on 15^th August 1999 in Ontario, Canada after the Wife had divorced her first husband.

11.After the marriage the Wife ran a company known as MD and MS with sole marketing rights in Asia for certain products that assisted sleep, but the products were subsequently pulled from the market by the manufacturer over accreditation problems. She then traded as K & Co. and from early 2001 as V Limited. There was also a time when she was involved in what is known as a FC Collection business but of no significant value or income. In 2003 she formed a consultancy business known as DDK Limited (“DDK”) in events management which has since been her sole source of income averaging about HK$52,000 per month according to her Financial Statement (Form E) filed in these proceedings.

12.In about late 2002 the parties decided to leave Hong Kong to settle in Canada, reluctantly on the part of the Husband as he preferred living in Hong Kong where he had the security of a well-paid job, but insisted by the Wife due to her unhappiness with his alleged drinking problem and her belief that their future should be in Canada. The parties therefore sought and obtained legal advice to structure their assets to minimize tax liabilities with the Canadian Revenue Agency in preparation for the move.

13.Accordingly a BVI registered company known as CO Group Limited (“COG”) was set up in 2002 with the parties as the only directors with equal share holding to hold properties and investments by way of shareholder loans. It has 3 bank accounts all with HSBC, of which a trust loan account operated solely by the Husband to deal with the shareholder loans, while the other 2 accounts have the parties as joint signatories.

14.As part of COG’s business plan, another company known as K I Limited (“KIL”) was set up with COG as the only share holder and again with the parties as directors to purchase and hold the following properties in Canada :

(a)  19XX Jackson’s Mill Road, Kingston, Ontario (“Jackson’s Mill Property”);

(b)  3XX, 3YY and 3ZZ Queen Street, Kingston, Ontario (“Queen Street Properties”);

(c)  1XX Bagot Street, Kingston, Ontario (“Bagot Street Property”).

15.The Jackson’s Mill Property was purchased on 31^st October 2002 as the parties’ future intended home for C$376,000 by means of a mortgage of C$244,400 from HSBC Canada with the parties as guarantors, with the down payment of C$127,100 funded from the Husband’s savings as a COG loan to KIL, plus a further payment of C$10,422.75 from him.

16.In anticipation of their move to Canada, the Wife in 2003 enrolled E into Trinity College School in Ontario as a boarder starting for the new school term of September 2003.

17.Shortly thereafter in April 2003 the Wife met an accident after falling through the glass door of a shop in a shopping mall in Central, Hong Kong which had not affected the parties’ plan but did cause her serious head injuries with post-traumatic stress and post-concussion syndromes. Legal proceedings have subsequently been instituted in the High Court on her behalf to sue for damages for the injuries which to my understanding are still unresolved at the time of the hearing of this application.

18.By late 2004 or early 2005 the parties agreed that the Jackson’s Mill Property be transferred to the Husband’s sole name before his official return to Canada to minimise potential capital gain tax there. The transfer was completed in December 2005 at the then market value and recorded for the sum of C$384,000 by means of another HSBC Canada mortgage in the Husband’s sole name with the down payment funded by a loan from the COG trust loan account.

19.The Bagot Street Property was purchased on 1^st February 2003 as investment for C$354,000 by means of a mortgage of C$228,800 with the down payment funded by the Wife’s savings.

20.The Queen Street Properties which consisted of 3 units were purchased about 2 months later on 2^nd April 2003 also as investments for the total sum of C$610,000 again by means of mortgages with HSBC Canada with the down payments funded similarly by the parties’ savings.

21.The parties then appointed a local property manager known as Keystone Property Management (“Keystone”) to manage these properties including letting them out for rental income, with the management fees and other expenses relating to the properties being met by an overdraft account of KIL guaranteed by the parties until December 2006 when Keystone was fired and the Husband, who had by then settled in Ontario, took over the management.

22.In preparation for their planned move in mid-2005, the Husband sold his Woodland Gardens Property in November 2004, took a short term lease for an apartment on Borrett Road for the family, and formally resigned from his civil service in Hong Kong on 28th December 2004.

23.For his retirement the Husband elected to buy back his pensionable service in order to extend such service back to February 1981 when he first joined the civil service so as to improve on his pension rights, for which he paid the buy back amount of HK$1,363,926.95 from his savings and the sale proceeds of the Woodland Gardens Property. He has since been receiving HK$30,464 as his pension per month.

24.In around February 2005 the parties continued with their investments by purchasing another property, this time in Phuket, Thailand at Baan Yamu (“Phuket Property”) in the Wife’s sole name for investment and as a holiday home through the COG trust loan account.

25.However shortly thereafter the Wife wanted to postpone the move to Canada for 6 months as her business DDK had been offered a number of projects and she would like to remain in Hong Kong to manage them. It was decided that the Husband should nevertheless go ahead with the move first, and the Wife therefore accompanied him to Canada on 13^th June 2005 where they stayed at the Jackson’s Mill Property until mid-July 2005 when she returned to Hong Kong for her business.

26.To accommodate the Wife while she was in Hong Kong the parties purchased a small flat in Causeway Bay at Hoi To Court, Gloucester Road (“Hoi To Court Property”) through a holding company known as SC Investment Limited (“SC Investment”) wholly owned by them in equal shares. The purchase price of HK$3,200,000 was funded again by a shareholder loan of about HK$1.8 million via COG with the balance secured by a mortgage of HK$1.6 million from HSBC. SC Investment then let the property to DDK at HK$15,000 per month to pay for the mortgage instalments.

27.In January 2006 the Husband’s mother passed away in Canada leaving a will which gave him an option to purchase her family home at Elva Avenue, Kingston, Ontario (“Elva Avenue Property”) where he grew up with his family. On 15^th May 2006 the parties decided that he should exercise his option to purchase the property in their joint names for the nominal sum of C$1.00 and taking a mortgage from her estate for C$324,999 based on the then market valuation of C$325,000.

28.Unfortunately shortly thereafter the parties started to experience problems with their marriage and after a failed attempt for reconciliation in August 2006 in Canada, the parties have since remained apart from each other, while E as aforesaid has gone on to university in Scotland.

29.In anticipation of the eventual breakdown of their marriage, the parties decided to realise some of their investments by selling first the Bagot Street Property in December 2006, followed by the Jackson’s Mill Property in 2007 and eventually all 3 of the Queen Street Properties in 2008, with the balance of the sale proceeds kept in some of the Husband’s accounts pending their distribution in these proceedings, of which he subsequently spent C$314,901.29 renovating the Elva Avenue Property as his home, in which he now resides.

30.On 20^th July 2007 the Wife instituted these proceedings for divorce, custody of E and general ancillary relief for both of them. As aforesaid E is now a university student in Scotland and it is no longer necessary to deal with her custody, while the parties have agreed to dissolve their marriage on consensus basis of separation for 1 year since 31^st May 2006. They however have multiple issues over the division of their assets in terms of the date of computation and the methodology of their valuation, as well as the Husband’s dealings and utilization of some of the joint funds and sale proceeds under his control since their separation, the details of which I now propose to set out in their respective case.

The Wife’s Case

31.As the parties have agreed the date of their separation as at 31^st May 2006, the Wife’s case is that it should also be the relevant date for the valuation of their assets since the their finances have been independent from that date, hence :

(a)  for money in bank accounts, it is the cash balance standing to the credit of the parties as at 31^st May 2006;

(b)  for real property, the value should be either the realised value when the property was sold, or the present value when it is still in existence;

(c)  for fixed assets such as jewellery, the valuation should be the present value of the assets held by the respective party as at 31^st May 2006;

(d)  for depreciating assets such as vehicles or household items, the value should be the value as at 31^st May 2006.

32.There is no basis for any other valuation as the Husband had improperly used their joint accounts for his personal trading and other spending such as the renovation of the Elva Avenue Property which she had not agreed, and that he had wrongly treated family assets as his own personal assets or used them to fund his own legal costs, refusing to account to her or allowing her use of these funds.

33.In particularly the fundamental errors of the Husband’s approach can be illustrated by his valuation of the Elva Avenue Property, of which he embarked on an expensive renovation process by using the sale proceeds of the Jackson’s Mill and other joint funds despite her objection, and uses its current valuation in these proceedings, as she argues that he cannot expect her to bear the loss incurred by the renovation costs which were without her agreement or for her benefit, hence fairness requires a valuation without the improvement.

34.She proposes that all the assets with their valuation on the basis as stated above are those listed in her updated schedule (Paginated Pleading Bundle 9 : 2814A), with the adjusted figure of the total assets at 31^st May 2006 of HK$18,167,558, of which an equal division would give the parties assets with value of HK$9,083,779 each.

35.She does not agree to include her claim for her personal injury case as liability would be an issue and that it would be wrong in principle to speculate as to what she may recover and put it in the balance sheet as part of the assets to be divided between the parties, although she accepts that the court should take the fact that there is a claim into account and that it is an asset of hers.

36.She therefore proposes that in the equal division of the assets, she should keep or receive the following :

Hoi To Court Property	HK$2,817,058
The Phuket Property (THB 18m)	HK$3,706,000
Her Inheritance	HK$ 874,255
50% of Golf Club Membership, Car, etc	HK$ 300,204
Her Jewellery	HK$ 105,000
SC Investment	HK$ 0
DDK	HK$ 0
Her HSBC HK Account	HK$ 22,817
Her Lloyds UK Current Account	HK$ 9,444
Her Lloyds UK Savings Account	HK$ 54,491
Her HSBC Credit Card -	HK$ 82,319
Total ~	HK$7,806,950

37.To bring her half share of the assets up to the HK$9 million which she computed above, she proposes that the Husband should pay her an additional sum of HK$1,276,829 from the joint funds and sale proceeds of the various properties which he has since kept under his control.

38.Apart from using their joint funds inappropriately or without her consent after their separation, the Wife also believes that the Husband has failed to disclose or account for all his assets including as certain ‘paper gold’ worth more than HK$1.2 million.

The Husband’s Case

39.Whether the parties commenced living together as husband and wife in September 2006 or in March 2007, the assets which the Husband brought to the marriage in excess of HK$11 million were a lot more than those from the Wife, and in addition he had a secure employment with the Hong Kong Government with all the benefits of his then package such as home finance allowance, housing loan, education allowance, leave travel allowance, medical and dental benefits, as well as his British Government compensation scheme benefits relating to ‘1997’ which amounted to ₤104,312.47 between 1^st July 1997 and 1^st July 2001 as well as his pension built by his employment since 1981.

40.As against this the Wife brought into the marriage only two sums, ₤12,059.49 (or HK$133,679.45) (PB : 2811) in July 2001, and ₤131,784.79 (or HK$1,623,588) (CB : 776-59) in November 2002, with the former sum disputed by the Husband as having been invested in the family assets, but even on her own case her maximum was only HK$1,757,268. His initial contributions were therefore much more significant than the Wife’s and should not be disregarded.

41.It was not a 50/50 partnership in terms of assets between them as alleged by the Wife, as it is not borne out either by the initial contributions or by the subsequent financial arrangement of the parties :

(a)  there were no joint accounts;

(b)  the corporate structure of COG and KIL recorded the source of the monies invested and allowed the parties to minimise their Canadian tax only, as otherwise if there were to be a ‘pooling’ of assets (without a record of the source and to where they would return) there would have been no need for the records which showed the parties’ individual shareholders loans;

(c)  the Husband recorded a loan re FC being the Wife’s own business which appears on all his assets schedule;

(d)  the Husband kept asset schedules in his own name until the joint purchase of properties in 2005 through the corporate structure;

(e)  in addition to the corporate shareholder loans between COG and KIL the parties had individual shareholder loans as evidenced by the Wife signing the SC Investment accounts for the purchase of Hoi To Property showing shareholder’s loans and also the corporate resolution  acknowledging the Husband’s return of shareholder loan for his purchase of Jackson’s Mill Property.

42.Whoever was the driving force behind the move from Hong Kong to Canada, and the Husband says it was the Wife, the result was that the Husband’s financial security in Hong Kong such as home, job and pension has been significantly and adversely affected by the ‘move’ to Canada, whereas conversely the Wife has a home and business in Hong Kong, that it must be an important circumstance of the case for the court to take into account.

43.Another circumstance that the court should take into account is the fact that the former matrimonial home at Woodland Gardens was purchased by the Husband without any contribution from the Wife but which had provided a home for her and E during the marriage, and when it was sold in 2004 for the move to Canada and the proceeds were used to buy back his pension, it is an asset and benefit which he can no longer enjoy.

44.He insists that all his utilizations of the joint funds and sale proceeds after their separation were either necessary or reasonable in the course of defraying various expenses relating to their corporate structures and maintaining their properties which he has all accounted for before or during the proceedings, and that he has also made full and frank disclosure of all his assets including the paper gold raised by the Wife. Hence he dos not agree with her that there should be any ‘add back’ to the total assets before their proper distribution.

45.He has summarised the parties’ assets in accordance with his schedule (CB 3 : 1127) as follows :

(a)  Wife’s assets including her personal bank accounts, pension, jewellery, inheritance and the Phuket Property but less her liabilities :	HK$4,122,346;
(b)  Husband’s assets including his personal accounts/pensions, Pennilee/Lakewood Golf Membership, inheritance and others but less liabilities :	HK$2,209,734;
(c) Joint assets	HK$5,440,719
Total  :	HK11,772,799

46.From these the 3 remaining real properties account for about 70% of the net assets :

(a)  Phuket Property	HK$3,933,000
(b)  Elva Avenue Property	HK$1,468,031
(C)  Hoi To Court Property	HK$2,854,000
Total  :	HK$8,255,031

47.Of these 3 properties, he proposes for the Wife to keep Hoi To Court Property, that he is to keep the Elva Avenue Property, while the Phuket Property should be sold with the net proceeds to be apportioned to give him 60% and the Wife 40% of the total assets in the circumstances, so that he is left with his home, some cash and pensions and the problem of obtaining a regular job which he has experienced since his return to Canada, while the Wife will also have her home, some cash and her personal injury claim as well as her business.

48.The Wife’s proposal, on the other hand, he argues is unworkable as she maintains a 50/50 division of assets on the wrong basis of valuing the liquid assets and other non real properties as at 31^st May 2006 in the total sum of HK$18,719,655 of which he says some HK$6 million does not exist, in which case her proposal of 50/50 division would in effect leave him with only HK$2,412,972. Her proposal to settle is in her letter of 4^th February 2009 (CB 3 : 798).

The Principles

49.Notwithstanding the recent flurry of developing case law on how the property of the husband and wife should be divided following a divorce, starting in particularly in England with their House of Lords’ landmark decisions in White v White [2001] 1 AC 596 and the combined appeals of Miller v Miller and McFarlane v McFarlane [2006] 2 WLR 1283, which were considered by two different Hong Kong Court of Appeal, first in DD v LKW [2008] 2 HKLRD 523 (Cheung, Yuen JJA and Lam J) and later in W v H [2009] HKEC 757 (Rogers VP, Le Pichon JA and Stone J), it must still be borne in mind that, as reminded by the Vice President in the latter case, section 7 of Matrimonial proceedings and Property Ordinance, Cap.192 (“MPPO”) sets out what the court must do when deciding how the matrimonial property is to be divided :

“(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, f so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say –

a.  the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

b.  the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

c.  the standard of living enjoyed by the family before the breakdown of the marriage;

d.  the age of each party to the marriage and the duration of the marriage;

e.  any physical or mental disability of either of the parties to the marriage;

f.  the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

g.  in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.”

50.While section 7(1), which is in almost identical terms with section 25(1) of the Matrimonial Causes Act 1973 and now section 3 of the Matrimonial and Family Proceedings Act 1984 of the United Kingdom, does not explicitly state what is to be the aim of the court when exercising these powers, Lord Nicholls in White v White held that ‘the purpose of these power is to enable the court to make fair financial arrangements on or after divorce in the absence of agreement between the former spouses.’

51.Lord Nicholls went on to emphasize the equal status of a husband and wife in a matrimonial union should be reflected in the fair division of assets by stating (at p605) :

‘In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles. Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money, and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering (f), relating to the parties’ contributions. If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer.’

52.He then suggested that the ‘yardstick of equality of division’ should be used as a check on the proposed method of division of assets when he sated (p 605) :

‘A practical consideration follows from this. Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.

This is not to introduce a presumption of equal division under another guise. Generally accepted standards of fairness in a field such as this change and develop, sometimes quite radically, over comparatively short periods of time. The discretionary powers, conferred by Parliament 30 years ago, enable th ecourts to recognise and respond to developments of this sort. These wide powers enable the courts to make financial provision orders in tune with current perceptions of fairness. Today there is greater awareness of the value of non-financial contributions to the welfare of the family.’

53.In Miller/McFarlane Lord Nicholls further elaborated on the general principle of fairness :

‘In the search for a fair outcome it is pertinent to have in mind that fairness generates obligations as well as rights. The financial provision made on divorce by one party for the other, still typically the wife, is not in the nature of largesse. It is not a case of ‘taking away’ from one party and ‘giving’ to the other property which ‘belongs’ to the former. The claimant is not a suppliant. Each party to a marriage is entitled to s fair share of the available property. The search is always for what are the requirements of fairness in the particular case.’ [9]

54.He then went on to identify 3 strands of principle under the fairness approach :

‘Financial needs

This element of fairness reflects the fact that to a greater or lesser extent every relationship of marriage gives rise to a relationship of interdependence. The parties share the roles of money-earner, home-maker and child-carer. Mutual dependence begets mutual obligations of support. When the marriage ends fairness requires that the assets of the parties should be divided primarily so as to make provision for the parties’ housing and financial needs, taking into account a wide range of matters such as the parties’ ages, their future earning capacity, the family’s standard of living, and any disability of either party. Most of these needs will have been generated by the marriage, but not all of them. Needs arising from age or disability are instances of the latter.’ [11]

‘In most cases the search for fairness largely begins and ends at this stage. In most cases the available assets are insufficient to provide adequately for the needs of two homes. The court seeks to stretch modest finite resources so far as possible to meet the parties’ needs. Especially where children are involved it may be necessary to augment the available assets by having recourse to the future earnings of the money-earner, by way of an order for periodical payments.’ [12]

Compensation

‘This is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage. For instance, the parties may have arranged their affairs in a way which has greatly advantaged the husband in terms his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned. Then the wife suffers a double loss : a diminution in her earning capacity and the loss of a share in her husband’s enhanced income. This is often the case. Although less marked than in the past, women may still suffer a disproportionate financial loss on the breakdown of a marriage because of their traditional role as home-maker and child-carer.’ [13]

Sharing

‘This “equal sharing” principle derives from the basic concept of equality permeating a marriage as understood today. Marriage, it is often said, is a partnership of equals. In 1972 Lord Keith of Kinkel approved Lord Emsile’s observation that ‘husband and wife are now for all practical purposes equal partners in marriage’ : R v R [1992] 1 AC 599, 617. This is now recognised widely, if not universally. The parties commit themselves to sharing their lives. They live and work together. When their partnership is entitled to an equal share of the assets of the partnership, unless there is a good reason to the contrary. Fairness requires no less. But I emphasise the qualifying phrase : ‘unless there is good reason to the contrary’. The yardstick of equality is to be applied as an aid, not a rule.’ [16]

55.This fairness approach with its underlying principles was firmly embraced by Cheung JA in DD v LKW when he said in the leading judgment :

‘White and White are, of course, not binding on this Court but nonetheless they are highly persuasive authorities. I would firmly embrace the approach in White and Miller on the division of family assets on divorce. On marriage the parties commit to sharing their lives. It is a partnership of equals. The husband may work while the wife may stay at home to take care of the family. Their contributions are nonetheless equal. As more frequently happens these days, with domestic helpers being available, both the husband and wife work and make equal contributions to the welfare of the marriage. [63]

On divorce the principle and spirit underlining the union should be reflected in the division of the family assets. The division should proceed on the basis of fairness and this necessarily means there is no room for discrimination between husband and wife. The starting point is equally in division unless there is a good reason to depart from it.’ [64]

56.Cheung JA then set out what he considered to be the relevant principles when the court considers ancillary relief applications :

‘In the majority of the cases where the parties only have limited financial resources, the focus of the inquiry on fairness is to divide the assets of the parties so as to make provision for their housing and financial needs. It may be necessary to augment the available assets by making orders for periodical payments.

Where there are assets which are available beyond satisfying the immediate housing and financial needs, equality in the division of the assets should be made unless there is a good reason to the contrary. This approach is not confined to ‘big money cases’ but to cases where the assets are available beyond satisfying the needs of the parties.

The inquiry should be conducted in two stages :

1)  First, computation of the available assets of the parties such as property, income (including earning capacity), and other financial resources which the parties have and are likely to have in the foreseeable future.

2)  Second, distribution of the assets by reference to the three principles of need (generously interpreted), compensation and sharing. These principles can be gleaned from section 7(1) and each of the matters set out in section 7(1)(a) – (g) can be assigned to one or another of the three principles.’ [69]

57.Cheung JA concluded on these principles by stating :

‘ The principle of fairness is to apply to all properties of the parties both ‘matrimonial’ (i.e. the product of both parties which also include the matrimonial home, even if this was brought into the marriage by one of the parties) and ‘non-matrimonial’ (i.e. by inheritance and gift).

The equal sharing principle applies to both long and short marriages, but in cases of short marriage, the non-matrimonial property may be a good reason for departing from equality.

The concept of ‘special contribution’ i.e. exceptional income generated by only one party, may be regarded as a factor pointing away from equality of division when, but only when, it would be inequitable to proceed otherwise.

When a spouse has given up a lucrative career for the benefit of the family, this may justify an award for compensation.’ [69]

58.He then proceeded to allow the appeal by the wife in that case, rejected the approach of C v C [1990] 2 HKLR 183 (CA) in applying her ‘reasonable requirements’ to determine her share of the assets, and increased her share to 50% on the basis of equal division.

59.While accepting that DD v LKW currently represents the applicable principle in our jurisdiction, another division of the Court of Appeal in W v H (Rogers VP, Le Pichon JA and Stone J) warned against the unqualified acceptance and adoption of the approach in White and suggested a flexibility in the exercise of the court’s discretion, as Rogers VP said :

’ … I consider that there are grave difficulties in accepting that the Hong Kong courts are bound by the decisions of English courts. Naturally, decisions of the House of Lords are to be given respect. But since the resumption of sovereignty in 1997, it would appear difficult to suggest that decisions, even of the House of Lords, could be considered as binding. [47]

‘I consider it unnecessary to examine what was said in all the cases, but the provisions of the Ordinance mandate a flexibility in the exercise of discretion which in each case is necessary to meet the circumstances of the case. The English decisions have shown a progression towards the realisation that fairness often dictates that, on dissolution of the marriage, the family assets should, in principle, be shared between the parties unless there was good reason to depart from such a distribution. Nevertheless, each case must be decided on its own facts and its own merits. In cases of divorce, the facts and circumstances relating to the parties and the marriage can and do vary significantly. In my view it would be dangerous to attempt to decree a principle that is applicable in all cases.’ [48]

60.Stone J sitting in the same court agreed and added that :

‘The issue of the applicable law inevitably would have been a focus of the current appeal had it not been for the subsequent decision of the Hong Kong Court of Appeal in DD v LKW [2008] 2 HKLRD 523 (Cheung, Yuen JJA and Lam J), which landmark judgment, as the Vice President has noted, was issued but a few days after the judgment of Saunders J in the present case, and in which that division of the Court of Appeal firmly grasped the nettle, holding that the ‘reasonable requirement’ principle in C v C was outdated, and in future should be replaced by the new ‘fairness’ approach of White v White – a result which no doubt resulted in the pragmatic approach adopted by both parties to the present appeal, who chose to argue this appeal solely upon White v White principles.’ [79]

‘However, we have been told that DD v LKW, op. cit., is to go further, and whilst it is clear that this case currently represents the applicable law in this jurisdiction, I respectfully venture to suggest that unqualified acceptance and adoption of the approach in White v White – which appears to have encountered its share of difficulties in its application in ‘big money’ cases in England – ultimately may not provide the appropriate prescription for Hong Kong, with its different social and cultural norms.’ [80]

‘As Rogers VP has pointed out 9at paragraph 47 above) the Hong Kong courts are not bound by decisions of the House of Lords, notwithstanding the respect that such decisions automatically engender, and for my part I would respectfully agree with the obiter observation of Yuen JA in DD v LKW, whilst her Ladyship clearly felt bound to apply the House of Lords interpretation of the like legislation in the cases of White and Miller, nevertheless she expressed the view 9at paragraph 90) that “there is much to be said” for the Australian position as set out in such cases as Figgins v Figgins [2002] Fam CA 688, [2003] 2 FLR 299 – an approach which also echoes the sage observations of Stock JA in L v C & L v L, op. cit, (at paragraphs 106-108), although the court in this latter case expressly did not form any conclusion as to competing principle because in that instance it was common ground that those parties always had intended an equal division of assets.’ [81]

61.This concept of flexibility in the exercise of the court’s discretion in dividing the parties’ assets proposed in W v H was in fact proposed by Lord Nicholls in the Miller case when he discussed the court’s approach towards matrimonial property and non-matrimonial property, which is one of the issues between the parties in the case now before me :

’21. A complication rears its head at this point. I have referred to the financial fruits of the marriage partnership. In some countries the law draws a sharp distinction between assets acquired during a marriage and other assets. In Scotland, for instance, one of the statutorily prescribed principles is that the parties should share the value of the ‘matrimonial property’ equally or in such proportions as special circumstances may justify. Matrimonial property means the matrimonial home plus property acquired during the marriage otherwise than by gift or inheritance : Family Law (Scotland) Act 1985, sections 9 and 10. In England and Wales the Matrimonial Causes Act 1973 draws no such dinstinction. By section 25(2) the court is bidden to have regard, quite generally, to the property and financial resources each of the parties to the marriage has or likely to have in the foreseeable future.

22.  This does not mean that, when exercising his discretion, a judge this country must treat all property in the same way. The statute requires the court to have regard to all the circumstances of the case. One of the circumstances is that there is a real difference, a difference of source, between (1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the marital acquest but more usually the matrimonial property, and (2) other property. The former is the financial product of the parties’ common endeavour, the latter is not. The parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should be treated as matrimonial property for this purpose. As already noted, in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.’

62.He however stressed that this difference in treatment of matrimonial property and non-matrimonial property does not suggest that in every case a clear and precise boundary should be drawn between these two categories of property :

‘ … Fairness has a broad horizon. Sometimes, in the case of a business, it can be artificial to attempt to draw a sharp dividing line as at the parties’ wedding day. Similarly the ‘equal sharing’ principle might suggest that each of the party’s assets should be separately and exactly values. But valuations are often a matter of opinion on which experts differ. A thorough investigation into these differences can be extremely expensive and of doubtful utility. The costs involved canquickly become disproportionate. The case of Mr and Mrs Miller illustrates this only too well. [26]

Accordingly, where it becomes necessary to distinguish matrimonial property from non-matrimonial property the court may do so with the degree of particularity or generally appropriate in the case. The judge will then give to the contribution made by one party’s non-matrimonial property the weight he considers just. He will do so with such generality or particularity as he considers appropriate in the circumstances of the case.’ [27]

63.It is thus with these principles as my guidance, and with the necessary flexibility in accordance with the circumstances of the case, I shall proceed with the section 7 enquiry of the parties’ evidence with the aim to achieve fairness in the distribution of their assets, starting first with their identification and proper valuation.

The Assets

64.All the assets to be divided are in fact already set out in the Wife’s schedule (PB 9 : 2814A) which has also incorporated the Husband’s schedule (CB 3 : 1127 – 1129) and consists of totally some 35 items. I do not propose to list them here again, as noted above there is no real dispute over what they are, or basically who should get what assets, rather it is their value, the methodology of their valuation, and in particularly their post-separation utilization that are at issues, with the difference of a staggering HK$7 million between the Wife’s figure of HK$18,719,655 and the Husband’s of HK$11,722,799.

65.As noted above the Wife’s case is that the relevant date for valuation is 31^st May 2006 which is the date of separation, apart from property assets which have been sold, which should be the net sale proceeds, and those not sold, their current values.

66.Mr Egerton for the Husband argues that the current values should be adopted across the broad for all assets in particularly those liquid assets such as joint funds and net sale proceeds of realised properties. He relies on Cowan v Cowan [2001] 2 FLR 192 which held that the assessment of assets must be at the date of trial or appeal, with rare exceptions to that rule and probably confined to cases where one party had deliberately or recklessly wasted assets in anticipation of trial.

67.The facts of that case is not entirely relevant but Thorpe LJ gave the following reasons :

‘I start with Mr Pointer’s basic submission that the date of separation represents a cut-off date. I am unable to agree with it. I note that s 25(2)(a) itself requires the court, when exercising its power to make among other things a property adjustment order, to have regard to, inter alia :

‘… the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future…’ [132]

Further, the date of the exercise of the court’s power is not only accepted to be the traditional date but is, as it seems to me, also the natural date in a case such as present. Here the parties have lived apart, either content or obliged to wait before any divorce. The bulk of the assets was in the meantime the husband’s and under his control. He could do with it as he wished. She had no opportunity to use the assets or to increase them in the meanwhile. If the husband lost the moneys, the wife would suffer. If he added to them, one might expect the wife to benefit. [133]

68.Subject to the Husband’s utilization of the liquid assets after separation being necessary or reasonable, I agree that the assessment of the assets should be at the time of the trial. The mere fact that the parties may have agreed to adopt 31^st May 2006 as their date of separation does not make it necessary or right to adopt that date for the assessment of the assets, as it was then not the end of their marriage, and the evidence clearly show that the parties had continued to manage and deal with their corporate structure and assets after their separation, as naturally life did not stop there and it would only be normal for the parties to continue to resort to their joint funds from time to time as part of their ongoing lifestyle and livelihood, hence it does not make sense to use that as the cut-off date for the assessment of the assets.

69.For the same reason it would not be right in my view to use different dates for the valuation of different types of assets, and that it would no doubt cause problems and complications in cases involving many such assets, as in this one, and lead to disproportionately expensive investigations.

70.One of the main reasons for the Wife’s proposal to use that date for assessment of the liquid assets is her dispute over some of the Husband’s utilization of the joint funds and the sale proceeds after that date, in particularly for the renovations of the Elva Avenue Property which she says was without her agreement, unnecessary and unreasonable as the renovations which cost a total sum of C$314,901.29 only benefit the Husband and are not fully reflected in the current value of the property of C$547,000.

71.The Elva Avenue Property was first purchased by the Husband’s parents in 1958 and was according to the Husband in a state of serious disrepair by April 2007 when he decided to renovate it as his home after the sale of the Jackson’s Mill Property. He alleges that he had discussed this with the Wife by e-mail who was aware the property needed to be upgraded (PB 7 : 2330), and that he had obtained a fourth inspection report of the property dated 12^th April 2007 with more details as to the state of disrepair of the house, as well as an energy report on the needs to repair its plumbing and electrics (PB 7 : 2332 - 2370).

72.The Husband then gave these reasons for using the sale proceeds of the Jackson’s Mill Property for the renovation in his affidavit of 27^th March 2009 (PB 7 : 3130 – 3131) :

’54… All of the reports for the Elva Avenue property evidence that in addition to the cosmetic repair that was needed the plumbing and electrics were outdated having last been updated in the 1940’s with periodic maintenance and piecemeal replacement over the years. The furnace was 15 years old and needed replacement, the basement oil tank was nine years old and was rusting and starting to show leakage and the insulation and heat retention qualities of the house were substandard. There were also foundation and roofing issues. The house had its last major redecoration upgrade in about 1958 before my family moved in. The energy audit report indicated the house was severely substandard with regards to insulation and heating efficiency and recommended upgrades. Given that the work was extensive I considered it was necessary that the work was undertaken while the house was still vacant and whilst I could still reside at Jackson’s Mill as I otherwise had no place to live.

55. It was around this time that I approached the Petitioner to refinance the Elva Avenue property from the Estate mortgage into a commercial mortgage as this had not yet been done and interest on the Estate mortgage had accrued from September 2006, I also wanted to access funds on my own account to fund the Elva Avenue renovations. The Petitioner did not agree so I then instructed my solicitors who wrote to the Petitioner’s solicitors dated 4^th July 2007 (PC1 : 0004) and 26^th July 2007 (PC1 : 0063) and my further letter of 20^th August 2007 (PC1 : 140-4) requesting that the Petitioner cooperate in refinancing the mortgage and providing her with mortgage documents to sign. The Petitioner refused. I therefore had no access to funding but for the equity in the Jackson’s Mill house.’

73.The Wife however insists that the property was in good condition, that her agreement to ‘upgrade work’ was given prior to their separation, that any major refitting was unnecessary and a waste in bad investment terms, and that in any event the costs should be to the Husband’s personal account and not from the joint funds.

74.There is no question that the purchase of the property from the estate of the Husband’s mother was a joint decision of the parties before 31^st May 2006, nor is there any dispute that he needed to move to that property after their agreed sale of their originally intended home, the Jackson’s Mill Property. By 2007 the parties would no doubt have realised that their marriage was at an end, and Elva Avenue Property was going to be the Husband’s home in Canada, same with the Hoi To Property to become the Wife’s home in Hong Kong. For this reason I do not see why the Husband, and for that matter the Wife as well, should not be allowed to renovate the Elva Avenue Property accordingly.

75.The question of course is whether it is reasonable under the circumstances for him to spend almost C$315,000, or the equivalence of more than HK$2.3 million at the then average exchange rate of C$1.00 to HK$7.5 during the latter half of 2007, in renovating a property purchased for only slightly more at C$350,000 just a year ago.

76.According to the various reports produced by the Husband, it was not only reasonable but necessary as the work done was not just cosmetic but went into re-fitting and repairing the basic infrastructure of the house such as plumbing, electrics, roofing and heating which I agree are all important features necessary to maintain a proper retirement home for him in a place where temperature can drop down to freezing in winter, and while the Wife may have found the house perfectly safe and comfortable during her albeit limited time there, the mere few photos produced by her of its interior are simply in my view not enough to challenge those professionally prepared reports of the Husband.

77.In fact the Wife did at one time agree that the house should undergo ‘upgrade’ work, and while there are no details of what upgrading or budgeting which she might have agreed, whatever they might be it would certainly be the case that the work would be supervised by the Husband in Canada and the expenses paid out of the joint funds. Whether or not she would agree to spend as much as C$300,000 and more is of course speculative, but given the state of the house it would in my view be unlikely to be insubstantial.

78.The post-renovation value of the property is agreed at C$547,000, an increase by C$197,000 brought certainly by the renovations carried out by the Husband, and while it is true that they will not be enjoyed by the Wife, it would be incorrect to say that they will all benefit the Husband alone either, since the total value of the assets to be divided between the parties has been enhanced accordingly.

79.There is no question that the court may add back assets which have been lost by one of the parties in some circumstances, the principle of which was established in the English case of Norris v Norris [2003] 1 FLR 1142 when Bennett J said at [77] that ‘a spouse can, of course, spend his or her money as he or she chooses, but it is only fair to add back into that spouse’s assets the amount by which he or she recklessly depletes the assets and thus potentially disadvantages the other spouse within ancillary relief proceedings.’

80.This was followed in M v M (Third Party Subpoena : Financial Conduct) [2006] 2 FLR 1253 where the husband’s share of the assets was reduced to take account of his substantial gambling losses, and in Re C [2007] EWHC 1911 (Fam) where the husband’s lump sum was reduced to reflect extravagance, whereas in B v B [2007] 2 FCR where the husband took substantial assets to the US, leaving behind considerable debts, it was said to be appropriate to reflect the husband’s history of studied indifference to his family obligations and leave him to use his entrepreneurial skills to trade out of his difficulties.

81.There is however no question in my mind of any wrongful or reckless utilization of assets on the part of the Husband in this case in respect of the renovation of the Elva Avenue Property, and given the relatively insubstantial difference between the parties’ proposed valuation, I do not propose to depart from the traditional valuation as at the time of the trial in respect of this property, or to make any adding back to the assets of the renovation costs.

82.Apart from the valuation of Elva Avenue Property, the Wife of course also takes issue with the Husband’s accounts of many of their joint funds and sale proceeds as appeared from her Schedule of Assets (PB 9 : 2814A) which listed the value of almost every one of their 35 items of assets down to their last dollar.

83.It appears that the Wife has taken a purely accounting approach in respect of these assets as if it were a straight commercial partnership, as demonstrated by the way she prepared her schedule of assets as aforesaid as well as her evidence in her affidavits and testimony in court, no doubt exacerbated by the Husband’s long held habit of preparing periodical detailed spread sheets of his assets (CB 3 : 960 – 981) and his similar approach of going into minute details in his accounts and utilization of the joint funds, necessitated in turn by the Wife’s allegations of his misappropriation of funds. The result is the parade before the court of 16 trial bundles of more than 5,000 pages of documents, bank statements, e-mails and letters of which only a tiny fraction were relevant or referred to at the trial.

84.The Husband’s case is that he has already accounted for all their joint funds and sale proceeds first in his main affidavit filed on 30^th March 2009 (PB 7 : 2114 – 2153) with full supportive documentation, and later supplemented by his testimony in court. As noted above the Wife takes issue with many of his accounts, disputing either the accuracy of the then and current balance of these funds, or the purpose of their utilization by the Husband.

85.While I can understand the Wife’s scepticism over the Husband’s accounts as most of these funds in particularly the sale proceeds had all along been under his sole control since their separation, but given the large number of transactions in the bank accounts involved upon which she has raised numerous queries, the fact that most of the properties were funded by personal/shareholders loans as well as bank mortgages which needed to be settled in their sale, that the many account entries that needed to be reconciled in the corporate structure that held these assets, and that their investments in particularly in stocks and shares must have been seriously impacted by the 2008 Global Financial Crisis, surely these forensic accounting exercises should, if indeed necessary, have been carried out by more appropriate experts such as accountants or auditors rather than by lawyers at the trial.

86.It would, in my judgment, be foolish after some 10 years of marriage or relationship either to expect or require a party involved in ancillary relief proceedings a detailed account of the state of their financial affairs from the commencement of the marriage or relationship up to the time of separation or divorce as if it were a straight commercial partnership. This is in fact the kind of exercise that Lord Nicholls in White urged for the need to avoid detailed and disproportionately expenses investigations in carrying out the statutory exercise (at 995F).

87.It would, therefore, be equally foolish in my view for the court to seek to undertake a task which only an accountant or auditor could undertake to arrive at a precise view as to the extent of the joint funds and sale proceeds of the parties at any point throughout the marriage, of which I repeat that I am not suggesting that this was either necessary or even appropriate. I propose therefore to make a broad assessment only after taking into account of all the points raised by the parties, the evidence before the court and the parties’ respective submissions.

88.Having heard his evidence which were in the main clear, firm, spontaneous and properly supported by documentation, many of which were never challenged at the trial, I am satisfied that the Husband has fully and accurately accounted for all his dealings of the joint funds and sale proceedings under his control or possession including the so-called hidden gold taels which he has disclosed in his spreadsheets but inadvertently omitted from his Form E, and in the absence of any formal forensic accounting to dispute or rebut his accounts and records, I can find no reason or justification to make any add back to the assets of those amounts suspected by the Wife save the following exception.

89.The Husband put his monthly expenditure in his Form E at just over HK$67,000, which is more than twice his monthly income from his pension of HK$31,000, hence a deficit of some HK$36,000 per month which must have accumulated quite substantially since he left Hong Kong for Canada, and which he must have used the joint funds and/or the sale proceeds of their properties to meet such deficits. Some of these expenses such as payment of previous loans made for the purchases of properties, mortgage repayments and accounting fees should of course be allowed to be so deducted, and for which have already been accounted for by him as noted above, but his legal costs incurred in these proceedings as part of his personal expenses under item 4.2 of his Form E, the final total amount of which is not clear but must have been quite substantial and estimated to be in excess of HK$1 million, are likely to have also been met by these funds as well and if so, should rightly be added back to the assets for the purpose of distribution, otherwise it would not be fair to the Wife as she no doubt has had to meet her own legal costs from her own funds.

90.There is however still one last issue that needs to be dealt with before coming to my conclusion of the assessment of the parties’ assets, i.e. the Wife’s personal injury litigation which the Husband argues that her claim should be included as part of her assets albeit not yet ascertained and realised.

91.Mr Clough for the Wife does not dispute that her claim should be treated as one of her assets but its quantum at this stage is at best speculative, as liability is an issue and hence it is uncertain whether there will be a settlement or an award, although there is a payment of HK$450,000 into court by the defendant of that litigation.

92.He argues that any award that the Wife may receive will no doubt include damages for her pain and suffering which should be more appropriately considered under the s. 7 exercise in respect of ‘any physical or mental disability of either of the parties to the marriage’, while any compensation for her past and future loss of earnings should be considered under the item in relation to income as part of her income which she would have had since the accident and also future income which she would have been likely to have in the foreseeable future.

93.Mr Egerton for the Husband on the other hand submits that the claim is substantial, as the Wife’s claim in her writ for loss of earnings alone already amounts to more than HK$11 million, which is comparable with the total figure of all the other assets available for distribution, and while such claim may seem grossly exaggerated given the evidence before the court of her current income, he believes that the award would be at least some HK$1 million net of legal fees, which is clearly a ‘circumstance’ to be taken into account.

94.There is no question in my mind that this claim is a ‘circumstance’ that the court should take into account, and given the Husband’s confirmation at the trial that he does not wish to have any ‘actual’ share of it, I do not propose to include it as part of the assets to be distributed, and instead regard it as part of the Wife’s possible past and foreseeable future income.

95.My assessments of the assets are therefore as follows :

Wife (in title or possession)	HK$
Phuket Property (THB18 m)	$ 3,933,000
Bank accounts/Pension	$ 108,143
Others (Jewellery, Inheritance)	$ 885,598
	$ 4,926,741
Less Liabilities	$ 804,395
Net	$ 4,122,346
Husband (in title or possession)
Bank accounts	$ 611,741
Pennilee/Lakewood Golf Membership	$ 325,000
Shares	$ 2,488
Pensions	$ 143,671
Inheritance	$ 737,184
Others	$ 253,002
	$ 2,073,086
Less Liabilities	$ 110,211
Net	$ 1,962,875
Joint Assets
Elva Avenue Property (C$547,000)	$ 3,651,566
Mortgage (C$296,032) -	$ 1,975,953
Hoi To Court Property	$ 4,180,000
Mortgage -	$ 1,326,000
Bank accounts	$ 5,145
Companies	$ 538,543
Personal	$ 600,000
	$5,465,719
Joint Liabilities (storage costs)	$ 25,000
Net	$5,440,719
Total	$11,772,799

96.As noted above, this sum of HK$11,772,799 should be added back any money which the Husband may have withdrawn from the joint funds or sale proceeds for his legal costs incurred in these proceedings for the purpose of their proper distribution.

97.I shall next proceed to consider the s. 7 factors, starting with the parties’ income and resources.

98.In her Form E the Wife put her income at average HK$52,000 per month from her event management business. There is as aforesaid her personal injury claim with possible compensation for future income, but despite the huge amount claimed in her writ, the Husband accepts that realistically the figure should be much lower, and I agree it would be fair to put it at between HK$450,000 and HK$1,000,000.

99.The Husband has no full-time employment since his retirement in 2004 from the Hong Kong Government, with perhaps the possibility of some consultancy work in engineering, but his monthly pension of HK$31,225.92 does have the benefit of secured payment for the rest of his life to meet his needs, which is what I propose to consider next.

100.Again there is nothing controversial as to the parties’ respective needs, in particularly with their accommodation already secured by their own home, although the Wife does wish to upgrade hers and would require a capital sum to do so, the evidence of which however is at best sketchy, and her financial responsibility towards E which I propose to deal with separately later in the judgment.

101.The same can be said about the standard of living enjoyed by the parties prior to the breakdown of the marriage which is again non-controversial and can simply be described as comfortable.

102.There is however some dispute over the duration of their relationship, of which the Husband says started when they cohabited in March 1997 but while the Wife has put earlier by about 6 months to September 1996. I am inclined to agree with her as no doubt by then they were fully committed to their relationship. The separation was agreed to be after May 2006, hence a relationship of almost 10 years.

103.More controversial is the Husband’s case over the parties’ contribution to the marriage, as he argues that he had contributed significantly more by bringing in excess of HK$11 million of net assets to the marriage in addition to all the benefits of his employment with the Hong Kong Government for the family, while the Wife’s capital contribution was at the maximum no more than HK$1.75 million.

104.Against this the Wife’s argument is that it is artificial and misleading to take the estimated value of the Woodland Gardens Property at HK$15 million in 1997 when it was purchased for only HK$7.8 million in January 1996 and eventually sold for HK$ 9 million in 2004, and that her own assessment shows that his net worth at the time of the marriage was only about HK$ 1.8 million (PB 9 : 2741).

105.Be that as it may, the Husband’s approach to take into account of his bigger financial contribution to the marriage would in my view be to re-introduce precisely the sort of discrimination the White case was intended to negate, and which Lord Nicholls expanded in Miller (at 20) :

‘For the same reason the courts should be exceedingly slow to introduce, or re-introduce, a distinction between ‘family’ assets and ‘business or investment’ assets. In all cases the nature and source of the parties’ property are matter to be taken into account when determining the requirements of fairness. The decision of Mumby J in P v P (Inherited Property) [2005] 1 FLR 576 regarding a family farm is an instance. But ‘business and investment’ assets can be the financial fruits of a marriage partnership as much as ‘family’ assets. The equal sharing principle applies to the former as well as the latter. The rationale underlying the sharing principle is as much applicable to ‘business and investment’ assets as to ‘family’ assets.’

106.Of course it does not mean that the court should treat all property in the same way, as Lord Nicholls went on to explain (at 22) :

‘ … The statute requires the court to have regard to all the circumstances of the case. One of the circumstances is that there is a real difference, a difference of source, between (1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the marital acquest but more usually the matrimonial property, and (2) other property. The former is the financial product of the parties’ common endeavour, the latter is not. The parties’ matrimonial home, even if it was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose. As already noted, in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.’

107.There is no question that Woodland Gardens Property was both the matrimonial home and matrimonial property, as although it was brought into the marriage at the outset by the Husband, it was the parties’ matrimonial home during the majority of their marriage until its sale in 2004 in anticipation of their move to Canada, and as such I believe no distinction should be made between it and other assets of the parties. In fact the Husband has admittedly using part of its sale proceeds to buy back his pension right which will no doubt benefit him alone after the divorce.

108.Which brings us to another circumstance which the Husband submits that the court should take into account is that the divorce has resulted in him now living in Canada without a job whereas the Wife is in Hong Kong with a job, and that the ‘change’ in where the parties now live, irrespective of the reason, has resulted in significant loss to him, in particular in terms of the loss of the many benefits which he would have been entitled to had he not resigned from his civil service for the move to Canada at the Wife’s insistence.

109.I agree that it would be highly unlikely for the Husband to take early retirement if not because of the decision to move to Canada, and it is also probably true that he had some reservations about the move, but it was nevertheless still a joint decision of the parties, no doubt for the sake of their marriage, and in the absence of any evidence of faults on the part of the Wife for subsequently changing her mind about joining the Husband in Canada, it would in my view be unfair for him to seemingly put the blame of his current situation in Canada entirely on the Wife, as no doubt she also stands to lose those benefits as well. It is in fact no different from a situation such as her deciding to leave Manila in 1996 to join him in Hong Kong then for her to come around to blame him for her lost opportunities in Manila. The Husband’s circumstance is simply part of the sad consequences to the parties through no fault on their parts when their marriage was not working out.

110.There is however one last matter that I need to deal with before arriving at my conclusion on what should be a fair distribution of the parties’ assets, i.e. E’s needs.

111.The Husband has accepted that E was a child of the family (PB 3 : 531), and in his Form E he stated that :

‘The Petitioner’s first husband and the Petitioner have made all financial contributions relating to E’s education and I am not aware of them nor have I made any financial contribution to E’s education save for one year, around or about 2001/2002.’

112.The Wife does not dispute that she has received money from her former husband for E and from the evidence it is apparent that E’s biological father has been party to the discussion of her future with the Wife and that he has been supporting her. The issue is therefore, on the basis of the Husband’s acceptance that E was a child of the family, what amount of maintenance if any that he should pay for her.

113.In the absence of detailed evidence from the Wife, it seems that in the past the only support of substance provided by the Husband, other than room and board in the former matrimonial home, was by virtue of the education allowance in 2001/2002 from his then civil service employment. Given his present reliance on his pension, I accept that the Husband is not in a position to make any provision of significance for E, in particularly when her financial details have not been placed before the court, a responsibility of which will have to be shouldered up by both her biological parents until she graduates.

Conclusion

114.Both parties agree that upon a fair distribution of the assets, there should be a clean break between them as neither wishes to seek any periodical payments for themselves. Given their current age and employment situation and the fact that they married late in life, no doubt they will need their fair share of the assets to maintain themselves in future. While it may be true that the Husband may have brought more assets into the marriage in terms of value, the fact is that after the marriage both parties continued to work and pooled together their assets and resources for the support of their family and their investments in the true sense of a marital equal partnership, amply evidenced by the ways they structured their financial arrangements and dealings, their joint decisions in all their investments as well as the sharing of most of their expenses up to the time of their separation.

115.The Wife argues that the assets should be divided equally. The Husband submits this is a case that the court should depart from equal division on the basis of those particular circumstances referred to above to which I do not agree and have already given my reasons. I am of the firm view that all the circumstances of this case in fact show that fairness can only be achieved if the assets, with the proper adding back as noted above, be divided between the parties equally, and I so order.

116.For the distribution of assets, logically the Wife should keep the Hoi To Property and all other assets in her possession, while the Husband should keep the Elva Avenue Property and all other assets in his possession, and that the Phuket Property be sold with the net proceeds to be divided between the parties in such proportion to bring the value of their total assets to more or less equal, so that each will have his/her own home and some cash, with the Husband having a secure pension, and the Wife a business. Accordingly I make this order which is to take effect upon the granting of the decree absolute of divorce, with liberty to the parties to apply for further directions as to its implementation.

117.The above terms shall be in full and final settlement of the parties’ claims against each other, which claims shall stand dismissed accordingly.

118.Lastly, on the question of costs, I believe the parties may well wish to be heard but pending which I make an order nisi that there be no order as to costs which shall be made absolute at the expiration of 21 days.

Mr. Neal Clough instructed by M/S Erving Brettell for the Petitioner.

Mr. Robin Egerton instructed by M/S Hampton Winter & Glenn for the Respondent.

Appeal by the respondent to Court of Appeal dismissed and cross appeal as to costs by the petitioner dismissed. Please refer to CACV252/2009 and CACV71/2010 dated 15 October 2010