Wyc v. Lwwv
|
FCMC 944 / 2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 944 OF 2008 ---------------------------- BETWEEN
---------------------------- Coram: Her Honour Judge Sharon D. Melloy in Chambers (NOT OPEN TO PUBLIC) Dates of Hearing: 31 May – 2 June 2011 Date of Judgment: 10 June 2011 -------------------------- J U D G M E N T -------------------------- Introduction 1.This judgment follows a 2 ½ day trial to determine the issue of final ancillary relief. 2.I should say at the outset that I am a little perturbed that this case has not settled, as the issues are not complicated and the assets limited. Once again I am very much afraid that the award will be completely wiped out by the cost implications of the order. Nevertheless it now falls to me to adjudicate upon the issues in dispute, the main one being whether or not a wife is entitled to a further share of the matrimonial assets where the parties have been separated for a long period of time and the assets in dispute have been largely accumulated post separation. Background 3.The parties married in Singapore in May 1994 and subsequently had two children, L a boy born in August 1997 who is now 13 years of age and R a boy born in July 2000 who is now 10 years of age. Both boys were born in the United States, which is where the parties lived during the early part of their marriage. The husband had obtained a scholarship from a university to study for his doctorate degree there. Unfortunately unhappy differences arose between the couple and in August 2003 the parties separated. By that stage they had returned to Singapore to live. They continued to live separately and apart in Singapore and in May 2004 the wife asked the husband to enter into a Deed of Separation. He did not do so and says that at that time he still had hopes that reconciliation could be effected. Unfortunately that was not to be and in June 2006 the husband relocated to Hong Kong and took up an academic post at one of the universities in the City. The wife quite separately and coincidentally was also offered a job in Hong Kong and she also relocated here at the end of 2006. She works for a well known clothing brand. The children continued to reside in Singapore with their maternal grandparents. The wife’s sister and husband also assist in taking care of the boys. 4.During the marriage the parties owned three properties, two of which were still in existence as at the date of separation. These were held in joint names. The husband put the properties on the market in 2006 and they were eventually sold in October 2007 and February 2008 respectively. In March 2008 the husband deposited the sum of S$70,804.50 into the wife’s bank account, allegedly being her half share of the net proceeds of sale. 5.On the 23 January 2008, divorce proceedings were eventually issued by the husband. Arrangements for the children were initially contested, but thankfully agreement was finally reached and on the 9 June 2009 an order was made granting the wife custody and the husband reasonable access to the two boys. The children have continued to live in Singapore with their maternal grandparents. Issues 6.The following issues now fall to be determined by this court:
The law on Ancillary Relief 7.The Court of Final Appeal’s decision in LKW v DD (FACV no 16 of 2008) sets out the approach that the lower courts should now take when determining final ancillary relief. The Four Principles 8.Mr Justice Ribeiro PJ reiterates four underlying principles that should permeate ancillary relief proceedings namely fairness, the absence of discrimination, the upholding of the concept of the yardstick of equality and the rejection of a need for a minute retrospective investigation of the parties finances. These four principles apply in all ancillary relief applications and this case is no exception. 9.In addition he identifies a four step approach to be adopted in an ancillary relief trial namely
10.The s.7 factors are largely dealt with within this general framework. They are:
The parties open proposals The husband’s proposals In his open proposal the husband makes the following offer on the premise that he
The wife’s proposals The wife counters as follows:
What is the computation of available assets? 11.The parties produced an agreed schedule of assets as follows: Husband’s assets
12.It was agreed during the hearing that the husband’s life insurance policies for the boys would not be included in the computation of assets. Thus if we deduct the value of those two policies, the husband holds approximately HK$3,515,000 and the wife HK$1,575,000. In total there is just over HK$5 million in the matrimonial pot. 13.The husband has sought to argue, that the assets accrued by him after the parties divided up the net proceeds of sale from two matrimonial properties are non matrimonial property and should not therefore be included in the computation of assets available for distribution. As I pointed out during the hearing prima facie everything is included in the pot. As Mr Justice Ribeiro PJ states at paragraph 71 of LKW v DD: The first step in the exercise is to ascertain the financial resources of the parties calculated as at the date of the hearing. 14.Consequently I am proceeding on the basis that prima facie there is just over HK$5 million in the pot available for distribution. How then should those assets be divided bearing in mind the principles identified in the Court of Final Appeal’s decision in LKW v DD FACV 16/2008, the four step approach and the s.7 factors? In particular should there be an equal division of assets, or should the yardstick of equality be departed from and if so on what basis? An assessment of the parties financial needs 15.In LKW and DD, Ribeiro PJ reiterated that after determining the asset base of the parties the next stage is to assess the parties’ financial needs, generously interpreted. In this case the wife argues prima facie that the equal sharing principle should be adopted but that in any event she “needs” sufficient funds in order to buy a property in Singapore or in the alternative to at least put down a deposit on a property in Singapore. 16.The difficulty with the wife’s assertion is that although she has mentioned the fact that she would like to buy a property in Singapore in her earlier affidavits, the claim lacks detail. It is not until her 6th affidavit filed on the 18 May i.e. just shortly before the trial, that further information is provided. At paragraph 21 she says as follows:
17.In the exhibit she actually produces copies of properties in the S$510,000 – S$720,000 price range. No further details were provided. During the trial I asked her if she had made enquiries about mortgages. I was particularly concerned to know what her borrowing capability was likely to be. She presently earns HK$46,580 per month. She was unable to tell me as she said that her Estate Agent had told her not to make enquiries until she was ready to proceed with a purchase. I have to say that I find this very hard to believe. How does one know where to start unless you know what your budget is and how much you can borrow? The wife added that in the event that there were difficulties in this respect that her mother had agreed to help her, but she this was very much a last resort. She said that the intention was to continue to live in a three generational unit. The difficulty was that the wife was unable to give me any firm idea of when she might be able to relocate to Singapore to live with the boys and her parents. She had no concrete plans in that respect. 18.Consequently although I am prepared to accept that on a very broad brush basis that the wife could be said to “need” funds in order to purchase a property in Singapore in the future, whether or not in reality she will be able to make such a purchase remains very much a moot point. I also accept, as pointed out by the husband, that this is appropriate given the fact that the wife is the custodial parent and as such is primarily responsible for housing the children appropriately. Should the sharing principle be adopted? 19.The wife maintains that the sharing principle should be adopted. In opposition the husband argues that
The clean break argument 20.The parties held two properties in their joint names as at the date of separation. Although it seems that both sides were open to the properties being sold earlier they were not able to do so until October 2007 (the investment property) and the February 2008 (the 2nd property). I was taken to email communication between the parties in early 2008 where the method for dividing up the net proceeds for sale was discussed between them. I accept that the net proceeds of sale were divided equally at that time, with each side receiving S$70,804.50. The husband says that he notified the wife of his calculation on the 17 March 2008 and that when he did not hear anything further from her that he deposited that sum into her account on the 24 March 2008. The decree nisi was pronounced a day later on the 25 March 2008. He said that It was my intention that the division of the proceeds was a clean break with the Respondent. 21.My difficulty with that statement is that although that may have been the husband’s intention nowhere is it stated and perhaps more importantly nowhere is it accepted as such by the wife. I pointed this out to the husband during the hearing. The husband was represented by a well known firm of matrimonial lawyers at the time. If there had been an agreement between the parties then one would have expected, in the normal course of events, for a consent summons to have been filed either at court at the time of the decree nisi or shortly thereafter confirming the agreement. An order to that effect would then have been made by the court. This does not exist. Neither is there a signed Deed of Separation, nor any other documentary evidence that I have been taken to, to support the husband’s case on this point. I do not therefore accept that there was a clean break between the parties or that the wife had agreed not to make any further claim against the husband. 22.The wife has tried to make a case that she did not receive her rightful share of the net proceeds of sale. I should add that I find no force in that argument and do not intend to take the matter any further. Assets accrued post separation 23.This point is dealt with in paragraph 94 of LWK v DD, when discussing the need to avoid minute retrospective investigations. Given the way in which this litigation has been conducted I think it might be helpful if I were to repeat some of the comments made by the Hon Mr Justice Ribeiro
This is seen here and is to be discouraged. 24.At paragraph 94 he concludes.
25.I accept that the husband has accrued some of his assets post separation and that this is a factor that should quite rightly be taken into account when coming to the division of the parties’ assets. However I find myself in some difficulty in assessing precisely what might be termed as “non matrimonial property”. Nevertheless I accept that this is a reason to depart from the yardstick of equality. Should there be any add back for the funds spent by the wife on facials/gym/beauty/yoga? Or for the amounts withdrawn by her from her Singaporean accounts? 26.The husband advances an argument that the wife has spent excessively on gym memberships, yoga centres, facials, massages and other beauty items and that given the relative means of the parties that this should be added back into the computation of asset available for distribution. 27.The legal basis for an application of this nature can be found in case law, such as Norris v Norris [2003] and in other reported/unreported Hong Kong cases. Rayden summarizes the situation as follows:
28.The difficulty with the husband’s argument is that although it is clear that the wife has spent a fairly large amount of money on these items, it does not seem to me to come into the “excessive” category. Counsel for the wife referred me to Vaughan v Vaughan [2008] 1 FLR 1108, where the Court of Appeal stated that
29.On the evidence produced the wife accepts that she spent just over HK$545,000 on these sorts of items from March 2007 – May 2011 i.e. a period of 51 months. This is far in excess of the amounts admitted to by her in her Form E’s and other affirmations filed in support. I found the wife to be a straightforward and credible witness when dealing with this matter. She admitted frankly that she had paid these sums and the reasons for the expenditure e.g. personal training packages, yoga centres going into bankruptcy, top ups etc. This equates to approximately HK$10,685 per month if spread over 51 months. Alternatively counsel for the wife argues that it should equate to HK$7,125 per month because she has only recently purchased two further packages and that these will be spread over an additional two year period. In either event I accept that the wife spent these sums when she had money in the bank to do so. She accepts quite readily that she enjoys the gym and yoga and that she has regular facials and massages. At present she does two sessions in the gym during the week for one hour on each occasion, a further two hours on Saturday and a further yoga session for either an hour or an hour and a half on a Sunday. I can see nothing wrong with this. She does not spend large amounts on anything else. She does not, for example, spend excessively on hand bags or shoes, nor does she eat out in expensive restaurants. In contrast the husband says in his most recent Form E that he spends HK$3,000 per month on books and a further HK$1,580 per month on language courses. This is his area of interest and likewise is perfectly permissible and reasonable. Generally it is interesting to note that in her last Form E the wife says that her personal expenditure is HK$17,703 per month. If one adds on the HK$10,685 per month on average for gym/facials etc this comes to HK$28,388 per month. In contrast the husband says that his personal expenditure amounts to HK$36,156 per month. Given the disparity I do not intend to add any sums allegedly spent by the wife back into the computation of available assets for distribution. Withdrawals from the Wife’s Singaporean account 30.Likewise it is suggested that the wife spent excessively from her Singaporean accounts. Again I can find no merit in this argument. The wife maintains the boys and her family partially from this account. I accept that at times she would give her mother cash brought with her from Hong Kong. It is clear that she has dipped into her savings from time to time. Again I found the wife to be a straightforward and credible witness in this respect. I accept that she used these funds to make auto payments and to cover other expenses in Singapore. Although the husband has now agreed to pay HK$13,000 per month as maintenance for the boys and he has contributed other sums, the fact remains that certainly earlier on in the separation the wife was largely responsible for maintaining the boys. I also accept that the husband was largely responsible for the mortgage repayments during this early period. Both, it seems to me were contributing appropriately to the welfare of the family. There will be no add back or adjustment to reflect funds withdrawn from the wife’s Singaporean account. I accept that she has clearly spent more than she stated in her Form E’s and affirmations in support and that this discrepancy is unfortunate. I can find no basis however for the suggestion that she has dissipated these sums or spent them other than as stated in the witness box. For the avoidance of doubt I will now turn to the s.7 factors as follows: S.7 Factors
31.The husband is presently earning HK$70,790 per month inclusive of a housing allowance and the wife HK$43,000 per month. The husband is on contract terms and is entitled to an end of contract gratuity. The wife is entitled to an annual bonus. Both are financially independent of the other.
32.Clearly both sides have an ongoing financial responsibility towards the children. The wife also contributes towards her parents expenses. I accept that in a broader sense the wife needs to be able to provide a home for both herself and the boys in Singapore. The husband has accepted this to be the case.
33.The parties were not earning a great deal of money at the time and the standard of living enjoyed by the parties prior to the breakdown of the marriage reflects that fact.
34.The husband is now 45 years old and the wife 44. I accept that the parties’ relationship lasted just over 9 years. They have been separated for a further 8 years.
35.Thankfully this is not in issue.
36.Much has been said about each party’s respective contributions to the marriage. For the avoidance of doubt I accept that each party has made a valid contribution both financially and otherwise and especially with respect to the children. I do not accept that either party has made a greater contribution than the other. Both have made a valid contribution in their own way. I do not accept the notion that the wife is entitled to a 50% share of the non matrimonial property on the basis of her contribution during the course of the marriage, which was equaled by that of the husband’s contribution during the same period of time.
37.This does not appear to be in issue. Division of assets 38.The court is charged with dividing the assets in a fair and equitable manner. I have heard what both sides have said and I intend to make an order that will provide the wife with sufficient funds to put down a deposit on a property in Singapore, notwithstanding the fact that it is not clear what her borrowing capability might be. In doing so I am mindful of the fact that she has already received some funds from her share of the net proceeds of sale and that she has some savings of her own. I will make an order that the husband do pay the wife a lump sum of HK$400,000 or S$64,515 in full and final settlement of her claims for capital ancillary relief. With her own savings this should enable her to proceed with the purchase of a small flat as set out in her affidavit. The husband initially asked to make payment by instalments, agreed during the hearing that he was able to make a one off lump sum payment. Consequently I will make an order that upon pronouncement of the decree absolute that the husband do pay to the wife HK$400,000 in full and final settlement of her claims for capital ancillary relief. The husband shall also pay the wife nominal maintenance as proposed and maintenance for the boys as agreed in the sum of HK$6,500 per month each, until they attain the age of 18 years or cease full time education, whichever is the later. The husband has also said that he will pay for the tuition fees for the two sons. This should be expressed as an undertaking in the preamble of order. A Section 18 Declaration to issue. Costs 39.The husband has proposed that there be no order as to costs whereas the wife seeks her costs. I will make an order nisi to be made absolute in 14 days time that there be no order as to costs. In doing so I am mindful of the fact that to date the wife’s cost estimate stands at HK$340,000 of which HK$50,000 – HK$60,000 remains outstanding. This is almost her entire award. The wife is also to pay the costs awarded to the husband previously in the court order of the 1 March 2010 and the 23 November 2010 within the next 7 days. In the event that those costs are not paid they may be deducted from the wife’s lump sum award. I should add that the husband’s cost stand at just over HK$710,000 of which approximately HK$625,000 relates to the ancillary relief proceedings. Between them the parties have spent over HK$1 million on legal costs which equals the total amount in dispute.
Ms C Kei instructed by Messrs Jesse HY Kwok & Co for the Petitioner Ms P Yue instructed by Messrs Leung, Tam & Wong for the Respondent | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment