Cwl v. Lwk
Read the full judgment text of FCMC 1100/2010 on BabelCite. This Family Court judgment before Deputy District Judge G. Own.
Matrimonial Causes – Ancillary Relief – Financial Provision – Asset Identification – Gift vs Loan – Pension – Costs – District Court – Matrimonial Proceedings and Property Ordinance – LKW v DD – $680,000 advanced by Husband's parents found to be gift – $1,200,000 proceeds from Kowloon City property found to belong to Husband's father due to Hidden Intention – Stock investments in Husband's account found to be Husband's sole asset – Husband's Pension found to be asset subject to equal division – Matrimonial home to be sold with net proceeds divided equally – Husband ordered to pay Wife $436,000 from other assets and $730,000 from Pension upon receipt – Costs order nisi made for specific portion of Wife's costs to be borne by Husband.
Legal issues: Whether $680,000 was a gift or a loan · Whether Husband's father has beneficial interest in stock investments · Whether $1,200,000 proceeds of sale belong to Husband or Father · Whether Husband's Pension is an asset subject to division · Costs order
Outcome: Ancillary reliefs granted. Matrimonial home sold. Lump sums awarded.
Cites 2 cases
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FCMC 1100 / 2010 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 1100 OF 2010 ---------------------------- BETWEEN
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------------------------- J U D G M E N T ------------------------- Background 1.This is the trial of the Petitioner’s Wife (“the Wife”) claim against the Respondent’s Husband (“the Husband”) for ancillary reliefs for herself, including a claim for an order for sale of the former matrimonial home, which was purchased under the Hong Kong Housing Society scheme and registered in the joint names of the parties. 2.The parties were married on 28th July 1996 in Hong Kong. There is no child born out of the marriage and both parties are having full time employment during the entire period of marriage. 3.The Husband is now aged 40 and is an Analyst/Programme II (civil servant) since 1994. In his 2nd Form E filed on 24/11/2010, he deposed his average monthly income was $36,740 (before 1/4/2010) which was revised to $36,945 (from 1/4/2010). He has had received some acting allowance and honoraria for the year and the final average income was stated to be $39,370 per month. 4.The Wife is now aged 41 and is a Senior System Analyst on employment in the private sector on contract basis. In her 2nd Form E filed on 24/11/2010, she deposed her average income including overtime was $47,800 per month. 5.The divorce proceedings were commenced by the Wife in January 2010 relying on the fact of “One Year Separation and Consent”. The marriage between the parties lasted for 11 years and 9 months when the parties separated on or about 26th April 2008. 6.The Decree Nisi was granted on 27th April 2010 and was made absolute on 11th November 2010. The Notice of Application to Proceed with ancillary reliefs was only filed on 11th December 2010. 7.Both parties are legally represented throughout in these proceedings and have engaged Counsel for this trial. It is common ground that no issue would be taken on parties’ conduct and that the parties’ contributions towards the marriage are to be considered equal. Counsels for both parties have thus separately filed and exchanged their own Lists of Issues (Petitioner’s dated 12th March 2011; Respondent’s dated 29th December 2010) covering two areas, namely :-
8.Following the exchange of written Closing Submissions after trial, Counsel for the Petitioner by letter informed the Court that since the parties have, before the trial commenced, confirmed the distribution of family assets between the parties was to be on a 50/50 basis, this Court was only needed to determine the size of the family pot. 9.Counsel for the Respondent by letter contended that it was not the Respondent’s position that this Court only need to determine the size of the family pot. The issues in relation to distribution of assets, in so far as the Respondent is concerned, remain to be those as set out in the List of Issues filed with the Court earlier. 10.Accordingly, a short hearing was held on 13th April 2012 for clarification by both Counsels with leave for both parties to submit supplemental closing submissions (if any) by 4th May 2012. 11.The main issues on computation of assets, which I will frame for the trial of the Wife’s ancillary reliefs claim, are as follows:-
The Wife’s Open Offer for Ancillary Reliefs 12.The Wife stated her written open offer as follows:
The Husband’s Open Offer for Ancillary Relief 13.The Husband stated his written open offer as follows:
The Law on Ancillary Relief 14.The jurisdiction of the Court in granting financial relief for a party is governed by section 4 of the Matrimonial Proceedings and Property Ordinance, Cap 192(“MPPO”) which provides:
15.The court also has power to grant a property transfer order or a sale of property order under ss.6 and 6A of the MPPO:
16.The governing principles in relation to the distribution of the family assets in dissolution of marriage are set out in section 7 of the Matrimonial Proceedings and Property Ordinance, Cap. 192, (“section 7 factors”) which states as follows:
17.In the leading case of LKW v DD[1] the Court of Final Appeal sets out 4 principles as to how section 7 shall be approached, which are stated as follows:
18.The Court of Final Appeal went further to lay down 5 steps as to how the Court should do when exercising section 7 as follows:
Identification of Assets 19.The first step is to identify the assets of the parties and the family. Whether the sum of $680,000 was a gift or a loan ? 20.It is common ground that this sum of $680,000 was advanced by the Husband’s parents by 3 payments of $350,000 (on 27/4/1998), $150,000 (on 4/3/1999) and $180,000 (on 9/3/1999) to assist in the purchase of the matrimonial home. The Wife contends that this is a gift whereas the Husband maintains it is a loan which had not been repaid. 21.It is the Wife’s case that on one occasion during dinner the Husband’s parents offered to give a lump sum to them as a wedding gift for purchase of property as their matrimonial home as they did not have any property at that time. At that time, there was no discussion of the amount to be provided by the parents but the parents did mention something about assisting her and the Husband around 20% of the purchase price. It had never been said the amount of 20% was meant to be a loan nor was there any discussion about time for repayment or interest. The Wife said the Husband’s allegation of “loan” is an attempt to reduce the net distributable amount of the sale proceeds of the matrimonial home and also her share in it. 22.It is the Husband’s case that this lump sum of $680,000 was a loan by his parents. Besides, another loan of $350,000 was obtained from his uncle on 1/3/1999 towards purchase of the matrimonial home. The Husband testified that the parents had once made a loan of $400,000 to his elder brother for purchasing a property in 1994. His uncle had also advanced a loan of $400,000 to the elder brother. The elder brother fully repaid the uncle’s loan in 2001 first and then that of the parents’ in 2004. A loan had also been made by the parents to the 3rd elder sister which is still unpaid. As the parents had no pressing need for money, no repayment had ever been made to the parents over the years although there were repayments made to the uncle. 23.Since there are no documents to show the real nature of such lump sum and both parties’ testimonies are diametrically in the opposite, it is thus a matter of whose evidence is to be preferred and believed, on a balance of probabilities, having considered all the other surrounding circumstances. 24.Whilst I fully accept the absence of any document of a loan between parents and their child is not uncommon, I am however inclined to find such sum to be a gift rather than a loan for the following reasons. 25.First, attached to the Letters of Administration of the estate of the Husband’s mother (which is at page 967 of the Trial Bundle) is the Schedule of assets and liabilities, the Husband’s father as Administrator deposed to only 2 sums of safe deposit box deposits of $800 and $460 (at page 971 and 972 of the Trial Bundle) as debts owed to the deceased. This was dated 10 April 2007 which is a year before the parties’ separation. In the absence of any evidence that the Husband’s father had given false information when accounting for the debts owed to the Husband’s mother, I have to accept the information so declared as true and accurate. Had the sum of $680,000 been a “loan” by parents, at least half of it should be included as debts owed to the deceased. The Letters of Administration was handled by a law firm. Had this sum of $680,000 been a “loan” and unpaid, the lawyer would have included it in the Schedule unless no such instructions had ever been given by the Husband’s father. Had this been the case that no such instructions of “loan” was given, it is hard to believe that such sum had ever been intended to be a “loan” which had slipped out of the memory of the Husband’s father 5 years ago in 2007 and back to his memory now in 2012. 26.Secondly, the fact that the parents had lent $400,000 to the elder brother for purchase of property who had repaid the parents could not be supportive that the sum of $680,000 was a loan. I find the testimony of the elder brother “我父母好均真，對幾兄弟姐妹都用同一把尺” not to be insufficient for drawing an inference that the sum $680,000 would then also be a loan. The mere fact of a loan having been made to the 3rd elder sister by the parents, in my finding, could not be supportive of the Husband’s case either that the sum of $680,000 would be a “loan”. Such alleged unpaid loan to the 3rd elder sister by the parents could equally be a gift. 27.Thirdly, it is the Husband’s case that he had gained profits from stock investments, whether it is on his own investment or those allegedly jointly with his father. It is also the Husband’s case that his father had never demanded him to account for profits made out of the father’s stock investments but nevertheless his father had injected funds to his bank account on a few occasions since 2006 to buy stocks. The last injection was the sum of $80,000 on 29 July 2008 after the sale of the late mother’s Kowloon City property. The fact of profit making on the part of the Husband himself on stock investments but without having paid the father anything over the years for the alleged loan is, in my finding, inconsistent with the sum of $680,000 being a “loan”. There was even no time frame on repayment except that it was said that the loan would have to be repaid as and when the Husband is ‘financially comfortable’ to do so. The fact of the Husband having capital sums of around $200,000 in late 2007 or early 2008 for stock investment and having made profits out of such investments, in my view, would put the Husband in the so-called ‘financially comfortable’ position to repay the “loan” or at least part of it to his father. I do not accept the explanation that since his father was not pressing for money and therefore no repayment having been made to him. This is particularly odd when the Husband, after one odd year to two years since 2006 of handling stock trading for his father, had allegedly agreed with his father around end of 2007 or early 2008 on a 50:50 ratio on their stock investment portfolio but without any “loan” repayment schedule. Why is that there was no discussion at the time of the alleged agreement with the father about the 50:50 ratio in 2007/2008 as to repayment of the $680,000, if it was ever a loan at all, which was allegedly advanced in 1998/1999 ? The only reasonable inference I can draw upon all this is that the sum of $680,000 is not a loan and had never intended to be as such by the father or the Respondent. 28.In relation to the father’s evidence under cross examination that “如果無充份理由，我會告佢”, it does not sit happily with my finding of facts in the preceding paragraphs. The phrases “financially comfortable” and “充份理由” are both too vague and abstract so as to find any definitive obligation to repay which is an essence for a loan. Furthermore, since no repayment dates had ever been agreed, how could the father claim the Husband had defaulted in repayment when there was no dates fixed for repayment ? 29.Therefore, I find the sum of $680,000 to be a gift by the parents and not a loan. This sum should not be deducted from the sale proceeds of the matrimonial home. Proceeds of sale of the Kowloon City property of $1,200,000 30.The following are undisputed facts supported by documentary evidence in relation to the Kowloon City property :
31.It is the Husband’s case that all along all the family members had agreed the estate of the mother, including but not limited to, the Kowloon City property should belong to the father. Thus the proceeds of sale of $1,200,000 had never been his personal assets and should therefore be excluded when considering the Wife’s ancillary relief claim. The entire arrangement of the DFA and DA was advised by lawyers for the sole and ultimate purpose of enabling the Husband to assist his father who wished to sell the property after the death of the mother. 32.Upon receipt of the balance of proceeds of sale on 19th August 2008, the Husband wrote a cheque in favour of his eldest sister for $1,000,000 on 6th September 2008 and another cheque in favour of his father for $120,000 on 12th October 2008. The balance of $80,000 had been directed by the father to be kept by him within his consolidated investment account with HSBC for the father’s stock investment. 33.The Wife’s first contention and challenge focuses upon the legal effect and implication of the DFA and DA. The other contention relates to the alleged agreement between the Husband’s father, the Husband and his siblings that the property was to be assigned to the Husband solely for him to arrange a sale on the father’s behalf (which Counsel for the Wife called it “Hidden Intention” in paragraph 25 of her written Closing Submission) was beyond belief and devoid of all senses. 34.In my view, there are 2 issues for the Court’s determination, namely,
35.The Husband arranged his father and all siblings to testify at trial. All of them have filed their respective Affirmations (at pages 283 to 303 of the Trial Bundle). Although the Husband and all his witnesses maintained the existence of the “Hidden Intention”, there is no evidence from the lawyer who allegedly had advised and prepared the DFA and DA to testify as to what had actually happened. This is understandable since the lawyer’s evidence as to instructions given to him would be subject to legal professional privilege. 36.As the Husband bears the burden of proving the existence of the “Hidden Intention”, the answer to issue (a) will have to be decided upon the testimonies of the father, the Husband and his siblings and by reference to any relevant surrounding circumstances. 37.The Husband’s first witness, his elder brother, under cross examination agreed the DFA and DA did not reflect the “Hidden Intention”. He testified that the lawyer had tried to give advice on other ways of handling the matter. However, before that advice was given, they all decided to take the advice of using the DFA and DA and nothing further was said by the lawyer. Upon further question as to why not asking the lawyer to prepare documents which reflect exactly the “Hidden Intention”, he answered what they needed at that time were documents to enable one of them to handle the sale for the father and that was a collective decision of all the siblings. When further questioned whether he now hoped the Court to ignore the DFA and DA but adhere to the alleged “Hidden Intention”, his answer was there was no such hope but he was merely telling the truth to the Court. He also disagreed the Wife did not attend the law office on that occasion or the Wife did not know about the “Hidden Intention”. 38.The Husband’s second witness, his 2nd elder sister, agreed upon cross examination that paragraphs 3 and 4 of her Affirmation (at page 289 of the Trial Bundle) do not reflect the “Hidden Intention”, and also that on words (文字上) it was not so expressed. However, she persistently maintained all siblings had agreed the Husband to temporary “own” the property for carrying out the “Hidden Intention” and this was purely based on mutual trust (互信) between them. She recalled the lawyer had said the simplest way was to transfer the property to one of them and sell it. She did not ask for other method as the lawyer had said that was the simplest way. Upon cross examination as to whether she had ever come across document such as Power of Attorney, her answer was that she did come across such document when dealing with the banks. She had not thought about asking the lawyer on using Power of Attorney because they already had the lawyer’s advice on the simplest way of handling the sale for the father. 39.The Husband’s third witness, his 3rd elder sister, under cross examination accepted the legality and validity of the DFA and DA but maintained the existence of the “Hidden Intention”. She plainly agreed the “Hidden Intention” wasnot recorded by words anywhere in the DFA and DA. She signed because she trusted the lawyer. When asked about whether the lawyer had advised on using other methods, she answered the lawyer did say there are other methods but the DFA and DA was the most convenient way. Upon further questioned about why not listen to the lawyer on those other methods, her answer was that all the siblings were busy at the time and hoped to have the matter done quickly and then went off for tea. She also disagreed the Wife did not know about the “Hidden Intention” as there were a number of occasions of family dining (家庭飯局) where the Wife was present and there was discussion of the “Hidden Intention”. 40.The Husband’s fourth witness, the eldest sister, upon cross examination agreed the DFA and DA do not reflect the “Hidden Intention” nor were there any documents to reflect the “Hidden Intention”. However, she maintained it was something which all the siblings understood and had agreed beforehand. She testified the lawyer did mention about the risks if the Husband abscond (colloquially in Chinese “走路”), all of them, however, did not feel there was such a risk. When further questioned as to whether the lawyer had mentioned the DFA and DA was the only method, her answer was that the lawyer had said there are few other ways of doing it but the simplest way was the present one. She also recalled clearly the Wife had also attended the law office on the occasion of signing the DFA and DA but she was waiting outside. The father, the Husband and all the siblings were inside the lawyer’s room. 41.The eldest sister agreed she had set up a fixed deposit of $1,000,000 with the Bank of East Asia under her sole name integrated account with the Bank but the father is an authorised signatory. This arrangement was requested by the father as he did not wish his name appeared on any record in fear of affecting his Old Age Allowance (生果金). She also confirmed the $1,000,000 came from a cheque issued by the Husband to her (at page 993 of the Trial Bundle) on 6 September 2008 (i.e. which is about 17 days after completion of the property sale). 42.The Husband’s fifth witness, his father, under cross examination in the afternoon of 6th December 2011 denied having given the property to the Husband. He said the following during cross examination :-
43.When being asked whether the lawyer had explained to him the contents of the DFA and DA before he signed, his answer was “唔記得喇”. (3:23:47 pm to 3:23:48 pm). He however agreed that it could be the lawyer did explain to him but now he could not recall whether it had so happened. It was suggested to him that the lawyer did explain the documents to him, he understood the contents and then signed on them. His answer was “律師係話呢個做法最簡單嘅。” (3:30:05 pm to 3:30:12 pm). It was then put to him that the lawyer had explained the documents strictly according to the contents, that is to say, the property was transferred to the Husband and then it belonged to the Husband and no longer belonged to him. His answer was “但係我就係信哂我個仔。” (3:32:54 pm to 3:33:00 pm). 44.Having had the benefit of seeing all the witnesses testifying and considering each of their evidence, I am satisfied, on balance of probabilities, that they had agreed amongst themselves that the property was to be assigned to the Husband solely for sale on the father’s behalf. Although Counsel for the Wife pointed out to me which I also noticed, that at paragraphs 3 and 4 of each of the Affirmations of the eldest, 2nd and 3rd elder sisters; and also paragraph 8 of the Affirmation of the elder brother, there contain exactly identical words and contents (respectively at pages 298, 289, 302 and 295 of the Trial Bundle) and also none of them had given any account in their Affirmations as to the presence of the Wife at the law office when they signed the DFA and DA, I consider this not to affect their credentials. Both the elder brother and the 3rd elder sister replied under cross examination that they did not know that each and every details need to be included in their Affirmations. I accept their answer as it is always the legal representatives’ task and duty to consider, select and finally decide what details to be included in the Affirmations. 45.On the evidence of the elder brother (1st witness), eldest sister (4th witness), 2nd elder sister (2nd witness) and 3rd elder sister (3rd witness), I find them honest and credible. Their respective evidence as to whether the lawyer had given advice on other ways of handling the matter apart from the DFA and DA are, in my view, consistent although not exactly identical. The elder brother said they decided to take the DFA and DA method before listening to further advice on other methods. The eldest, 2nd and 3rd sisters all recalled the lawyer mentioned the DFA and DA was the simplest and convenient way. Rightly or wrongly the use of the DFA and DA was the simplest and convenient way is not something for me to comment or decide upon. I am minded only to consider the veracities and credibility issues of the witnesses’ evidence. From close observation of the siblings’ demeanour when testifying in Court, I believe they are telling the truth. 46.On the evidence of the father (5th witness), he said he was told by the lawyer that the DFA and DA was the simplest method. Such evidence supported the evidence of the 2nd, 3rd and 4th witnesses (i.e. her 2nd, 3rd and eldest daughter respectively). He maintained he trusted his son (i.e. the Husband). The father is of 70 odd years of age. He appeared weak in movement but mentally sound to give evidence. He claimed to be under long term illness. The Court was told that he had had a stroke earlier which affected his speech. With my permission and no objection from the Wife’s Counsel, he was physically assisted by one of her daughter (who having given her testimony already) when he was testifying in the witness box. From his answers to the cross examination questions, I believe he might not be fully aware of the legal effect and implication of the DFA and DA although he had a definite purpose in mind at the time of signing, that is, to sell the property rather than to make an outright gift to any of his children. I accept and find as a fact that the father did not intend to give away the property. 47.Thus, on issue (a) of paragraph 34 of this Judgment, my finding is in favour of the Husband’s case. 48.Now I will deal with issue (b) of paragraph 34. 49.Both the DFA and DA are legal documents duly executed, registered and implemented according to its contents. The property involved in question had been sold back in 2008 and the transaction fully completed. 50.The crux of the matter is whether the DFA and DA could, for the purpose of these ancillary reliefs claim, be taken to displace or override the “Hidden Intention” so found by this Court. This is exactly the second part of issue (b). In my finding, the answer must be in the negative. 51.I approach the matter from the perspective that the DFA and DA are legal documents executed to implement the “Hidden Intention” of the father, the Husband and his siblings. Such way for implementation, with hindsight, was correct or incorrect to which I have no comment. The fact which remains as a real issue before this Court is that whether the $1,200,000 proceeds of sale belong to the Husband absolutely by virtue of the DFA and DA or whether it had never been the Husband’s assets. 52.With my finding of issue (a) in the Husband’s favour, it follows that the entire proceeds of sale of $1,200,000 should belong to the father and not the Husband. Such finding is further supported by the undisputed fact that about 17 days after the completion of the property sale and balance of sale proceeds having been received, a substantial sum of $1,000,000 (i.e. around 83.33% of the sale price of 1.2 million) was withdrawn by the Husband to his eldest sister for the benefit of the father. A further sum of $120,000 (i.e. 10% of the sale price of 1.2 million) was withdrawn by the Husband out of the sale proceeds to the father. I accept the father’s explanation that the sum of $1,000,000 was given to the eldest daughter for his benefit was because he was concerned about having substantial sums under his name might affect his Old Age Allowance (生果金) to be genuine. 53.In my view, it is incorrect for the Court to make findings of fact by simply construing legal documents at its face value without regard to any other relevant surrounding circumstances. Such approach may be too simplistic and general. In a simple case of an outright disposal by way of a deed of gift, there could still exist an element of trust within such disposal. On the facts of this case, the subsequent return of the $1,120,000 ($1,000,000 and $120,000) by the Husband eliminates any issue of the Husband holding the sale proceeds on trust for the father. This also provides considerable support for my finding of the existence of the “Hidden Intention” being genuine. The remaining $80,000 retained by the Husband was said to be under the father’s directions to be kept by the Husband. I accept such evidence and thus there is no issue of any part of the sale proceeds belonging to the Husband. 54.I wish to add that my finding in favour of the Husband on issue (a) would not conflict with the legality of the duly executed DFA and DA. Without any disrespect to the lawyer handling the DFA and DA, the Husband, his father and the siblings might well be adopting a way of carrying out the “Hidden Intention” which they should not have been advised in the first place or, even having been advised, might not be the simplest and convenient way. 55.In conclusion, my finding on the sale proceeds of $1,200,000 is that it should not be considered as part of the Husband’s assets as it belongs to the father. The stock investments in Husband’s account 56.It is the Husband’s case that the moneys held in his consolidated investment account with HSBC is beneficially and jointly owned by him and his father in equal shares. As at the Husband’s 2nd Form E dated 24 November 2010, the balance was $923,880. Besides, the Husband also possessed some moneys in his savings account and current account with HSBC which he does not claim to be jointly owned with his father. 57.The Husband claims that his father had paid a total sum of $285,000 from October 2006 to around July 2008 ($205,000 was injected at different times before January 2008 and the sum of $80,000 came from the 1.2 million proceeds of sale of the Kowloon City property around July 2008). 58.The Wife does not dispute the various payments or transfer made by the father to the Husband’s HSBC consolidated account in terms of date, amount and the manner of payment. The Wife’s contention is that those payments were not for stock investment purposes nor those payments were injected so as to render the father having 50% or any interest in the Husband’s stock investment account. The Husband is put to strict proof thereof. 59.Unless there is sufficient evidence to the contrary, moneys within a bank account normally belong to the holder of that account. Thus the Husband bears the burden of proving by sufficient evidence, documentary or otherwise, to the requisite standard of balance of probabilities, of his case that the moneys within his consolidated investment account with HSBC contains his father’s interest which he alleged to be 50%. 60.The Husband relied principally on his exhibit “LWK-4” recording the contributions by him and his father towards stock investment and the transactions undertaken. Attached at pages 896 to 899 of the Trial bundle (which is part of “LWK-4”) are 4 sheets of record which the Husband himself prepared purportedly to be record of shares transactions carried out by him for his benefit or for his father’s since 1 January 2008 when he and his father had already agreed on the alleged 50:50 ratio of stock investment. It is not disputed that these 4 sheets of record are prepared by the Husband. 61.On the 4th day of trial (i.e. on 13 May 2011) when the Husband was being cross examined as to those stock trading he allegedly handled for his father prior to the alleged 50:50 agreement in early 2008, he revealed that there are other documents which had yet to be disclosed. Accordingly, with the leave of the Court, the Husband produced a small bundle (“Respondent Bundle”) from pages 1 to 85 which contains, amongst other documents, various excel records allegedly to be stock trading records of himself and his father from the end of 2006 to the end of 2007. 62.Counsel for the Wife in her written Final Submissions at paragraph 42 (i) submitted the late disclosure of these documents had caused injustice to the Wife and substantially and unnecessarily increased the costs. 63.Having considered the evidence produced by the Husband in respect of his own records of share transactions and his bank records, I am not satisfied that the Husband has discharged his burden of proving on balance of probabilities that his father has had an interest in his stock investment account on a 50:50 ratio as alleged. Had there been any interest of the father in his investment account (which I made no such finding), it is also far from clear on the available evidence as to what is the ratio. 64.First, all the records of share transactions (whether before or after January 2008) are self serving without being confirmed or acknowledged by the father at any time as to the portion allegedly undertaken for the father was correct. 65.Secondly, as Counsel for the Wife had stated in her written Closing Submissions, there are discrepancies within the records. Say, for example, the amount of the alleged capital investment of the father was $205,000 (at pages 280 and 896 of the Trial Bundle) but $203,320 (at page 56 of the Respondent’s Bundle). Furthermore, for the month ending December 2007 (at page 56 of the Respondent Bundle), there recorded a profit of $56,457.76 for the father but such amount does not appear in the records at the beginning of the year 2008 (at page 896 of the Trial Bundle). 66.Although I noted paragraph 26 of the written Closing Submissions from Counsel for the Husband that these are father and son share investments which, in the normal sense, would not count to every nickel and dime, I am of the view that since the Husband chose to keep records of each and every single stock trading transaction since 2006, there is no plausible reason to record an approximate figure and not to record the exact figure when it comes to investment amount and profits. It cannot be right, in my view, that on the one hand they are father and son relationship and therefore figures need not be exact to every nickel and dime but, on the other hand, there are records of transactions to every single dollar and cent. The two simply does not sit happily with each other. This cast doubts on the veracities of the records prepared by the Husband. These records carry little evidential value for proving the alleged joint investment with the father. 67.Thirdly, there is no evidence to show the moneys given by the father to the Husband were actually spent on stock investment for the father. The moneys of the father intermingled with the Husband’s moneys already in the HSBC investment account. I believe that it was difficult, if not impossible, to identify the moneys spent on any particular stock purchase on a particular day actually came from the actual moneys given by the father. Likewise and in the reverse, when a particular stock was sold, the proceeds of sale would be deposited into the investment account and mixed with those other sale proceeds or moneys already in there which might belong to the Husband solely. 68.Fourthly, had there been the alleged joint investment agreement of 50:50 ratio between the Husband and his father (to which I made no such finding), why is that there was no payment of the same amount of $80,000 by the Husband so as to maintain the 50:50 ratio after the father had directed the $80,000 in July 2008 allegedly to be kept within the investment account for stock investment purpose for the father ? 69.Fifthly, on the Husband’s admitted evidence, there had never been any account for profits over the years to the father. There were even no records of any acknowledgement from the father as to the transactions allegedly undertook by the Husband was made for him or the profits arising from those transactions are correct. 70.Sixthly, the Husband himself also agreed that by simply reading the records of sales, it would not reveal which stocks are his or his father save and except from his own recollection or other personal records or entries made. The Husband supplemented his answer by saying that he himself preferred high risk investment on smaller listed companies stocks whereas his father preferred low risk investment on, say, “blue-chips” stocks. 71.In conclusion, I find the Husband fails in adducing sufficient evidence to prove on balance of probabilities his case of the stock investments or moneys within his HSBC investment account were jointly owned by him and his father on a 50:50 ratio or in any other ratio. Thus, in computing the Husband’s assets, the full amount in the investment account closest to the date of trial should be included. I adopt the figure of $923,880 appeared in the Husband’s updated 2nd Form E. The estate of the Husband’s mother 72.The Husband is one of the beneficiaries to the estate of his late mother. The Husband’s case is that all his siblings and himself had agreed the father should be receiving all his late mother’s estate. The evidence in support mainly comes from the siblings’ oral testimonies. 73.Since I have found the siblings’ testimonies on balance of probabilities are credible, I also find the estate of the Husband’s mother belongs to the Husband’s father and thus will be disregarded when calculating the Husband’s assets. The Husband’s Pension 74.The Husband is a civil servant since 1994. Assuming he is retiring on 18 April 2011 (which is the day before this trial), he would then have served the civil service for about 17 years. Counsel for the Wife produced Exhibit P-11 which contains the pension calculator downloaded from the website of the Civil Service Bureau for the New Pension Scheme applicable to appointments on or after 1 July 1987. By using a monthly salary of $39,220 (which is less than the Husband’s deposed average monthly income of $39,370 in his 2nd Form E – (at page 258 of the Trial Bundle), electing a notional retirement date of 20th July 2011 and upon a 50% commuted lump sum pension gratuity, it worked out a lump sum pension gratuity of $983,788.67. The total 100% pension (without the odd cents) would then be $1,967,576 (i.e. $983,788 x 2) 75.The Wife claims 50% share of the Husband’s Pension based upon the length of marriage (15 years) apportioned with the Husband’s years of civil service (17 years), which is approximately 90% of his years of civil service. Relying upon the case of Lo v. Wong, FCMC 9860/2005, the Wife claims the sum of $885,409 (i.e. $1,967,576 x 90% x 50%). 76.Mr. Cheung, Counsel for the Husband, raises 4 contentions. First, Pension is not an asset. It is an entitlement to be paid upon resignation or reaching retirement age. Secondly, pension accrual after the Wife’s departure from matrimonial home has little to do with marital relationship. Hence, the dividing line for entitlement (if there is any) should only calculate up to the time of separation in April 2008 which, at page 1267 of the Trial Bundle, was $769,520.42. Thirdly, the Wife had all along been in employment with an income higher than the Husband. The Wife herself has an MPF entitlement which will increase during the Wife’s future continual working life. Fourthly, there are no authorities suggesting the principle of sharing applies to Pension. If there is any pension entitlement, it would be based upon a need basis and on the facts of each case. 77.The cases cited by Mr. Cheung in his Closing Submissions, namely, Lo v. Wong (FCMC No.9860/2005); 莊 v. 陳 (FCMC No.6574/2003) and 劉 v. 歐陽 (FCMC No.3070/2005) all supported the view that Pension can form part of the wife’s entitlement in ancillary reliefs. Therefore, the fact that it was only payable upon resignation or retirement is neither here nor there. The first contention thus fails. The Husband’s Pension will be included for consideration of the Wife’s ancillary reliefs claim. 78.Although I have not been assisted by Counsel on any other authorities, I noted in the case of CPK v. CY, FCMC No.7599 of 2007, where Deputy Judge Lo had accepted 7 years of pre-marital MPF and 4.5 years of post separation MPF (i.e. 11.5 years outside marriage) not to be equally shared for a short marriage of 3 years counting up to the date of Decree Nisi. First, that case is not binding upon me. Secondly, the parties in that case married on 24th November 2004, separated in November 2006 (i.e. 2 years later) and Decree Nisi granted on 7th December 2007 (i.e. 3 years later). In the present case, however, the marriage is a long one for 11.75 years counting to the date of separation (i.e. 26th April 2008); or 14.75 years counting to the date of this trial (which is the date for assessment of the ancillary reliefs) (from 28th July 1996 to 19th April 2011). 79.With respect, I do not accept Counsel’s second contention of the “dividing line” on pension calculation to be the date of separation. 80.The calculation of the Husband’s Pension in Exhibit P-11 had used the date of 20th July 2011 (whilst in the middle of trial) and arrived at a 50% lump sum pension gratuity of $983,788.67. The trial was, however, commenced 3 months earlier on 19th April 2011. Thus, I will round up the 50% lump sum pension gratuity figure to be $980,000 or to be $1,960,000 (100%) to reflect the 3-month gap. 81.Accordingly, the amount of the Husband’s Pension accountable for these ancillary reliefs by reference to the duration of marriage up to this trial (i.e. 14.75 years) and the Husband’s years of civil service up to this trial (i.e. 16.50 years from October 1994 to April 2011) is as follows :- $1,960,000 x 14.75/16.50 = $1,752,121.21 (round up as $1,750,000) 82.As for the third contention, the fact that the Wife is working and having an MPF entitlement would not affect her right or entitlement to a share of the Husband’s Pension. Counsel was not able to provide me with any authorities to support such contention. This contention fails. 83.As for the fourth contention, Counsel at paragraph 57 of his written Closing Submissions, stated that there are no authorities suggesting the principle of sharing applies to pension. He submitted pension entitlement is to be decided on a need basis and on the facts of the case. 84.The three cases cited by Counsel for the Husband at paragraphs 58, 59 and 60 of his written Closing Submissions are all Family Court level decisions and decided before LKW v. DD (Date of Judgment : 12th November 2010). His Lordship Riberio in LKW v DD had said :-
85.Considering all the circumstances and the law, I find the Husband’s Pension as part of his assets subject to the Wife’s ancillary reliefs claim although any share out of it would only be payable upon The Husband receiving the same on retirement or otherwise. 86.Both parties agreed the matrimonial home is family asset and to be sold with the net proceeds divided equally, there was no agreed valuation of the market price for computation of family assets save and except the bottom line of the selling price of 3.8 million. Thus, the matrimonial home would be considered separate from any other family assets which this Court may found for the Wife’s ancillary reliefs claim. 87.To arrive at what would be the net proceeds of sale of the matrimonial home, there is the question as to what sums would have to be deducted. The parties only agreed that there will be deductions for (i) premium payable to the Hong Kong Housing Society; (ii) outstanding mortgage loan; (iii) estate agent’s commission; (iv) legal costs and expenses; (v) expenses incidental to the sale; (vi) a sum of $100,000 to be repaid to the Husband’s father; and (vii) a sum of $200,000 to be repaid to the Husband’s uncle. 88.The parties are unable to agree on other deductions. The sum of $680,000 alleged by the Husband as a “loan” to be deducted which I have already found against the Husband. This sum will not be deducted. The Wife is claiming deduction of a loan of $150,000 which consists of 2 sums of $100,000 (9/3/2004) and $50,000 (18/5/2004) obtained from her mother for the purpose of discharging the 2nd mortgage of the matrimonial home. The Wife’s case is that there were insufficient funds to redeem the 2nd mortgage and if not so redeemed at that time, there would be high interest after the interest-free period. The need to redeem the 2nd mortgage was not contested by the Husband. To achieve such purpose, loans have to be drawn from the Husband’s parents, Husband’s uncle, Wife’s savings and a loan from the Wife’s mother. On balance, I accept and believe the Wife’s evidence. I find such loan did exist for such purpose which had not been repaid and therefore have to be deducted from the proceeds of sale. 89.The matrimonial home has all along been occupied by the Husband since the Wife left in April 2008. As deposed in the Husband’s 2nd Form E (at page 249 of the Trial Bundle), he has been paying the monthly mortgage instalments of $12,615 per month since July 2008. The total sum calculated up to November 2010 is $365,835.00 ($12,615 x 29 months). Besides, from August 2008 to November 2010, the Husband himself has paid management fees in the total sum of $27,160 ($970 x 28 months) and government rent and rates for $7,316.00. As the parties have agreed upon an equal division of the net proceeds of sale of the matrimonial home, it is only fair and reasonable that the Wife’s half share of those expenses and payment should also be deducted and repaid to the Husband out of the proceeds of sale. Any further of those expenses and payments subsequently made by the Husband would also have to be calculated, deducted and repaid to the Husband. This would have to be calculated up to the date of actual completion of the sale. 90.To summarise, apart from the agreed deductions under paragraph 87 above, in addition there will be deductions stated in paragraphs 88 and 89 above from the sale proceeds of the matrimonial home. Luckily, with the passage of time and recent property prices rising in Hong Kong, I anticipate that the best selling price of the matrimonial home may exceed the bottom line price of 3.8 million which might benefit both parties. 91.Apart from the family asset of the matrimonial home, the other assets disclosed in the Husband’s 2nd Form E include :
92.The liabilities disclosed in the Husband’s 2nd Form E include :
93.Leaving aside the matrimonial home and the Pension, I calculate the Husband’s other net assets value in the sum of $ 949,351.50 (i.e. $996,169 + 21,636 + $57,000 – 125,453.50). 94.Apart from the family asset of the matrimonial home, the other assets disclosed in the Wife’s 2nd Form E include :
95.The liabilities disclosed in the Wife’s 2nd Form E include :
96.Leaving aside the matrimonial home and the MPF entitlement, I calculate the Wife’s other net assets value in the sum of $77,162.37 (i.e. $5,460.32 + $136,052.67 - $64,350.62). 97.To sum up, the Husband’s other assets value is $949,351.50. The Wife’s other assets value is $77,162.37. The total assets value of the parties is $1,026,513.87 (i.e. $949,351.50 + $77,162.37). The Court’s view 98.Given the fact that Counsels for both parties have had different views after exchange of their respective written Final Submissions as to the whether this Court should only be confined to find and determine the size of the family pot and then apply the principle of equal distribution or this Court need further to find and determine those other issues under the Respondent’s List of Issues, I will approach the Wife’s claim by applying the established principles laid down in the leading case of LKW v. DD (supra) and considering the section 7 factors. Assessing the parties financial needs 99.The next step is for the Court to assess the parties’ financial needs. Income, earning capacity, property and other financial resources 100.Both the Husband and the Wife have not stopped working since their marriage. Both of them are having a reasonably high and steady income. Although it was submitted that the monthly income of the Wife is higher than the Husband, the Husband’s employment with the civil service with pension scheme comparatively is more stable than the Wife’s employment in the private sector cannot be ignored. The higher income factor and the job stability factor set off each other. Considering both parties’ earning capacities and income, I believe they can adequately provide for their own financial needs after this divorce. Applying the sharing principle 101.Both parties have agreed and aimed at selling the family asset of the matrimonial home and share the net proceeds of sale equally, the common need for accommodation of both parties after sale would be set off when the parties are having the net proceeds of sale to resolve such issue. 102.It is obvious from the parties’ financial disclosure that the total income and resources, even without taking into account the matrimonial home, the Pension and MPF entitlement (“retirement benefits”), are readily sufficient to go beyond to meet both parties’ financial needs. Generally, the Court will decide that the sharing principle applies to the total assets, so that they should be divided equally between the parties unless there are good reasons for departing from the principle of equal division (see LKW v. DD, supra). 103.The principle of equal division will also be applied to the parties’ retirement benefits. Consideration of any good reasons for departing from equal division Source of assets 104.Counsel in his written Submissions dated 11th April 2012 submitted the following 4 items not to be considered as matrimonial properties :-
105.I believe all these have been dealt with in the earlier parts of this Judgment except the Rolex watch issue. There is no evidence that this watch was purchased after separation. I find this also a family asset for distribution. Conduct of the parties 106.Both parties have agreed that there are no issues of conduct in this case. Financial needs, obligations and responsibilities etc 107.This is a ‘childless marriage’. Both parties are fully capable of providing for their own financial needs. Standard of living before breakdown of marriage 108.The parties have no dispute on this issue. Age of each party and duration of marriage 109.The Husband is 40 and the Wife is 41. The marriage lasted for 13.75 years until Decree Nisi. This is a long marriage. Any physical or mental disability of either party 110.The parties have no dispute on this issue. Contribution to the welfare of the family 111.Both parties have agreed that their respective contributions to the welfare of the family are equal. Compensation 112.The parties have no dispute on this issue. Deciding the Outcome 113.As parties have agreed, which I also accept, this is a suitable case for a ‘clean break’ for the parties when deciding upon ancillary reliefs. 114.Considering all the circumstances, I find there are no good reasons for departing from the equal division. Applying the equal sharing principle over the total of the other net assets value of the family, the Wife’s share of 50% of the parties’ total assets (apart from the matrimonial home and retirement benefits) will be $513,256.93 (i.e. $1,026,513.87 x 50%). 115.Since the Wife’s assets are $77,162.37, she will therefore be receiving the sum of $436,094.56 (i.e. $513,256.93 - $77,162.37) from the Husband. I will round up this figure to, say, $436,000. 116.On the issue of retirement benefits, I have found the Husband’s Pension entitlement as at date of trial to be $1,750,000 at paragraph 81 of this Judgment. The Wife’s MPF entitlement was $287,506.84. Thus the total sum of the parties’ retirement benefits is $2,037,506.84 (i.e. $1,750,000 + $287,506.84). 117.Again, applying the equal sharing principle, each party would be entitled to $1,018,753.42 (i.e. $2,037,506.84 x 50%). The Wife’s entitlement after taking into account her own MPF entitlement is therefore $731,246.58 (i.e. $1,018,753.42 - $287,506.84). I will round up this figure to, say, $730,000. This amount would be paid to the Wife upon the Husband’s receiving his Pension. 118.I wish to add that there is no issue as to the Husband not being able to work until his retirement age in the civil service. Conclusion 119.I now make the following orders and directions on the Wife’s ancillary reliefs claim :
Costs 120.In CACV No.196/2009, Hon Kwan JA said in paragraph 123 of the judgment:
121.The Husband, with full benefit of legal representation throughout these proceedings, chose to disclose those documents in the Respondent’s Bundle on the 4th day of the Trial when giving his evidence under cross examination. The documents so produced mainly touched upon the issue of stock investment allegedly to be jointly held with the father which contention the Husband failed at the end. I see no reason why the Wife should not be compensated in terms of costs for the Husband’s delay in disclosure and his eventual failure on such issue. However, bearing in mind these additional documents are not substantial in quantity and that they relate to only a small fraction of one of the 3 main issues (i.e. the $680,000 loan issue; the 50% stock investment issue; the 1.2 million sale proceeds issue), I estimate such costs would only be a small fraction comparing with the overall costs of the Wife in these ancillary relief proceedings. I will exercise my discretion and make a summary assessment of such costs, say, to be one-tenth (1/10) out of one-third (1/3) of the overall costs of the Wife, the amount of which to be taxed if not agreed, and be paid by the Husband to the Wife in any event. 122.As to the overall costs of the ancillary relief trial, the Wife is successful on the $680,000 loan issue and the 50% stock investment issue of around $461,940 (i.e. $923,880 x 50%). Thus, on money terms, the total sum is $1,141,940 (i.e. $680,000 + $461,940). This is close to the amount of the $1,200,000 proceeds of property sale issue which the Husband had been successful. Also, this outcome is nowhere close to the Open Proposals of either of the parties. It can neither be said that the winner is the Husband or the Wife. Regrettably, the legal costs incurred so far by each party, as I see it, have already become disproportionate to the present outcome. 123.Considering all the circumstances, I find it is fair and reasonable that there should be no order as to costs for these ancillary relief proceedings including all costs reserved, save and except the costs of the one-tenth (1/10) out of the one-third (1/3) of the Wife’s costs which I have ordered to be borne by the Husband under paragraph 120 of this Judgment. There will be Certificate for Counsels. Such costs order nisi will become absolute unless any of the parties apply to vary the same within 14 days from the date of this Judgment. 124.Last but not least, I wish to express my gratitude to both Counsels and the lawyers for their assistance in this case.
Miss Yanky S.Y. Lam instructed by Messrs. Wong, Fung & Co., Solicitors for the Petitioner Mr Earnest W.H. Cheung instructed by Messrs. Ho & Tam, Solicitors for the Respondent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment