Case Document

100%Judiciary

CACV 48/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 48 OF 2012

(ON APPEAL FROM HCMC NO. 2 OF 2010)

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BETWEEN

	PLTO (formerly known as PLTO)	Petitioner
	and
	KLK (also known as KLKK)	1^st Respondent
	HITL	2^nd Respondent

________________________

Before : Hon Cheung, Fok JJA and Macrae J in Court

Date of hearing: 30 May 2013

Date of decision: 30 May 2013

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D E C I S I O N

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1.Both the wife and husband apply for leave to appeal to the Court of Final Appeal against our judgment dated 25 March 2013 on the ground that issues of great general or public importance are involved. The wife in addition relies on the ‘or otherwise ground’ having regard to the substantial amount of money or value at stake and/or the great general or public important question. Both parties oppose the application by the other party. The Trustee’s stand is neutral.

The wife’s application

2.In respect of the wife’s application, the single question said to be of the great general or public importance is as follows :

‘ What is the correct approach in Hong Kong ancillary relief proceedings to the sharing of matrimonial assets that have been placed (by one spouse) into a post-nuptial trust or settlement, and in particular:

(1) What is the correct approach to the computation/attribution and distribution of assets when the trust or settlement is discretionary in nature and a spouse is a discretionary beneficiary or object of a discretionary dispositive power?

(2) What are the differences in approach to be taken in respect of two broad categories of trust or settlement, namely (i) a trust or company structure, created by a party to a marriage into which assets earned or acquired during the marriage have been transferred and whose trustees, or directors, quite lawfully have been acting at, or can be expected to act at, the direction of, or in accordance with, the wishes of that party, and (ii) a trust created by a non party under which a spouse is one of the beneficiaries and which is not a nuptial settlement (see G v G (Short Marriage: Trust Assets) [2012] 2 FLR 48 at 71 para. [91])?

(3) What is the proper exercise of the court’s powers under s. 6(1)(c) Matrimonial Proceedings and Property Ordinance (Cap. 192) when there is an application for variation of nuptial settlement?

(4) To what extent is it a relevant consideration in determining the attribution and distribution on divorce of assets settled by a spouse in a discretionary trust:

(a) That the assets put into the trust were ‘marital acquest’;

(b) That in putting the marital acquest into a trust the party so doing is trading with or disposing of the other party’s unascertained share;

(c) That there has been an ongoing equal contribution on the part of the other party after the alienation of the assets into trust;

(d) That the other party had not consented, nor was in a position to give informed consent, to the alienation of marital acquest into trust?

(5) Whether in determining the extent to which the assets of a discretionary trust in divorce are attributable to parties to the divorce and therefore subject to distribution between those parties, the following are relevant considerations and what weight is to be given to them:

(a) The nature and extent of the beneficiaries’ interests or expectations under the trust;

(b) Such terms of the trust document as may authorize a trustee to appoint assets or make advancements to the settlor-spouse to the exclusion of the other beneficiaries;

(c) Powers under the trust, including:

(i) the power to remove a trustee when reserved to the settlor-spouse;

(ii) the power to add or remove beneficiaries, with the consent of the settlor-spouse or otherwise;

(d) The terms of the letters of wishes in respect of lifetime and post-mortem wishes respectively;

(e) The pattern of historic distributions from the trust to the settlor-spouse or on the settlor-spouse’s request;

(f) The level of historic compliance of the trustee with the wishes of the settlor-spouse;

(g) Presence or absence of documentary evidence as to historic consideration given to beneficiaries under the trust;

(h) Representations made by the settlor-spouse as to his effective control over disposition of trust assets;

(i) The stance of the trustee as expressed (i) by way of submissions only or (ii) by way of evidence on oath?’

The husband’s application

3.In respect of the husband, the three questions are :

1) Having obtained a decree nisi of divorce (subsequently made absolute) under Section 11A(2)(d) of the Matrimonial Causes Ordinance, Cap. 179 (‘MCO’) based on an undefended petition pleading a specific date of living apart under Section 11A(2)(d) of the MCO (‘the separation date’), for the purpose of determining financial remedies in subsequent ancillary relief proceedings, in particular, when dealing with wealth or assets created by one party after the separation date (‘post-separation accrual’), is it open to the other party in subsequent ancillary relief proceedings to assert a different date of living apart under Section 11A(2)(d) (‘the different date’) which is inconsistent with the separation date when the different date was made in the absence of or inconsistent with the evidence filed by the parties.

2) What constitutes ‘living apart’ under Section 11A(2)(d) of the MCO, in particular, where the parties, albeit living in the same household, mutually recognized the marriage as dead, engaged in no meaningful communication to the extent of not even having eye contact with each other, recognized and asserted on oath the date when they had lived apart, and lived under the same roof for their respective practical purposes and convenience only.

3) When assessing financial remedies in ancillary relief proceedings, whether and if so, how post-separation accrual should form the basis of departure from equality, particularly in the context of :-

(a) Section 7(1)(f) of the Matrimonial Proceedings and Property Ordinance, Cap.192 (‘MPPO’);

(b) duration of the marriage under Section 7(1)(d) of MPPO; and

(c) the fact that one party continued to trade with the business created during the marriage after separation.

Our view

4.We do not propose to address the submissions in detail by reference to each of these questions. We are of the view that the principles in respect of these questions are well established. The parties’ complaint is in essence on our application of these principles to the facts of this case. In our view, our judgment is contextual and fact specific and the issue of great general or public importance is not engaged in either the husband’s or wife’s application. Likewise we do not consider the ‘or otherwise’ ground is engaged. If the Court of Final Appeal is of the view that the principles are worthy of consideration then it is for it to grant leave.

5.Accordingly, the applications for leave are refused. The husband and wife are entitled to the costs of the other’s application. They will bear the costs of the Trustee on an indemnity basis. The husband will pay the costs of his applications to amend the Notice of Motion to the wife and the Trustee.