Cheung Wong Kim Ching Esther v. Cheung Chai Kong
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CACV000140/1990
HEADNOTE Observations on
BETWEEN
----------------------- Coram: Hon Sir Derek Cons, V-P, Kempster and Clough, JJA Date of Hearing: 21 December 1990 Date of Handing down of Judgment: 17 January 1991 ----------------- JUDGMENT ----------------- Clough, JA handed down the judgment of the court: 1. This is a wife's appeal against the provision for her maintenance contained in an order made by His Honour Judge Gould on the 27th June 1990 in divorce proceedings in in the District Court in which the wife was the petitioner. The learned judge ordered the sale of the matrimonial home, a flat in Taikoo Shing, within two months of the date of the order and the division of the net proceeds as to 55 per cent for the wife and 45 per cent for the husband. The husband was ordered to make monthly payments from the 4th July 1990 of $1,000 for the maintenance of the wife and $2,000 for the maintenance of the younger daughter of the marriage. The husband was also ordered to pay the costs of the wife, who was legally aided. The wife, contends that the judge erred in fact and in law in awarding her an inadequate sup for her maintenance and that the. Monthly sum of $1,000 should be increased. The appeal is confined to this issue. But the capital provision for the wife out of the proceeds of sale of the flat are a material consideration. There is no cross-appeal by the respondent husband regarding any part of the judge's order. 2. The parties were both 42 at the date of the order. They were married on the 15th October 1974. There were two children of the marriage, both daughters, the elder daughter having been born on the 9th March 1975 and the younger daughter on the 20th October 1982. The wife worked during most of the marriage. The parties seem to have fallen out over money matters throughout the marriage. They separated on the 14th allay 1987 but they continued to live, albeit separately, in the matrimonial home, the wife with the younger daughter and the husband with the elder daughter. 3. The wife petitioned for divorce under section 11A(1)(b) of the Matrimonial Causes Ordinance (Cap. 179) on the 7th August 1987. Those proceedings were defended by the husband but were eventually superseded by a fresh petition for a consensual divorce under section 11A(1)(d) of the Ordinance filed by the wife on the 20th June 1989 after an interim order for her maintenance (by monthly payments of $3,000 for the wife and $2,000 for the younger daughter) had been made by His Honour Judge Chism on the 4th April 1989. This order was made at a time when the husband was meeting the mortgage payments and utilities charges in respect of the Taikoo Shing flat. On the 27th July 1989 Judge Pang made an order for a decree nisi to be granted, awarded custody of the elder daughter to the husband and custody of the younger daughter to the wife. The matter of financial provision was adjourned to be dealt with.,in chambers and subsequently came before His Honour Judge Gould on the 1st May and 26th and 27th June 1990 after a substantial volume of affidavit evidence had been filed. At the hearing before the judge both parties gave oral evidence and were cross-examined. 4. By her petition the wife had sought, inter alia, maintenance for herself and the two daughters under sections 4(1)(a) and 5(2)(a) respectively of the Matrimonial Proceedings and Property Ordinance (Cap. 192), a lump sum provision under section 4(1)(c) and an order under section 6(a) of the ordinance requiring the husband to transfer all his interest in the Taikoo Shing flat to the wife. It was common ground that there was only one capital asset to consider, namely the Taikoo Shiny flat which had been acquired in November 1983 in the husband's name but, in 1986, vested in both husband and wife as joint tenants. In this connection each party's evidence, in professionally drawn affirmations, was that the parties were "registered owners (as joint tenants)" of the flat. No documents of title or registered memorials were produced to the judge. It was also common ground that for the purposes of the proceedings the value of this property was to be taken to be in the region of $1.2 to $1.3 million, subject to an outstanding mortgage liability of about $200,000. By the time the appeal came to be heard the flat had been sold (in August 1990). The net proceeds of sale were $1,178,538. 5. In opening her case below miss Van der Eb (who represented the wife below and on appeal) indicated (as did the wife's petition) that the wife sought the transfer to her of the husband's share in the matrimonial home. On this basis the wife was, miss Van der Eb submitted, seeking a clean break solution and accepting that all her rights to periodical maintenance and her claim for a lump sum payment in compensation for loss of benefit under the husband's provident fund scheme would be extinguished and that the wife's only further claim would be for periodical payments for the younger daughter. Alternatively the wife's claim was for a deferred sale of the flat on the footing that she should be given the right to remain in the flat and that the mortgage instalments (stated to be approximately $3,800 per month) be paid by the husband in lieu of maintenance until the sale of the property. 6. It was apparent from the affirmation evidence of the parties that each of them wished to go on living in the flat with one of the daughters, but not while the other spouse and daughter were also living there. The husband had accepted in one of his affirmations that the flat might have to be sold and the proceeds distributed. The wife had affirmed that he was in a far better position than her to obtain alternative accommodation. In her oral evidence in chief she said that if she were to receive only half of the net proceeds of sale of the flat (estimated at about $450,000) she would not be able to buy a flat and that even if she were to live in the New Territories the monthly rent of a flat would have been $4,000-$5,000, whereas monthly rent for a 600 square feet in Taikoo Shing would have been $11,000. 7. The husband said in chief that he did not think he could go on living in the flat with the wife also there. He proposed that the flat should be sold, leaving him to look for smaller accommodation. Under cross-examination he said he was not suggesting that the wife should not have half the proceeds of sale of the flat. He added that he agreed she should have a third to half of the proceeds of sale. Later in the course of his cross-examination he said that if the flat were sold and the proceeds divided equally he would be able to buy a small flat for himself, using his share of the proceeds to provide a deposit. He accepted that the wife could not do this without "an increasing" salary. He said it had never occurred to him that she would have to rent her. alternative accommodation. He suggested that she could also go to work. 8. Thus the husband's evidence was directed to the desirability of selling the flat so that the parties could use their respective shares of the net proceeds as a deposit or part payment for smaller alternative accommodation to be purchased on a mortgage to be maintained by earned income in each case. This approach was advanced by Mr. Kenneth Chan (who represented the husband below and on appeal) in his closing submissions below on the 26th June 1990. He submitted that there should be a sale of the flat with a proportionate distribution of the proceeds as the court should think fit, but he did not agree on the husband's behalf to an equal division of the proceeds. He contended that the amount awarded for interim maintenance was more than enough. Continuing his submissions on the next day Mr. Chan cited Wachtel v. Wachtel [1973] Fam. 72 [C.A.] in support of his contention that if the wife were to be given more than one third of the net proceeds of sale of the flat there should be a reduction in the periodical payments to be made to her. In this. respect he contended that her earning capacity could be ignored. 9. Wachtel was concerned inter alia with the effect on the "one third rule" of the introduction of the wide new powers of the court under the Matrimonial Proceedings and Property Act 1970 (from which the Hong Kong Ordinance is substantially derived) to readjust the financial position of the parties in divorce proceedings. The court was considering a case where a modest suburban house was the matrimonial home which had been acquired (with the aid of a mortgage) in his own name by the husband, a dentist earning a reasonably good income. The value of the house was £20-22,000 and about £2,000 was outstanding on the mortgage. Ormrod J. had ordered pursuant to sections 2(1)(c) or 4(a) and 5(1)(f) of the 1970 Act (corresponding to sections 4(1)(c), 6(a) and 7(1)(f) of the Ordinance) that the husband should tranfer to the wife the sum of £l0,000 or half the net value of the house, whichever was the less. The husband was also ordered to make periodical payments to the wife and the daughter of the marriage. The Court of Appeal inter alia reduced to £6,000 the sum payable by the husband to the wife. Mr. Chan relied below and on appeal on the following statement of principle' in the dictum of Lord Denning in Wachtel at p. 95: -
10. In her closing submissions below Miss Van der Eb sought to distinguish Wachtel on the basis that in that case the house was in the sole name of the husband, whereas in the present case the flat was in the joint ownership of the parties. At this stage Miss Van der Eb abandoned the wife's claim for a transfer of all the husband's interest in the flat because, she said, the wife would be unable to keep up the payments for the mortgage and utilities. However a claim for two thirds of the proceeds of sale of the flat was advanced, (taking into account the need to compensate the wire for loss of pension and medical benefits and a debt owing by the wife to her sister) together with one third (i.e. $7,000i of the husband's income. This court was informed from the bar in the course of the hearing of the appeal that by the end of the hearing below it was common ground that the flat would have to be sold. 11. At the conclusion of the submissions on the 27th June 1990 the judge delivered an extempore judgment and made his order. He subsequently produced an undated document curiously headed "Reasons for verdict" which begins with the observation that he had delivered oral extempore reasons based upon seven headings which he had jotted down in the record. In the absence of any note kept by counsel this court had difficulty in accepting the written reasons as complying with section 60 of the District Court Ordinance (Cap. 336), because counsel indicated on the hearing of the appeal that the oral judgment was very short, and the final paragraph of the recorded reasons consists of ex post facto comments which cannot have been made at the time the extempore judgment was delivered. We understand that all district judges have been supplied, as we have, with portable tape recorders. We suggest that the judges make use of these machines to record extempore judgments for subsequent transcription. Alternatively judges could ensure that counsel or solicitors, when instructed on both sides, comply with their duty to make a note which can subsequently be agreed. Either course will obviate any suggestion that the recorded reasons have departed from or added to the original reasons on matters other than the purely legal grounds mentioned in section 60(3) of the District Court Ordinance (Cap. 336). 12. In his written reasons the judge made brief reference to the background circumstances under which the Taikoo Shing flat (and a flat in Aberdeen which was the previous matrimonial home) had come to be vested in the joint names of the parties. In the following passage he indicated his assessment of the wife's contribution to the welfare of the family (relevant under section 7(1)(f) of the Ordinance) and his view that the parties overall intention had been to pool their resources : -
13. Under section 7(1)(g) of the Ordinance he compensated the wife for the loss of the chance of acquiring benefit under the husband's provident fund scheme. He calculated the lump sum representing that copmpensation by reference to the prospective proceeds of sale of the flat, saying : -
The additional five per cent of the proceeds of sale thus given to the wife amounts to $58,926. No issue arose on the appeal concerning the validity or the amount of this award to the wife. 14. The judge then went on to consider the wife's claim for periodical payments. Having regard to her record of previous earnings and to her need to provide care for the eight year old younger daughter while the wife was at work, the judge assessed her effective earning capacity (after paying for the cost of child care) at a minimum figure of $1,000. This assessment has not been challenged by the husband, nor has he challenged the judge's findings that the husband had exaggerated his obligations to his parents to whom, the husband had affirmed, he had been paying $2,300 per month, whilst allegedly remaining indebted to his mother for a long standing loan of $20,000. 15. The judge made the following findings regarding the wife's expenditure on herself and the younger daughter : -
16. Thus the periodical payments in respect of the wife (and the younger daughter) seem to have been calculated by reference only to the wife's evidence of her monthly expenses contained in her first affidavit of means filed on the 29th September 1989. The judge justified this approach by going on to say in his written reasons : -
The judge was here relying on the passage in Rayden paraphrasing Lord Denning's dictum (cited above in this judgment) in wachtel at p. 95 which Mr. Chan had cited to him. 17. It seems to have been assumed below that the judge had jurisdiction under the Matrimonial Proceedings and Property Ordinance to order a sale of the flat. When this court raised the jurisdictional issue Or. Chan cited a helpful passage in the second (1986) edition of Mr. Pegg's work on Family Law in Hong Kong at p. 143 where the learned author points out that the court has no such express power under the Ordinance, as Power J. held in 1984 in the unreported case of Chan Cheung Hing v. Chan Tan Lan (Divorce action No. 35 of 1981). There is no equivalent in Hong Kong to section 24A of the Matrimonial Causes Act 1973 which was introduced by section 7 of the Matrimonial Homes and Property Act 1981. 18. In the present case the court did not have jurisdiction to order a sale under sections 6 and 7(7) of the Married Persons Status Ordinance (Cap. 182) because the parties had express and established rights as legal and beneficial joint tenants of the Taikoo Shing flat, so no question "as to the title to or possession of" the flat arose under section 6 of that Ordinance. Jurisdiction to order a sale only arose under the more cumbersome procedure provided by sections 2 and 6 of the Partition Ordinance (Cap. 352) under sections 3(2) and 3A whereof respectively the Director of Buildings and Lands would have to be served with the documents prescribed under the Partition Rules and the Attorney-General would have the right to intervene. This is all academic insofar as the parties to these proceedings are concerned because they both wanted the flat sold and it was sold before the hearing of the appeal. However we endorse Mr. Pegg's suggestion that there is a need in Hong Kong for the equivalent of section 24A of the Matrimonial Causes Act 1973. 19. On the appeal Miss Van der Eb relied on the fact that the judge's award of the periodical payments of $1,000 made at a time when the flat was to be sold was less than the $3,000 interim maintenance awarded to her when she was living in the flat without having to meet the mortgage and utilities payments. This comparison did not seem to us to be appropriate since, as Mr. Chan submitted, citing the dictum of Silke J. in V. v. V. (unreportede:Civil Appeal No. 200 of 1980) at p. 5, when awarding interim maintenance for a wife the court is concerned with her immediate needs and is not intending to affect the eventual final order for periodical payments to be made to the wife in the light of the matters stipulated in section 7 of the Matrimonial Proceedings and Property Ordinance. 20. However, Miss Van der Eb was, in our opinion, on decisively strong ground when criticising the learned judge's crucial reasoning to the effect that because the wife had ended up with 55 per cent of the net proceeds of sale of the flat she was not entitled to be maintained "in excess of ... her needs (assuming of course that the maintaining spouse has no significant excess of income)". The judge was here clearly applying the dictum of Lord Denning in wachtel cited above and paraphrased in Rayden at p. 915-6. But, as Miss Van der Eb submitted below and on appeal, the present case is clearly distinguishable. In Wacntel the house was acquired in the husband's name and he continued to live in it after the divorce. The court in that case was concerned with the question of the amount of the capital sum representing the net value of or equity in the mortgaged house the husband should pay to the wife, bearing in mind that she was also claiming periodical payments for her maintenance. 21. In the present case the factual circumstances are different. It was common ground that the spouses were legal and beneficial joint tenants. Either of them could have severed the joint tenancy by alienation in law or equity (see Megarry on the Law of Real Property, 5th edition, at p. 430) or obtained an order for sale and distribution of the proceeds under section 6 of the Partition Ordinance. For all practical purposes they enjoyed equal beneficial proprietary rights in the Taikoo Shing flat and the wife was effectively entitled to call half the prospective proceeds of sale of the flat her own. Her rights being clearly established, no question arose under section 6 of the Married Persons Status Ordinance (c:f. the Wachtel case where the wife had also made an application under section 17 of the Married Women's Property Act 1882) and the husband had made no application under sections 4(1)(c) or 6(a) for the wife to pay him any part of the proceeds of sale of the flat. 22. In these circumstances (as the judge seemed to recognise, because his written reasons contain no express purported award of half the prospective net proceeds of sale of the flat to the wife) the wife was effectively beneficially entitled to a moiety of the net capital value of the equity in the flat. The judge had no jurisdiction to award this to her. It was effectively hers already as of right. All that he awarded her in addition was 5 per cent of the prospective proceeds of sale in respect of the wife's loss of future benefit under the husband's provident fund. However, on final analysis, this can only be regarded as the machinery by which the judge decided to implement an award of a lump sum payment under section 4(1)(c) or property transfer under section 6(a) attributable to a matter stipulated in section 7(1)(g) of the Ordinance and being one to which the court is required to have regard. 23. We leave open, until such time as it may arise (leaving aside the matter of the long standing one third rule as a starting point), the question whether in comparable circumstnces in Hong Kong this court would apply the approach of the English Court of Appeal in Wachtel in refusing to award a wife capital adjustment of the husband's equity in the matrimonial home on the basis of equality where she was also claiming periodical payments for her maintenance. However we can see no basis in the circumstances of the present case for applying the relevant aspect of the Wachtel case and we consider that the judge was, with respect, wrong to accept Mr. Chan's submission on this crucial matter. The basis for his judgment cannot therefore be sustained or be regarded as a safe guideline. 24. In our opinion the correct approach in this case must be, as the Ordinance in terms provides, to have regard to the matters mentioned in section 7 when determining what financial provision should be made in this case. In so doing the court should regard the property of the each of the spouses for the purposes of section 7(1)(a) as including effectively one half of the net proceeds of sale of the flat. 25. The wife's effective earning capacity was determined by the judge to be $1,000. This has not been challenged. The judge made no reference to the husband's earning capacity, presumably because he applied Wachtel and considered that the husband had "no sufficient excess of income". However, as Miss Van der Eb rightly argued, the husband's monthly income, amounting to $21,666, is highly material under section 7(1) (a) once the blinkers imposed by the relevant aspect of wachtel are removed. The combined earning capacity of the spouses, amounting to $22,666, together with their combined capital assets (in this case the equity of the flat) are also a guide to the standard of living enjoyed by the family before the breakdown of the marriage (see section 7(1)(c)). 26. Bearing in mind under section 7(1)(d) that this was a 15 year marriage and that the spouses are 42, under section 7(1)(f) that the judge assessed the monetary and other contribution of the wife to the welfare of the family on a favourable basis, under section 7(1)(c) that the standard of living enjoyed by the family before the breakdown of the marriage is to be gauged by reference to the equity in their jointly owned flat of $1.178.million and a combined earning capacity of $22,166, it seems to us that the court should, when assessing the periodical payments to the wife by the husband, adopt the long standing one third rule as a starting point. This not being a case where the parties are very poor or very rich we start with the guideline of that rule in the absence of any statutory guideline. We then propose (as indicated in Jackson's Matrimonial Finance taxation, 4th edition at p.72) to use the net effect method to assess the impact of an order made on that basis and determine whether any adjustments one way or the other are required to meet the circumstances of the case. 27. On this flexible provisional basis the wife should receive: 28. 1/3 of $22,666 = $7,555-$1,000 (her effective earning capacity) = $6,555. 29. Rounded off to $6,500 and supplemented by the wife's effective earned income of $1,000 and the $2,000 payable for the younger daughter, the wife' ,household would then have a combined income of $9,500 in the form of periodical payments and earned income of the wife. The husband would be left with $13,166 of his earned income. 30. When considering the likely impact of an order adjusting the combined income of the parties in this way the primary concern of the court must be the need for the provision of suitable homes for each spouse and each of the daughters committed to the spouse's respective custody. As Miss Van der Eb acknowledged at the hearing of the appeal, the question of the likely cost of providing such suitable homes was not really considered or determined below and this court has no firm evidence to assist it on this point. However, this being a situation where the only capital asset of the spouses has already been eroded to the extent of $200,000 by legal costs incurred in these proceedings we do not contemplate remitting the case to the lower court for re-hearing. We think this court should do the best it can on the material available to assess the effect on the wife and younger daughter and on the husband and elder daughter of a 1/3 - 2/3rd adjustment of earned income in all the circumstances of this case. The wife and younger daughter 31. On the basis that each spouse is entitled to half the net proceeds of sale of the flat, amounting to $1,178,538, but that the husband has been ordered (and this has not been challenged) to pay the wife $58,927 (5 per cent of the proceeds of sale) as compensation under section 7(1)(g), the wife has or is entitled to receive a sum of $648,196. She owes her sister $40,300. She can be taken to have about $600,000 as capital available towards the provision of a home for herself and the younger daughter. It may be, as the husband suggested in his evidence, that the wife could buy a suitable small flat with that sum. However there was no evidence before the judge upon which an informed view could be formed on this important question. We have therefore considered the wife's prospective position, and that of the younger daughter, on the basis that the wife may well be unable to purchase a suitable flat outright with the capital at her disposal. It seems to us that the possibility of this adverse contingency occurring must be taken into account when assessing the wife's future requirements. 32. If the wife is unable to buy a suitable flat outright with her capital it seems unlikely that, as a single woman of 42 with such a low effective earning capacity, she would be able to obtain a mortgage to assist in the purchase of a more expensive flat. It may therefore be necessary for the wife to rent a small flat or other accommodation for herself and her younger daughter. If she moves to a cheaper area than Taikoo Shing we would expect her to be able to obtain such accommodation at a cost of not less than $5,000 per month for rent and utility charges. 33. The extent to which that sum could be raised from the income of her capital sum of $600,000 must be uncertain. Interest rates fluctuate and can be volatile. At present the minimum lending rate is 10 per cent, but we apprehend that appreciably less would be paid on a deposit account of $600,000. Bearing in mind the very real risk of wide fluctuations of interest rates over a long term period and the importance of keeping a roof over the heads of the wife and her daughter we have adopted a cautious approach and assumed that the wife can expect a yield of not less than 5 per cent on her capital. This would give the wife only $2,500 per month towards the cost of providing the home for herself and her daughter. The balance would have to come from the periodical payments made by the husband. If the balance of $2,500 is obtained from the total prospective income of the wife's household there would be $7,000 left for the reasonable requirements of the wife and daughter. 34. In her affirmation filed on the 29th September 1989 the wife had put the monthly expenses of her household (the actual accommodation being paid for by the husband) at $5,310 after the making of the interim maintenance order requiring the husband to make monthly payments of $5,000 ($3000 for the wife and $2,000 for the daughter). The judge only accepted $4,000 of this expenditure after reducing the cost of medical expenses from $1,000 to $300 and rejecting the sum of $600 for tutorial fees. In her affirmation filed in the 25th April 1990 (to which the judge did not refer) the wife had stated her monthly expenses for herself and her daughter (again in accommodation paid for by the husband) to have been $7,280. Ignoring a figure of $660 in respect of Legal Aid contribution, this leaves $6,620 which included $1,500 for medical expenses and $1,500 for clothing. The high medical expenses were stated to be due to the younger daughter's nasal infection. The increase in clothing expenses were attributed to the requirement of summer clothing for the wife and her daughter. 35. Doing the best we can with this evidence of expenditure on basic living requirements other than the provision of accommodation and allowing for the fact that items of expenditure such as clothing and medical expenses will fluctuate from month to month, we conclude that once they have a roof over their heads the basic living expenses of the wife and younger daughter's household would in future amount to about $4,500. 36. This would mean that the wife (and the younger daughter) would have a monthly sum of $2,500 available to cover the contingency of the cost of their home and utility charges exceeding $5,000 per month and to meet their reasonable requirements over and above bare necessities. This would be a modest margin and the wife and daughter would face a reduction in their standard of living from that enjoyed by them before the breakdown of the marriage. However the position of the husband and the elder daughter would be no better, indeed it would probably be appreciably worse. The husband and the elder daughter 37. The husband will receive $530,342 from the proceeds of sale of the flat (i.e. his half share amounting to $589,269 less the $58,927 payable by him to the wife under section 7(1)(g)). His present salary is $21,666 less his 5 per cent contribution of $1,083 to his provident fund, leaving an effective balance of $20,583. If he is required to make monthly payments of $6500 to the wife and $2000 for the younger daughter he will be left with $12,083: 38. The question of the husband's tax liability was never gone into or resolved below and it was not touched upon on appeal'. It is important, because he affirmed that since the divorce his monthly provision for tax had increased from $1,700 to $2,960. He expressed anxiety about this and about a prospective liability for tax provision of $71,000. In the absence of any apparent challenge to the husband's assertion that he had to make a monthly provision of $2,960 for tax, we have accepted this figure as one of his monthly outgoings. 39. Miss Van der Eb pointed out on appeal that, whereas the wife had confined her evidence of expenditure to bare necessities, the husband's evidence included monthly items such as $2,300 contributed to his parents and $500 for entertainment and expenses. In order to make as fair a comparison as possible of the prospective positions of husband and wife (and their respective daughters) we have ignored those two items, although the court would accept that a son in a Chinese family in Hong Kong will normally feel under a strong obligation to contribute to the maintenance of his parents. We have also ignored, as being too nebulous, the item of $150 for "Household sundries" in the husband's evidence of his outgoings. We have retained the item of $500 for "Miscellaneous" because it results in the monthly living expenses of the husband and elder daughter set out in the calculation below amounting to $4,550 which corresponds almost exactly with the $4,500 allowed in the case of the wife and younger daughter. We can see no reason why there should be any disparity in the amounts allowed for the two households in the circumstances of this case. 40. On this basis the items of the husband's expenditure to be taken into account are $1300 for household food $1,620 for expenditure on the elder daughter (including $650 for her lunch and pocket money). $570 of the sum of $1620 was spent on both the daughters with presents for the elder daughter only. Doing the best we can we have made a reduction in this respect in the calculation below reducing $570 to $300 and $1620 to $1350. Remaining items to be taken into account relate to the husband's monthly personal expenditure of $1,400 (comprising $300 for clothing, $300 for transportation, $600 for lunches, $200 for subscriptions etc) and $500 for "Miscellaneous". The total expenditure thus allowed for the husband's household is therefore $4,550 calculated as follows:
41. Deducting tax liability and the allowable items of monthly expenditure from the monthly sum of $12,083, which the husband will have left after making his provident fund contribution and periodical payments to the wife and for the younger daughter, the following amount remains:
Thus, after meeting his basic expenditure on his daughter and himself the husband should have $4,573, available out of his monthly income towards the cost of providing living accommodation for himself and his elder daughter. 42. The husband will be receiving a capital sum of $530,342 from the proceeds of sale of the flat, but he has been ordered to pay the costs of the proceedings below and he will most probably have to pay the costs of resisting unsuccessfully the wife's appeal to this court. We were told from the bar that the total costs of the proceedings to date are in the region of $200,000. Bearing in mind his liabilities for tax provision mentioned above and the burden of costs which the husband faces, he cannot realistically be regarded as prospectively getting the benefit of more than about $260,000. Assuming an overall yield of about 5 per cent (as in the case of the wife's capital) this would yield him about $1,083 per month. Alternatively he could use the sum of $260,000 to provide a deposit towards the purchase of a small flat with the assistance of a mortgage from a bank through his employers. 43. However there is no available evidence to enable the court to assess the husband's position if he were to buy a small flat subject to a mortgage. If he were to rent accommodation, which he might well be obliged to do, the likely minimal monthly cost can only fairly be, taken to be the same as for the wife, namely $5,000. The husband would therefore have to find the further monthly sum of 427 from his other resources. In that event he would be left with only the monthly sum of $656 ($1,083-427=$656) after paying for the accommodation and basic living expenses of himself and his elder daughter. 44. In all the circumstances of this case the effect of the practical capital differential between the husband and the wife would be, if the court were to make an order for periodical payments in favour of the wife based on the one third rule, that the margin between income meeting basic need and additional reasonable requirement of the two households would be unfairly balanced in favour of the wife. In her case it would be $2,500. In the husband's case it would be $656 if the monthly cost of providing a home for himself and the elder daughter is treated as $5,000 as in the case of the wife and younger daughter. Furthermore it would be very difficult for him to assist his dependent parents at all. Whilst the needs of the husband's parents cannot override or be equated with the husband's duty to maintain the wife and daughters, his commitment to his parents is, particularly in the Hong Kong community, a reasonable one. 45. Accordingly we have made an adjustment of the provisional order for periodical payments contemplated above in accordance with the one third rule by reducing the payments to the wife by $922 (i.e. half of the difference ($1844) between $2,500 and $656), rounded off to $900, from $6,500 to $5,600 and thereby allowed the husband another $900 per month towards meeting his reasonable commitments. This will leave the husband's and wife's households on a comparable footing regarding income, although the wife will retain the security of her full share of capital supplemented by the additional award of $58,927 under section 7(1)(g), whereas the husband's capital entitlement will be substantially eroded by the costs of the proceedings below and on appeal. 46. We therefore allow the. wife's appeal and vary the judge's order by increasing the monthly periodical payments to be made to her by the husband from $1,000 to $5,600. As the calculation of this figure is materially influenced by the amount of the net proceeds of sale of the flat, which was not sold until August 1990, we order that the husband make monthly payments of $5,600 to the wife (and $2000 for the younger daughter) with effect from the 1st September 1990. We further order that prior to that date the interim maintenance order should remain retrospectively operative. We make an order nisi that the husband is to pay the wife's costs of this appeal and direct a taxation of those costs in accordance with the Legal Aid Regulations. 47. Finally we recommend that counsel make a regular practice in these cases of assisting the judge by producing calculations to demonstrate the net effect of any order for financial provision which they ask the court to make. The incidence of tax is usually not as important in Hong Kong as it is in England but we venture to suggest that a modified form of the English net effect method (illustrated in Jackson at p.68 et seq.) could be usefully applied in Hong Kong.
Representation: Ms C. Van der Eb (Liu, Chan & Lam) for Petitioner/Appellant Mr Kenneth C.L. Chan (Hobson & Co) for Respondent/Respondent |