Kan Lai Kwan also known as Kan Lai Kwan Kay v. Poon Lok To Otto Formerly Known As Pun Lok To Otto and Another

Press Summary (English)

Press Summary (Chinese)

FACV Nos 20 & 21 of 2013

FACV No. 20 of 2013

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 20 OF 2013 (CIVIL)

(ON APPEAL FROM CACV NO. 48 OF 2012)

_______________________

Between

_______________________

FACV No. 21 of 2013

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 21 OF 2013 (CIVIL)

(ON APPEAL FROM CACV NO. 48 OF 2012)

Between :

_______________________

Before:

Chief Justice Ma, Mr Justice Ribeiro PJ,Mr Justice Tang PJ, Mr Justice Bokhary NPJ and Mr Justice Gummow NPJ

Dates of Hearing: 23-24 June 2014

Date of Judgment: 17 July 2014

_______________________

_______________________

Chief Justice Ma:

1.I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Ribeiro PJ:

2.This appeal arises out of an application for financial provision in matrimonial proceedings.  It raises questions concerning the proper approach to a discretionary trust set up by the husband and issues concerning separation and estoppel in the context of ancillary relief where profits earned by the husband’s business substantially increased during the final years of the marriage.

A.   The course of events

3.Kay Kan Lai Kwan (“W”) was born in 1939 and Otto Poon Lok To (“H”) in 1940.  They married on 6 January 1968 in England where they were each working and pursuing further qualifications, W as a nurse and H as an engineer.  After returning to Hong Kong in 1969, they found employment and had three children, Karen,[1] Richard[2] and Heather.[3]  In 1977, H started his own engineering business while W continued to work as a nurse. 

4.After a slow start, H’s business enjoyed some success but then had a major setback in the mid-1980s when it almost failed.  It was a very difficult time for them since most of their savings were lost in a stock market crash.  They decided to emigrate to Canada in 1988.  W remained in Canada with the children for several years while H returned to Hong Kong and started rebuilding the business.  They became Canadian citizens in 1992.

5.H’s engineering business began to prosper and in 1994 it consisted of a number of operating companies based in Hong Kong.  H decided to restructure the group and obtained advice from Messrs Deacons, a firm of Hong Kong solicitors.  The plan adopted was to set up an off-shore corporation which would act as the holding company for the operating companies and to settle the shares of the holding company on the trustee of an off-shore discretionary trust.  In a letter dated 21 March 1995 covering a draft of the trust deed, the solicitors recorded H’s purpose in the following terms:

“As previously discussed, the principal purpose of establishing the trust is to provide for continuity in the ownership of the Analogue group of companies for the benefit of you and your family, to avoid a requirement for probate in respect of your interests in the Analogue group following your death and to relieve your estate of the liability to estate duty that would arise in respect of your shareholdings in the Analogue group.”

6.On 18 July 1995, Analogue Holdings Ltd (“Analogue”) was incorporated in Bermuda.  H was its Chairman and Analogue became the holder of all the shares in the operating companies. 

7.The trustee selected was HSBC International Trustee Limited (“the trustee”) and by a deed dated 25 July 1995 entered into between H as settlor and the trustee, “The Otto Poon Family Trust” (“the trust”) was established under the laws of Jersey.  The property settled on trust consisted solely of shares in two private companies, Analogue and Realty Limited.  The latter company initially owned a flat in Fulham Gardens, Pokfulam, which was later replaced by a house at Twin Bay Villas in Sai Kung, being residences where the parties lived. 

8.Unfortunately, two tragedies befell the family. On 7 October 1995, the younger daughter Heather was killed in a road accident in the United States.  Karen’s boyfriend, who was driving, was also killed and Karen was injured.  H stated in evidence that he and W were devastated by their loss.  W described herself as “totally heart-broken”.[4] According to H:

“... Kay and I found it impossible to talk to each other or to turn to each other in our moment of grief. We both somehow bottled it up and I again threw myself completely and with renewed energy in my work and my projects.”[5]

9.Five years later, in September 2000, they suffered the second tragedy when Richard took his own life, leaping from the balcony of the family home in Fulham Gardens.  H described the consequences of this event affecting the parties’ relationship as follows:

“After Richard’s death, the rift between the parties simply became too wide to be bridged. Still we did not talk about our pain, our anger, our grief or our overwhelming and irreplaceable loss. Still we were unable to turn to each other in our darkest moments and by then we probably both had changed into virtual strangers to each other. There was simply nothing that we could say to each other anymore.”[6]

10.Reflecting this sad situation, the trial Judge, Deputy High Court Judge Carlson, stated:

“As I have already indicated, Richard died in September 2000. The husband says, and I am satisfied that he is right, that this tragic event really marked the end of the marital relationship. There was no more warmth or connection between the parties notwithstanding which they continued to live together.”[7]

11.The Fulham Gardens flat, with its unhappy associations, was sold and on 22 January 2001, the parties purchased and moved into the house at Twin Bay Villas.  H’s case is that while he and W lived there under the same roof, their marriage was (as the Judge found[8]) “a bare shell and nothing more”.  As discussed below,[9] W successfully contested this finding in the Court of Appeal.

12.The Analogue Group’s development is reflected in its annual net profits which were as follows:

Year	Net profits
2000	$12,463,425
2001	$25,865,899
2002	$27,741,544
2003	$9,330,983
2004	$8,583,115
2005	($32,066,322)
2006	$17,031,022
2007	$55,526,026
2008	$78,049,582
2009	$161,760,278
2010	$293,077,695

13.After strong initial results, profits fell during 2003 and 2004 (according to H due to the SARS epidemic) followed by 2005 when the Group made a significant loss.  Thereafter, especially as from 2007, there was a steep increase in its profits. 

14.In 2008, matters came to a head in the parties’ relationship.  W discovered and confronted H about a long-term relationship he had maintained with Queenie Law, a younger woman employed in the Group.  On 3 July 2008, H moved out of the Twin Bay Villas property.  On 6 November 2008, W petitioned for divorce on the basis of one-year separation and consent.[10]  And on 23 December 2008, the Trustee, at H’s request, transferred to W the shares which it held in Realty Limited, thereby transferring to her ownership of the Twin Bay Villas house.

B. The proceedings and awards in the Courts below

15.W did not proceed with her petition.  It was dismissed by consent and, on 6 February 2009, H issued his petition based on two years’ separation.[11] He affirmed that the parties had lived apart since February 2001.[12]  W did not defend the proceedings and on 26 May 2009 and 1 September 2010 respectively, the decree nisi and the decree absolute were pronounced by the Court on the basis of H’s petition.  The February 2001 separation date was also deposed to by both parties in their Form E financial statements filed in the ancillary relief proceedings.  However, shortly before the start of the hearing, W made an affirmation[13] stating that the February 2001 date was incorrect and that separation had in fact occurred “some time in 2008”.  The date of the parties’ separation and the extent to which W should be awarded a share of the profits of the business accruing after 2001 therefore became contentious issues. 

16.Also controversial was the prior question of how the trust ought to be approached.  H contended that the Court ought to treat Karen as if she had a “one-third interest” in the trust estate which should be protected from W’s claims.  His case was that only two-thirds of the value of the shares should be treated as matrimonial assets.  The trustee was joined as a party to the proceedings and adopted a position which was consistent with H’s contentions.

B.1  The award of Deputy High Court Judge Carlson

17.The hearing before DHCJ Carlson took place on dates in October and December 2011.[14] The Judge accepted a valuation of $1,560,686,000 for the shares held by the trust, representing 84.63% of the issued shares in Analogue.[15]  His Lordship found that additionally, H had assets to the value of $46,052,707 and W, assets worth $58,259,660.[16]  He also found that they jointly owned a flat in Westland Gardens (H agreeing to transfer his 50% share valued at $7,500,000 to W).  Those figures are not in dispute.  It was agreed that each party would retain other properties held in their respective names without bringing such properties into account.

18.The Judge held that the trust assets were not a “resource” of H[17] but nevertheless decided that $1,040,457,300 representing two-thirds of the value of the Analogue shares held on trust should be ascribed in equal shares to the parties as forming the major part of their matrimonial assets available for distribution.[18]  Netting off the parties’ respective assets, the Judge concluded that if the principle of equal sharing[19] were to be applied without modification, H would be required to pay $508 million to W.[20]

19.However, for a combination of reasons involving estoppel, a perceived need to preserve the Analogue Group’s liquidity and a finding that the parties had lived separate lives during the last ten years of the marriage, his Lordship held that there ought to be a departure from the equal sharing principle.  In the result, he ordered H to pay W a lump sum of $370 million representing 72.83% of the sum of $508 million he had prima facie arrived at by applying the equality principle.[21] 

B.2  The award of the Court of Appeal[22]

20.Cheung JA, with whom the other members of the Court agreed, upheld the Judge’s decision that only two-thirds of the value of the shares held on trust should be regarded as matrimonial assets available for distribution.[23] However, the Court of Appeal disagreed with the Judge’s reasons relating to liquidity and separation, substituted a separation date of February 2007 and held that there was no basis for departing from the equality principle.[24]

21.Taking the parties’ matrimonial assets as totalling $1,144,800,000,[25] their Lordships awarded to W 50% of that amount, resulting (after netting off adjustments) in a lump sum award of $510,400,000 in W’s favour, an increase of $140,400,000 over the Judge’s award of $370 million. 

22.The Court of Appeal ordered the award to be paid in three tranches: $250 million within one month and two tranches of $130 million each to be paid on or before 1 March 2014 and 1 March 2015 respectively.  The Court was told that the first two tranches have duly been paid.

B.3  This appeal

23.Pursuant to leave granted by the Appeal Committee,[26] both parties have brought appeals against the Court of Appeal’s judgment.  W challenges its decision upholding the Judge’s conclusion that only two-thirds of the value of the shares held on trust should be regarded as a financial resource available to H.  W contends that the entire value of those shares constitutes such a resource and that the “yardstick of equality” should be applied to the full value and not merely to two-thirds of that amount.

24.H, on the other hand, disputes the Court of Appeal’s substitution of a February 2007 separation date for the Judge’s finding that separation occurred in February 2001.  He challenges the Court of Appeal’s conclusion that there was no basis for departing from the equal sharing principle and argues that W should be excluded from sharing in the increased profits accruing after February 2001.

C. Is the discretionary trust is a financial resource available to H?

C.1  The legal test

25.The Court’s jurisdiction to grant ancillary relief, including its power to make financial provision orders,[27] arises under the Matrimonial Proceedings and Property Ordinance (“MPPO”).[28]  Section 7(1)(a) provides that in deciding whether and in what manner to exercise those powers:

“It shall be the duty of the court ... to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say – (a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future...”

26.The terms of the trust are considered more closely below.[29] For the present, it suffices to note that apart from being the settlor, H was named as protector of the trust and also as a member of the class of potential beneficiaries.[30]  The question which arises is whether the trust and its assets should be regarded as a “financial resource” which H has or is likely to have in the foreseeable future within the meaning of section 7(1)(a).  In addressing that question, the Court is engaged in taking the first step in deciding an ancillary relief claim.  As pointed out in LKW v DD,[31] the first step is:

“... to ascertain the financial resources of each of the parties calculated as at the date of the hearing. ... At this stage, the court need not attempt to distinguish between matrimonial and non-matrimonial property, that being an exercise best undertaken (if necessary) when considering distribution of the assets.”

27.Section 7(1)(a) is closely modelled on the equivalent English provision, making English decisions on section 25(2)(a) of the Matrimonial Causes Act 1973[32] helpful and persuasive.  The approach adopted in England and Wales was laid down by the Court of Appeal in Charman v Charman,[33] a case concerning a discretionary trust situated in Bermuda.  Wilson LJ formulated the test as follows:

“Superficially the question is easily framed as being whether the trust is a financial ‘resource’ of the husband for the purpose of section 25(2)(a) of the Matrimonial Causes Act 1973, as substituted by the Matrimonial and Family Proceedings Act 1984, section 3 . But what does the word ‘resource’ mean in this context? In my view, when properly focused, that central question is simply whether, if the husband were to request it to advance the whole (or part) of the capital of the trust to him, the trustee would be likely to do so.”[34]

28.This was confirmed to be the test in Charman v Charman (No 4),[35] and has been treated as established in English law.  A helpful elaboration can be found in the judgment of Lewison J in the English Court of Appeal in Whaley v Whaley:[36]

“... a discretionary beneficiary has no proprietary interest in the fund. But under section 25 the court looks at resources; not just at ownership. Thus whether a beneficiary under a discretionary trust has a proprietary interest is not relevant. The resource must be one that is ‘likely’ to be available. This is the origin of the ‘likelihood’ test. No judge can make a positive finding about the future: the best that can be done is to assess likelihood. What is relevant is the likelihood of the trust fund or part of it being made available to him, either by income or capital distribution. If the husband were to ask the trustees to advance him capital, would the trustees be likely to do so: Charman v Charman [2006] 1 WLR 1053; A v A [2007] 2 FLR 467, 499? The question is not one of control of resources: it is one of access to them.”

29.Charman v Charman was cited with approval by this Court in KEWS v NCHC.[37] That was a case involving parental financial support rather than a discretionary trust in which a similar test (asking what is the likelihood of such financial assistance continuing) was adopted.  It is right that the Charman test should be adopted in this jurisdiction since the issue arising in cases like the present and since the Hong Kong provision are materially identical.  To decide whether a discretionary trust is a financial resource of one of the parties, the Court asks whether, if that party were to request the trustee to advance the whole or part of the capital or income of the trust to him or her, the trustee would, on the balance of probabilities, be likely to do so.

30.The Judge was therefore wrong to hold that Charman was inapplicable – a conclusion which he reached apparently because:

“Mr Charman’s behaviour was completely different to that of this husband who has always viewed his responsibilities to his wife (even after their divorce) and his children, now only Karen, with the utmost concern for their best interests.”[38]

31.The Charman test provides the approach to deciding whether a discretionary trust forms part of a party’s resources.  A comparison of H’s conduct with Mr Charman’s conduct is not relevant to that question.

32.The Court of Appeal accepted the applicability of the Charman test.[39] However, the way in which it actually applied that test requires further discussion below.[40]

C.2  Acceding to the wishes of a beneficiary, settlor or protector

33.It should be clearly understood that the Charman test does not postulate any impropriety on the trustee’s part.  This was noted in Charman v Charman itself where Wilson LJ stated:

“A trustee – in proper ‘control’ of the trust – will usually be acting entirely properly if, after careful consideration of all relevant circumstances, he resolves in good faith to accede to a request by the settlor for the exercise of his power of advancement of capital, whether back to the settlor or to any other beneficiary.”[41]

34.In like vein, Lloyd LJ stated:

“There is no doubt that trustees can properly take into account any expression of wishes, formal or otherwise, on the part of the settlor as to how they should exercise their discretionary powers, and indeed that they should have regard to any such wishes expressed to them.”[42]

35.In In Re Esteem Settlement,[43] the Jersey Royal Court[44] provided a helpful explanation of how trusts like the present are generally administered and how trustees may properly arrive at distribution decisions on the basis of requests received:

“[165] ...In our judgment there is nothing untoward in beneficiaries making requests of a trustee as to the investment of the trust fund, the acquisition of properties for them to live in or for the refurbishment of properties in which they already live. In our judgment many decisions of this nature are likely to arise because of a request by a beneficiary rather than because of an independent originating action on the part of a trustee. The approach that a trustee should adopt to a request will depend upon the nature of the request, the interests of other beneficiaries and all the surrounding circumstances. Certainly, if he is to be exercising his fiduciary powers in good faith, the trustee must be willing to reject a request if he thinks that this is the right course. But when a trustee concludes that the request is reasonable having regard to all the circumstances of the case and is in the interests of the beneficiary concerned, he should certainly not refuse the request simply in order to assert or prove his independence. His duty remains at all times to act in good faith in the interests of his beneficiaries, not to act against those interests for improper reasons.

[166] In our judgment, where the requests made of trustees are reasonable in the context of all the circumstances, it would be the exception rather than the rule for trustees to refuse such requests. Indeed, as Mr Journeaux accepted, one would expect to find that in the majority of trusts, there had not been a refusal by the trustees of a request by a settlor. This would no doubt be because, in the majority of cases, a settler would be acting reasonably in the interests of himself and his family. This would particularly be so where there was a small close-knit family and where the settlor could be expected to be fully aware of what was in the interests of his family. Indeed, in almost all discretionary trusts, the settlor provides a letter of wishes which expresses informally his desires in relation to the administration of the settlement. Furthermore he may change his wishes from time to time. In our judgment it is perfectly clear that trustees are entitled ... to take account of such wishes as the settlor may from time to time express provided, of course, that the trustees are not in any way bound by them. The trustees must reach their own independent conclusion having taken account of such wishes.

[167] ... A lack of any refusal may of course be indicative of the fact that trustees have abdicated their fiduciary duties and are simply following the wishes of the settlor without further consideration.  But, as mentioned above, a lack of any refusal may be equally consistent with a properly-administered trust where the trustees have in good faith considered each request of the settler, concluded that it is reasonable and concluded that it is proper to accede to such requests in the interests of one or more of the beneficiaries of the trust. But one does not start, as at times seems to have been the plaintiffs’ case, with an attitude that it is very surprising and worthy of criticism that the trustee acceded to all Sheikh Fahad’s requests.  On the contrary, as the Privy Council said in Letterstedt v Broers (9 App Cas 371), trustees exist for the benefit of beneficiaries and it is in our judgment very common that trustees will have perfectly properly acceded to all the requests of a settlor without in any way abdicating their fiduciary duties and responsibilities.” 

36.Of course there may be cases where the trust is a sham and a settlor controls the purported trustee who does not act in good faith as a trustee when acceding to the settlor’s or beneficiary’s wishes.  Or a trust may be constituted with provisions which result in the settlor being found not to have effectively divested himself of the trust property.  That occurred for instance in Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Company (Cayman) Limited,[45] where the settlor retained a power to revoke the trust and was held by the Privy Council to have thereby retained rights tantamount to ownership, enabling a judgment creditor to levy execution (via a receiver by way of equitable execution to whom the power of revocation was ordered to be delegated) on the trust assets.[46]

37.In the present case, W accepts that there is no question of the trust being a sham and there is no suggestion of any impropriety on the part of the trustees.  The question is whether, looking at all the evidence, the Court should be satisfied that if H were to request the trustee to advance the whole or part of the capital or income of the trust to him, the trustee, acting in accordance with its duties and after having regard to all relevant considerations, would on the balance of probabilities be likely to do so.

C.3  The judgments below on the discretionary trust

38.Unfortunately, DHCJ Carlson appears to have fallen into error in considering it somehow necessary for W to show that the trustee was prepared to act in breach of trust before the Court would treat the trust estate as a resource likely to be available to H. 

39.After acknowledging that on the evidence the trustee had shown H “great deference”, treating him and the Analogue Group as valued customers of HSBC;[47] that H “does have a very powerful position within the Trust by having retained the power to remove the trustee”;[48] and that Mr Lynn[49] had been able “to point to various aspects of the relationship of the trustee with the husband which may be said to demonstrate his strong influence over the affairs of the trust and of the way that the trustee has in the past done what he has asked of it”, his Lordship continued:

“... what Mr Lynn has signally failed to achieve is to show that the trustee has acted in breach of trust in the way that it has treated the rights of the other beneficiaries compared to its treatment of the husband.”[50]

40.The Judge appears erroneously to have thought that Mr Lynn’s submissions, advocating application of the Charman test, amounted to an argument that the trust was a sham – which had been disavowed on W’s behalf.  Thus, his Lordship observed:

“Mr Lynn really has had a very difficult row to hoe. He has disavowed the notion of a sham trust and yet he has had to make submissions which plainly have their place in support of an argument that the Trust is indeed a sham.”[51]

41.The learned Judge evidently misunderstood the Charman test, leading him to conclude that “it would be wrong to hold that this shareholding (the trust assets) can be viewed by me as a resource of the husband” and to distinguish Charman (as I have previously indicated) on the basis of that the quality of H’s conduct differed from that of Mr Charman.[52]

42.His Lordship’s subsequent reasoning is not easy to follow.  Notwithstanding his rejection of the Charman test and his decision that the trust assets were not a resource, he nevertheless took two-thirds of the value of the shares held on trust as representing the major part of the matrimonial assets of H and W.  That decision appears to be explained by his Lordship’s statement that while it was incorrect to regard the “three discretionary beneficiaries” – that is, H, W and Karen – as each having a fixed one-third share, it was nevertheless his view that:

“... the trustee in exercising its duty of safeguarding the interests of all the beneficiaries fairly as between themselves would not ... countenance any disposition which results in Karen’s interest being diluted to below something in the order of 1/3.”[53]

43.It therefore appears that the Judge again fell into error in treating Karen as “a beneficiary” with an “interest” to be protected as against the other beneficiaries.  In the joint judgment of Gummow and Hayne JJ in Kennon v Spry,[54] the description of the position of the wife in that case is apposite for describing Karen’s position in the context of the present trust:

“The wife was an eligible object of benefaction of the Trust. She was one of the class of ‘beneficiaries’ identified in [the Instrument]. The use in that document of the term ‘beneficiaries’ was inapt insofar as it suggested the existence of any vested beneficial interest in the assets held on the trust of [the Instrument]. Dr Hardingham correctly identified the wife as one of the class of objects of the discretionary power conferred upon the trustee ... Furthermore, as an object of these powers the wife had a right in equity to due administration of the Trust. The existence of such a right did not depend upon entitlement to any fixed and transmissible beneficial interest in the trust fund. The right of the wife was accompanied at least by a fiduciary duty on the part of the trustee, the husband, to consider whether and in what way he should exercise the power conferred ...”

44.Karen, like the wife there mentioned, did not have any fixed beneficial interest in the trust fund, but was merely owed limited fiduciary duties of the kind described.  Moreover, as we shall see,[55] the trust deed expressly authorizes the trustee in its absolute discretion to appoint capital and income to any one member of the class of eligible objects to the exclusion of the others.  It was therefore erroneous to think that the trustee had a duty to safeguard the “interests” of “all the beneficiaries fairly as between themselves” so that the trustee “would not countenance” a disposition diluting Karen’s “interest” to the stated extent.  It was evidently on that incorrect basis that the Judge ascribed only two-thirds of the value of the trust shares to the matrimonial estate.

45.Even though the Court of Appeal acknowledged the applicability of Charman v Charman,[56]Cheung JA, writing for the Court, appears to have accepted the Judge’s erroneous approach:

“In my view the Judge was correct when he only took into account a two-third interest in the Family Trust as the resource that would likely be available to the husband for the purpose of assessing the matrimonial assets. In so doing the Judge had expressly recognized that the husband’s view that the three of them each has a one-third share is not a correct appreciation of the position. However, the Judge considered (and I agree) that the Trustee in exercising its duty of safeguarding the interest of all the beneficiaries would not countenance any disposition which results in K’s interest being diluted below one-third.”[57]

His Lordship added:

“This is not a case where the husband said that the whole of the Family Trust should not be taken into account. On the contrary he accepted that it should be taken into account but only in a way that will not adversely affect K’s interest.”[58]

46.The Court of Appeal identified as a further ground for supporting the Judge’s conclusion “the stand taken by the Trustee and also by the Jersey law experts”[59] and proceeded on the basis “that the matrimonial assets include two-thirds and not the whole of the value of the Family Trust”.[60]

47.With respect, I can see nothing in the Jersey law opinions to suggest that the trustee is bound to protect a one-third “interest” in the trust attributable to Karen.  I turn then to deal with “the stand taken by the trustee”.

C.4  Submissions of counsel

48.The trustee has instructed solicitors and counsel to appear throughout these proceedings.[61] However, no evidence was tendered on the trustee’s behalf.  Instead, at the hearing before DHCJ Carlson, two notes[62] containing opening and closing submissions of counsel setting out the trustee’s position were provided to the Court.  Two paragraphs, repeated in each of the two notes, were relied on in particular, as is re-iterated in the trustee’s printed case[63] lodged in this appeal.  They were also given prominence on H’s behalf.

49.The first paragraph addresses W’s alternative claim for the trust to be varied pursuant to MPPO section 6(1)(c),[64] which I have not so far mentioned, but which relevantly indicates the view taken by the trustee of Karen’s “interest”.  The submission states:

“Although the Court does have the power to vary the Trust under s 6 MPPO, in so far as the 1st Respondent [W] seeks to have 50% of the shares held under the Trust transferred to her, the Trustee has obvious concerns that this will not be in the interests of the beneficial class as a whole, particularly Karen as an innocent third party, and also the Polytechnic and other potential beneficiaries. This should also be something that the Court is concerned about and gives careful consideration to before exercising its discretion to vary. See C v C (Ancillary Relief : Nuptial Settlement) [2004] EWHC 742.”[65]

50.This paragraph obviously does not purport to address the Charman test but merely expresses reservations against any variation order that the Court might make to vest half of the trust fund in W. It also introduces the curious description of Karen as “an innocent third party”.  She is, of course, properly seen as a member of the class of eligible objects of the trustee’s discretionary powers of appointment with no vested beneficial interest in the trust fund, as described above. 

51.The second paragraph, heavily relied on by Ms Anita Yip SC[66] on H’s behalf, states as follows:

“Should the Court consider that this is an appropriate case where ‘judicious encouragement’ should be applied the Trustee’s position on this is a neutral one (the Court has seen that there have been various distributions of dividends to the Petitioner in the past) but only to the point as set out above where innocent third party beneficiaries will be adversely affected. Accordingly if an Order applying judicious encouragement is made as part of the final AR [ancillary relief] Order made for the 1st Respondent [W], the position of the Trustee is that no more than 1/3 of the value of the Trust should be realized to meet such an order. This will ensure that the interests of all beneficiaries are preserved.”[67]

52.Four points may be made regarding that paragraph. The first is that the trustee has not answered the Charman question.  It has not addressed the likelihood of its acceding to a hypothetical request by H to advance to him the whole or part of the capital or income of the trust.  Instead, the trustee has taken it upon itself to engage in advocacy as to the kind of order that the Court should avoid making. 

53.Secondly, Karen is once again apparently assumed to have some sort of accrued one-third interest on the basis that she is an “innocent third party beneficiary” whose interest must be preserved, a proposition which is unwarranted. 

54.Thirdly, the paragraph focuses on the award which the Court might make on the basis of “judicious encouragement”.  But the question we are concerned with does not relate to the Court’s award.  It involves ascertaining the extent of the parties’ matrimonial assets as the first step in determining ancillary relief.  The Court is asking whether the trust fund should be regarded for the purposes of section 7(1)(a) as a “financial resource” of H.  If the Court answers “Yes”, it does not thereby decide to award the whole of the fund to W.  It proceeds next to consider the subsequent steps in the ancillary relief exercise, including the question whether and to what extent it should depart from the equal sharing principle. 

55.That leads to the fourth point.  A decision by the Court that the trust fund is a resource available to H does not disable the trustee from appointing one-third of that fund in favour of Karen.  Even if there was to be no departure from the sharing principle, satisfying the award in W’s favour out of the trust assets would still leave half of the fund intact, enabling the trustee if so advised to make a one-third appointment in Karen’s favour out of that balance.

56.The decision to recognize only two-thirds of the trust fund as H’s financial resource therefore does not, in my view, find any support in “the stand taken by the trustee” which, with respect, is legally flawed and not to the point.

57.The foregoing reasons also undermine the central argument advanced on this issue on H’s behalf.  His written case recalls that:

“Husband asserted that given the presence of the Trustee, there was no need for the court to debate hypothetically what was the ‘likelihood’ of the Trustee advancing all trust assets to the Husband, granted that Wife accepted the Trustee was acting properly. In this case, the Trustee could and did unequivocally articulate the way they would exercise the discretion on the question of extent of availability.”[68]

58.It goes on to state:

“With the participation of the Trustee in the present case, given Wife’s concession that this was not a sham trust and the Trustee was acting properly in discharging its duty, the ‘likelihood test’ is simply not engaged. The Trustee has answered the question: if requested, would the trustee advance the whole of the trust assets to H? The answer was ‘no’, they were not going to countenance an advancement which would result in a termination of Karen’s interests. As submitted, this was well within the terms of the trust and within the trustee’s powers.”[69]

59.Those propositions are incorrect.  The trustee did not in fact address the Charman test and the premises underlying those propositions are legally and logically flawed. 

C.5  The proper application of the Charman test

60.As the Charman test has not been properly applied, it falls to this Court to decide whether it should be satisfied that if H were to request the trustee to advance the whole or part of the capital or income of the trust to him, the trustee, acting in accordance with its duties, would on the balance of probabilities be likely to accede to that request.  In making its assessment the Court is able to consider the creation and terms of the trust; H’s letters of wishes; the nature of the trust assets; and previous distributions made by the trustee.  As was held in KEWS v NCHC,[70] the Court looks at the reality of the situation and regards past conduct as a useful guide.

C.5a  The creation and terms of the trust

61.As pointed out above, when H created the trust as settlor, he caused himself to be named as protector and also as a potential beneficiary. 

62.The deed authorizes the trustee to act through managers and agents[71] and in practice, the trust is operated on the Jersey trustee’s behalf by HSBC entities in Hong Kong.[72] The trustee is given power in its absolute discretion from time to time to appoint capital and to distribute income to any eligible object of its discretion to the exclusion of the others.[73]  It also has power in its absolute discretion to appoint additional persons to become beneficiaries.[74]

63.As settlor and protector, H’s wishes, conveyed from time to time in letters of wishes, are taken into account by the trustee in considering the exercise of its discretion.  As protector, H has the power to remove the trustee and appoint a new trustee.[75]  Furthermore, certain powers conferred on the trustee are only exercisable with H’s consent as protector.  These include the power to remove potential beneficiaries[76] and the power to alter, revoke or add to any provisions of the deed.[77]

64.While the settlement constitutes the trustee the 84.63% majority shareholder of Analogue, the deed authorizes the trustee to leave the administration, management and conduct of Analogue’s business to its directors and managers, relieving the trustee of any responsibility in that connection.[78]

65.Relevant to the Charman test, the following features may therefore be noted: (i) In making himself protector, H has reserved to himself important powers, including the power to remove the trustee, obviously intending his views as to the administration of the trust to be given great weight.  (ii) In making himself a potential beneficiary, he intended to benefit from the trustee’s distributions of capital and income.  (iii) He intended the trustees to have only the passive role of a shareholder, leaving it to him to run the Analogue Group.  (iv) Karen is one of the discretionary objects and has no vested beneficial interest in the trust assets.  (v)  There is no impediment to the trustee appointing the whole or part of the capital or income to a single beneficiary to the exclusion of all the others.

C.5b  H’s power to replace the trustee

66.One controversy developed in argument concerns the significance of H’s power as protector to replace the trustee.  In answer to W’s argument that such power indicates a high degree of control over the trustee, H replied that the power is “toothless” because (as W’s own Jersey law expert states) “the office of protector [is] fiduciary” and not personal to the protector.[79]

67.It is incorrect to state categorically that a protector must be a fiduciary or that a power to replace a trustee is necessarily fiduciary.  The position is explained in an article by Matthew Conaglen and Elizabeth Weaver entitled “Protectors as fiduciaries: theory and practice”.[80] As the learned authors point out, the term “protector” is not a term of art and generally “signifies little more than that a person who is not the (or a) trustee has been granted a power affecting the operation of the trust”.[81]  One cannot assume that such a power is held in a fiduciary capacity requiring it to be exercised only in the interests of others to the exclusion of the donee of the power.  Whether a power to replace a trustee is fiduciary depends on the construction of the trust instrument.[82]

68.In the present case, H’s power as protector to replace the trustee[83] is not subject to any express limitations.  Even if the deed were construed to require that power to be exercised in the interests of the potential beneficiaries, that class includes H himself.  That makes it highly debatable whether its exercise is subject to fiduciary duties and, if so, what such duties are.  As the learned authors of the article point out:

“Where the purpose and intention of the settlor was that the protector was also to be able to benefit under the trusts, the courts will usually respect that intention and not find fiduciary obligations which would disable the protector from acting in his own interest, although they might still hold that the protector owes limited or qualified fiduciary duties to consider the exercise of his powers on a regular basis. On the other hand, the cases show that powers which impinge upon the trustees’ position as ‘ultimate guardians of the trust’ are likely to be treated as fiduciary, to some degree at least, so that the court can retain a supervisory jurisdiction.”[84]

69.The question whether the power of replacement is fiduciary does not directly arise in the present case.  It is only likely to become relevant in a practical sense if a conflict or lack of harmony were to develop between H and the trustee, such discord often being a legitimate ground for replacing a trustee.[85] Everything indicates that there is and has always been the fullest cooperation between the trustee and H so that the power is of no immediate significance.  Nonetheless, it is relevant to note for the purposes of the Charman test that H (as the trustee undoubtedly is aware) has the ultimate power to replace the trustee which, in the event of a serious disagreement as to the operation of the trust, might well be lawfully exercisable.

C.5c  H’s letters of wishes

70.As was pointed out in the Esteem Settlement case, it is usual for the settlor of a discretionary trust to provide letters of wishes in relation to the administration of the trust, changing his wishes from time to time.  Trustees are entitled to take account of such wishes while not being bound by them.  In the present case, prior to the hearings below, H had issued five letters of wishes, each superseding the previous.[86]  They all followed the same pattern. 

71.Thus, the letter of wishes dated 14 May 2010 has the following aspects.  Having identified the Analogue shares as constituting the trust fund, it goes on express H’s desire:

(a) that “following [his] death, Mr Fong Chun Yau shall be appointed as the Managing Director of [Analogue] and the Analogue Group ... for a period of two years after which the position of Managing Director shall be decided by the shareholders at their discretion;”

(b) that after his death, Karen should be appointed protector;

(c) that the trustee should continue to hold its present interests in Analogue and that “following [his] death the balance of the Trust Fund ... be divided into three equal parts or shares” one for the benefit of “my soon-to-be former wife, Kay”, one for Karen and one for three named colleagues in the Analogue Group, with The Hong Kong Polytechnic University as the residuary beneficiary if Kay and Karen should predecease H without issue from Karen.

72.H added a general direction that:

“In considering whether and how to exercise your powers and discretions, it is my wish that you should consult with me during my lifetime and thereafter with my daughter, Karen. I would also like you to consider any suggestions put to you by me or, after my death, by Karen and, if you consider them wise, to act upon such suggestions.”

73.It is clear that the trustee has accorded H’s desires great weight.  When in a letter of wishes signed on 22 January 1996, H indicated a wish that The Hong Kong Polytechnic University should be a potential beneficiary, the trustee executed a deed four days later appointing the University to the class of eligible objects.  Then, after H moved out of Twin Bay Villas and W issued her divorce petition on 6 November 2008, the trustee, at H’s request, transferred all its shares in Realty Limited (which owned Twin Bay Villas) to W by an instrument dated 23 December 2008.  And when applying for directions from the Jersey Court[87] regarding its participation in these proceedings, the trustee referred to the letter of wishes of 14 May 2010.

74.The letters of wishes confirm that the trust is principally intended to function as a substitute for H’s will in relation to the Analogue shares.  They focus on what is to happen following his death. Just as a testator is free to change his will, it was evidently understood that any changes desired by H would be treated with respect by the trustee.

75.What also emerges from the letters is that it is plainly not H’s intention that the trust assets should be divided up or that he should relinquish his position of influence during his lifetime.  He only contemplates such matters occurring after his death.  He makes it clear that he should be consulted by the trustee and that it should consider any suggestions which he might put to it during his lifetime.  Karen is only to be consulted and her suggestions given weight after his death.  There is no suggestion that Karen or anyone else should acquire any vested beneficial interest in the trust assets during H’s lifetime.[88]

76.In the context of Charman v Charman, the terms of the trust and the letters of wishes indicate that H has always intended to occupy and in fact occupies a dominant position in relation to the administration of the trust.  The trustee is plainly likely to treat any request he might make for a distribution with great deference.

C.5d  The nature of the trust assets and distributions made by the trustee

77.It is important to note that the sole asset of the trust is the 84.63% parcel of shares in Analogue.[89]  The underlying group of companies was described by the expert valuer as consisting of “13 electrical and mechanical engineering companies employing around 1,500 staff and achieving a turnover in excess of HKD2.5 billion a year”.[90]

78.It is not surprising that the trustee is assigned an entirely passive role as shareholder and plays no part in the management of such a group.  It is even relieved of any obligation to exercise the voting powers or rights conferred by its shareholding.[91]  A trustee in such a situation is obviously in no position to second guess any requests made by H as to how those shares should be voted or his wishes touching on the operations or resources of the Group.  The trustee would be entitled to assume that acceding to such wishes would generally be in the best interests of the underlying companies and thus of the potential beneficiaries.  H is thus not only the Group’s managing director, but also acts effectively as its controlling shareholder.  Indeed, the letters of wishes show that he seeks to influence the management of the Group even after his death by stipulating who should then be appointed managing director.

79.This is not a trust in which the trustee manages and invests the trust fund to produce income.  The only income of the trust consists of dividends declared by Analogue and the decision whether, when and how much to declare by way of dividend is taken by the Analogue board controlled by H.  Unless a dividend is declared, the trust has no income.  And when a dividend has been declared, the trustee has, quite understandably, invariably complied with H’s wishes as to how the money which he has sent its way should be applied – namely, distributed to H himself. 

80.The following distributions, all made to H personally following declarations of dividends, occurred prior to the ancillary relief proceedings:

29 March 2001	$8,463,333
14 March 2002	$846,333
16 July 2008	$8,463,333
30 July 2009	$25,390,000
21 February 2011	$25,390,000
Total	$68,552,999

81.The modus operandi is revealing.  On 26 March 2001 for example, H wrote to the trustee as Analogue’s managing director announcing that a dividend of $833.3333 per share had been declared and sent it a cheque for $8,463,333 being its entitlement as holder of 10,156 shares.  On the same day, the trustee wrote to H stating: “... we intend to exercise our trustee power to make a distribution from the trust fund to you as beneficiary thereof” and on 29 March 2001, the distribution of $8,463,333 was credited to H’s account.  On 9 April 2001, H paid the trustee $5,000 as its fee for “arranging the distribution”.

82.The procedure was later streamlined.  By letter dated 10 July 2008, Analogue again informed the trustee that a dividend of $833.3333 per share had been declared, entitling the trustee to payment of $8,463,333 as shareholder.  The letter went on to state:

“As Mr Otto Poon wishes to have the said dividend to be received by HSBC International Trustee Ltd distributed to him, we would therefore appreciate if you could kindly send us your letter of instructions to pay the said dividend directly into Mr Poon’s bank account.”

83.The trustee obliged.  By letter dated 16 July 2008 it instructed Analogue to pay the dividend into H’s account.  H therefore caused the dividend to be declared and notionally distributed to him by the trust without the money ever passing through the hands of the trustee. 

C.5e  Satisfying the awards of the courts below

84.A crucial indication relevant to the Charman test is the glaringly important fact that H has indeed been able to draw on the trust as his resource for the purpose of satisfying the awards made in favour of W.

85.On 10 February 2012, DHCJ Carlson awarded $370 million to W and ordered H to pay a first instalment of $250 million.  This led H to cause Analogue to declare a dividend on 12 April 2012 of which $262 million was received by the trust and, according to the trustee,[92] “advanced as a loan” to H to enable him to satisfy the Court’s order which he did on 30 May 2012.

86.On 25 March 2013, as we have seen, the Court of Appeal increased the award in W’s favour and ordered H to pay a lump sum of $510 million by an initial instalment of $250 million followed by two equal instalments of $130 million on or before 1 March 2014 and 2015 respectively. The Court was informed that the first two instalments have duly been paid.

87.The trustee also recently disclosed that a fresh letter of wishes dated 12 November 2013 had been received from H.  It follows the pattern of identifying H’s choice of managing director and protector following his own death and stating his wishes as to how the balance of the fund should then be divided.  H goes on to request the trustee to advance to him from the trust assets the sums needed to satisfy the Courts’ awards in the following terms:

“My former wife Kay should receive in aggregate an amount equal to the amount awarded by the Hong Kong Court under [DHCJ Carlson’s judgment] (“the Judgment”) as varied and finally determined on appeal by the Court of Appeal or the Court of Final Appeal (as the case may be) less any amounts already advanced or paid to her under or in respect of these proceedings. For the purpose of calculating amounts paid to Kay under the Judgment, amounts advanced to myself by way of distribution or loan and paid by me to Kay shall be deemed as amounts paid by the Trustee to Kay. On payment of the amount awarded to Kay under the Judgment (as varied and finally determined on appeal as aforesaid) it is my request that Kay should be excluded from further benefit under the Trust.”

88.Given that the payments already made by H were funded by the trustee’s distributions, there is every reason to believe that the trustee will comply with H’s request to meet the Court’s award as determined on final appeal out of the trust assets (no doubt in turn funded by dividends which H will cause Analogue to declare).  There could, in my view, be no clearer evidence of the overwhelming likelihood that the trustee, acting in accordance with its duties, would if requested by H, advance the whole or part of the capital or income of the trust to him. 

C.6  Conclusion as to the discretionary trust

89.It follows that the entire trust fund valued at $1,560,686,000 should be regarded as a financial resource available to H for the purposes of section 7(1)(a).  The Judge and the Court of Appeal were wrong to confine the parties’ matrimonial assets represented by the trust shares to two-thirds of their assessed value.

90.The combined matrimonial assets of the parties to be taken into account in assessing ancillary relief therefore consist of (i) the aforesaid sum of $1,560,686,000, plus (ii) H’s assets of $46,052,707, plus (iii) W’s assets of $58,259,660, plus (iv) $15 million representing the value of the flat in Westland Gardens.  Those figures total $1,679,998,367. Applying the “yardstick of equality”, 50% of that sum comes to $839,999,183.50, which may be rounded up to $840 million as the starting-point.  If the equal sharing principle were to be applied without modification W would be entitled to payment of that sum less the value of the matrimonial assets already in her possession (her own assets and the Westland Gardens flat totalling $73,259,660).  That would leave her an entitlement to $766,740,340 of which H has already paid $380 million in partial satisfaction of the awards below.  If these tentative calculations are correct, that would mean that a balance of $386,740,340, in round figures $386,700,000, remains to be paid unless the sharing principle is departed from resulting in a lower award.

91.Mr Lynn devoted considerable efforts on the alternative argument that the Court should exercise its powers under MPPO section 6(1)(c) to vary the trust, settling half of its assets on W in case the Court decided that the trust fund is not a financial resource available to H. In the light of the conclusion I have reached, that question does not arise. 

D. Should there be a departure from the principle of equality?

92.I turn then to consider the second main question in this appeal: Should there be a departure from the equality principle on the basis that the parties’ separation ought to deprive W of an equal share in the increased Group profits which accrued after February 2001?

93.Although he was later persuaded to depart from equality, DHCJ Carlson began his judgment by describing this marriage as a paradigm case for adopting the sharing principle:

“On any view, the ‘yardstick of equality’ as a starting point, which Hong Kong matrimonial courts are now required to give the most serious consideration in applications such as this, must have particular resonance in this case where the wife, after a very long marriage in which she has fully played her part as wife, mother and supporter of the husband in his business successes, comes to court as worthy of the highest consideration. Prima facie, if ever the yardstick of equality is to be wielded it must be in a case such [as] this.”[93]

94.His Lordship was plainly right to take that view, at least for the greatest span of the marriage.  W’s contribution to the family, bringing up the children, settling in Canada to acquire Canadian citizenship, making economies and taking up arduous nursing jobs (sometimes working double shifts) while offering support to H through good and bad times over decades, presents a classic example of a marital partnership that justifies equal sharing of the matrimonial assets upon the marriage coming to an end.

95.H recognizes this, at least to some extent.  In his first affirmation,[94] he states:

“It was undoubted that during the first 10 years of the marriage both parties contributed equally and unstintingly towards the marriage and the family. Kay worked, looked after the children and achieved savings. I worked hard on building up the business and the first two years were really scary. There was nothing happening and no business coming in for the first two years. Then everything started coming together, the business took off and we began to enjoy some stability. .... We were even able to send Karen and Richard to boarding schools in England.”

96.The reference to “the first 10 years” must surely be an understatement.  As we have seen, the business only really began to take off in the 1990s, so that H appears to be referring to a period which runs into the third decade of the marriage.  Later in the same affirmation,[95] he states more broadly: “... I fully recognise Kay’s full contribution to the marriage and her entitlement to a fair share of all my assets including the companies” in the context of a request that the Court should not make an award which involves transferring Analogue shares to W.

97.This is therefore a case where the equality principle should be adopted not merely notionally, but as a starting-point which reflects a fair basis for sharing the matrimonial assets upon dissolution of a 40 year marriage.  As was stressed in LKW v DD,[96] the “yardstick of equality” is applied “with a view to eliminating insidious discrimination and promoting fairness” and “should be departed from only for good, articulated reasons”.

D.1  The Judge’s reasons for departing from equality

98.The course of the divorce proceedings has been described in Section B above.  It will be recalled that they were undefended and that the decree was granted on the basis of H’s petition grounded on two years’ separation.  It will also be recalled that both parties affirmed that separation took place in February 2001.  In considering whether there should be a departure from the equality principle, the Judge held that W was estopped from denying that separation had occurred in 2001.  He held that W could not be heard to say that they had only been separated since 2008 because that was less than two years immediately preceding presentation of the petition.[97]

99.On that basis, his Lordship concluded that there ought to be a departure from equality for two main reasons.  First, he held that since the parties had lived separate lives as from February 2001, “some adjustment should be made in the husband’s favour” so that W was not to share equally in the substantial profits of the Analogue Group which had accrued after that date.[98] His Lordship did not quantify that adjustment since he regarded his second reason for departing from the sharing principle, namely, “the issue of the company’s liquidity” as “a very much stronger factor in potentially driving the court away from equality”; so much so that “any reduction due to post-separation accruals is likely to be theoretical rather than real and which will be subsumed by the issue of the company’s liquidity”.[99]

100.I shall deal with the estoppel question later.[100] However, the main reason for departure articulated by the Judge – fears for the Group’s liquidity – was rejected as unfounded by the Court of Appeal.[101]  Cheung JA points out that the expert valuer testified that as at 30 December 2010, the company had $446 million which was not needed for the ongoing operations of the business and that, according to the Group’s financial statements for the following year, bank balances and cash increased by some $227 million to $749,593,757.  The liquidity argument is in my view unsound and is in any event no longer supported by H in this Court.  The principal reason articulated by the Judge for departing from equality was therefore unsound.

D.2  The evidence as to separation

101.Although DHCJ Carlson ultimately excluded such evidence on the basis of estoppel, there was a considerable body of evidence before the Court regarding the parties’ relationship between 2001 and 2008.  As noted above, the tragic deaths of Heather and Richard had had a devastating effect on the parties’ relationship, leaving them emotionally numb and mutually unable to communicate.  As the Judge put it, there was no more warmth or connection between the parties.

102.However, after leaving the Fulham Gardens flat following Richard’s death, they did not go their separate ways but moved together to the Twin Bay Villas house in February 2001.  As to their relationship in the period which followed, his Lordship found as follows:

“What is agreed is that they had separate bedrooms. ... The wife says that whilst this may well have by then become an unhappy and unfulfilling marriage, it remained a marriage. She would polish his shoes, see to it that his laundry was done and if she did not always prepare his meals herself, they had a maid, she saw to it that his meals were prepared and kept warm for him if he returned home late. They would sometimes have meals at home together and she continued to be a ‘corporate wife’, attending functions and entertaining, as his wife, clients from overseas as well as Hong Kong government officials and mainland officials. They travelled together to the mainland on company business where she was seen to be his wife. They even went on a cruise together to Greece and shared the same cabin. For the first time in court she said that on one occasion they even had sexual intercourse which he has denied.[102] On one or perhaps two occasions she performed the ‘wifely’ task of driving him to the airport when he had to travel on business. Usually he employed a driver to do this sort of thing, who I presume on this occasion, was not available.

They even entertained together at home. He would have barbecues for friends and for young engineers who the husband wished to encourage in their careers.

This ‘modus vivendi’ continued until the husband finally left the home and went to live elsewhere in 2008.”[103]

103.Ms Anita Yip SC acknowledged that W’s evidence to the aforesaid effect was uncontradicted.  Indeed, although H suggested that theirs was “a mere shell of a marriage”, he added that it had been “preserved for convenience, appearances, for friends and relatives and for the odd family [or] business occasion”.[104] He elaborated on this in cross-examination, stating:

“... I think we all have face, we, you know, Chinese people are so face conscious, I think a divorced person would be looked upon by his friends, his business associates and the community as an outclassed [sic] person. And as a businessman running a business with a number of quite important public service on my shoulder, I do not wish to be seen by the community or by my business friends whatever to be divorced or to be separated physically because when I move out, everybody knows. ... I could have left but I did not, I decided not to leave because of those reasons I’ve just mentioned.”

104.The Judge evidently recognized that all this militated against there having been a separation in 2001 but apparently felt unable to act on such evidence because of the conclusion he had reached on estoppel.  His Lordship observed:

“If I were to accept the wife’s evidence on the way that they ordered their lives until he finally departed in 2008, it could not be said, on any view of the matter, that these parties were living separate lives. This would need to be viewed as a single household within an unhappy marriage that was, no doubt, in terminal decline.

The conclusion that I would need to come to is that after so many years together, the parties continued to live within the same single household almost as a matter of habit. Whilst there was no tenderness, or feeling they still presented the outward appearance of a married couple appearing together at functions, travelling together on business, once going on a cruise and entertaining at home together. This apart from the performance of wifely services like seeing to laundry, polishing shoes and on occasions having meals together and sometimes watching television programmes together.

The husband has even signed a statement at the wife’s insistence affirming their marriage.”[105]

105.The signed statement referred to was made in circumstances explained in W’s 3^rd affirmation.[106]  She recounted how on 4 May 2008, she discovered H’s personal effects in a flat occupied by Queenie Law.  H had previously admitted to having had an extra-marital relationship in 1988 with Ms Law, an employee at Analogue, but he had assured W that the affair had been terminated.  It therefore appeared to W that H had maintained a clandestine relationship with Ms Law for some twenty years.  She states:

“I was very unhappy and cried, and he asked me what happened. I told him I knew he had a woman. I said I want to have a complete family. He said he had done so. I said he always did not keep promise. Then I asked him to write a note to me.”[107]

106.The note, dated 10 May 2008 and signed by H, is exhibited. In translation, it states: “My wife Kan Lai Kwan, I want a complete family forever harmonious and happy”. 

107.A week later, H and W went on a trip to France together.  It was intended to be a two-week trip but, when H said he would return to Hong Kong first, W insisted on returning with him since she was worried about Queenie Law.[108] After returning, W had an emotional confrontation with Ms Law.  H moved out on 3 July 2008 but they later travelled to Singapore together only to have another row there.[109]  W states that a final attempt was made at reconciliation when in October 2008, H asked her to book a cruise holiday but, when that did not materialise, W lodged her divorce petition on 6 November 2008.

108.The learned Judge stated his factual conclusions as follows:

“Taking all of the evidence as a whole I come to the following conclusions: Firstly, any tenderness or intimacy had ended by 2001. I reject the wife’s evidence that the parties had engaged in sexual intercourse as recently 2008 as she has suggested in her oral evidence. She had in fact said in cross-examination that the last time they had sex was in 2001, contradicting her evidence in chief. Secondly, they occupied separate bedrooms. Thirdly, communication was very limited. Fourthly, they had occasional meals together at home. These features lead me to the overall conclusion that none of the indicia of a matrimonial relationship were present. This was a bare shell and nothing more. Accordingly, I find as a fact that they were separated, as the husband alleges, from February 2001.”[110]

109.With great respect, those conclusions are unconvincing.  The four matters mentioned – lack of sexual intimacy, separate bedrooms, very limited communication and occasional meals together – appear insignificant when contrasted with the many facets of their ongoing relationship.  

110.As the Judge recognized, the evidence tended to show that while the marriage was unhappy, with “no tenderness or feeling”, the parties continued their habitual relationship founded on their very long marriage, with W continuing to do domestic chores for H; entertaining at home and accompanying H to business events to keep up appearances as a “corporate wife” to save H’s face in front of his associates and friends; going on trips together; and having a row on W discovering H’s continued relationship with his mistress – W reacting very much as a jealous wife and H acting like a husband seeking to placate her with a note which acknowledges her as his wife and records a desire for a harmonious and complete family life in May 2008.  In my view, the evidence unmistakeably points to the marriage (unhappy though it was) having continued until the parties finally separated when H moved out of the house in mid-2008.

D.3  The Court of Appeal’s decision

111.The Court of Appeal was also of the view that the evidence had “simply not shown that there is the necessary degree of separateness”.[111] Cheung JA pointed to the matters to which attention has been drawn above and concluded that the parties did not separate in 2001.[112]  But because of the doctrine of estoppel, the Court of Appeal felt unable to find that separation had only occurred in 2008 even though that was very much what the evidence indicated.  Cheung JA held that:

“... the wife certainly cannot rely on separation that only began in 2008 because it will destroy the very foundation of the decree, namely, there was a two-year separation.”[113]

112.His Lordship’s solution was to hold that the separation had occurred in 2007.  He reasoned that while W was estopped from asserting a 2008 separation, she was not precluded from denying that the separation occurred in February 2001 and could validly assert that separation had occurred in February 2007.[114] Understandably, objection was taken on H’s behalf since there was no factual foundation for such a finding.  Cheung JA’s response was as follows:

“Certainly there is no reference in the evidence to this period of time but in my view the reliance on this time is really a practical solution in order to reconcile the requirement of honouring the integrity of the decree and at the same time allowing the wife to challenge in the ancillary relief proceedings that the separation already began in 2001.”[115]

113.Having found that the separation occurred only in 2007, the Court of Appeal held that there should be no departure from the equality principle on the basis of post-separation accruals to the value of the trust estate.  The period between 2001 and 2007 was irrelevant and post-2007 accruals were seen to be “based on the business foundation that the company has built up from its earlier years” to which W had equally contributed over the life of the lengthy marriage.[116]

114.With respect, I am unable to accept the adoption of a February 2007 separation date as a “practical solution”.  Whether parties have separated is a question of fact and the evidence simply does not support a finding that separation occurred in February 2007.  The real question is whether the Judge and the Court of Appeal were right to hold that they were estopped from finding that separation in fact occurred in mid-2008.

D.4  Estoppel

D.4a  The authorities

115.In approaching the question of estoppel in a case like the present, it is essential to recognize that the Court is exercising a statutory jurisdiction under MPPO section 7(1)(a) which states: “It shall be the duty of the court ...  to have regard to the conduct of the parties and all the circumstances of the case ...”  Estoppel is a doctrine which regulates the relations between parties.  It precludes one party from unconscionably contradicting certain facts or certain proprietary expectations bearing upon the position assumed by another party.   But the Court remains subject to its statutory duty to have regard to all the circumstances of the case, regardless of the position assumed as between the parties.

116.This was acknowledged by the English Court of Appeal in Thompson v Thompson,[117] a divorce case which came before the court after fully contested maintenance proceedings involving cross-charges of cruelty, in which the husband’s version alleging the wife’s cruelty was accepted.  When the husband petitioned for divorce, the wife sought to rely on the same allegations of cruelty that she had unsuccessfully made against him in the maintenance proceedings. The husband argued that she was estopped from doing so.  However, the divorce proceedings were subject to section 4 of the Matrimonial Causes Act 1950 which provided that: “On a petition for divorce it shall be the duty of the court to inquire, so far as it reasonably can, into the facts alleged”.   Denning LJ dealt with the estoppel argument, stating:

“There is no doubt, to my mind, that if the doctrine of res judicata applies in its full force to the Divorce Division of the High Court, the wife is so estopped. ... The question in this case is, however, whether those ordinary principles do apply to the Divorce Division. The answer is, I think, that they do apply, but subject to the important qualification that it is the statutory duty of the divorce court to inquire into the truth of a petition - and of any countercharge - which is properly before it, and no doctrine of estoppel by res judicata can abrogate that duty of the court. The situation has been neatly summarized by saying that in the divorce court ‘estoppels bind the parties but do not bind the court’: but this is perhaps a little too abbreviated. The full proposition is that, once an issue of a matrimonial offence has been litigated between the parties and decided by a competent court, neither party can claim as of right to reopen the issue and litigate it all over again if the other party objects ...: but the divorce court has the right, and indeed the duty in a proper case, to reopen the issue, or to allow either party to reopen it, despite the objection of the other party... If the court does decide to reopen the matter, then there is no longer any estoppel on either party. Each can go into the matter afresh.”[118]

117.Unfortunately, in Hull v Hull,[119] the import of Thompson v Thompson was, in my view, unjustifiably narrowed.  Mr Hull was seeking custody of the children after his wife had been granted a decree nisi of divorce in an undefended suit on the ground of his desertion.  In the custody proceedings, he sought to allege that it was in fact his wife who had deserted him and also that she had committed undisclosed adultery.  Sachs J held that the husband was estopped from making those allegations, distinguishing Thompson v Thompson on the ground that a different statutory provision was involved.  That was surprising since the relevant words of section 1 of the Guardianship of Infants Act, 1925 provided as follows:

“Where in any proceeding before any court ... the custody ... of an infant, ... is in question, the court, in deciding that question, shall regard the welfare of the infant as the first and paramount consideration, and shall not take into consideration whether from any other point of view the claim of the father, ... in respect of such custody, ... is superior to that of the mother, or the claim of the mother is superior to that of the father.”[120]

118.Sachs J construed those words as dealing “simply with the weight to be attached to facts once they are proved”.[121] But, with respect, I do not think that in a custody case where the court is under a duty to “regard the welfare of the infant as the first and paramount consideration”, the court should exclude itself from considering evidence which might have a material bearing on the child’s welfare on the ground of an estoppel, especially where the estoppel is based on earlier undefended proceedings where the conduct of the parents had not been investigated.

119.It is noteworthy that nine years later in Porter v Porter,[122] a case about how discretion in awarding maintenance should be approached, Sachs LJ recognized that the courts’ attitude had changed:

“The practice as to discretion has thus naturally varied on this matter as on many others — such as the discretion exercised when granting a decree, where the ambit of the discretion has fundamentally altered in the past 25 years. In the exercise of any such discretion the law is a living thing moving with the times and not a creature of dead or moribund ways of thought.”[123]

120.In marked contrast with the Hull v Hull approach, Sachs LJ cited with approval what Denning LJ had stated back in 1950 in Trestain v Trestain,[124] moving away from being constrained by the implications of earlier proceedings:

“I desire to say emphatically that the fact that the husband has obtained this decree does not give a true picture of the conduct of the parties. I agree that the marriage has irretrievably broken down and that it is better dissolved. So let it be dissolved. But when it comes to maintenance, or any of the other ancillary questions which follow on divorce, then let the truth be seen.”

121.In Porter v Porter,[125]decided two years later, Ormrod J pointed to two competing policy interests affecting the approach to estoppel in matrimonial cases:

“This then is yet another case on the much argued problem of estoppel in matrimonial causes. It is a great pity that it has not yet been finally laid to rest. It arises from a conflict between two issues of public policy; on the one hand, the desirability of finality in litigation, which means the very proper and reasonable wish to prevent the same parties litigating the same issues of fact in the suit, and again in chambers on ancillary applications; and, on the other hand, the importance in the interests of justice to the individuals concerned, that the discretionary powers of the court in ancillary matters should be exercised with a full knowledge of all the relevant facts, rather than on a basis, partly of fact and partly of assumptions, arising from such rules as estoppel. It is particularly difficult to do justice in so personal a field as matrimonial cases if the realities of the situation are allowed to be obscured by the application of rules or principles which in other situations assist the cause of justice.”

D.4b The proper approach to estoppel in matrimonial cases

122.In my view, the approach of Denning LJ in Thompson v Thompson should be adopted.  It provides a measured and flexible approach which goes a long way towards reconciling those two competing policy interests, giving priority to the latter where appropriate.  The parties are bound by the estoppel but, where the circumstances demand the Court’s intervention, it is free to override that estoppel in exercising its statutory jurisdiction and to act upon evidence which is material to its determination. 

123.Ms Yip sought to argue that since the power to grant ancillary relief arose “on granting a decree of divorce”,[126] W was bound to adhere to the ground on which the decree was granted or else, as she puts it: “... the integrity of the decree of divorce would fall apart.  In turn, this would mean that no ancillary relief could be obtained.”[127]  I do not accept that argument.  In performing its statutory duty of having regard to all the circumstances of the case, including circumstances which may be inconsistent with the basis upon which the undefended decree was obtained, the Court is not involved in setting aside the decree.  No one has sought to have it rescinded and jurisdiction to deal with ancillary relief on the basis of an extant decree is unaffected. 

124.The Thompson v Thompson approach accords with the recognized quasi-inquisitorial role of the Judge in a matrimonial case.  As Thorpe LJ put it in Parra v Parra:[128]

“The quasi-inquisitorial role of the judge in ancillary relief litigation obliges him to investigate issues which he considers relevant to outcome even if not advanced by either party. Equally he is not bound to adopt a conclusion upon which the parties have agreed.”

125.As Lord Sumption JSC explained in Prest v Prest:[129]

“... claims for ancillary financial relief in matrimonial proceedings ... have some important distinctive features. There is a public interest in the proper maintenance of the wife by her former husband, especially (but not only) where the interests of the children are engaged. Partly for that reason, the proceedings although in form adversarial have a substantial inquisitorial element.”

126.Similarly, Baroness Hale of Richmond JSC stated: 

“I would ... emphasise the special nature of proceedings for financial relief and property adjustment under the Matrimonial Causes Act 1973 ... There is a public interest in spouses making proper provision for one another, both during and after their marriage, in particular when there are children to be cared for and educated, but also for all the other reasons explored in cases such as McFarlane v McFarlane [2006] 2 AC 618. This means that the court’s role is an inquisitorial one.”[130]

D.4c Conclusion as to estoppel

127.In my view, the Judge and the Court of Appeal were wrong in law to hold that the Court was precluded by the doctrine of estoppel from finding that separation occurred only in mid-2008.  The present case is one calling for the Court to override the estoppel created as between the parties.  The suit was undefended and the facts relating to separation were not investigated at any stage prior to the ancillary relief proceedings.  The evidence referred to in Section D.2 above compellingly points to separation occurring only as from mid-2008.  Those are circumstances to which the Court ought properly to have regard if it is to make fair financial provision orders for distribution of the matrimonial assets on dissolution. 

D.5  Conclusion as to departure from equality

128.When considering ancillary relief, the financial position is generally approached on the basis of the values existing at the date when the hearing takes place. [131]   

129.Where, however, there has been a substantial period of separation prior to the hearing and where during that period, there has been a steep increase in the value of the matrimonial assets attributable to the independent business or professional efforts by one spouse, unmatched by any contribution from the other spouse, grounds may exist for departing from equality.[132]  In some such cases, fairness may dictate that the non-contributing spouse has no claim to share equally in the post-separation accrual to the matrimonial assets.

130.There are opposing arguments as to whether a spouse should be excluded in such cases.  As Nicholas Mostyn QC explained in Rossi v Rossi:[133]

“...it can legitimately be argued that the party in question has traded with the other party's undivided share and so should share with that party the profit that has been generated. On the other hand it can equally convincingly be said that the second party has not contributed to the industry or endeavour that gave rise to the profit or growth and so it is unfair that the second party should share to the same extent in that profit as the first who made all the effort....”

131.In Cowan v Cowan,[134] Thorpe LJ favoured the former approach and visualized only rare and exceptional departures from equality by reason of post-separation accruals:

“The assessment of assets must be at the date of trial or appeal. The language of the statute requires that. Exceptions to that rule are rare and probably confined to cases where one party has deliberately or recklessly wasted assets in anticipation of trial. In this case the reality is that the husband traded his wife’s unascertained share as well as his own between separation and trial ... The wife's share went on risk and she is plainly entitled to what in the event has proved to be a substantial profit. If this factor has any relevance it is within the evaluation of the husband's exceptional contribution.”

132.His Lordship’s reference to “exceptional contribution” was a reference to cases where it can be established that the increase is only attributable to what has been called one spouse’s “stellar” contribution.  As discussed in LKW v DD cases in that class are necessarily rare and exceptional.[135]  H makes no claim to “stellar contribution” in respect of the increased profits of the business in the present case.

133.The summary of the principles provided in Rossi v Rossi[136] is broader than Thrope LJ’s stricter approach and is, in my view, preferable.  It points to various factors relevant to deciding whether a post-separation accrual justifies departure from equality, including the length of the marriage and separation, the nature of the property accruing and the means or efforts by which it was acquired, and so forth.  Of particular present relevance is the following passage:

“Assets acquired or created by one party after (or during a period of) separation may qualify as non-matrimonial property if it can be said that the property in question was acquired or created by a party by virtue of his personal industry and not by use (other than incidental use) of an asset which has been created during the marriage and in respect of which the other party can validly assert an unascertained share. Obviously, passive economic growth on matrimonial property that arises after separation will not qualify as non-matrimonial property.”[137]

134.In my view, the increased Analogue Group profits do not provide a ground for departure from the equal sharing principle in the present case.  The parties married in January 1968 and separated in mid-2008, over 40 years later.  The period of separation prior to the hearing date was relatively insignificant.  The profits accruing to the Analogue Group during the post-separation period arose out of the business which had been built up in the course of the marriage, in respect of which W can legitimately assert an unascertained share on the principles accepted in LKW v DD.[138]

135.As no other ground for departing from equality is contended for, I conclude that the Court of Appeal was right to hold that there should be no such departure in the present case.

E.  Disposal of this appeal

136.For the foregoing reasons, I would allow W’s appeal and dismiss H’s appeal. 

E.1  Quantum

137.In Section C.6 above, I arrived at a tentatively calculated balance of $386.7 million remaining to be paid by H on the footing that there is no departure from equality.  That represents an increase of $156.7 million over the Court of Appeal’s award (in respect of which an instalment of $130 million payable on or before 1 March 2015 is outstanding).  The calculation is necessarily tentative since the parties have not been heard as to whether that calculation correctly reflects the conclusions reached in this judgment.  Miss Yip also requested an opportunity to make submissions regarding instalments and other payment arrangements in the event that the award was increased. The parties should plainly be afforded the chance to make such submissions.  I would accordingly direct that the parties be at liberty to lodge written submissions as to the quantum of the award and as to directions for its payment.

E.2  Costs

E.2a Costs at first instance

138.In W’s printed case, she seeks an order for “costs here and below”.[139] However, the position in relation to the proceedings at first instance is unclear.  In his formal judgment in HCMC 2/2010 dated 10 February 2012, DHCJ Carlson directed that there should be no order as to costs as between H and W.  However, in the Court of Appeal’s judgment on costs,[140] Cheung JA states that the Judge had ordered H to pay W the costs of the ancillary relief proceedings and that there was no appeal against that decision, adding that the Court had been told that the costs had been paid on 20 August 2012.  It is therefore unclear whether the first instance order is in issue.  I would direct that the parties be at liberty, if so advised, to address that question in written submissions.

139.As to the trustee’s costs at first instance, the Court of Appeal noted that DHCJ Carlson had ordered such costs to be borne by H and W equally on an indemnity basis, but that H had taken it upon himself to pay the trustee’s costs in full (save for the costs incurred on 27 February 2012 on W’s unsuccessful application to vary the order nisi regarding the trustee’s costs).  The Court of Appeal directed that “the parties” should pay the trustee’s costs of 27 February 2012.  I would direct that the parties and the trustee be at liberty, if so advised, to address the question of the trustee’s costs of 27 February 2012 in written submissions.

E.2b Costs in the Court of Appeal

140.The Court of Appeal ordered that as between H and W, W should be paid two-thirds of her costs of the appeal on the footing that she had been unsuccessful in claiming that the whole trust fund was H’s resource.  As the Court of Appeal has been reversed on that point, I would set aside the aforesaid order of the Court of Appeal and make an order nisi that W should have all her costs of the appeal in the Court of Appeal to be paid by H.

141.As to the trustee’s costs in the Court of Appeal, the Court of Appeal ordered that W should be solely responsible for the trustee’s costs in that Court on an indemnity basis on the basis that its presence “was solely on the issue of the treatment of the trust assets” and that W failed on that issue.  Since W has now succeeded on that issue, I would set aside the aforesaid order of the Court of Appeal and make an order nisi that H should pay the trustee’s costs.  The parties are obviously entitled to make submissions on the order nisi.  I would direct that the trustee should also be at liberty to lodge submissions on its own behalf.

E.2c Costs in this Court

142.Regarding costs as between H and W in this Court, I would make an order nisi that H should pay W the costs of both appeals. 

143.As to the trustee’s costs in FACV 20/2013, I note that the trustee was joined on W’s application, presumably because this was thought necessary in the light of the alternative claim for a variation of the trust.  However, the trustee participated by making submissions not just in relation to variation, but also regarding the discretionary trust as a possible financial resource in the ancillary relief proceedings, as it had done in the Court of Appeal.  In doing so, it aligned itself with H, arguing for only two-thirds of the trust fund to be treated as an available asset on a basis which I have rejected.  I would accordingly make an order nisi that H do pay the trustee’s costs and direct that the trustee be at liberty to lodge submissions on its own behalf in that regard.

E.3  Directions regarding written submissions

144.I would direct that any written submissions to be lodged in relation to the abovementioned orders nisi and regarding matters on which liberty to make submissions has been granted must be lodged with the Registrar within 14 days of the date of this judgment and any written submissions in reply within 14 days thereafter.  No further submissions should be accepted without the leave of a single Permanent Judge.  I would furthermore direct that each set of submissions and of any submissions in reply must not exceed 10 single-sided A4 pages of ordinarily legible 14 point print. Non-compliant submissions should not be accepted.

145.In the proceedings below the parties were anonymized, being referred to by their initials.  The parties informed the Court that there was no reason for anonymity in the present case and that they had no objection to being named.  They are accordingly referred to by name in this judgment.  It is consistent with open justice that anonymity should be maintained only if there is good reason to follow that course.

Mr Justice Tang PJ:

146.I agree with the judgment of Mr Justice Ribeiro PJ.

Mr Justice Bokhary NPJ:

147.This case is very unfortunate in its immediate circumstances and, for reasons which are emphatically not the fault of either party, utterly tragic in its background.  Despite the arguments so ably advanced by Ms Anita Yip SC on the husband’s behalf, I would allow the wife’s appeal and dismiss the husband’s appeal, doing so in terms of the orders and directions proposed by Mr Justice Ribeiro PJ. There are only two matters on which I will add something of my own.

148.In connection with the question of what financial provision ought to be made for the wife, there arose an issue as to when the parties are to be treated as having started to live separately. How this issue is now to be decided goes to the proper role of each of the three court levels which make up a legal system like ours: first instance, intermediate appeal and final appeal.

149.The husband said that it was in 2001 that the parties started to live separately while the wife said that it was not until 2008 that they started to do so.  After conscientious consideration, the trial judge concluded that the parties had started to live separately, albeit under the same roof, as from February 2001. There being no basis for doing so in the circumstances, the Court of Appeal rightly refrained from disturbing any of the trial judge’s findings of primary fact on which he based that conclusion. What the Court of Appeal did – and was within their province to do – was to review the conclusion at which the trial judge arrived on the basis of those findings of primary fact. Upon such review and on a correct understanding of what constitutes a married couple living separately, the Court of Appeal felt unable to support the trial judge’s conclusion as to when this married couple started to live separately.  And they arrived at a very different conclusion in that regard. Their conclusion was, in my view, supported by the trial judge’s findings of primary fact viewed in the context presented by the record realistically approached. That being so, their conclusion arrived at on intermediate appeal ought not to be disturbed by us on final appeal.

150.It was pointed out on the husband’s behalf that the date upon which the Court of Appeal proceeded, namely February 2007, is not consistent with the evidence either of the husband (who said that the separation had begun as long ago as 2001) or of the wife (who said that it did not begin until 2008). That is true in the sense that the Court of Appeal adopted the date February 2007 on the footing that although the separation had begun only in 2008 as the wife said, the parties’ divorce having been decreed on the ground of two-year’s separation prior to the presentation of the petition on 6 February 2009, the wife is estopped from relying on any date earlier than two years prior to such presentation.  That is, I think, the limited extent to which an estoppel would have operated if one had arisen.  As it happens, for the reasons given by Mr Justice Ribeiro PJ, no estoppel arose.

151.I understand that anonymity in family cases is the subject-matter of on-going consultation, and I am content to say nothing on the subject at this stage.

Mr Justice Gummow NPJ:

152.I agree with the judgment of Mr Justice Ribeiro PJ.

Chief Justice Ma:

153.The Court unanimously :

(a) Allows W’s appeal and dismisses H’s appeal.

(b) Directs that the parties be at liberty to lodge written submissions as to the quantum of the award and as to directions for its payment.

(c) Directs that the parties be at liberty to address the question of costs at first instance in written submissions.

(d) Directs that the parties and the trustee be at liberty to address the question of the trustee’s costs of 27 February 2012 in written submissions.

(e) Sets aside the Court of Appeal’s order that W should be paid two-thirds of her costs in the Court of Appeal and makes an order nisi that all of W’s costs in the Court of Appeal be paid by H.

(f) Sets aside the order of the Court of Appeal that W should be solely responsible for the trustee’s costs in the Court of Appeal on an indemnity basis and makes an order nisi that the trustee’s costs be paid by H, with liberty to the trustee to lodge submissions on its own behalf in that regard.

(g) Makes an order nisi that H do pay W the costs of both appeals in this Court.

(h) Makes an order nisi that H do pay the trustee’s costs and directs that the trustee be at liberty to lodge submissions on its own behalf in that regard.

(i) Directs that any written submissions to be lodged in relation to the abovementioned orders nisi and regarding matters on which liberty to make submissions has been granted must be lodged with the Registrar within 14 days of the date of this judgment and any written submissions in reply within 14 days thereafter, with no further submissions to be accepted without the leave of a single Permanent Judge.

(j) Directs that that each set of submissions and of any submissions in reply must not exceed 10 single-sided A4 pages of ordinarily legible 14 point print and that non-compliant submissions will not be accepted.

Mr Andrew Lynn and Mr Patrick Siu, instructed by C.Y. Lam & Co., for the Wife (Appellant in FACV 20/2013, 1^st Respondent in FACV 21/2013)

Ms Anita Yip SC and Mr Eric Leung, instructed by Foo & Li, for the Husband (1^st Respondent in FACV 20/2013, Appellant in FACV 21/2013)

Mr Victor Joffe QC and Ms Mairead Rattigan, instructed by Withers, for the Trustee (2^nd Respondent)