El v. Cfl

FCMC 4685/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 4685 OF 2012

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Judgment
(Application for Ancillary Relief)
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1.This is the Petitioner Wife’s application against the Respondent Husband for ancillary relief for herself and their 4 year old daughter, hopefully the last episode of what can only be described as one of most entrenched and protracted litigation over the past 2 years or so during which almost every step of the way was bitterly fought, from contested divorce and all matters arising from the eventual dissolution of their marriage including custody care and access of their daughter, financial discovery, preliminary issue on beneficial ownership of properties, and final ancillary relief, resulting in more than 30 court hearings including 3 substantive trials, and a combined legal costs in excess of HK$17 millions which had no doubt substantially contributed to the parties’ disclosed debts and liabilities of more than HK$32 million that the Husband now asserts have substantially exceeded what remains of their available assets for division consisting essentially of 2 heavily mortgaged properties with a total net equity of only HK$28 million.    

2.This total disregard for any sense of proportion in legal costs and excessive use of the court’s time and resources for which both sides are no doubt guilty had in fact already caused this court to express its grave concerns in 2 earlier judgments in the proceedings but had apparently fallen on deaf ears, when I first said this in the judgment dated 9^th August 2013 on the Wife’s discovery application:

  “10. In her petition the Wife also sought sole custody care and control of the daughter and general ancillary relief for herself and the daughter, which were all opposed by the husband, and hence for the following year or so the parties became embroiled in what can fairly be described as a most acrimonious and stubborn litigation initially mainly over every arrangement of their daughter down to the most numbing details, and now in their financial disputes including for further disclosure and discovery from both sides, such as the matter now before me, resulting in an insanely and staggering 13 bundles of pleadings and exhibits of almost 4000 pages, plus 4 correspondence bundles of 437 letters between solicitors with another 1272 pages mostly of incessant quarrels over every aspect of their litigation, resulting in a combined legal costs between them so far incurred of over HK$9 millions. All these for just 15 months since the issue of the petition, and with the FDR-related hearings yet to come.

  11. These kinds of costs and litigation generated over such a relatively brief period of time seem to me wholly disproportional to the means and assets disclosed by the parties … “

3.In my second judgment made some 8 months later on 16^th April 2014 after the trial of the preliminary issue over certain properties which the Wife alleged to be beneficially owned by the Husband but which he claimed to belong to his mother and should therefore be excluded from the marital pool and which I ruled to be the case, I raised my concerns again as follows:

  “3. … when I dealt with one of the parties’ many hotly contested applications in July 2013 … I mentioned with great alarm that the parties had by then incurred in excess of HK$9 million in combined legal costs, which by now no doubt must have exceeded well over HK$10 million, and that there were then 13 bundles of pleadings and documents in excess of 4,000 pages generated in just slightly more than a year of litigations, mainly over their only child then not even 3 years old.

  4. To keep a check on the proliferation of pleadings and affirmations and for the purpose of the application now before me, I gave specific directions on 30^th September 2013 that the filing of evidence by the parties be strictly confined to the preliminary issue and be self-contained. Still the resultant trial bundles have grown to 6 in total, apparently certain allegations seemingly irrelevant or at best peripheral to the issues somehow managed to find their way into the parties’ affirmations …”

4.At the end of that judgment I said this about the Wife’s conduct in pursuing that preliminary issue:

  “45. Despite overwhelming evidence against her case, the Wife has blindly, stubbornly and foolishly pursed a blatantly false hope that can only lead to one inevitable consequence: That costs will follow the event and she is to bear both the costs of the Intervening Parties and the Husband …”

5.Sadly, as will be apparent below, these words appeared still not to have been heeded by the Wife, nor the Husband for that matter, and I am obliged to refer to much more authoritative and wiser words of two different Court of Appeal in 2 very recent cases when both expressed similar sentiments and concerns not just over the litigation conduct of the parties but also those of their lawyers, starting first with Lam VP (with Kwan and Barma JJA) when he remarked on 22^nd September 2014 in the case of IDC v SSA, CACV 91 of 2013:

  “7. The applicant said she had incurred costs in the sum of $1,458,703 for the purpose of this appeal. This is on top of her own costs of $4,220,355 at the court below. We do not have the details of those costs. However, we are of the firm view that these are exorbitant figures and someone must have failed to have proper regard to the underlying objectives in Order 1A Rule 1 in bringing about such state of affairs. Matrimonial litigation is a growing industry in Hong Kong. There is nothing wrong in lawyers providing good legal advices demanding proper fees for their services. However, lawyers in this field must, like lawyers practising in other fields, also have duties to their clients as well as to the court to instil a sense of proportionality in the conduct of litigation.”

6.In the second case of YNakaYN(A) v NA, CACV 236 of 2013, Cheung JA (with Barma and McWalters JJA) also found it necessary to address similar concerns in his judgment dated 24^th November 2014:

“IV. Matrimonial litigation

  4.1.  There are two matters I need to address first before I deal with the grounds of appeal.

1) A sense of proportion

  4.2  The Judge was critical of the time taken by the wife’s lawyers in dealing with this case and also of their approach. In my view the criticism is well justified. Let me say at the beginning that the role of the family Court in making financial provisions for a divorced couple is to ensure that the parties will receive a fair share of their entitlement. It is concerned that the ultimate award complies with the established principles now laid down by the Court of Final Appeal in LKW v DD (2010) 13 HKCFAR 537 and the award can be satisfied from the available pool of assets. The Court is, however, not required to comb through every fine detail of the matrimonial history and financial information to arrive at a precise mathematical figure. A sense of proportion must be recognised by the parties and their lawyers having regard to the size of the available pool of assets and the costs of litigation. If there is an attempt by the parties to dwell on the minutiae then the trial judge will have to stop this from happening. The Court will not countenance any unhealthy trend in matrimonial litigation where a substantial portion of the parties’ available fund are unnecessarily spent on costs. Likewise the Court of Appeal will not be expected to review all the details that had been canvassed below as if it is trying the case afresh. The fact finding role of a trial judge will be given proper respect in accordance with the well-established principles. Any attempt to sidestep this demarcation will not be entertained. After all the whole ethos of the Civil Justice Reform is to ensure that the case is to be efficiently disposed of.

   4.3  In the present case, it is an excessive use of judicial time to have a 10-day hearing where the marriage lasted only about 10 years, the financial picture is not overly complicated and the resources are by no means high. This has a direct impact on the costs which ultimately eats into the available fund for distribution. The parties spent over HK$4 million below by way of costs in respect of a matrimonial pot of HK$17 million. This amounts to about 25% of the total assets. More costs will be incurred for the appeal. The parties are well off financially but they are not rich litigants. As examples of the extravagance, the wife actually obtained the whole of the transcript of the ten-day hearing below where her lawyers would be expected to have taken notes of the proceedings. The transcripts were hardly referred to on appeal. Numerous bundles are prepared for this appeal when another division of this Court dealing with a related matter had already commented on the excessive waste of paper. Family lawyers, particularly like the present case where the wife is represented by a firm of experienced specialist solicitors, are duty bound to ensure that the sense of proportion is observed. While I do not underestimate the difficulties of handing clients why may be highly emotional in a contested matrimonial dispute, lawyers should not let themselves be dictated to by what their clients may perceive to be their entitlement, to the extent that they cannot give proper assistance to the Court.”    

7.With the exception of the number of days required for the trial of the question of ancillary relief in that latter case, almost everything else that had come under criticism as excessive, extravagant or disproportionate in those 2 cases in my view pale in comparison with the one now before me, and if both Courts appeared aghast by the disproportional utilisation of court’s time and resources and in particular the legal costs incurred in those cases, they are simply dwarfed by the many excesses displayed here, in particularly of the combined legal costs of HK$17 million which is a staggering 60% of the agreed net assets of the parties.

8.There is no question in my mind that the parties are mainly to blame for this madness and the resultant financial disaster, with the Wife being criticised by Mr Coleman SC for the Husband of wholly unable to see and grasp reality in the entire litigation right up to her open proposal with what were described as ridiculous and illogical terms, while the Husband was said by Mr Brewer for the Wife to be guilty of trying to bully her into a quick and dirty settlement without proper disclosure, and then spared no expenses in his litigation against her with total disregard for his professed financial difficulty by resorting to heavy borrowings while incurring twice as much in his legal costs. I agree with both submission.

9.However, given the way the whole litigation was being conducted almost from day one, as amply evidenced in the many affirmations filed by and for the parties as well as their even more voluminous lawyers’ correspondence, I cannot help but think that the parties apart, and quoting Lam VP from above, someone else must have failed to have proper regard to the underlying objectives of Order 1A Rule 1 in bringing about such sorry state of affair, and to me that must mean the solicitors who have had first-hand daily conduct of the litigation on behalf of the parties, all the more unacceptable as both are specialists in this practice.

10.In fact it cannot be emphasized enough the importance for practitioners to have proper regard to those underlying objectives without first referring to the paragraph that started off Order 1A/0/3: “The underlying objectives set out in r.1 are probably one of the most, if not the most, important aspects of CJR”, as well as the subsequent paragraph setting out their intended purposes as follows:

  “These underlying objectives are intended to set out the basic principles underlying CJR, which will influence the court in exercising its discretion under the rules. They established a framework for decision-making in procedural matters and guiding the court in managing individual cases. The court’s role is to control and manage litigation with a view to achieving these objectives…”

11.It would also be relevant and in fact necessary to remind ourselves of what those underlying objectives are:

(a) to increase the cost-effectiveness of any practice and procedure to be followed in relation to proceedings before the court;

(b) to ensure that a case is dealt with as expeditiously as is reasonably practicable;

(c) to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings;

(d) to ensure fairness between the parties;

(e) to facilitate the settlement of disputes; and

(f) to ensure that the resources of the Court are distributed fairly.

It henceforth follows that under Order 1A r.3 there is a duty of the parties to any proceedings and their legal representatives to assist the Court to further these underlying objectives, and an examination of the relevant background and circumstances of this litigation, which I shall do next in any event as part of the section 7 exercise, will sadly reveal the many failures in this duty in the present case.

Background

12.Although some relevant background have already been given in my 2 earlier judgments, it would be necessary to set them out here again, and with further details as they would in my view be more relevant and in fact essential for the purpose of the matters now before me.

13.The Husband was born on 6^th October 1977 in Canada and is now aged 37. After spending childhood in Hong Kong he went to study in Canada. Upon graduating from university he returned to Hong Kong in 1999 at the age of 22 to work for REL International (“RELI”) as an associate at a starting salary of US$2,500 per month ( ̴ HK$20,000), which was a subsidiary company of his mother’s business in financial consultancy and wealth management known as REL Holding Company (“REL Holding”) in which she is a 50% shareholder and under which is a complex of subsidiaries in various places including Seattle, Dubai, Singapore and Hong Kong of which I shall for the present purpose collectively refer to as REL.

14.In late 2001 the Husband’s mother acquired a BVI company known as A Express Holding Ltd (“A Express”) for investments on equities and appointed the Husband as her trustee of the company to deal with her investments so as to enable him to develop his own clientele, business exposure, financial investment skills and network including opening a private banking account with JP Morgan in the name of the company.

15.In about 2002 the Husband became acquainted with the Wife who was in Hong Kong and Singapore visiting her parents and looking for a job upon graduating from a college of arts and design in Canada. She was born on 1^st May 1980 in Hong Kong, and like the Husband also spent her school years in Canada and is now 34. Soon they started dating and at the Husband’s invitation the Wife began to work as an associate in REL International. Initially she stayed in a hotel paid for by the Husband and subsequently rented a small apartment at Caine Road also paid for by him. It is not in dispute that during their courtship the Wife was lavished with expansive gifts and extravagant spending by the Husband that continued well into their marriage.   

16.In 2005 the Husband was similarly allotted one share in another BVI company of his mother known as A Energy International Ltd (“A Energy”), and again he was made her trustee to invest in landed properties, starting with a flat in Paris Court in Conduit Road (“Paris Court”) for HK$7.5 million with a mortgage from JP Morgan. By then the Husband had been promoted to be the managing director and CEO of REL International, and already had his own investment in a flat at Island Resort, Siu Sai Wan, Hong Kong (“Island Resort”) purchased in February 2005 for HK$7,345,000 funded by a mortgage of about HK$5.1 million from Hang Seng Bank.   

17.Soon more purchases were to follow including these properties:

(a) An apartment at Camelot Heights in Kennedy Road (“Camelot Heights”) in 2005 through a holding company of the Husband for HK$10.2 million with the assistance of a mortgage from JP Morgan;

(b) A property at Juniper Apartment, Singapore (“Juniper Apartment”) in 2005 for about HK$28.7 million in the Husband’s sole name with the assistance of a bank mortgage;

(c) A flat in Mountain Lodge, Kellett Road (“Mountain Lodge”) in January 2007 for HK$29.05 million in the name of A Energy by means of the sale proceeds of Paris Court and a mortgage from JP Morgan.

18.On 6^th October 2005 the parties became engaged and shortly thereafter the Wife moved into the Husband’s then residence at Paris Court. They subsequently got married on 24^th November 2006 with a lavish and expansive wedding. Upon returning from their honeymoon and in about January 2007 the parties moved into the newly purchased Mountain Lodge and made their matrimonial home there, and soon the Wife was promoted to be a vice president of the company.     

19.During their marriage the parties continued to enjoy an expensive and extravagant lifestyle and also purchased 2 properties, an apartment at Martin Road in Singapore (“Martin Road Apartment”) in 2008 in their joint names and a Taikoo Shing unit (“Taikoo Shing Flat”) in 2010 in the Wife’s sole name for HK$5.45 million with a mortgage from Bank of China which has been used by her grandmother. In 2010 the Wife became pregnant and the parties moved out of Mountain Lodge during its renovation to stay first at the Four Season Hotel and later with the Husband’s parents at their home on the Peak.

20.On 22^nd October 2010 the Wife gave birth to the daughter and a live-in nanny was hired at HK$30,000 per month specifically to care for the child while the Wife soon returned to her job. Sadly their marriage began to unravel with increasing heated quarrels between the parties leading to the Husband moving out of the Mountain Lodge Property in February 2012 to return to stay at his parents’ home.  

21.Shortly thereafter the Husband presented the Wife with a draft deed of separation prepared by his then solicitors consisting of terms inter alia for the care and control of the daughter to be given to him and for the Wife to waive all her financial claims against him other than nominal maintenance, and when it was rejected by the Wife, the Husband cancelled her supplementary credit cards and her use of his cars and told her to leave the Mountain Lodge Property.

22.This immediately triggered off the parties’ legal battle when the Wife issued her petition on 3^rd April 2012 through her present solicitors against the Husband based on his unreasonable behaviour for divorce, sole custody care and control of the daughter and general ancillary relief. Not surprisingly she was shortly thereafter dismissed by REL, but subsequently found new employment in June 2012 working for IPG, a direct competitor of REL.

23.The Husband quickly responded by having his present solicitors filed an answer and cross-petition for divorce likewise based on the Wife’s unreasonable behaviour, and for joint custody care and control of the daughter, and general ancillary relief.

24.By then both parties had also filed their Financial Statement Form E, in which the Wife disclosed her total worth of at least HK$61.8 million mainly made up of her claimed ½ interest in both Mountain Lodge which she believed to be wholly owned by the Husband, and the Juniper Apartment, and significantly little liabilities being HK$600,000 loaned from her parents to assist in funding her legal costs. Equally of significance, she revealed a monthly spending of more than HK$257,000 for herself and the daughter which was 2 ½ times her then disclosed income of HK$97,500, and in the proposed orders of the Form E that she was seeking, apart from general periodical payments for herself and the daughter, she also sought the transfer of both Mountain Lodge and Juniper Apartment.    

25.As for his Form E the Husband disclosed an average monthly income twice as much at HK$170,000 plus the use of a chauffeur and medical insurance provided by his employer, but significantly much lower net worth of less than HK$29 million made up mainly of the net equity of the said Juniper Apartment, bank savings of HK$1.2 million, securities investments of HK$1.4 million, personal items of HK$3.5 million including a Lamborghini and 3 other cars, some club memberships, watches and jewellery, and wine collection.

26.Against these income and assets the Husband also revealed a much higher spending in excess of HK$400,000 per month which also happened to be some 2 ½ times of his disclosed income, and with substantial debts and liabilities then in excess of HK$13 million the bulk of which were loans from his mother, but it still gave him a net worth of more than HK$15 million, and while it may not qualify his case to be a big money one as the Wife had repeatedly asserted, nevertheless still a fairly healthy situation but which was as will be apparent quickly deteriorating and descending to the present seemingly insoluble one.    

27.The Wife as expected was highly suspicious of the Husband’s revelation of his financial situation in particularly his alleged nil interest in the Mountain Lodge property which she estimated to be worth more than HK$60 million, and soon various applications for discovery and further disclosure were to follow, but as stated above initially most of the disputes were over various arrangements of their daughter, starting with the Husband’s application of 19^th June 2012 for interim shared care of the daughter with a supportive affirmation consisting of 22 pages and 84 paragraphs of minutiae about the interim care of a small and no doubt privileged child then not even 2 years old.

28.This sadly turned out to be the hall mark of how the parties were to conduct their litigation for the next 2 years to come, as the Wife promptly retorted by an equally lengthy affirmation with 22 pages and 83 paragraphs of her version of the minutiae but one step up with more than 50 pages of exhibits of charts and tables as well as emails and text messages of mostly heated exchanges between the parties over their daughter.

29.Apparently so as not to be outdone by the Wife, the Husband filed an affirmation in reply 5 days later and exhibited his share of the emails and messages. The fact is that apart from their disputes over how much time the Husband should be allowed to spend with the daughter in the interim pending the court’s determination of the question over her custody care and control and of course access, which is not uncommon between divorcing parents, the parties in this case had many more other issues over their daughter’s daily arrangements, and while some were no doubt legitimate such as the Husband’s concern over the Wife’s alleged unilateral decision about the daughter’s schooling arrangements, others were simply downright petty to require the court’s adjudication, such as whether the nanny should be present when the daughter was taking her afternoon nap at the Husband’s home during his access.

30.That was of course not all the parties were fighting about, as the Wife soon found that she was quickly running out of the HK$600,000 borrowed from her parents to meet her ever mounting legal costs, hence she applied for maintenance pending suit as well as provision for legal costs of which she asked for HK$250,000 per month for the latter, a seemingly huge monthly sum for that purpose but not surprising given the amount of work generated by the parties’ almost daily incessant quarrels over everything as evidenced by the 13 bundles of pleadings and the 400 plus letters between solicitors in correspondence mentioned above at the beginning of this judgment.

31.It would also be relevant to mention here that for that latter application, it was subsequently resolved, or so it seemed, by the Husband’s undertaking to the court to sell one of his cars and the Juniper Apartment as soon as possible to meet the legal costs of both parties and hopefully the Wife’s interim maintenance pending their FDR hearing, but it turned out that while the Husband was able to quickly sell his car and paid over its proceeds of HK$130,000 to the Wife, the Juniper Apartment has up to this judgment remained unsold due to lack of offers and the very slow market situation in Singapore.

32.Eventually the parties were able to compromise on their contested divorce for the Wife to “water-down” her alleged behaviour of the Husband and the decree nisi was subsequently granted on 29^th January 2013, but that of course did not mean that the parties had finally called a truce as they continued to fight over their daughter, when the Wife apparently stepped up her efforts against the Husband with her 5^th Affirmation, typically lengthy with another 88 paragraphs with additional 50 odd pages of exhibits including several witnesses’ statements, but also with what appear to me scandalous allegations such as he may in fact be the illegitimate son of a named Hong Kong wealthy tycoon thereby implicating that her mother had had extramarital affairs, that he hated his father whom his mother also feared with various derogatory remarks about them, and that he had lied about his university degrees and falsified their certificates, allegations which I found to be either irrelevant or unhelpful but just further fuelled the animosity of the parties, and by elevating their personal disputes into family feud in this manner all but destroy any hope of any settlement or compromise, a point so plain and obvious to all but somehow escaped both the Wife and those advising her.

33.Furthermore, one of the exhibits to her affirmation were 22 pages of transcripts of what she claimed to be her diary record of the Husband’s access to the daughter between September and December 2012 as evidence of her alleged problems particularly at handover, which is clearly so self-serving and that in the absence of the diary itself, what evidential value the Wife and her solicitors could see in them is indeed beyond me.

34.One thing was however clear and certain to all: the response from the Husband which be swift and equally scathing in his affirmation in reply (7^th Affirmation) that ran up more than 100 paragraphs with many more pages of exhibits, refuting all the Wife’s allegations and as expected putting forward his share of the mud for dragging her parents through including allegations that when she was small she and her brother were neglected by her mother who was often away from home meeting different men after the death of her father, and that her present step-father had had various extra-marital affairs that caused her mother to want to divorce him, and so on, all of which were similarly scandalous and utterly irrelevant for absolutely no purpose other than simply tit-for-tat, but somehow his solicitors saw fit to include in the affirmation no doubt with the excuse that it was on the Husband’s instructions.   

35.Eventually after 2 CDR hearings and on the advice and assistance of their jointly appointed psychologist, the parties were finally able to compromise their disputes over their daughter by having her joint custody with care and control to the Wife and certain defined access to the Husband on various terms and undertakings not necessary to recite here, which were then made an order of this court on 8^th May 2013.

36.With that phrase of their battle resolved, the parties then shifted their focus to their financial disputes and the inevitable discovery applications, of which one of the most contentious was in respect of the Husband redacting his credit cards statements which the Wife suspected as part of his efforts to mislead the court as to their true standard of living during the marriage and his real financial situation by concealing his spending habits, but which he explained were just his business expenses but should not be revealed to the Wife who was working for his competitor, and that her applications were just blatant fishing expeditions.

37.After hearing yet another heated arguments from both sides, on 9^th August 2013 I gave my decision allowing some of the Wife’s applications including un-redacting those relevant credit cards statements of the Husband, and disallowing the others, but I again expressed my concerns over the parties’ ongoing battle and commented about the proper role of their solicitors at the conclusion of my decision as follows [A2/850]:

  “47. … while I may not agree with Mr Coleman that the Wife’s application was a blatant fishing expedition, I certainly share the sentiment that … this constant complaint of her as to lack of funds to meet her legal costs, to which I was fully sympathetic at her earlier maintenance pending suit application, and I also note similar complaint from the Husband, but notwithstanding still the tendency to argue over almost everything in the proceedings between them instead of trying to compromise through mediation or otherwise, thereby causing more and more contested applications and court hearings with obviously more legal costs by both sides is simply and painfully unfathomable. If indeed the parties are psychologically or emotionally incapable of helping themselves to see the irony and to get out of this vicious circle, certainly those representing them have a duty and obligation to help them to do so, or so I implore them to.”

38.Yet the fighting continued to the next phrase and what was then the core issue between the parties: What was the Husband’s interest if any in the Mountain Lodge Property, and notwithstanding the production by him of 2 formal Declarations of Trust made prior to the marriage as evidence that he was merely holding the property on trust for his mother but which was not acceptable to the Wife, and hence the mother was joined as an intervener and the matter was tried as a preliminary issue in March 2014 necessitating yet another 4 days in court during which both of the Husband’s parents were also required to give evidence, and which led to my judgment on 16^th April 2014 referred to above confirming the mother to be the true and only beneficial owner and hence the property should not form part of the marital pool, and criticising the Wife for “blindly, stubbornly and foolishly pursued a blatantly false hope” for which she was ordered to bear both the costs of the Husband and his mother.

39.With that major issue out of the way and with FDR the next stage of the proceedings, the parties then updated their respective Form E in July 2014 which not surprisingly revealed a much more dire situation than 2 years ago in debts and liabilities, with the Husband’s stated net worth down to less than HK$6 million due to escalated debts to more than HK$27 million no doubt the result of his mounting legal costs having surpassed HK$8 million by then and with a much lower monthly income of HK$55,200, while the Wife’s monthly income may have gone up somewhat to more than HK$122,000, her net worth was now in the negative no doubt also the result of her legal costs by then having risen to more than HK$5.1 million.   

40.Certainly it would have been blatantly clear to both parties that it was time to put an end to their fight and to settle their remaining financial dispute before incurring further costs, yet the FDR hearing turned out unsuccessful, and when the Wife still refused to vacate Mountain Lodge despite the mother’s threats to take legal action against her for possession and mense profits/damages after giving her time until August 2014, the only possible outcome was to head towards their final battle on ancillary relief upon filing their narrative affirmation setting out their respective case, with their open proposal made shortly before the trial as follows.      

Wife’s Open Proposal

41.Instead of filing her open proposal pursuant to Practice Direction 15.11 not less than 21 days before the trial by a concise statement setting out the nature and amount of the orders which she was proposing to invite the court to make, the Wife did so by a 7 pages letter from her solicitors dated 4^th November 2014 together with a large spreadsheet containing what she claimed to be 35 items of her monthly expenses and the daughter’s dating back to the date of her first Form E in May 2012 up to September 2014, and which she only inserted in a correspondence bundle amongst more than 800 pages of other letters and documents [C2/1756 – 1762] but was only brought to the court’s attention at the start of the trial, a practice wholly unsatisfactory and unacceptable.    

42.In that letter the Wife put the net value of the 2 said remaining landed properties less their outstanding mortgage at just over HK$28 million being HK$24.55 million for the Juniper Apartment and HK$3.47 million for the Taikoo Shing Flat, and the parties’ liabilities at HK$6.78 million and HK$26.42 million for herself and the Husband respectively, and accepting that the sale of the Juniper Apartment would take time and pending sale and provision of a lump sum to her for purchasing her own home, she would need to rent a suitable accommodation for herself of the daughter, her proposal for an overall settlement can be summarized as:

(a) Generally the parties were to retain all their personal items in their possession or control;

(b) The Husband was to retain all the vehicles including the Mini Cooper currently used by her and to pay her HK$300,000 to purchase her own vehicle for herself and the daughter;

(c) Their wine collection was to be divided between them;

(d) Upon the sale of the said 2 properties a lump sum equivalent to 70% of the net sale proceeds estimated to be about HK$20 million was to be paid to her for her to purchase a permanent home for herself and the daughter;

(e) Each party was to be responsible for his or her own liabilities;

(f) The Husband was to meanwhile pay her periodical payment at the rate of HK$34,000 per month for her maintenance until the said lump sum is paid to her whereupon the periodical payment was to be reduced to HK$1.00 per annum;

(g) The Husband was to pay maintenance for the daughter at the rate of HK$37,354 per month up to 31 January 2015, thereafter to be increased to HK$71,946 per month to include her rented accommodation expenses, to be reduced to HK$62,596 per month after her nanny was to replaced by a second helper;

(h) The Husband was to continue to pay for the daughter’s school fees and related educational expenses including any future tutoring and extra-curricular activities;

(i) The Husband was to reimburse her for the nanny’s expenses from July 2012 to December 2014 in the total sum of HK$870,000;

(j) Alternatively and by way of a clean break between the parties the Husband was to pay her a lump sum of HK$30 million taking into account of the assets already held in her name including the said Taikoo Shing Flat;

(k) There be no order as to costs including all costs reserved all that all costs order previously made between the parties were to be waived including the costs of the Intervener Proceedings.   

43.This proposal was as expected rejected by the Husband as wholly unreasonable without any regard to the reality of the existing financial circumstances in particularly the paucity of assets available for division, and that it would mean that the Wife would be getting most if not all of what are essentially the only remaining valuable assets while he would still be heavily burdened with most of his debts and liabilities, and at the same time having to pay her close to HK$100,000 per month for the daughter when he is said to be earning only about 1/3 of the Wife’s.

Husband’s Open Proposal

44.Likewise the Husband’s open proposal was just set out in his solicitors’ letter dated 6^th November 2014 in reply to the Wife’s, which was twice as long at 13 pages plus an equally comprehensive 4-page schedule of what he claimed to be the parties’ respective assets and liabilities down to such minor items such as the Wife’s share of the Singapore storage costs from April 2012 to October 2014 of a relatively meagre sum of HK$47,080.27 or her business expenses paid by him in the amount of HK$159,224 for which she had been reimbursed by her former employer but had yet been repaid to him, just to cite a few examples of the kind of minute retrospective disputes that the parties were embroiled in.

45.This open proposal of the Husband was similarly not filed into court and was likewise only inserted in the Correspondence Bundle [C2/1767 – 1779], in which he not surprisingly also took issue with some of the financial figures relied on by the Wife such as her debts and liabilities which he contended to be less than half of what she claimed at only about HK$4.77 million, while his debts should in fact be more at HK$29.6 million, hence the total net equity of the said properties were not even adequate to meet their liabilities. His open proposal as can be seen is at the diametrical opposite end of the pole in that all the net sale proceeds of the 2 properties should be used to pay off their debts and liabilities, essentially giving him the bulk thereof as his total liabilities are according to his calculation some 6 times of the Wife’s, and which can be summarised as follows:

(a) The Juniper Apartment was to be sold and the entire net proceeds be given to him to pay off his debts and liabilities; 

(b) The Taikoo Shing Flat was to be sold and the entire net proceeds be given to the Wife to pay off her liabilities except those arising from the costs orders against her in the Intervener Proceedings;

(c) Various chattels such as jewellery, watches and personal belongings in storage in Hong Kong and Singapore were to be set off, sold or divided between the parties;

(d) He was to transfer the Mini Cooper to the Wife at his expenses;

(e) All other assets and personal belongings in the parties respective possession and/or control were to be retained by them;

(f) There was to be a clean break between the parties on the above terms;

(g) He was to continue to pay a sum of HK$5,000 per month towards the daughter’s maintenance and her school fees at the current rate of HK$5,600 per month, and that each party was to bear the extracurricular activities which are enrolled by them respectively when the daughter is in their respective care;

(h) No order as to costs except those Intervener Proceedings costs provided that there was a settlement prior to the trial.

46.The Husband’s proposal on the 2 landed properties which essentially provides the Wife with only about 12% of their net equity is not surprisingly considered by her as equally and wholly devoid of realty. Given this wide gulf between the parties, it is no surprise that this proposal of the Husband was outright rejected by the Wife, and despite their ever mounting debts and liabilities the parties chose to go through the huge expenses of a full trial during which the only sensible thing that they did, no doubt on advice of their counsel namely Mr Brewer for the Wife and Mr Coleman SC for the Husband, was not to call any of their witnesses except the Husband’s mother over the issue of his alleged debts due to her in excess of HK$17.7 million, thereby cutting short the trial by some 1 ½ days. 

47.There were of course many other issues as well between the parties, of which they have filed a joint statement on 12^th November 2014 shortly before the trial as follows.

Issues

48.The joint statement of issues can be found in Trial Bundle A3/1158 – 1164 and consisted of 18 items but most of which had either ceased to be so at the beginning of the trial or fallen away along the way, and what remains can be summarised as follows:

(a) What exactly are the Husband’s debts due to his mother and whether they are soft loans and may not be repayable;

(b) Whether there should be a clean break between the parties;

(c) What should be the appropriate level of the Husband’s financial provisions for the daughter.     

49.Essentially it all boils down to how the net value or sale proceeds of the 2 landed properties are to be divided between the parties and what should be the Husband’s monthly maintenance for the daughter, but before proceeding to discuss them in greater details, it would be relevant to first set out the legal principles applicable to them, of which for once there seems to be no major disagreement between the parties.     

Applicable Law and Principles

50.First and foremost, the court is required by section 7(1) of Matrimonial Proceedings and Property Ordinance, Cap 192 to have regard to the following matters when making orders for ancillary relief as between the parties:

(1) It shall be the duty of the court in deciding whether to exercise its power under section 4, 6 and 6A in relation to a party to the marriage and, if so, in what manner, 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;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

51.How this so-called section 7 discretionary exercise should be approached is guided by the 4 principles laid down in the now seminal decision of the Court of Final Appeal in LKW v DD [2010] 13 HKCFAR 537 namely:

- Objective of Fairness

- Rejection of Discrimination

- Yardstick of Equal Division

- Rejection of Minute Retrospective Investigation

52.It is not necessary to go into the reasoning behind these principles enunciated in that judgment except for the last one given the way the parties had conducted their litigation, where Riberio PJ stated as follows:

  “62. The fourth principle is that the court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tend to deplete the parties’ (and the court’s) resources and to increase antagonism and discourage settlement.

  63. Such attempts have been encountered in various contexts, including disputes over the extent of a party’s assets; over the contribution made to the welfare of the family; over the parties’ conduct; over claims to be compensated for having suffered some disadvantage, and so forth.

…

  69. The essence of this fourth principle is reflected in Thorpe LJ’s illuminating comments in Parra v Parra:

    “ … the outcome of ancillary relief cases depends upon the exercise of a singularly broad judgment that obviates the need for the investigation of minute detail and equally the need to make findings on minor issues in dispute. The judicial task is very much different from the task of the judge in the civil justice system whose obligation is to make findings on all issues in dispute relevant to outcome. The quasi-inquisition 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. But this independence must be matched by an obligation to eschew over-elaboration and to endeavour to paint the canvas of his judgment with a broad brush rather than with a fine sable. Judgments in this field need to be simple in structure and simply explained.”

53.Mr Coleman for the Husband submits that the Wife’s many affirmations up to the trial did not in fact adopt this correct approach as “they ranged through pages and pages of repetitive and irrelevant mud-slinging”, and it is in this context, he submits, that her approach to the litigation comes into play, including her failure or refusal to mediate as alleged by the Husband, of which I will no doubt go into details when I come to consider the evidence, but meanwhile given the parties’ approach taken at the trial essentially seeking the bulk of the assets with the justification of requiring them to meet their own needs, it would be relevant to refer to further guidance of Riberio PJ in LKW when he stated the 2^nd Step in the section 7 exercise as follows:

  “74. The next step is for the court to assess the parties’ financial needs. As has been noted, the section 7 exercise often stops at this point since the total resources may be insufficient to go beyond or even to meet both parties’ needs. If so, no room is left for the application of any sharing principle. Addressing the needs of say, the wife and children may immediately absorb more than half of the total assets. If so, ‘needs” are, for want of any alternative, determinative. Where the assets are meagre, a “clean break” may not be possible and it may be necessary to have recourse to an order for periodical payments.

     …

   77.  As section 7(1)(b) indicates, the process of evaluating “needs” involves assessing the financial needs, obligations and responsibilities which each of the parties has or is likely to have in the foreseeable future in the light of present and foreseeable resources…

     …

   79.  Baroness Hale stressed that the parties’ needs should be “generously interpreted. Accordingly, in trying to ensure that each party and their children have enough to supply their needs set at a level that equates, in so far as resources allow, to the standard of living they enjoyed during the marriage, those needs should not be assessed according to some perceived lowest common denominator, but with flexibility in the light of all the relevant circumstances.”

54.It is with all these principles and guidance in mind that I shall now consider the relevant issues, starting with the one over the Wife’s alleged failure to mediate.

Wife’s Alleged Failure or Refusal to Mediate

55.It is the Husband’s case that while the Wife was keen to describe this litigation as “high conflict”, but she has in fact been the cause of much of the conflict and ensuing expenses on both the child and financial sides of the action, and that she has been almost steadfast in opposing a more sensible and economical approach such as might have occurred through mediation, which was in fact first suggested by her, unfortunately she then seemed wholly unwilling to progress with that suggestion when it was agreeable to him, as amply evidenced by the relevant correspondence between solicitors.

56.According to the Husband it was as early as June 2012 when the Wife invited him to mediate and suggested certain mediators, and thereafter while there were some disputes over which mediator to be used, as can be seen from the Correspondence Bundle [C1/144-5, 160, 177, 201, 301-302], and that when that could not be agreed between the parties, mediation never took place notwithstanding several letters from his solicitors in both 2013 and 2014 to remind the Wife of his agreement to mediate but which was never followed up by her [C1/579, 877, C2/1432, 1449, 1529 and 1530], and as a result it had led to significant further and unnecessary costs expenditure, as the “reality-checking”, which is a standard feature of the mediation process, of the Wife’s focus on a real case and the real facts rather than her chosen aspiration had thus been missed.

57.Mr Brewer for the Wife however submits that the invitations to each other to resolve matters through mediation must necessarily be considered in the context of their irretrievably broken relationship which had been reflected in their many disputes from which any residual trust upon which even the most seasoned mediator could begin to build and draw the parties together would have been undermined, and that whether the Husband was indeed bending over backwards to mediate, he was certainly engaged in equally painful contortions to resist specific discovery of his unredacted credit cards statements, and that the court should really look to see whether his invitations to mediation truly go beyond mere appearance, as it seems that while he was stressing one form of mediation in one breath immediately after having disavowed another in FDR in the preceding breath.

58.While it is true that our courts have yet been empowered by statute to order parties to attend mandatory mediation, which is still entirely on a voluntary basis of the parties, the courts do retain the discretion to penalise a party on costs for refusing to mediate without good reasons. Here it is clear that as far as the Wife was concerned, the Husband’s disclosed financial means in particularly as to his alleged debts and liabilities were unbelievable to her, and hence there was simply no point going through mediation unless and until all the cards were on the table.    

59.This of course led to what the Husband claims to be the Wife’s wholly unrealistic approach in her open proposal without any regard for the reality that their debts exceed the unencumbered value of the only remaining capital assets of the Juniper Apartment and the Taikoo Shing Flat in their respective sole name, and which need to be repaid or discharged by their sale proceeds rather than being treated as matrimonial assets which might be available for sharing.

60.Which brings me to what is at the heart of the parties’ disputes, which is what are their debts and how should they be paid off if indeed they need be, especially those of the Husband due to his mother, starting perhaps first with the more straight forward ones of the Wife.

Wife’s Debts and Liabilities

61.The Wife’s debts and liabilities are set out in her Schedule dated 12^th November 2014 including legal costs due to the Husband and his mother in the intervener proceedings and preliminary issue and can be summarised as follows:

(a) Credit cards	HK$  208,800
(b) Loans from parents	HK$  600,000
(c) Loan from brother	HK$  120,000
(d) Pledge agreement for legal costs	HK$  420,000
(e) Legal costs due to Husband’s mother	HK$  700,000
(f) Legal costs due to Husband	HK$1,139,000
(g) Own outstanding legal costs	HK$2,848,400
(h) Mesne profit claim by Husband’s mother	HK$ 495,000
(i) 2 Mortgages on Taikoo Shing Flat	HK$4,874,800
Total   :	HK$11,406,000

62.Even ignoring the 2 outstanding mortgages on the Taikoo Shing Flat which will be set off against the proceeds in the event of its sale at its agreed value of HK$8,373,000, the Wife’s personal liabilities would still stand at more than HK$6.5 million and clearly cannot be met by the net sale proceeds of less than HK$3.5 million.

63.The Husband accepts that the Wife, like himself has substantial debts but disputes their correct level in particularly with that said to come from her parents, as while that loan of HK$600,000 was first disclosed in her 1^st Form E, she later said it had since been repaid to her parents, but then in a turnaround in her 2^nd Affirmation she said she had used the money to pay her legal costs.

64.Nevertheless, he submits that it is not possible to see from all the disclosure the sum of HK$600,000 ever being provided by her parents at any time, and therefore the Wife’s evidence about this loan was at best misleading, and it remains wholly unclear whether this alleged loan is indeed still outstanding, and if so how much.

65.Furthermore, Mr Coleman submits for the Husband that from the cross-examination, it seems that there was a regular but ad hoc provision of money by the parents, sometimes in cash and sometimes used for other expenses but not properly recorded in the Wife’s financial documents, all of which smacks of an alternate source of income, he submits, which explains why the Wife thinks she might somehow be able to deal with her loans in future, even though she could not identify in cross-examination where she might possibly get the money to do so, or that this loan is in fact not repayable.

66.While there may be some confusion as to exactly which sums of money into the Wife’s bank account constituted the loan from her parents, but she has never said that the loan of HK$600,000 was paid to her in one go, and it is quite possible that it was made by various sums provided ad hoc by the parents whenever the Wife found herself in need to settle her legal costs, and to suggest that they may be alternate source of income seems too far-fetched to me under the circumstances and in the absence of concrete evidence of undisclosed additional income.   

Husband’s Debts and Liabilities

67.The Husband’s total debts and liabilities as updated by the said Schedule are much more substantial at HK$49.7 million, and that even if one were to put aside the 2 outstanding mortgages on Juniper Apartment which will of course be set off against its proceeds in the event of its sale, his other personal debts would still be a staggering sum at just over HK$26.6 million as summarised as follows:

(a) Loans from mother (2005-2012)	HK$13,683,000
(b) Loans from mother for club membership	HK$ 4,800,000
(c) Loans from 3 colleagues for legal costs	HK$10,920,000
(d) Outstanding legal costs	HK$ 1,700,000
(e) Deposit owed to tenant of Juniper Apartment	HK$ 120,000
(f) Mortgage and loan on Juniper Apartment	HK$23,286,000
Total  :	HK$49,710,000

68.The Wife takes no issue with those loans from his colleagues nor his obligation to repay them. However, since the Husband’s stated purpose of these loans was to assist with the costs of his litigation, Mr Brewer submits that the court should be mindful of the extent to which the liability of these litigation costs is permitted to burden the pot of the matrimonial assets.

69.Mr Coleman on the other hand argues that this point of the Wife was never pursued in cross-examination of the Husband and formed no part of her evidence, and that in any event they need to be repaid which should not depend on any other feature as suggested by Mr Brewer. I agree.

70.As for the loans for the various club memberships, again they will be repaid upon the sale of the memberships whether now or as originally intended when they are no longer needed for the daughter’s use or enjoyment. Thus leaves the first item of loans from the Husband’s mother in the total sum of HK$13.68 million from 2005 to 2012 which the Wife contends to be “soft” at the heart of the parties’ disputes.

71.Mr Brewer submits for the Wife that while it now seems clear that the Husband had for many years lived a lifestyle well beyond his means when measured by his annual income, measures taken by him since the breakdown of the marriage to articulate substantial liabilities to his mother smack loudly of litigation window-dressing, as while he may have as early as June 2012 in his 1^st Affirmation tried to impress upon the Wife that the cost of their lifestyle had to be restrained, it was presented simply in terms of responses to losses on his investments in 2008 and 2011, and that although he did mention loans from his mother in his then Form E, the prospect of them being required to be repaid did not feature in any of his evidence until his 6^th Affirmation of 19^th December 2012, and that none of his affirmations ever suggests that he had ever informed the Wife that their lifestyle was to any extent funded by his mother, or that he was required to repay her.

72.The picture subsequently drawn by the Husband and his mother in respect of these loans and repayment obligations is, submitted by Mr Brewer, very much muddled by the Husband’s explanation which he argues as entirely unconvincing as to why he repaid HK$10 million to his mother in April 2011 following the sale of his Camelot Heights Property when even on their own evidence the balance advanced by the mother was considerably less at only HK$6.63 million.   

73.The Husband’s evidence on this loan, and I agree with Mr Brewer that it was at best scarce and vague, was that when he purchased the Camelot Heights Property for HK$10.2 million by trying to borrow from JP Morgan, the bank was reluctant to lend due to some alleged structural defects in the property, his mother therefore assisted in the funding by providing certain to JP Morgan, and after he sold the property in 2011 he therefore repaid the HK$10 million to his mother.

74.Mr Brewer however submits that against a purchase of HK$10.2 million the Husband’s account squarely contradicts the evidence and fails to explain why the sale proceeds would be divided between JP Morgan as to HK$8.854 million on the one hand and his mother as to HK$10 million on the other, as the numbers simply do not add up.

75.In fact, Mr Brewer submits, only when confronted with the Land Registry record that the Husband was driven to accept that the JP Morgan lending was contemporaneous with the acquisition of the property, and hence his mother may or may not have put up the HK$10 million with JP Morgan as additional security as suggested by the Husband under cross-examination, and that even so it would have been a matter between his mother and JP Morgan alone and would not have created any form of obligation on his part to reimburse his mother.

76.Furthermore, Mr Brewer argues, given the mother’s apparent unrestricted financial support all these years to the Husband being her only son when his spending increased consequent upon pursuing the Wife from 2003 and well into their marriage, it is questionable whether the mother truly expected him to repay her at some point in the distant future, and in considering this issue it is submitted that the court should not be distracted by the fact that the mother has issued recovery proceedings because they were by consent between mother and son which amounts to nothing more than a coat of whitewash paint applied to what the Wife believes to be elaborate decoration of litigation window dressing of the true character of these loans.

77.Mr Coleman for the Husband however submits that it would be a nonsense to suggest these loans from the mother are “soft” when she has sued for them and has a High Court judgment in her favour and has sought to register it against the Juniper Apartment, nor should the Husband be properly criticised for saving costs by entering into a consent judgment for such part of the loans as he accepts were immediately repayable and which were not deferred such as those used for club membership, as while the Wife insists on running up and causing costs in hopeless litigation is no proper basis for criticism of the Husband taking a pragmatic and economic approach to litigation.

78.In any event, Mr Coleman submits, there was no cross-examination of the mother at all on these loans, and that it was never suggested to her that they were “soft” or that she would not in fact, and did not intend to, recoup them.

79.That last point seems to be a complaint of procedural unfairness to the Husband and his mother in that the Wife’s contention that these loans were “soft” and not intended to be repaid was never properly put to them in cross-examination, nor were their evidence on these loans specifically challenged by the Wife at the trial.

80.This complaint of procedural unfairness was in fact recently considered by the Court of Appeal in LWYA v KYW, CACV151/2013 where it was raised as an argument that it was unfair to the wife and her father in that case when it was never put to them in cross-examination by the husband that their alleged trust arrangement never took place, that their evidence regarding a trust was deliberately untrue, or that the shares transferred to the wife were in fact a gift.    

81.In her judgment for the Court of Appeal (with Cheung and Yuen JJA) Kwan JA said this about that point:

  “89. … raised a point based on Browne v Dunn (1894) 6 R 67 HL, making complaints that it was unfair to the father, the wife and the witnesses called in that various matters were not put to them in cross-examination and particular aspects of their evidence were not specifically challenged…

  90. At the trial, the father’s counsel … had also made the point that it was not suggested by the husband’s counsel in cross-examination that the father or the wife was not telling the truth when they said the shares were held by the wife as a trustee. The judge did not think it necessary to put to the father or the wife they were lying. As stated in §44 of the judgment,

    ‘Everybody knows where they have stood in this regard … The issue is well and truly joined and if I find for the husband, I am afraid that the basis of such a conclusion will be that the father’s and the wife’s evidence has not been truthful. The fact that such a suggestion was not in terms put to them is in my view neither here nor there. Everybody knows that their evidence is under the severest challenge.’

  91. I agree with the judge. I am satisfied there was no procedure unfairness. The parties knew their respective positions regarding the issue plainly in contest. The father and the wife knew the imputation intended to be made against them and had the opportunity to make any explanation open to them. There was no need to put to them what was obvious.”   

82.Likewise everybody here knew where they stood over these alleged loans from the mother to the Husband. As early as March 2013 in her 7^th Affirmation the Wife rebutted the Husband’s allegation of financial limitation and said this [(A1/602):

  “3. I do not accept that C (Husband)’s financial resources are limited solely to his income nor do I accept that he has made full and frank disclosure of his finances. From the first moment we met right up until we separated we lived a life of luxury...

  4. I believe C’s claim of having financial difficulties since 2008 is completely fabricated for the purposes of these divorce proceedings. This is part of his malicious plan to deprive me of a fair share to the matrimonial assets…

  5. Since I filed for divorce, C cries poor:

…

(3) From March 2012 to 13 December 2012, he claims to have borrowed HK$7,838,370.94 from his mother … and from 14 July 2005 to December 2011 he borrowed HK$11,446,500 and HK$773,848.40 on dates unknown;

(4) Only after I filed for divorce has C started making repayments of the alleged loans to his mother…”

  … 

83.The Wife then went on to say this about the alleged loans from the mother in the same affirmation at §103:

  “I rebut the suggestion by C that the advances by his mother are all loans. This was never mentioned by C during our entire relationship as he prided himself on being financially independent and self made. He was proud of the fact that he did not take money from his parents.”

84.In her 16^th Affirmation [A2/1056] filed on 3^rd October 2014 in support of her ancillary relief application the Wife also raised issue over the Husband’s dealing of the sale proceeds of his Camelot Height Property at §27 as follows:

  “Given C’s explanation as to how the family finances have operated through the marriage, I am unclear as to how he has spent the HK$10m which he borrowed against the Juniper Apartment in 2008 and the net proceeds of sale from Camelot Heights of about HK$12 million.”

85.She then went on to question whether those alleged loans from the mother are bona fides loans or soft loans in the same affirmation at §52:

  “At one of the earlier hearings the Court previously recognised an issue to be addressed whether the loans from R (Husband’s mother) are bona fides loans or soft loan …”

86.In his 17^th Affirmation filed on 28^th October 2014 [A3/1108] the Husband responded to the Wife’s allegations accordingly under separate topics such as “Financial Matters” [(A3/1110), “Other properties purchased by me” [A3/1117], and in particularly “My liabilities” [A3/1129], as did his mother in her 1^st Affirmation of 19^th December 2012 [A2/907] and 4^th Affirmation of 24^th October 2014 [A3/1074] where she explained why she lent money to the Husband and why they had to be repaid.

87.While the Wife’s case about these loans may not have been properly put to the Husband or his mother in their cross-examination at the trial, it is abundantly clear to me that both of them well knew all along the imputation intended to be made against them and had had the opportunity to respond accordingly and did so at least in their said affirmations if not in so many words in their testimony. I am therefore satisfied that there was no procedural unfairness to either of them.

88.It also seems clear to me that the Wife has now conceded that all those financial advances made by the mother to the Husband over the years were indeed loans, and that it is the question of whether they are “soft” or not in the sense of being repayable as now demanded by the mother while in the middle of these proceedings or at all that is at the heart of the dispute.    

89.It would be relevant to first look again at the mother’s evidence on these loans, starting with her said 1^st Affirmation filed in 2012 at the early stage of the proceedings in which she said:

“8. When these proceedings were initiated by the Petitioner in April 2012, my husband and I did not expect it would be a prolonged and expensive process. We had agreed to advance loans to C as he lacks liquid resources including to fund the litigation. C is an adult and we have brought him up to be financially responsible and accountable. This is essential if he is to be a success in business and in life generally. Therefore all the loans which I have advanced to C are properly documented and recorded. The majority of the loans were made to C in relation to I (Daughter). I is C’s first child and is our only granddaughter. We all hope to be able to provide her with a good start in life. C is to take full responsibility to provide for I in the years ahead. There is now produced and shown to me marked Exhibit … a schedule showing the loans advanced to C by me since 14^th July 2005. The total net amount of the loans as of 19^th December 2012 stands at HK$14,188,792.61 (the “Loans”).

   9. Recently, my husband and I have suffered considerable loss in our investments. The level of C’s legal costs requirements have increased to an extent which we can no longer sustain. We are also concerned with C’s ability to repay the Loans. In fact, I have asked C to start paying back the loans to me earlier. Unfortunately, C was unable to pay back the loans especially in 2008 when there was economic downturn. During 2010 (the year in which I was born) and 2011, my husband and I agreed to lend C some funds to support his family. In June 2012, I advanced additional loans to C as he was facing substantial liabilities on legal fees. I have lent him money to ensure that he makes timely repayment on his credit card before he receives reimbursements from his employer in order not to affect his credit rating or find himself embarrassed in from of business associates. Nevertheless, the volatility of the market has caused me and my husband substantial loss. Therefore, I had long been speaking with C about him getting his finances in order and making proper repayment. C has started to do so since August 2012.”  

90.Two things are apparent from this evidence of the mother: that her loans to the Husband started from 2005, and that they were mainly to assist him to provide for his daughter and to meet his legal costs in these proceedings, but then the daughter was not born until October 2010 and his legal costs would not become necessary until these proceedings commenced in April 2002, which begs the obvious question of how could these loans have started 5 years back to 2005 when the parties were not even married?

91.The answer can perhaps be gleamed from my earlier judgment of 16^th April 2014 [A2/969] on the preliminary issue in which I recorded and accepted the mother’s evidence that upon the Husband’s return from Canada, she had plans to train and groom him in the hope of succeeding her business on her retirement by inter alia providing him with funds to conduct and manage her investments from early 2000s and in particularly in 2005 when A Energy was incorporated to invest in the property market on her behalf when large sums of money could be seen channelled from her to the Husband. Her evidence about these funding were clearly that they were not loans.

92.What is also clear to me, and which has now been accepted by the Wife and submitted by her counsel, that the Husband had for many years lived a lifestyle either by himself before they met and thereafter with her and well into their marriage, the costs of which had been well beyond his means when measured by his annual income from his employer without other financial resources, and that must have come from his mother as evidenced by her said Schedule of Loans referred to above which shows that from 14^th July 2005 to late 2010 she had on various occasions loaned US$650,000 and HK$1,300,000 totalling HK$6,370,000 to the Husband [B7/3186] before the daughter was born, averaging just over HK$1.2 million per year. Were they therefore meant to subsidize his and the Wife’s luxurious lifestyle?   

93.In my said judgment I found the Husband’s annual income from 2005 to 2008 at respectively HK$4.05 million, 3.47 million, 2.59 million and HK$1.5 million [A2/988] during those 4 years totalling HK$11.61 million and at an average of HK$2.9 million per year, or just over HK$240,000 per month. With this income of his and possibly the Wife’s as well, why would the Husband still require financial assistance from his mother? The answer must lie in the level of the parties’ spending and their lifestyle which the Wife has maintained throughout these proceedings as “extremely lavish” starting with her 1^st Affirmation of 20^th June 2012 [A1/83 – 85] and in particularly her 7^th Affirmation where she devoted 20 pages of her 7^th Affirmation [A2/604 – 624] to describe how lavished her life had been provided for by the Husband when she started off in §7 as follows:

“He was once great to me and he would never let me settle for 2^nd best. He would always say: “only the best for my little monkey and nothing else”. Those words still ring in my heart from time to time, as I am sure I will never find someone else who will spoil the way C did during our time together. C has always lived a luxurious lifestyle, enjoying only the best in dining, apparel, travel and living. I have been very fortunate to have enjoyed such a lifestyle and have been very grateful that I have had what I had.”  

94.She then went on to give numerous illustrations of such luxurious lifestyle and spending lavished on her by the Husband including extravagant meals at the most expensive restaurants which would cost up to US$2,000 for 2 on some occasions, travelling around town with her in chauffeured limousines, gifting her with expensive jewellery and wardrobe of the highest brand names including 10 Hermes Birkin and Kelly handbags which cost well over HK$1 million, with multiple annual holidays around the world travelling only on first or business class and staying at the most luxurious hotels with extravagant shopping sprees during each trips, and providing her with supplementary credit cards including the American Express Centurion Card with no spending limit, and all of these even before their marriage.

95.For their wedding held at the Four Seasons Hotel in 2006 she was told that the Husband had spent close to US$1 million, and that she was given a diamond necklace with matching earrings and bracelet worth over HK$2 million by his parents, followed by a 2-week honeymoon in Egypt where the Husband spent, amongst other luxuries, HK$100,000 for a 15-minute tour of the tomb of the queen of Pharaoh Ramses II.   

96.After their marriage it seems that the parties’ lifestyle could only get more extravagant including attending expensive overseas events such as the Formula 1 races as well as frequenting various exclusive clubs and nightclubs in Hong Kong, Macau and Dubai, not to mention of course the Husband’s investments in those properties mentioned above with lavish decoration and furnishing of the Juniper Apartment of which the Wife claims to cost close to SG$2 million.

97.While there is no direct evidence of the parties’ monthly expenditure at that time, their subsequent disclosure in these proceedings should shed some light when the Husband’s 1^st Form E of filed on 20^th June 2012 disclosed a household and personal spending in excess of HK$340,000 per month which was twice as much as his then disclosed income of HK$170,000 even before taking into account of his spending on the daughter, while the Wife’s Form E filed at the same time disclosed a monthly spending of more than HK$200,000 on similar items which likewise happened to be twice as much as her disclosed income of HK$97,500. It is therefore plain that if both parties had for years been leading a lifestyle and spending way beyond their means, they must have other resources, and the only evidence before the court is that they were mostly from the mother, this is even before taking into account of the Husband’s disclosed legal costs incurred in the proceedings in excess of HK$11 million.     

98.Which brings me to what is at the heart of the dispute: Whether these loans from the mother are “soft” in the sense of not repayable at all or at least not when the Husband cannot afford which is his present case without selling the Juniper Apartment for this purpose. Before determining this issue, however, it would first be necessary to go back to that particular transaction between the Husband and his mother over his Camelot Heights Property.

99.For whatever reason behind this alleged loan from the mother for the Camelot heights Property, and whatever her role was in its purchase if any, there cannot be any dispute and according to the Land Registry record that JP Morgan was the mortgagee bank that funded the purchase in 2005, and when that property was sold later in 2011 for HK$22.5 million, as evidenced by the completion statement [B3/1396] prepared by the Husband’s solicitors in the sale, JP Morgan was repaid the redemption money of HK$8,854,056.68, and after discharge of other costs and expenses, the balance of the net proceeds of HK$11,316,177.52 was deposited into the Husband’s HSBC Premier Account on 23^rd March 2011, from which the HK$10 million was transferred to the mother’s account with the same bank some 3 weeks later on 15^th April 2011 [B2/406].

100.It is henceforth indisputable to me that the mother could not have loaned HK$10 million to the Husband for the purchase in the same sense as did JP Morgan, as clearly the Husband did not need to borrow as much as HK$18 million to pay for the property which cost only HK$10.2 million, and it was indeed misleading on his part to have stated in his evidence that he had to repay a loan of HK$10 million to his mother for the purchase without even mentioning that JP Morgan was in fact the mortgagee bank until he was confronted with the Land Registry record of the purchase under cross-examination and admitted that JP Morgan was in fact the mortgagee bank.

101.Whatever financial assistance provided by the mother, if indeed any, the Husband has never fully explained in his evidence other than that reference to the mother providing some sort of security to obtain the mortgage from JP Morgan, and there is no evidence that it was for HK$10 million, it could therefore not be said to be a loan to the Husband per se as otherwise he could have easily used it to finance the purchase and render any mortgage from JP Morgan unnecessary or redundant, hence I am unable to see any reason for him to repay any money to his mother after the sale, let alone as much as HK$10 million. If indeed it was to compensate the mother for providing security to JP Morgan, and again there was no evidence to that effect, I am not at all convinced that given her good relationship with her son that she would have required any compensation from him such as bank interests, and that if so certainly not at that amount.

102.Furthermore, even if one were to treat that sum as the Husband’s repayment of other money advanced by the mother over the years, as pointed out by Mr Brewer, by March 2011 the balance advanced according to the mother’s own evidence was considerably less at only HK$6.63 million, which brings me back to the first question of whether or not those loans are indeed “soft” as argued by the Wife. 

103.On this Mr Brewer submits that while the mother was unable to recall the Husband’s lifestyle or how it was funded prior to September 2005 when the pattern of his alleged borrowing from her commenced, what is plain from indisputable evidence is that while such expensive lifestyle was well beyond his declared income from his employer, he somehow had access to significant funds well prior to any of the mother’s scheduled loan balances which cannot be ignored by the court in considering the extent which the mother was accustomed to accounting for her financial support to her only son, and whether she truly expected him to repay her at some point in the distant future, particularly as his spending increased from 2003 consequent upon pursuing and marrying the Wife and the subsequent birth of their daughter.

104.I agree that the mother’s financial resources made available for the Husband was already in place prior to 2005, but that was for a specific purpose as far as the mother was concerned as stated in her affirmation of 27^th September 2013 [CD/12] and as I found in my earlier judgment on preliminary issue that she was then grooming the Husband into eventually taking over her business upon her retirement, which is why, I believe, she did not regard them as her loans to him for setting him up to run her business with a view to take over upon her retirement, and that must include, for example, establishing his expensive wardrobe, maintaining his lavish lifestyle, and funding his purchase of the Lamborghini in 2004 for HK$2.4 million and the decoration of his Juniper Apartment in 2005 for S$2 million according to the Wife, none of which were recorded in her said schedule of loans.   

105.After the Husband had established himself in his business and was made a CEO of the company, and subsequently got married and formed his family, I can see why the mother no longer found it necessary to continue her financial support for him, and hence from 2005 onwards whenever the Husband went to her for financial assistance, it would be natural for her to treat them as loans and to record them in her schedule accordingly with expectation of future repayment when he is financially capable, in particularly those for assisting him as to his legal costs in these proceedings. While her recent recovery proceedings does seem to be litigation window-dressing as submitted by Mr Brewer for the Wife, but not in the sense that that she is colluding with the Husband to defeat or obstruct the Wife’s claims but rather to protect her own right for repayment of those loans in the event of any sale of his assets such as the Juniper Apartment against which she is trying to register a charge in Singapore in what seems to me competing with the Wife for what is left of the Husband’s assets.     

106.Henceforth, and in conclusion, in respect of the Husband’s payment of HK$10 million to the mother from the sale proceeds of his Camelot Heights Property, as I have found above that it could not be any loan repayment relating to its purchase, given the fact that the parties’ relationship by then was already fraught with difficulty with frequent disagreements over various matters leading to talks about separation according to the Husband’s evidence including his 1^st Affirmation [A1/134], the only logical conclusion that I can draw is that he intended to place those sale proceeds with his mother in case of a divorce with the Wife.

107.I note that this property was purchased prior to their marriage and hence the Husband may argue that its sale proceeds should not form part of their marital assets. Given the fact that the parties were then already in cohabitation when it was purchased by the Husband as his investment and its close proximity to their marriage, I do not think it would be right or fair to so exclude it, and that in any event it is a substantial fund available to the Husband to meet his debts and liabilities, or according to the Wife to meet her future needs and those of the daughter. However, before proceeding to consider those needs and of course of the Husband as well, it would be proper to first consider the parties’ income and earning capacity, starting with the Wife’s.

Wife’s Income, Earning Capacity, Prospects etc

108.There is nothing controversial about the Wife’s current income which has been higher since she departed REL at a basic salary of about HK$97,500 per month plus commissions of which she received at least HK$700,000 in 2014 which brings her total average income to HK$155,000 per month for that year, although the Husband suspects that she may be entitled to further commissions before the close of this financial year.

109.It is also accepted that she has no significant liquid investments to speak of according to the said Schedule of Assets and Liabilities, except perhaps some personal items such as jewellery and handbags which the Husband suggests that she should sell to meet her costs liabilities rather than for him to pay as proposed in her Open Proposal.

110.More controversial however is the subject of her interest as a beneficiary of her grandfather’s trust of which she seems to know little other than that she is one of 13 grandchildren with also one uncle and two aunts who are all part of the trust and that her grandfather is still healthy, but that she does not know the amount or other details of her entitlement, nor does she have any copy of the trust.

111.The Husband however finds it difficult to accept that she has so little knowledge of the trust as she did sign some documents relating to the trust back in 2012 during which queries were being raised by his solicitors and hence she was well aware of her duty to provide further details, and that her brother who is also a beneficiary has bragged about expecting US$1 million from the trust, and which he believes should explain why the Wife suggested in her open proposal that she could meet her own liabilities when there seems to be no other possible source of monies identified by her for repayment of those debts.

112.While any bragging by 3^rd party is no better than just hearsay evidence and in the absence of any documentary evidence of any further details of the trust or the Wife’s share, it would be difficult if not impossible to say with any certainty as to what exactly is she going to receive under the trust other than that it may be significant in the event of her grandfather’s death.     

Husband’s income etc

113.The Husband’s income is more controversial notwithstanding the fact that it had been the subject of intensive examination during the trial of the preliminary issue and was found to have averaged in excess of HK$2.6 million prior to 2008, but it is now said to have since come down to HK$1.5 million in 2008 and then just under HK$1 million in 2009. In his updated Form E of 10^th July 2014 the Husband put his current income further down to HK$55,200 per month just on basic salary with no prospect of bonus or commission [A2/1039], for which he explained in his 17^th Affirmation [A3/1112-3] is due to drop in his bonus and commission and the cessation of his housing allowance since he no longer travels to Singapore for business as often as before, and also because he now works only on part-time with time off in the afternoon of Tuesday, Thursday and Friday in order to be with his daughter.

114.He further claims that while he may be the CEO of REL where he has now worked for 15 years since 1999, it is only a title inflated for marketing purpose, as he only oversees the marketing department with no control over the management of the group, and that if he were to leave REL he does not know what other job he could do as there are very limited prospects for him to change his career now given his lack of other working experience, and that he doubts whether REL’s competitors would even consider hiring him given his relationship with his mother who is closely connected with REL.

115.That last sentence is in fact Mr Brewer’s point that given his close relationship with his mother who had admittedly gone to huge efforts and expenses in grooming him with the expectation of eventually taking over her business when she retires, the picture which the Husband is now trying to paint about his future earning prospect indeed appears unreasonably and unrealistically gloomy.  

116.Furthermore, since the nature of his work, which according to him is “to solicit individual clients with high net worth to purchase insurance for wealth planning purpose” is similar to that of the Wife which she used to do at REL and now at her present employer, the fact that she is now able to earn much more speaks volume in refuting the Husband’s pessimistic view, which is no doubt further illustration of him crying poor once she filed for divorce.    

117.As a matter of fact, in his same affirmation the Husband appeared to be putting the blame of his current financial predicaments on the Wife in particularly his debts the majority of which was “due to the spending that was incurred during the marriage and the unnecessary legal costs that have been incurred in the last two years which could have been avoided if (Wife) had taken a reasonable and sensible approach towards these proceedings”, and that “her behaviour had left him no choice but to borrow money to meet his obligations and defend himself” [A3/1112-3§16], a common theme of his case throughout the proceedings.

118.While I have no doubt that the Wife must shoulder up her share of the blame for her unrealistic and very often aggressive approach in throughout the proceedings especially on the preliminary issue, for which she was so criticised in my said judgment and was penalised with the costs of that trial, but she is certainly not the only guilty party in the proceedings as a whole, and it certainly seems misleading to me for the Husband to put all the blame on her for his predicaments such as his legal costs situation.

119.As pointed out by the Wife throughout the proceedings, his costs is almost twice as much as hers, and as she noted as earlier as in her 2^nd Affirmation of 10^th August 2012 [A1/164] that when the Husband attended their very 1st First Appointment hearing on 22^nd June 2012, he was accompanied by an “entourage of 7 legal advisers” including senior and junior counsels as well as the senior partner of his solicitors’ firm while she was represented only by her solicitor, to which I in fact agreed in my earlier decision on the Wife’s application for provision of legal costs when I remarked that “ … where the playing field is clearly not level as far as the Wife’s situation with her legal costs is concerned, when in some of earlier hearings she could only afford to be represented by a senior solicitor while the Husband almost always came to court with an entourage of lawyers.”[A1/408], and that he had throughout the next 2 years continued to bring similar entourage of lawyers to almost every other hearing up to the very last trial, hence his constant expression of concern over his mounting legal costs and the need to economize indeed sounds hollow to me in the circumstances, and that in my view he was equally guilty of failing to recognise the reality that he simply could not afford to incur costs in the way he did.

120.Above all, the fact that the parties were spending well beyond their means during their marriage that caused the Husband to resort to borrowing from his mother and led to his current debts situation clearly in my view cannot be all blamed on the Wife, as he was himself equally extravagant in his lifestyle and spending, something which he was well into even prior to the marriage when he was being groomed by his mother into a high flying investment broker with a lifestyle which he clearly could not afford with his salary but which he would carry on without any curtailment after the marriage, and that if the Wife had been spoiled by being treated like a “princess” with a “fairytale lifestyle” before and after their marriage, then the Husband must be equally liable for allowing this state of affairs to continue throughout the marriage up to and well after the birth of their daughter, and I doubt very much that during all this time he would have told the Wife that he was in fact living on loans from his mother when they were staying in luxurious hotels enjoying their exotic holidays and paying for her Hermes Birkin bags, or for that matter paying HK$30,000 every month for the live-in nanny.

121.As a matter of fact, while the Wife was rightly criticised for stubbornly pursuing her claim against the Mountain Lodge Property even after being shown the unchallengeable evidence of the mother’s ownership, I cannot say that her belief that the Husband was much wealthier than he actually was under the circumstances is totally without basis, and that his initial attempt to get her to sign the separation agreement to give up her financial claims notwithstanding his then far superior assets position, as well as his aggressive approach over the care arrangement of daughter at the early stage of their litigation certainly did not help anything but just fuel her suspicions.    

122.Furthermore, if indeed the Husband’s current alleged much lower income is the result of him working only part time to enable him to secure his relationship with the daughter as he so alleged in his 17^th Affirmation, it then begs the obvious question of why could he not do as all other full-time working fathers, and all other full-time working mothers as well, spend time with his daughter only after work and on weekends and holidays? There is simply no evidence presented at the trial to justify him working only part-time for that reason or purpose. In any event it is his counsel’s submission that his income will increase when the daughter enters primary school so that he can spend more time working and more importantly to restore his income to similar level of the Wife if not more. Regardless of the truth or accuracy of his current alleged income, it is my firm view that he is perfectly capable of earning as much as the Wife or as before even without taking into account of his privileged and secured position in REL given his relationship with his mother.  

The Wife’s Needs

123.In considering the Wife’s needs I must obviously also include those of the daughter’s as well, the details of which were first set out in her updated Form E [A2/1015 – 1016] at almost HK$165,000 per month plus various as yet determined items of the daughter such as holidays, insurance, lunches pocket money when she starts primary school.

124.She then updated them with more details and exhibited to her 17^th Affirmation [B12/5066-5067] with yet further update a week later to her Open Proposal and which are typically never straight forward but instead tabulated into 35 items down to the most minutiae and in 5 different periods in yet another spread sheet [C2/1818]: Her Form E dated 29^th May 2012, 2^nd Form E dated 9^th July 2014, Amount claimed to 31^st January 2015, Amount claimed from February 2015 to August 2015, and Amount claimed from September 2015, with 5 different monthly sums at HK$252,426, HK$161,943, HK$127,967, HK$201,578 and HK$175,178 respectively. 

125.The first and immediate need must be for their accommodation once the Wife has moved out of Mountain Lodge with the daughter, and it seems that she has now accepted that it would be in Taikoo Shing for which her principle expense will be rental which she initially put at HK$68,000 but was prepared to come down to a more realistic sum of HK$40,000 at the trial for an apartment capable of accommodating the daughter, the nanny and a domestic helper.

126.The Husband believes that the obvious option would be for her to move into her own Taikoo Shing Flat with 3 bedrooms to accommodate both her need and that of the daughter with the helper, as there is no reason why housing her grandmother who has been occupying the property should have fallen on her, or trumped her own need and that of the daughter, as even from her own evidence her parents were and are well able to afford to care for the grandmother, or alternatively to have paid rent for the grandmother to stay in that property to have covered the mortgage instalments, thereby freeing up the Wife’s income to rent her own home in the same area for the 3 of them but without the nanny.

127.Furthermore, Mr Coleman submits for the Husband that the Wife’s brother who works together with her in the same profession is financially able to assist in support of the grandmother who may also spend time in Singapore to be care for by the wider family of the Wife’s parents thereby freeing up the Taikoo Shing Flat to accommodate the Wife’s needs.

128.At any rate, it seems that the Wife, as indicated by a letter from her solicitors during the trial that she would be vacating Mountain Lodge by 15^th December 2014 to move into her Taikoo Shing Flat, as suggested by the Husband back in May 2014 shortly after she lost her case on the preliminary issue, while looking to rent a bigger flat in the same neighbourhood presumably to accommodate not just herself, the daughter and her helper but also the nanny, whose continued need to care for the daughter and her cost had always been a thorny issues between the parties throughout the proceedings.   

129.The nanny in fact started off working as a confinement lady for the Wife during her pregnancy, and on and off after the birth of the daughter until about April 2011 when she was formally employed as a live-in nanny by the Husband at a salary of HK$30,000 per month until end of July 2012 when he terminated her employment but she has since stayed on under the Wife’s employment at a lower salary of HK$25,000 per month.

130.The Wife’s case is that it was the parties’ decision at the very beginning that their daughter needed a live-in nanny which the Wife insists is a sine qua non in order to permit her to commit to earning a full-time salary until the daughter is aged 5 or 6 and ready for primary school which shall be this coming September, but which the Husband insists that he had only agreed to the employment of a confinement lady but not a long-term nanny and which he insists that she was not, and that in any event he did not think it was necessary to continue with her service when the daughter became older and hence his decision to stop her employment in July 2012 as her cost has been a wholly unrealistic burden of the daughter’s expenses, yet the Wife has insisted on her continued employment beyond any need and beyond her financial means, while the problem she described in evidence of an attachment between their daughter and the nanny is precisely his concern ventilated in earlier earnings, and is entirely self-serving or self-imposed.

131.In addition, it is also the Wife’s suggestion that when she eventually let the nanny go, she should employ in her place a second helper to care for the daughter as her present helper would continue to be responsible for her household chores while she works, but of which the Husband also argues as absolutely unnecessary. 

132.Mr Coleman further submits, notwithstanding that financial burden to her, it is now telling that the Wife has felt able to have afforded and has in fact afforded to pay for the nanny herself, and that it also seems clear that the money spent on the nanny would be enough to have paid for a suitable rent in Taikoo Shing had the Wife’s demand been more real and not fanciful by agreeing to move out of Mountain Lodge much earlier. 

133.In fact, Mr Coleman argues, the level of her other expenses claimed as “current” in the Wife’s updated Form E are not entirely correct and reflect the fact that she has not been conscious or careful as to her spending level in view of her alleged mounting debts and liabilities, such as her personal grooming which she put at HK$4,000 per month but in fact turns out to be much higher when her evidence under cross-examination revealed that her cosmetics and treatments at Ingrid Millet alone amounted to HK$8,333 [B9/4013], while her nail painting and pedicure expenses at Nail Nail was costing HK$10,000 or more every other month [B9/4022, 4034, 4044, 4068 etc] even around the time when she was asserting inability to rent alternative accommodation after being told to move out of Mountain Lodge.

134.Another conflicting example of the Wife’s spending is on her clothing and shoes which she put at HK$12,000 per month in her updated Form E, but according to the Husband her credit card records and her Facebook pages actually reveal a much higher level which she had continued to choose to spend while complaining about not having funds to meet the daughter’s expenses or being able to afford rent.

135.Mr Coleman therefore submits that all these show that the Wife has been able to afford her own living expenses as well as those of the daughter without exhausting all her income or incurring overdrafts, and that if necessary with a sensible approach to finances, the Wife will be able to afford a suitable lifestyle for herself and the daughter on her own considerable income.    

136.Whether that is true or not, there is no question in my mind that the lavish lifestyle and high standard of living during the marriage is no longer feasible, a fact seems to have accepted by the Wife during the trial, and that whether she is to move into her Taikoo Shing Flat with the daughter in the mean time pending its sale, or to rented other accommodation in the same neighbourhood, and given the fact that it would require a flat of at least 2 bedrooms if not 3 to house both the daughter and her helper, it is only fair that the Husband should contribute equally towards such needs and expenses of the daughter, which certainly cannot be met by just a token sum of HK$5,000 for her other expenses plus her school fees, when there would also her fair share of the general expenses of the Wife’s household, including the monthly rental of HK$40,000, utilities and management at about HK$7,000, and food and other household expenses which the Wife has put at a total sum of HK$15,000 per month [B12/5066], none of which appear to have been specifically challenged by the Husband.

137.Furthermore, while I agree with the Husband that the live-in nanny would not have been needed for the daughter once she started nursery back in 2012, nor could they afford her monthly salary of either HK$30,000 or later HK$25,000 after their household split into 2 upon the breakdown of their marriage, but with the Wife working full-time there is no question that she would require her current domestic helper to continue looking after the daughter while she works and hence it is only fair that the helper’s salary and expenses of HK$6,300 per month should also form part of the daughter’s needs and expenses.

138.Hence and as explained above, for the daughter’s reasonable monthly needs and expenses, generously interpreted, it would be fair to allocate about half of those household expenses of the Wife referred to above to her of which I would round down to HK$30,000, and this is on top of her personal expenses which I broad brush at about HK$22,000 based on the Wife’s open proposal [C2/1763-1764] most of which not seriously challenged by the Husband apart from those over the live-in nanny and the 2^nd helper. There are of course in addition her school fees which are at present being paid directly by the Husband, and her various extracurricular activities being separately met by the parties and not necessary to quantify.

The Husband’s Needs

139.The Husband’s needs are much more straightforward in that while he may have put his current monthly expenditure in excess of HK$500,000 in his updated Form E [A2/1041 -1042] which is some 10 times his stated current income, but when they are stripped of the mortgage payments of his Juniper Apartment upon its sale and his legal costs provision upon the conclusion of these proceedings as well as his alleged monthly loans repayment to his mother, his general and personal expenses should come down to a much more realistic and manageable level at about HK$87,000 per month if he is to remain residing at his parents’ place, or at an addition sum of HK$38,000 if he is to rent his own place as the Wife’s in Taikoo Shing, although I do have some reservation that he would really be prepared to substantially down grade his accommodation by moving out of his parents’ expensive and spacious home until they decide to retire and downsize their accommodation, but be that as it may it would still be well within his income earned on full-time basis. He was not challenged as to the rest of his stated expenses.

Other Section 7 Factors

140.The remaining relevant factors are relatively straightforward and non-controversial, and suffice it for me to comment that whether this had been a 5 or 6 years marriage, plus a brief period of cohabitation leading seamlessly into the marriage, it is fair to say that this is neither a long nor short marriage that should not significantly impact either way on the court’s determination of their respective claims.

141.Neither is there any real or serious issue over contribution, although the Husband seems to argue that the Wife in fact made little to nominal financial contributions, and that she took no steps to reduce spending. For the former in the absence of any specifics I can only assume the Husband was referring to contribution towards the purchase of various properties during the marriage, but with the Wife’s means surely she could not and was never expected to do so, while there is no question that she was a full-time working wife and mother throughout the marriage.

Conclusion

142.Having considered the parties’ means and needs and those of their daughter as well as all other relevant matters, I shall now return to their open proposal, both of which as mentioned above I find to be devoid of practical realities as each sought the bulk of the 2 remaining landed properties without regard for the financial circumstances of the other, on one hand with the Wife’s total ignorance of the reality that it is impossible and impractical to maintain a similar standard of living as during their marriage, and on the other hand with the Husband’s disregard for the Wife’s liabilities or his fair share of the financial responsibility towards his daughter essentially living mainly in the Wife’s household.    

143.I do however agree that the only appropriate and practical solution as suggested by counsel for both parties in their closing submission is to liquidate the remaining 2 landed properties and to apply their net sale proceeds (less their respective substantive mortgages) of some HK$28.3 million to meet the needs of the parties as well as their daughter’s, and that of course do not just mean paying off their remaining debts and liabilities.

144.However, I should pause here to recall that when the Husband suggested in his open proposal that the entire net sale proceeds of the Juniper Apartment of HK$24.5 million should go to him, he justified it by claiming that would still not be sufficient to meet his remaining debts of more than HK$26.4 million, and that he would still have to look to other resources to meet the deficits such as his bank savings and investments to pay off the shortfall of his liabilities [C2/1776]. He might have been correct based on those figures of his at that time, but not if he in fact has, as I have found, an additional sum of HK$10 million stashed with his mother from the sale of his Camelot Heights Property, and taking into account of his savings and investments of about HK$1.2 million as disclosed in his updated Form E [A2/1031-10322], the Husband would in fact end up with more than sufficient funds to meet the deficits and with still some HK$9.3 million to spare (HK$24.5M + HK$10M + HK$1.2M – HK$26.4M = HK$9.3M).

145.If on the other hand as proposed by the Husband that the Wife should also sell her property to meet her debts and liabilities on her own, and then to rent her own accommodation in the same neighbourhood for herself and their daughter, it is plain that the net sale proceeds after discharging the outstanding mortgages of her Taikoo Shing Flat would leave just about HK$3.4 million and certainly insufficient to meet her remaining liabilities of HK$6.5 million, with a short fall of about HK$3.1 million, when at the same time she would have to find appropriate accommodation not just for herself but also their daughter, whereas he would not only be debts free but also with more than HK$9 million in cash, and can choose to remain in his parents’ house on the Peaks, this proposal of the Husband simply falls way short of achieving fairness between the parties, which is the overarching objective of the whole exercise.  

146.Fairness can only be achieved in the circumstances of this case, I firmly believe, for both parties to exit the marriage relatively free of debts and liabilities and with their fair share of what remains of their marital assets as I have found above in the following manner:

(a) Both the Juniper Apartment and Taikoo Shing Flat be sold as soon as possible, and that their net sale proceeds together with those of the Camelot Heights Property of HK$10 million be used to paid off the parties’ debts and liabilities as I have found above save for those legal costs due by the Wife to the Husband and his mother from the preliminary issue;

(b) Whereupon the surplus, and I would expect it to be not insubstantial as I have found, shall then be divided equally between the parties under the sharing principle, with those costs due to the Husband and his mother referred to (a) above be set off against the Wife’s share;

(c) These terms shall be in full and final settlement between the parties as a clean break and that all their financial claims be dismissed.    

147.As for the daughter’s needs and expenses generously interpreted, of which I have found to be about HK$52,000 per month as above for her share of the Wife’s general household expenses and personal expenses, it is only fair that the Husband should share such expenses more or less equally with the Wife, but given that he is paying for the school fees and shall continue to do so until she enters primary school, I believe a monthly sum of HK$25,000 would in the circumstances be reasonable and well within his means as before.  

148.In the premises I so order accordingly as above, with the direction that there be liberty to apply in case of any problem or delay in implementing these terms in particularly with the sale of the properties. As for the costs of these proceedings, given my views on the parties’ proposals and my findings as to their litigation conduct, I think it would be fair and appropriate for each of them to bear his/her own costs, which is an order nisi to be made absolute at the expiration of 14 days. Last but not least I must express my gratitude to both counsel for their valuable assistance in what is no doubt a most difficult case.       

Mr John Brewer instructed by Messrs. Stevenson, Wong & Co for the  Petitioner.

Mr Russell Coleman SC instructed by Messrs. Hampton Winter & Glynn for the Respondent.