Msk v. Gl
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FCMC 1559/2014 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 1559 OF 2014 (Transferred from FCMC 2676/2012 ----------------------------
---------------------------- Coram: Deputy District Judge I. Wong in Chambers (Not Open to Public) Dates of Hearing: 10 – 11 and 15 April, 1 and 5 August and 20 – 21 November 2014 Dates of Closing Submissions: 8 and 15 December 2014 Date of Handing Down Judgment: 18 February 2015 __________________ J U D G M E N T The Application 1.This is a trial on the ancillary relief upon the divorce of the parties. 2.The marriage in issue is a second marriage for both parties but sadly it has to come to an end by way of a divorce. The wife is the petitioner in the present proceedings. Decree nisi was granted on 2 April 2014. Background 3.The husband, now aged 49, was originally from the Mainland and the wife, 46 years old, is a local Chinese. 4.The husband is an engineer by profession and the wife also worked as an assistant purchasing officer in the construction field. At all the material times, the parties were in gainful employment. It was only in June 2011 that the wife resigned from her job and has since become jobless. 5.The parties met each other in 1995 while working in the same company and soon developed a relationship. At that time, both were already married to someone else. 6.The husband divorced his former wife in about 1998 or 1999 in the Mainland. He has a son from the former marriage. He was born in April 1994, now aged 20, and is a 3rd year medical student in Hong Kong (“the son”). 7.As regards the wife, she divorced her former husband in 2000. There was no child from this marriage. 8.In about 2000, the parties started cohabitation at the wife’s home in Hong Kong. At about the same time in May 2000, the parties purchased a property in Shenzhen (“the Shenzhen Property”) in their joint names for about RMB 400,000. The wife’s version is that she contributed $100,000 to the purchase. The husband’s version is that he paid the down payment from the proceeds of sale of another property in the Mainland, which was owned by him and his former wife. The remaining sum of RMB 320,000 was paid by way of a mortgage; and all the mortgage payments were made by him. Be that as it may, these differences are not material as far as the issues in dispute in the present proceedings are concerned. 9.Since the husband worked in Shenzhen, the Shenzhen Property was used as his residence. The wife stayed with the husband there every weekend. 10.On 12 March 2001, the parties were married in Hong Kong. 11.In about November 2002, the husband migrated to New Zealand. During this period the wife delivered necessities to the husband, and visited him there. The wife also assisted the husband in dealing with the rental matters of the Shenzhen Property and took care of the son. 12.Sometime later, the son also joined the husband in New Zealand. 13.On 8 March 2004 the parties registered their marriage again in New Zealand. 14.In May 2005 the husband purchased a property in Full Art Garden of Yuen Long (“the FA Property”) for $880,000, which was used as the wife’s residence. The husband’s version is that the FA Property was purchased entirely with his own monies. 15.Then in 2006, upon being granted residency in Hong Kong by virtue of his connection with the wife, the husband joined the wife and made the FA Property their matrimonial home. The husband also found a job in Hong Kong. 16.At about the same time in July 2006, the Shenzhen Property was sold for RMB 669,000. It is not in dispute that the husband kept all the proceeds of sale. The husband made use of the proceeds of sale to purchase a property at Sun Yuen Long Centre for $1,480,000 (“the SYLC Property”). This property was originally rented out for incomes but it has become the home for the husband and the son upon their moving out of the FA Property. 17.In August 2008, the son left New Zealand and joined the family in Hong Kong. 18.In 2009, the husband moved to another job which required him to work in the Mainland. As from early 2010, he was required to station in Chongqing and only returned to Hong Kong for 3 days every month. 19.Then sometime in June 2011, the wife resigned from her job and visited the husband in Chongqing. It would appear that it was after her return to Hong Kong that the parties’ relationship started to deteriorate; and eventually this led to the wife’s issuance of a divorce petition on 1 March 2012 on the grounds of 2 years separation since 2002. This is the case FCMC 2676/2012 (“the 1st divorce petition”). Subsequently by a consent order dated 30 October 2013, leave was given for the wife to commence another petition for divorce on the ground that the parties had separated since June 2011. This has become the present proceeding. 20.Despite the fact that in both of her petitions the wife pleaded that there were no children of the family, it is clearly not truthful even on the basis of the wife’s own evidence. I have no doubt that the son was a child of the family for the purpose of the present proceedings. 21.It is common ground that the husband and the son moved out from the matrimonial home to live at the SYLC Property on 30 April 2012. Sometime later in September 2012, the son was admitted to a medical school. As of now, the husband and the son are living in the SYLC Property whilst the wife is living alone at the FA Property. The 2 properties are registered in the sole name of the husband. 22.Since May 2013, the husband has been assigned to station in Guizhou of the Mainland; and as for wife, she has been out of work since June 2011. 23.The husband has been paying maintenance pending suit $12,000 per month since 1 October 2012 pursuant to an order dated 7 September 2012. Parties’ Late Applications 24.On the 1st day of trial on 10 April 2014, the wife sought leave to adduce the expert evidence of a psychiatrist pursuant to Order 38, rule 36 of RHC. Her application was dismissed. Since I have already set out my reasons in my Ruling dated 10 April 2014, I would not repeat the same here. 25.Then on the 2nd day, ie 11 April 2014 the husband filed his Form A seeking the return from the wife a few items of wedding gifts. 26.Ms Cheng, for the wife, raised the objection that it was a late application. I allowed the application for the reason that the husband’s demand for the return of these items had always been a live issue. The wife was fully aware that these items, being wedding gifts from one of his close relatives, were regarded by the husband of high sentimental values. I took the view that no prejudice would be caused to her. The Legal Principles 27.The jurisdiction of the court in granting financial relief for a party is governed by section 4 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) which provides:-
28.In deciding on how to exercise its power in this regard for a party to the marriage, the court is bound to consider section 7 (1) of MPPO which provides:-
29.The principles upon which this case is to be considered are the conventional ones, namely those set out in section 7 of MPPO. Those principles are to be interpreted in the light of the Court of Final Appeal judgment in LKW v DD, (2010) 13 HKCFAR 537. I will follow the steps set out by Ribeiro PJ in that judgment in the consideration of the application before me. As the parties have no dispute over the principles and steps to be applied, I do not think I need to set them out here. The Approach 30.I do bear in mind the proper judicial task that I am given in cases of this kind, as was said by Thorpe LJ in Parra v Parra, [2002] EWCA Civ 1886; [2003] 1 FLR. 942; [2003] 1 FCR. 97; [2003] Fam Law 314. 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; and judgments in this field need to be simple in structure and simply explained: see para 22, Parra v Parra. Parties’ Open Offers 31.The wife proposes that the FA Property and the SLYC Property (“the 2 properties”) be sold and the proceeds of sale, after deduction of outstanding mortgages and necessary expenses, to be divided equally between the parties. In addition, the husband is to pay a lump sum of $1,500,000 and a monthly maintenance of $16,000. The wife is also seeking the reimbursement from the husband for his share of costs (ie $4,000) paid to the single joint expert on the valuation of the two properties. 32.On the other hand, the husband proposes that the 2 properties be sold with proceeds of sale, after deduction of outstanding mortgages and necessary expenses, to be divided equally between the parties. 33.Hence, both parties agree on the sale of the 2 properties and the principle of equal division applies to the proceeds of sale. What they depart from each other is whether there should be a clean break. To be more specific, whether the husband should pay (1) a lump sum and (2) the periodical payments sought by the wife. 34.There also minor issues that both parties are seeking the return of some personal chattels. The wife seeks for the return of a stamp album and a bag of coins while the husband seeks for the return of some wedding gifts. In return for the wedding gifts, the husband is willing to pay $2,000. Issues to be Determined 35.At the beginning there was some dispute over the date of separation of the parties. The wife’s stance was that it started from June 2011 as pleaded in the present proceedings but the husband insisted on an earlier date, ie in about November 2002, as pleaded in the wife’s 1st divorce petition. That was the time when the husband departed for New Zealand. Be that as it may, the parties now agree that they separated in June 2011. On the undisputed evidence before me, this seems to be the correct situation. 36.The only main issue in dispute is whether the husband has any undisclosed assets. The wife alleges that over a period from June 2010 to December 2013 the husband has withdrawn a total of $2,000,000 for no reason and the same should be accounted for. This forms the basis of her claim for a lump sum payment. 37.Another minor factual issue which needs to be determined is whether the husband has taken the wife’s stamp album and the bag of coins as alleged. Whether the Husband has any Undisclosed Assets 38.The wife’s theory is this. 39.Apart from the husband’s monthly contribution of $19,000 to family’s expenses, she paid everything else during the marriage, ie all family expenses, the domestic helper’s wages, the utilities of the matrimonial home, the fuel and the maintenance of their car in Hong Kong and most of the husband’s expenses during the monthly 3-day stay in Hong Kong, inclusive of the money spent on the husband’s clothes and also the majority of the son’s expenses. The wife claimed that because of this arrangement or practice, which was in place since the husband resettled in Hong Kong from New Zealand, she had to exhaust her own wages to cover the shortfall. 40.As for the husband’s living expenses in the Mainland, either he was provided for by his employer with his needs or he could seek reimbursement from his employer. She said that the husband’s employer provided an accommodation and footed all utilities expenses, a car with chauffeur and even a part-time maid. She knew this because this had been the practice of his employer and also the practice of construction companies where she had also worked for 20 to 30 years. Further, while she was in Chongqing, the husband instructed her to keep all the receipts for reimbursements. 41.On that basis, Ms Cheng submitted that from June 2010 to December 2013 the total reasonable expenses of the husband should only be in the region of about $1,574,000. That is based on her assessment on the items of expenditure disclosed in the husband’s Form Es. Ms Cheng then went on to submit that during the same period the husband had a gross receipts of about $3,586,800, $3,397,000 of which were his salaries and the remaining $189,800 were rental receipts of the NYLC Property. As of June 2010 the husband had bank deposits of about $423,000. Adding up the sums of $423,000 and $3,586,800 (ie $4,009,800) and less his reasonable expenses in sum of $1,574,000 should give a figure of $2,435,800 (ie $4,009,800 - $1,574,000). This is the money that the husband should have at the end of December 2013 but according to the evidence available, he only had assets of about $370,670. Hence, she concluded that there are hidden assets in the region of $2,065,000. 42.In this regard, Ms Cheng also challenged that the husband failed to disclose a number of bank accounts maintained by him. 43.It is clear that whether the wife’s case stands or falls depends on her version of the husband’s expenditure being accepted by the court; there being no allegations that the husband has sources of income other than from his job, whether in Hong Kong or otherwise. Discussion 44.It is obvious that the wife tried to paint a picture that the husband was a very low-maintenance person. For instance, the wife said during the 3-day stay in Hong Kong, the costs of three dinning-out meals for three of them would just be $700 odd and the couple only went to movies about once every half a year. The husband and the son were given a medical card by the husband’s employer. Hence, they only needed to pay nominal sums for medical treatment. The purpose is two-folded. First, the husband’s financial needs were not great. This goes to the level of his living expenses. Secondly, there was no need for the husband to withdraw so much money. This goes to her contention regarding the hidden assets. Living Expenses in the Mainland 45.The husband gave an account of his expenditure from January 2010 to December 2013. He denied the wife’s suggestion that all the expenses in the Mainland could be reimbursed. 46.He gave evidence that he is still working for the same employer. Contrary to what the wife has testified, he maintained that apart from those set out in the employment contract, he would have no other benefits or allowances arising out of his employment. He produced his employment contract to prove that his employment all along has been in Hong Kong and his wages were and are paid in Hong Kong. It is only pursuant to the terms of the employment that he would be seconded to work for the subsidiaries of his employer in the Mainland. At the relevant time up to 31 March 2013 he was seconded to work in Chongqing where he had stayed for more than 3 years. He has been seconded to work in Guizhou since May 2013. Same as before in Chongqing, he lives in an apartment rented by the subsidiary. 47.He maintained that apart from the apartment rented by the subsidiary, he did not have any other benefits. He did have the use of employer’s vehicles and the drivers but there was not a particular car or driver designated for him and the use must be entirely for business purpose only. He was not entitled to use the same after office hours or during holidays. 48.The husband was cross-examined at length on his fringe benefits, in particular the reimbursement of expenses from his employer according to his employment contract and the relevant rules and regulations. To me, there is nothing to suggest that the husband, as the general manager of the joint-venture company that his employer established with the Mainland partner, is able to obtain reimbursements on whatever items of expenditure he likes as the wife has asserted. I am satisfied that he is an income earner with fixed income and fringe benefits according to his employment contract. He is able to obtain reimbursements of some expenses but only on the condition that those expenses are incurred in the performance of his duties. He is simply not given a blank cheque as the wife has tried to suggest. 49.Thus, the husband said he has to foot all his living expenses in the Mainland. He assessed that while in Chongqing, his monthly expenditure was about $17,000 per month. 50.As to how he spent this $17,000 in the Mainland, R was subject to extensive cross-examination. He was cross-examined on his routines in the Mainland, how much he spent on meals and how much he spent on entertainment such as going to karaoke or having tea with colleagues. He was even asked roughly how many times he played mah-jong and how much he lost. 51.I do not think I need to go into the details of his expenditures so much so that I need to examine each and every item. To me, his evidence is sensible and reasonable. I accept his evidence that the costs of living in the Mainland is not very low and further as a superior, sometimes when he dinned out with his colleagues, he would have to pay for them. 52.On the other hand, it is clear that the wife’s evidence is founded on what she allegedly heard from the husband or from what she allegedly witnessed during her 10-day stay in Chongqing at the husband’s place in June 2011. In evidence, the wife admitted that apart from this 10-day stay, she has no knowledge of his living pattern there. In any event, the husband had to be away for work during some of these days and they also went for a trip for 7 to 8 days, the expenses for which were paid by the husband. That said, she is adamant that the husband did not need any money from Hong Kong to spend in the Mainland because he had an account with his employer but she admitted that she does not know whether the husband withdrew any money from the account, if one really existed. During cross-examination, she admitted that it is her ‘guess’ that the husband may obtain all types of reimbursements. Not only that, she admitted that she is not clear as to whether or not the husband could get reimbursement for the red-pockets money that he gave to his subordinates during the Chinese New Year. 53.I am quite sure that the wife’s version that the husband could obtain reimbursements on most of his expenditures is more of imaginary than real. Her evidence is flimsy and her contention that it is the practice of his employer or his trade is devoid of concrete evidence and is utterly unmeritorious. Living Expenses in Hong Kong 54.The husband was again subject to elaborate cross-examination on his expenditure. It is of no wonder due to the wife’s case that the husband has substantial savings. 55.The wife said she is not good at figures when it comes to her own or home finance and she relied on the husband during the marriage in monitoring the financial matters of their family notwithstanding that in her previous job she was responsible for calculating and paying wages in construction sites. From the fact that she changed her figures on various items, she appeared to be rather confused. For instance, her spending on the husband’s clothing was changed from $800 to $1,000 per month to $2,000 per month and the water rates changed from $450 on average each month to that of $750. It is doubtful whether the figures given by her, whether in her Form Es or in evidence, are accurate. 56.That said, despite her contention that the husband did not need to spend much in Hong Kong, during cross-examination, she admitted that the husband paid for the medical check-ups for both of them at $8,000 each. The husband was also responsible for the license fee, the insurance premium and the monthly instalments of their car, the management fees and the mortgage payments of the NYLC Property. 57.The husband denied the wife’s evidence that the $19,000 family expenses basically include each and every item of living expenses and thus, he virtually did not have to spend much while in Hong Kong whether for himself, for her or for the son. That said, the husband agreed that while the son was in the secondary school, most of his expenses were paid out of the said $19,000, but this would not include the more substantial items such as the son’s birthday gifts or overseas trips. 58.The husband’s 1st Form E was dated 30 April 2012. He reported total living expenses at $49,270. Later on, he reported his total living expenses at $49,570 in his 2nd Form E dated 2 June 2012. Both figures inclusive of the $19,000 living expenses he paid to the wife. At the relevant time the husband had not moved out of the matrimonial home and the son was still in the secondary school. 59.In his 3rd Form E dated 17 October 2013, the living expenses increased to a total of about $65,370. By that time the husband had already moved out of the matrimonial home and the son had already been studying at medical school. An examination of these 3 Form Es shows that the increase was due to the increased expenditure of the son who was and is solely dependent on the husband. 60.The husband was cross-examined on the differences between the first 2 Form Es and the third one, and he insisted that the 3rd Form E is more accurate. He was subject to cross-examination on the son’s expenses. In essence, he said he gives $12,000 each month to the son for his spending and he also pays the extra substantial sums such as tuition fees and equipment for his study. As he is spending most of his time in the Mainland, the son has to have meals outside; this sum also includes these expenses. On the top of $12,000, there are also tuition fees, books and costs of overseas trips such as the trip to the Tsinghua University and other expenses; he assessed the total at about $17,000 per month. His son is an adult and has a living very much of his own. The husband’s evidence makes sense to me. The ultimate question is after having heard the evidence and guided by the factors in section 7(2) of MPPO what the reasonable expenses for a 20-year old young man at his 3rd year of medical school are. In my view, $15,000 is a reasonable sum. 61.In trial, the husband produced to court a list of his expenditures from January 2010 to December 2013, the total figure was about $3,090,000, some of which in the region of $846,000 were supported by documentary evidence. 62.An item on the list was the husband’s salary tax. The wife admitted that she does not know whether the husband needs to pay his Hong Kong tax to his employer. I accept that since he was staying most of the time in the Mainland, the husband was required to pay tax under the PRC law. That was taken care of by his employer but he had to reimburse his employer his salary tax calculated according to the Hong Kong law that he was otherwise liable to pay. For the year 2010/2011, he paid $84,267 and for the year 2011/2012 he paid $85,006. 63.I also accept that he had to pay various expenses such as continuing professional training course fees and membership fees in order to keep his memberships in various professional organizations and also that he had to pay his credit card liabilities and the evidence suggests that he paid them in cash. On the basis of the documentary evidence before me, for the reason that the husband and his son had moved away from the matrimonial home to live in the SYLC Property, he needed to incur some renovation and furniture expenses. 64.I also accept that the husband has to pay roughly RMB 12,000 to his parents who are retirees and are living in Beijing. 65.I do not think I need to go to the minute detail of each and every item. Suffice for me to say is that on the evidence before me and based on the above analysis, I do not think the wife has been successful in challenging the husband’s expenses. In my assessment, the husband’s evidence is consistent and solid. For the above reasons, I would prefer his version regarding his expenditure. The Husband’s Bank Accounts 66.Ms Cheng argued that the husband failed to give a full and frank disclosure of the bank accounts maintained by him. At the outset, in his 1st Form E, the husband stated that he had one bank account only, which was the Public Bank account he had been using for the auto-pay of his wages. However, at the end, after a series of discovery exercise, it was found out that the husband had a total of 8 bank accounts. 67.In reply, whilst accepting that he had these other accounts, the husband explained that when he filled out his Form Es, since the balance in these accounts was zero, he considered them as cancelled. 68.Despite his explanation, there is one thing that he has not been able to explain and that is, even if what he said is true, he thought these accounts were cancelled or considered as cancelled, he failed to provide the bank statements for the past 12 months as required under the Form E. 69.An examination of the other 7 accounts shows the following:
70.The bank passbook shows that this account was dormant most of the time since December 2009. This coincides with the husband’s leaving for Hong Kong from New Zealand. As from December 2009, the account maintained merely NZD $1.00 odd and about 100 Japanese Yen. The only single deposit since then was NZD 315.18 on 25 June 2011. The husband withdrew the balance of equivalence of $2,100 on 8 May 2013 upon closure of the account.
71.This account was active in the sense that there were in and out transactions up to 30 May 2012, the date of its closure. So as at the date of the 1st Form E, this account was still subsisting.
72.The bank passbook shows that this account all along was active in that there were frequent deposits and withdrawals or transfers up to its closure on 8 May 2013, which was a withdrawal of $98,697.38.
73.The statements show that most of the deposits were by way of transfers, in other words from other accounts and most of the so called withdrawals were by way of cheques.
74.The bank passbook shows that this account was inactive since 30 July 2010 with a balance of about $400 until it was closed on 30 May 2012.
75.The account was inactive throughout as from September 2012 with a balance of about RMB8,000 and it was closed on 2 December 2013 with a withdrawal of RMB 8,006.19.
76.It was inactive all the time except there was one transfer of RMB 602 on 25 April 2009 and it was closed on 30 June 2011. 77.Therefore, the two bank accounts that can be considered as active were Nos. 2 and 3, ie Wing Lung Bank Saving Account (“the WL Account”) and Bank of Communications Saving Account (“the BC Account”) 78.The husband’s explanation regarding the deposits and withdrawals in the WL Account and the BC Account is that all the monies were essentially from his Pubic Bank account, the account that received his monthly wages. He testified that whenever he returned to Hong Kong, being 3 days once in every month, he would have to withdraw cash from the Public Bank Account. Normally, he would have to withdraw several ten thousand dollars for his spending both in Hong Kong and in the Mainland. The expenditures in Hong Kong would cover what he needed to pay while staying here, his credit card liabilities and the monies given to his son. After having dealt with the expenditures in Hong Kong, this would leave about RMB10,000 odd for meeting his needs in the Mainland. In doing so, he would have to deposit some of the monies so withdrawn later on into the other two accounts for the ease of convenience or for settling payments. In other words, the withdrawals and deposits amongst his three bank accounts were essentially inter-bank transactions. This does not mean that he has any hidden assets. 79.In this regard, the wife frankly admitted that she does not know the purpose of these withdrawals and according to her understanding, the husband could not have spent all these monies in Hong Kong and he did not need to bring money to the Mainland for work either. However, under cross-examination, at one point she admitted that she is not clear as to whether R had to withdraw money for use in the Mainland. 80.In support of her claim that the husband has hidden assets, Ms Cheng has prepared a schedule setting out the monthly withdrawals of all the 8 accounts maintained by the husband. 81.The husband challenged that the schedule is inaccurate for the simple reason that many of these figures are in odd cents. If these were withdrawals there was no reason why he could have withdrawn cash in odd cents, for instance he was said to have withdrawn $1,162.84 from the WL Account in January 2010. Further, his only source of finance was his wages that were deposited into the Public Bank. The monies in the other accounts must have come from this account, and therefore there was double counting. 82.An examination of the relevant statements and bank passbooks indicates that some of these items were not withdrawals but transfers. It seems to me that the odd cents transactions were probably caused by the closure of the accounts. Further, as mentioned above, most of the deposits into the Bank of Communications Current Account (No. 4 above) were by way of transfers, I accept there could be double counting here. 83.As regards the husband’s contention that he withdrew monies from his Public Bank Account and deposited the same into his other accounts, the corresponding entries and deposits of these accounts have been examined; and for this purpose Mr Fu, who appeared for the husband, has prepared a table setting out the corresponding entries. I accept that some of the entries are able to confirm the husband’s contention. By way of examples, the deposits of $17,500 on 8 June 2010 and $8,000 and $20,000 on 1 February 2011 into WL Account and also the sums of $10,000 on 17 September 2011 and $39,000 on 3 October 2011 into BC Account seemed to support the husband’s contention but there are also items that alleged corresponding withdrawals and deposits could not be matched. I think it is fair to say that by and large there is some evidence in support of the husband’s contention. 84.The question remains to be whether the wife has been able to make out a case that the husband has hidden assets. This must be considered in light of what the husband disclosed in his Form Es and all the available materials. 85.On the date of the husband’s 1st Form E dated 30 April 2012, he reported his Public Bank account had $10,000 but in fact he had about $53,000 to $69,000. During the same period, as for the WL Account, he had $37,572 in the account before 17 April 2012 and he withdrew $30,000 on that day leaving about $7,572 and he cancelled it on 30 May 2012. Hence, even if the $30,000 is added back, the money he had in this account was merely $37,572. 86.As for the BC Account, before the filing of Form E, he had about $100,000 in his account. 87.Therefore, his cash in his bank accounts, inclusive the monies in the WL Account and the BC Account, would be about $206,572. 88.In his 2nd Form E dated 2 June 2012, he also reported $10,000 in his bank account (ie the Public Bank Account) but in fact, according to the statements now available, he had bank deposits of about $44,616. 89.In his 3rd Form E dated 17 October 2013, he reported having $140,000 in his Public Bank Account, but in fact it should be $163,600. 90.Thus, it can be seen that the discrepancies were not as substantial as the wife put it. 91.In fact, the husband had less money before the break down of the marriage. From the figures provided by the parties, on 1 August 2010 and 1 December 2010, the husband had a total of $94,131 and $14,266 respectively in his three major and active accounts. 92.Further, from January 2010 to December 2011, the total deposits of WL Account were about $157,241 and its withdrawals during the same period were about $122,532 and as regards BC Account, from January 2010 to May 2013, the total deposits and withdrawals were $626,054 and $514,846 respectively. It appears that these accounts were for the husband’s daily operation rather than for setting aside or accumulating funds behind the back of the wife. 93.All in all, looking at these accounts from various directions do not support the wife’s contention that the husband has or had substantial hidden assets. In her closing submissions, Ms Cheng contended that the husband has kept his savings in the Mainland. I do not think she is allowed to be heard to say so. First, she has not put this to the husband during the cross-examination. Secondly, there is no evidence suggesting that this is the case. 94.Thus, I find that the wife has failed in her contention that the husband has hidden assets. This conclusion is reached on the basis of not only the husband’s bank accounts but also on the basis of my conclusion reached regarding his expenditures. 95.Before I come to the Steps set out by the Court of Final Appeal in LKW v DD, it is pertinent for me to deal with the minor factual disputes first. Stamp Album, the Bag of Coins and the Wedding Gifts 96.The wife alleged that the husband took away the stamp album and a bag of pre-1997 coins of Hong Kong. She was not able to tell the years of the coins or identify the monarchs on the coins. This piece of evidence was irreconcilable with what she had affirmed. In her affirmation, she said the coins were from different countries, collected by her from overseas trips in the past. Also, at one stage, she said it was a small bag but at another point she said they were about 150 in quantity. However, she admitted that she had not inspected the contents of the bag. In my view, there is no basis for her to say the coins were worth $80,000 or in her words, ‘below’ $80,000. 97.As for the stamp album, the husband denied having taken it. The wife does not have any concrete evidence or particulars except she said in her affirmation that from what she heard from the domestic helper the husband took it away in about May 2011. 98.The burden is on the wife to prove that the chattels are in the possession of the husband. I do not think the wife has discharged the burden on the balance of probability. The Wedding Gifts 99.They were 2 pieces of jade stones, a spoon and a ring, which the husband called the dragon ring, and were all wedding gifts given by the husband’s aunt. 100.The wife admitted in evidence that she had damaged the 2 pieces of jades and the spoon in the fit of anger. 101.I have great doubt over whether she has actually damaged the items as she alleged. She said she did not keep the remains. At all the material times, she should be well aware that the husband was seeking for the return of these items and she was already legally represented at that time. She also acknowledged in her evidence that the court would have to deal with these items in trial. There is no reason why the wife did not keep the remains to prove that the items were actually broken. 102.The wife is still keeping the dragon ring and is willing to return it to the husband. She maintained that it does not worth anything. 103.The husband is willing to pay $2,000 for the return of these items but now since only one item is left and in light of the wife’s evidence that the item does not worth anything, I consider it is fair that the wife should return it to the husband at nil consideration. The Financial Resources of the Parties Assets 104.According to the Agreed Statement of Assets and Liabilities, the parties are agreeable on all the major items and their values. 105.Since most of the items are agreed, I do not think I need to reproduce the Agreed Statement here. I would just deal with the disputed items. The Wife’s Assets 106.As far as the assets of the wife are concerned, the only dispute is on her jewelleries. In her 1st Form E dated 3 May 2012, she stated a total of 8 items of jewellery, totalling $75,000. She claimed that she made use of 5 of the items, by way of set-off, for repayment of loans lent to her by her younger sister on 22 February 2013 and thus, she is retaining 3 items only, which according to her homemade valuation, is worth $12,000. She has since borrowed another $30,000 from the younger sister. The loan that the wife said to have borrowed from the younger sister is supported by the relevant bank statement. 107.I accept she has 3 items of jewelleries only. The Wife’s Liabilities 108.The Agreed Statement states that the wife has a net liability of $479,618.36. 109.The wife said she owes her siblings and a friend a total of $120,000. These were incurred for payment of legal costs and for her living expenses before the MPS order. Though these loans are not supported by documentary evidence, their authenticity has not been challenged by Mr Fu in his closing submissions. 110.The wife said there are also some bank loans, taken out by her at different times. There is some dispute over the total outstanding amount. The wife claimed it was $143,460 but the husband said it should be $92,554 only at the time of the Agreed Statement, ie 9 April 2014. 111.According to her testimony and documentary evidence, there appear to have 4 loans and one of them, ie the one for $10,000 dated 7 August 2013 and repayable in 12 months, by now should have been repaid. Given that there is a lapse of 9 months since last April, I reckon that the outstanding amount should be about $80,000 only. 112.The wife estimates that the First Charge of the Director of Legal Aid is in the tune of $400,000 and has included this sum as her liabilities. I disagree and would exclude this item. 113.Hence, the wife’s total liabilities are $200,000 ($120,000 + $80,000). 114.Finally, at the beginning there was a dispute over the amount of the MPF. During trial, the amount was agreed at $129,671. The Husband’s Assets The 2 Properties 115.The 2 main matrimonial assets, ie the FA Property and NYLC Property are in the name of the husband. Their values have been agreed, as assessed by a single joint expert. The FA Property is mortgage-free but the SYLC Property is still subject to an outstanding mortgage repayable by monthly instalments of $6,670 each. There is some discrepancy over the outstanding amount. Since it is the husband who is responsible for making the repayments, I would take his figure of $750,000 as stated on the Agreed Statement. Now that some time has lapsed, I would deduct a further sum of $66,700, hence the outstanding sum is $683,300. Thus, the net value is $3,516,700. The Car 116.The wife said during the marriage she paid for the fuel and the repairing costs of the car while the husband paid for its insurance premium and license fees. The husband sold it for $28,000 and this sum has already been deposited into his account with the Public Bank. There is no evidence that he has sold it at undervalue. For the reason that this sum has already been included in the bank balances, I would not assign a value to this item. Legal Costs 117.Finally, same for the wife, I would not include the legal costs of $70,000 as the family’s liabilities. 118.Hence, on the basis of the above analysis, the family assets and liabilities are set out below: Schedule of Assets and Liabilities
119.The total net family assets are therefore $6,795,661 ($6,995,661 - $200,000). The Financial Needs of the Wife The Wife’s Earning Capacity 120.Before her resignation in June 2011, the wife was earning about $10,040 per month. 121.She gave evidence that because of the breakdown of the marriage, she has been suffering from serious depression which prevents her from engaging in full-time work. She has since been attending out-patient treatment at the Castle Peak Hospital and is receiving follow-up treatment about once every month. She had also attended private treatment but she ceased it as from August 2013 because of her financial situation. She has also been referred to psychological counselling and relaxation exercise at Pok Hoi Hospital at about 5 times each week as from September or October 2012. 122.She tried to work as a sales assistant in a convenience store in March or April 2012 but failed because she was not able to control her emotion. 123.She said she has sleeping problem, suffering from bad memory and would refrain from going out. 124.Ms Cheng agreed that the wife still retains some earning capacity notwithstanding her mental illness. She agreed that the wife is capable of working part-time selling sundry goods or fashion in a boutique, earning about $4,000 per month. However, it is of note that the wife was able to complete and obtain a Certificate in Civil Engineering awarded by the Social Resources Development Institute in October 2011. The wife also claimed she is suffering from osteophyte at left ankle but there is no medical evidence in support. 125.According to the medical records, the wife has been suffering from adjustment disorder and has feeting suicidal idea. Because of this, her family members are assisting her in keeping a domestic helper to watch over her. I accept that she has been attending counselling and relaxation exercise and this would preclude her from engaging in full-time work. There is no medical evidence before me on her prognosis but doing the best I can, from my observation on the wife in the witness box, she has been able to give evidence and it appears that she is coherent and is able to engage in logical and rational discussions. Also given that she said she would have to look after her father who is suffering from dementia on Sunday, it is indicative that she is able to take care of other people, hence some work capacity. I believe that given time, and when all these proceedings are over, she should be able to return to the labour market on full time basis and become independent again. 126.In the meantime, I assess that she has an earning capacity of $5,000 per month. The wife’s Evidence on the Family Expenditure / Financial Needs of the Wife 127.The wife testified that during the marriage and starting from about July 2010 the husband gave her $19,000 per month as family expenses for everything and she had to use up her wages of $10,000. On that footing, I gather it is the wife’s case that a total of about $29,000 was required for the whole family of three, inclusive of the domestic helper’s wages. Of course, I am aware that at that time the son was still a secondary school student. That said, during cross-examination, the wife agreed that after she had resigned from work she relied on the $19,000 from the husband solely. She economized and was able to manage even with $19,000 for a family of three. 128.In her latest Form E dated 24 October 2013, the wife stated her monthly expenditure at $22,000 for herself only. Given that during the marriage for a family of 3, the total monthly expenses were $29,000 only, I have no doubt that she has exaggerated her expenses. It is true that the wife has not been cross-examined on the items but it does not prevent me from making a proper assessment. It would appear to me that her clothing/shoes of $1,000, personal grooming of $3,000 and entertainment of $1,000 are apparently very much on the high side on the basis of her description of the family life during the marriage. Further, given that her utilities and management fees are already $2,000, I regard that her household expenses of $1,000 is also on the high side. That said, I accept that for the time being it is necessary for her to keep a domestic helper. Doing the best I can and taking a board brush approach, I would assess her monthly expenditure at $15,000. 129.The wife agrees to have the FA Property sold. It would mean that in future she would have some rental expenses. I do not know why the wife has not included her future housing need as her anticipated future expenses. The Financial Needs of the Husband 130.From the tax returns for 2010/2011 and 2011/2012, the husband’s annual remunerations were $874,276 and $878,623 respectively. It means on average a monthly sum of about $73,037 (($874,276 + $878,623) ÷ 24). 131.The husband reported he needs a monthly sum of $65,370. I have already dealt with the husband’s expenditure in earlier part of this judgment so I would not repeat it here. In short, I find that his monthly expenses as reported in his 3rd Form E are by and large reasonable save and except that his entertainment of $2,500 is considered excessive and for which I would assess it at $1,000; and further that the son’s monthly expenses should be in an overall figure of $15,000. On that basis, if the interim maintenance of $12,000 is excluded, I assess his monthly requirement should be in the region of $49,470. 132.He gave evidence that when the son progresses to be a houseman he would have to rent a room for him in the proximity of the medical school. To cater for his future financial responsibility, he would have to take out a further mortgage on his SYLC Property sooner or later. This part of the evidence has not been challenged and in any event, I accept that. The Sharing Principle 133.This is a marriage of 10 years, which by today’s standard is not a short one. Apparently from their agreement that the 2 properties are to be sold with proceeds of sale divided equally, both agree that the yardstick of equality applies. In my view, this must be correct. Considering whether there are good reasons for departing from equal division 134.I consider that this issue can be considered together with the wife’s claim for periodical payments. 135.With the conclusion that I have reached regarding the wife’s financial needs, she would have a notional deficit of about $10,000 per month. However, as I have mentioned, I believe that after the conclusion of the present proceedings, in time she should be able to return to the labour market at full strength and should be able to be financially independent. 136.I think I am entitled to take notice that the real property market in Hong Kong has gone up at an appreciable rate since the last valuation was made for the purpose of the present litigation. On the assumption that the value has gone up 10%, it would mean that funds in the region of $6,893,000 could be realised, with $3,446,500 available for each party. The wife is at present 46 years old and the husband is 49. Assuming that their retirement age is 65, they would still have 10 or more than 10 years to go. 137.Parties should get on with their lives and to start afresh. Taking all these considerations in a round, I am of the view that a clean break is possible. This should enable the parties to meet their financial needs and at the same time get on with their lives and to start afresh. As a matter of fact, this is what the husband wants. However, in my view, there is one factor which calls for consideration. Earning capacity is a financial resource and it is clear that the husband has a much superior earning capacity. Having regard to the disparity in the earning capacity between the parties, I consider that there should be a departure from equal division. In practical term, it would mean that the wife should be given a larger share of the family assets instead of periodical payments. On the part of the husband, it is true that he will get less than 50% of the assets but on the other hand, he has the benefit of without a monthly spousal maintenance. This would provide him with some extra cash to meet the rising needs of his son. 138.On the basis that the wife has a monthly deficit of $10,000, on the top of equal division, I consider it is fair that she should be given a capitalized maintenance of $480,000 which is equivalent to 4 years’ periodical payments on the somewhat generous assumption that her monthly deficit remains unchanged throughout. I have not lost sight of her housing need but I am sure that it can be taken care of out of the capital divided. 139.I need to step back and look at the overall impact. I am conscious of the fact that the wife will be getting $480,000 more, but I believe this is justifiable due to her inferior earning capacity. In my judgment, this is a fair outcome. 140.Even on the wife’s own evidence, the family’s standard of living had never been a high one. I believe with this capital sum and also given her qualifications and ability, she should be able to gain self-sufficiency in the course of time and maintain her marital standard of living in the years to come. 141.Apart from the 2 properties, the values of other properties owned by the parties cannot be regarded as substantial. Taking a broad brush approach, I consider it is fair that each party is to keep their own properties. As for the liabilities of $200,000, as the same was mainly incurred for the wife’s living expenses, it should be shared between the parties, which means the husband is to pay $100,000 more. 142.The husband should also reimburse the wife for his share of costs of $4,000 for the valuation of the 2 properties. 143.The way to do it would be for the husband to have both properties sold within 6 months upon the issuance of the decree absolute, the proceeds of sale are to be shared between the parties in equal shares. In addition to this, the husband is to pay the wife a lump sum of $584,000 (capitalized maintenance $480,000 + share of liability $100,000 + share of costs of valuation $4,000) on a clean break basis. 144.In the meantime, before the sale proceeds are available for division, the husband should continue to pay the MPS. To be fair, if the 2 properties are sold at different times, the husband is discharged from the maintenance payment upon the division of the sale proceeds of the first property sold. The Wife’s Application for Attachment of Income Order 145.The wife also applies for the payment of maintenance to be attached to the husband’s income, the ground being that the husband has repeatedly failed to make punctual payments of the interim maintenance, which should have been made on the 1st day of each month. The affirmation of the wife dated 26 March 2014 in support of the application has not been challenged. The undisputed evidence is that the husband was always late in making payment and there were times that the wife had to issue solicitors’ letters chasing payment. I agree there is no reason why the husband could not make punctual payments. 146.I am satisfied that there are reasonable grounds to believe that the husband will not make full and punctual payment in compliance with any maintenance order to be made herein. However, given the conclusion that I have reached regarding clean break, the Attachment of Income Order is no longer necessary. That said, I would add that if periodical payments are involved, this is an appropriate case where I should grant an Attachment Order under section 28 of MPPO. Order 147.For the above reasons, I give the following orders:
Costs 148.Ms Cheng, on behalf of the wife, is seeking costs of the ancillary relief application against the husband on the ground that the husband has failed to give a full and frank disclosure of his bank accounts. To this, Mr Fu argued that the husband has already been penalized for costs during the interlocutory proceedings. I incline to agree with Mr Fu. 149.The final outcome is different from what the parties have asked for. The wife is able to achieve more than half of the family assets, with a capitalized payment in lieu of periodical payments. On the other hand, the husband obtains a clean break. By and large, though it can be argued that the wife gets more and thus she is the winning party, it can also be argued that each party has got something they want. 150.However, this would have been a straightforward case but for the wife’s allegation of hidden assets on which substantial time and costs have been spent and I have ruled against her. 151.Taking the matters in a round, I consider that the proper costs order is no order as to costs; and I so order by way of an order nisi. The petitioner’s own costs to be taxed in accordance with Legal Aid Regulations.
Ms Cheng of Leung ,Tam & Wong, Solicitors for the petitioner Mr Fu of Sam Fu & Co, Solicitors for the respondent | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment