Pw v. Pptw

CACV 224/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 224 OF 2013

(ON APPEAL FROM HCMC NO. 5 OF 2011)

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J U D G M E N T
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Hon Kwan JA (giving the judgment of the Court):

1.On 11 October 2013, DHCJ Chu made an order for ancillary relief after a seven-day trial in August and September 2013. The parties will be referred to as “the husband” and “the wife” in this judgment. This is the husband’s appeal.

2.In a nutshell, the judge held that the total assets of the parties were in the region of HK$292 million.  There are surplus assets after catering for the parties’ respective needs.  She considered that there are good reasons for departing from the principle of equal division and came to the view that a fair distribution would be for the wife to receive 45% of the total assets, and the husband 55%.

3.The order set out the undertakings each party agreed to give.  On the part of the wife, she undertook to fully discharge the living expenses of the two children of the family, other than the expenses the husband undertook to pay, until they reach the age of 25 or finish full time education, whichever is later.  For the husband’s part, he undertook to pay the children’s school fees including the costs of boarding, on the same basis.  The order then made these pertinent provisions:

(1) the husband is to pay to the wife a lump sum of HK$130,318,980 (being HK$131,400,000 minus the net value of the wife’s assets at HK$1,081,020) in full and final settlement of her ancillary relief claim; and

(2) the wife shall transfer the following assets to the husband, and any and all costs and expenses of the transfer shall be borne 45% by the wife and 55% by the husband respectively:

(a) all her title and interest in a property in Pudong New District, Shanghai (“the Shanghai Property”);

(b) all the shares of and in Angelwings Enterprises Limited (“Angelwings”) held by the wife; and

(c) all the shares of and in Katerini Limited (“Katerini”) held by the wife.

4.On 18 December 2013, the judge ordered the husband to pay the wife her costs of the ancillary relief application, including all costs reserved, on a party and party basis.

5.The husband filed a Notice of Appeal on 30 October 2013 to set aside the order for ancillary relief, but without stating what provision for ancillary relief should be made in the event the appeal is allowed.

6.A month before the hearing of the appeal, the husband issued a summons for leave to adduce new evidence on appeal regarding the distributions made to him after judgment was handed down in October 2013 in the liquidation of Welton USA, a company in Texas, contending that the value of his shares in Welton USA should be assessed by reference to the distributions he has received and is to receive in the liquidation.  We refused leave at the outset of the hearing for the reasons given in a separate judgment on 16 December 2014.

7.It was only when the husband’s leading counsel, Mr Sussex, SC[1] came to make oral submissions on the first day of the appeal that it became clear what was the main, indeed, the only, point in this appeal.  The husband abandoned his challenge to the judge’s valuation of his interest in Welton USA and the judge’s assessment of the reasonable needs of the wife, generously interpreted, at HK$95 million.  His only contention was that the judge had erred in principle and was plainly wrong in ordering that the total assets should be split between the parties in the proportion of 45/55, when the bulk of the assets were acquired by the husband before the marriage and were non-matrimonial assets.

Background

8.The relevant background matters for this appeal may be stated as follows.

9.The parties were married in Vancouver in January 1996.  The husband was then aged 54 and the wife 38.  They are now aged 72 and 56.  Two sons were born out of the marriage, now aged 16 and 14.  The marriage lasted 14 years.  During the marriage, the husband was a business man and the wife was a full time housewife and mother.

10.The husband had acquired all the major assets prior to the marriage.

11.In 1980, he set up a company in Hong Kong, Welton Electronics Limited (“Welton Electronics”), which was involved in manufacturing hi-fi systems.  In 1984, he started to relocate part of the manufacturing business to Mainland China.  In the same year, Welton USA was incorporated in the United States as a limited partnership, with the husband as a partner.  Its business was mainly in the design, import, assembly and distribution of furniture products.  According to the partnership agreement of Welton USA in 1987, the husband’s shareholding, which he held through a BVI company Urban Group Limited (“Urban”), was 39.35%.  There were two other partners.  S became the operating partner of Welton USA since 1989.  The husband did not participate actively in the management of Welton USA.

12.In 1986, the husband incorporated Katerini which was used to hold properties.  The wife later held 8.33% Class B shares in Katerini as the husband’s nominee.  The other shares were held by the husband.

13.From 1989 to 1992, three floors and some parking spaces were purchased for Welton Electronics by its wholly owned subsidiary Wallford Limited (“Wallford”).  90% of the purchase price was financed by mortgage loans.  Later one floor was sold and there were remaining two floors and five van parking spaces (“the Chaiwan Property”).  Since 1993, the Chaiwan Property had been rented out and the gross rental income collected at the time of the trial was about HK$340,000 a month.  The mortgage loans on the Chaiwan Property were repaid and the mortgage released in 2009, with money from Urban and Katerini.  The agreed valuation of the Chaiwan Property at the date of the trial was HK$130 million.

14.Since around 1990, Welton USA had generated profits in the region of US$82 million over the years and Urban’s share was about US$20.9 million (HK$163 million) net of tax.  During the marriage, distributions from Welton USA amounted to about HK$150 million.  The profits generated through Welton USA over the years were used to cover the losses of Welton Electronics, to pay off the outstanding mortgage loans of the Chaiwan Property and to fund the expenses of the family.

15.A year prior to the marriage, the husband purchased a property in Vancouver (“the Vancouver Property”).  Ownership was transferred to a Canadian company Angelwings which was owned equally by the parties.  The Vancouver Property was kept as the holiday home of the family.

16.The Shanghai Property, bought in 2007, was the only landed property purchased during the marriage.  It was jointly held by the parties and the gross rental income from this property at the time of the trial was RMB 20,000 a month.

17.In 2009, Welton Electronics ceased business due to heavy losses and other reasons.

18.In January 2010, the parties lived apart and the wife issued her petition for divorce.  A decree nisi of divorce was granted to the wife in September 2011.  The parties have joint custody of the children, with the wife having their care and control and detailed access arrangements were made for the husband.

The judgment below

19.The parties were in agreement that the wife’s claim for ancillary relief should be met by a lump sum payment.  There remained five issues in the agreed list to be resolved by the judge.  They were framed as follows:

(1) whether the Chaiwan Property was a non-matrimonial asset, and if so, whether it should be excluded from sharing (“Chaiwan Property Issue”);

(2) whether the rental deposits owed by Wallford to tenants of the Chaiwan Property should be deducted from the husband’s personal balance sheet (“Rental Deposit Issue”);

(3) what should be the valuation of Welton USA and the husband’s interest therein (“Welton USA Issue”);

(4) what should be the appropriate assessment and determination of needs, generously interpreted, for the wife and the husband (“Needs Issue”); and

(5) what should be the appropriate percentage split between the husband and the wife on a sharing basis (“Sharing Issue”).

20.On the Chaiwan Property Issue, the judge had regard to LKW v DD (2010) 13 HKCFAR 537 at §93, in which Ribeiro PJ, after quoting the dictum of Baroness Hale in Miller v Miller/McFarlane v McFarlane [2006] 2 AC 618 at §148 that the importance of the source of the assets “will diminish over time”, stated as follows:

“So where it is a short marriage, the court may well be inclined to regard as excludable non-matrimonial property, assets acquired by one of the parties before the marriage or acquired in the course of the marriage from some wholly external source. But after a long marriage, those factors are likely to have much less weight.”

21.She referred also to ARAV v VP [2011] 3 HKLRD 759 at §§11 and 12, in which Cheung JA, after citing Baroness Hale in Miller/McFarlane at §152 – that “If the assets are not “family assets”, or not generated by the joint efforts of the parties, then the duration of the marriage may justify a departure from the yardstick of equality of division.” – went on to say as follows:

“This means the departure will occur in short rather than long marriages. This recognition is to give effect to one of the factors identified in the equivalent of s. 7(1)(d) of the Matrimonial Proceedings and Property Ordinance, namely “the duration of the marriage”.”

22.She noted there was no attempt of the husband to ascribe a value to the allegedly non-matrimonial asset, the Chaiwan Property, at the date of the marriage, unlike Jones v Jones [2012] Fam 1 and K v L (Ancillary Relief: Inherited Wealth) [2012] 1 WLR 306, and the percentage of the mortgage loans were 90%.  There had been several mortgage loans and a couple of re-mortgages.  They were paid off in April 2009, when the husband decided to fold the business of Welton Electronics and to pay off all bank loans, liabilities to employees and trade creditors with money from Urban and Katerini.

23.It was apparently common ground that Welton USA was regarded as a matrimonial asset in that the husband had not asked for it to be excluded from sharing in the agreed list of issues[2].  And it was the wife’s case that had distributions from Welton USA not been poured into Welton Electronics to cover its losses, those amounts of at least HK$150 million would have been available for distribution as matrimonial assets.

24.It was only in the closing submissions that the husband’s counsel, Mr Clough, asked the judge to consider the source of funds not just for the Chaiwan Property, but also Welton USA and the Vancouver Property, to justify departure from equal division having regard to the source being pre-marital.[3]  The judge understood that submission to mean that the husband was not asking that “the Chaiwan Property was to be excluded completely from sharing but only sought a departure from equal division”[4].

25.Having regard to the above matters, and having taken the view that the “Chaiwan Property was never kept separate from other assets”, the judge held that the Chaiwan Property should not now be ‘ring-fenced’ as being excludable completely from sharing.  As to how the court should exercise its discretion and whether there should be departure from equal division, these would be considered under the Sharing Issue[5].

26.On the Rental Deposit Issue, the judge held that the rental deposits should not be taken into account as the husband’s personal liabilities, this being consistent with the parties’ agreed approach of only relying on the valuation of the underlying non-current asset of Wallford[6].  The parties had agreed on an approach that no valuation of any of the companies would be carried out, save for Welton USA, and agreed valuations were obtained only for the underlying assets of Welton Electronics (club memberships), Wallford (Chaiwan Property), Katerini and Angelwings on the basis that such assets were then treated as the parties’ personal assets for distribution[7].

27.The valuation of Welton USA was a major dispute at the trial.  The judge valued the company as at 30 April 2013 on a going concern basis using the asset approach at US$15 million and the husband’s shareholding at about US$5.9 million or HK$46 million[8].

28.Moving on to the Needs Issue, the wife’s monthly expenses, as set out in her second Form E, were about HK$128,731 and the single joint expert Mazars provided the Duxbury calculations which yielded a lump sum of HK$46.4 million[9].  She was not seriously challenged as to her outgoings and expenses.  The main disagreement was over her housing needs.  It was not in dispute that the parties were living in luxurious properties during the marriage and their standard of living was high[10].  The judge took the view that HK$45 million would be reasonable to cover the purchase price and furnishing costs of a flat for the wife[11].  She found that the wife’s financial needs, generously interpreted, would be met by a capital sum of about HK$95 million[12].

29.The judge found that the husband’s financial needs, generously interpreted, would be met by a capital sum of about HK$61 million, made up of a capital sum under Duxbury calculations of HK$15.8 million and the costs of purchase and furnishing of a residential property of HK$45 million[13].

30.The judge then considered the Sharing Issue.  In performing the exercise under section 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”), she bore in mind the four principles set out in LKW v DD at §§56 to 70 (the objective of fairness, the rejection of discrimination, the yardstick of equal division and the rejection of minute retrospective investigations).  She then applied the five steps mentioned in LKW v DD at §§ 71, 74, 80, 83 and 131 (identification of the assets, assessing the parties’ financial needs, deciding to apply the sharing principle, considering whether there are good reasons for departing from equal division and deciding the outcome).

31.For Step 1, the judge found that the total assets of the parties were in the region of HK$292 million[14].  As stated in LKW v DD at §71, the court need not attempt to distinguish between matrimonial and non-matrimonial property at this stage.  For Step 2, the parties’ respective needs had been considered under the Needs Issue and there are surplus assets after catering for their respective needs[15].

32.In dealing with Steps 3 and 4, the judge had regard to these statements of Ribeiro PJ in LKW v DD:

“84. [whether there are potentially good reasons for a departure from equality] … The answer is to be found in the terms of s. 7 and the implicit objective of a fair distribution of the assets. Any of the matters listed in paras.(a) to (g) of s. 7 may provide an appropriate reason, as may the “conduct of the parties” and “all the circumstances” referred to in s. 7(1). The catch-all category of “all the circumstances” makes relevant any matter which bears on the fairness of the financial outcome in a matrimonial context.

85. It is important to stress that while such factors, individually or cumulatively, are potentially capable of resulting in a departure from an equal division, a finding that one or more of those factors are engaged does not necessarily mean that a departure must occur. The weight to be given to such factors is in the court’s discretion to be exercised in Step 5 as described in Section E.6 below. It cannot be over-emphasised that the matter is fact-specific and discretionary. The sharing principle must not be mechanistically applied.”

33.The judge went through the matters in section 7(1)(a) to (g) of the MPPO including the following: neither the wife nor the husband has any significant earning capacity in the foreseeable future which the court would need to have regard to; the wife still has to care for the children as the younger son lives with her and the elder son returns home during term breaks; the parties’ marriage of 14 years was not a short marriage, nor was it very long; the wife stopped working after marriage and fully looked after the home and cared for the family during the marriage; the husband’s investments in the Chaiwan Property, Welton USA and the Vancouver Property were all acquired before marriage[16].

34.She noted it is clear from LKW v DD that the source of assets might provide a reason for excluding them from the sharing principle on the basis that they are not matrimonial property[17].  She cited Ribeiro PJ in LKW v DD at §91 and Lord Nicholls in White v White [2001] 1 AC 596 at 610 that there is no hard and fast rule as to whether assets independently acquired should be excluded and it is very much a matter within the judge’s discretion to be exercised taking account of all the circumstances of the particular case[18].  She referred again to the passage in LKW v DD at §93 on the importance of the duration of the marriage[19].

35.She accepted the submission of the wife’s leading counsel, Mr Pilbrow, SC[20], that the court should have regard to these matters: very substantial distributions of Welton USA to the tune of HK$150 million were earned during the marriage and were available to and directly enjoyed by the family; there was no dispute that Urban or Welton USA was matrimonial property available for sharing; a part of the HK$150 million had gone into the repayment of mortgage loans of the Chaiwan Property and a large unquantified part might have been spent on meeting the losses of Welton Electronics[21].

36.The judge then arrived at her conclusions on Steps 3, 4 and 5 in this manner:

“156. Whether classified as matrimonial, or non matrimonial, the “source” of the funds for the investment of Welton USA, the initial payments for the purchase of the Chaiwan Property, or for the purchase of the Vancouver Property were all from H’s funds prior to the marriage.

157. There was no sufficient evidence as to the amount of H’s initial investment in Welton USA in 1984/85 which was some 11 or 12 years prior to this marriage of about 14 years. I, however, accept the evidence that it was after Mr S took over the management in about 1989 that the company started to turn around. H said he (or through Welton Electronics) paid 10% towards the initial purchase price of the Chaiwan Property in 1989. Subsequent mortgage repayments were presumably paid by Welton Electronics. The Chaiwan Property was also re-mortgaged, presumably for funds for use by Welton Electronics, but ultimately all loans were paid off in 2009. The Vancouver Property was purchased a year prior to the marriage but this was used mainly for family home.

158. Having considered the circumstances of this case, and the source of the initial investments in particular Welton USA and the Chaiwan Property, I have come to the view that there are good reasons to depart from equal division. In my view, a fair distribution would be for W to receive 45% of the total assets, and H 55%.”

This appeal

37.The judge’s decision in the application for ancillary relief is highly fact-specific and very discretionary, as repeatedly emphasised in LKW v DD at §§52, 85 and 131.  The husband’s appeal involves challenging the judge’s findings of fact and exercise of discretion.  The approach of the appeal court in this regard is well established.  It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appeal court is entitled to interfere (Bellenden (Formerly Satterwaite) v Satterwaite [1948] 1 All ER 343 at 345).  As stated by Lord Hoffmann in Piglowska v Piglowski [1999] 1 WLR 1360 at 1373A to D:

“Thirdly, the exercise of the discretion under section 24 in accordance with section 25 [of the Matrimonial Causes Act 1973][22] requires the court to weigh up a large number of different considerations. The Act does not, as I have said, lay down any hierarchy. It is one of the functions of the Court of Appeal, in appropriate cases, to lay down general guidelines on the relative weights to be given to various factors in different circumstances. … These guidelines, not expressly stated by Parliament, are derived by the courts from values about family life which it considers would be widely accepted in the community. But there are many cases which involve value judgments on which there are no such generally held views. … These are value judgments on which reasonable people may differ. Since judges are also people, this means that some degree of diversity in their application of values is inevitable and, within limits, an acceptable price to pay for the flexibility of the discretion conferred by the Act of 1973. The appellate court must be willing to permit a degree of pluralism in these matters.”

38.The husband’s contention in this appeal was that the judge had erred in principle and was plainly wrong in ordering a division of 45/55 of the total assets.  The division giving the wife 45% was manifestly unfair as at the date of the marriage the husband had already acquired his assets, the main ones being Welton USA (valued at HK$46 million) and the Chaiwan Property (valued at HK$130 million).  This was a case where the judge was justified in making a needs award which had the effect of “de-quarantining” non-matrimonial property.  But there was no justification for applying the sharing principle to non-matrimonial property.

39.Mr Sussex submitted there were three major problems with the judgment.

40.Firstly, there was fixation with duration of the marriage in deciding to apply the sharing principle and considering whether there were good reasons for departing from equal division, whereas time of itself should have no freestanding significance.  The length of the marriage does not automatically make it more difficult to disentangle assets; it all depends on the particular circumstances.  The judge would appear to have been heavily influenced by the observations of Cheung JA in ARAV v VP at §12 as quoted earlier, that “the departure [from equal division] will occur in short rather than long marriages”.  She failed to recognize that in the particular circumstances of this case, the source and ring-fencing of the assets independently acquired are much more significant.

41.It was suggested by Mr Sussex that the courts here[23] have adopted a mechanistic application of the guiding principles in the context of non-matrimonial property.  Judges have tended to regard non-matrimonial property as automatically having no significance in a long marriage, and as being properly excluded from sharing in a short marriage.  In the case of marriages that are neither long nor short, the courts have tended to make some adjustment by departing from the yardstick of equality, but not to such an extent as totally to exclude non-matrimonial property, apparently to reflect the gradual decline of the significance of pre-marital assets in the percentage distribution.  Mr Sussex criticized this as illogical and smacks of “palm tree justice”.

42.Secondly, the judge adopted an incorrect approach in considering whether there were good reasons for departing from equal division in that she had failed to justify her decision by reference to one or more of the strands that informed fairness, namely, financial needs, compensation and equal sharing of the fruits of the matrimonial partnership (Miller/McFarlane at §§11 to 17 per Lord Nicholls, §§137 to 145 per Baroness Hale).  For example, an award in excess of needs having the effect of sharing non-matrimonial property may be justified where one spouse has given up valuable earning capacity for the benefit of the matrimonial partnership, see Lord Nicholls in Miller/McFarlane at §28.  There was no articulation in the conclusion at §158 of the judgment why the judge arrived at the division of 45/55, and less still why she considered it fair that pre-marital assets should be divided in that way.  There was no mention of justification such as an additional need for compensation, or that a pre-marital asset has changed its characterization by reason of co-mingling or the plain intention of the parties to the marriage.  The award in excess of needs was wrong in principle, where the judge had failed to identify or articulate a reason to justify the sharing of pre-marital assets.

43.Thirdly, the judge had confused the capital value of the husband’s shares with income in the shape of distributions from his shares.  The fact that the husband had applied income being distributions from Welton USA does not mean that the capital value of his investment should be regarded as a matrimonial asset available for distribution.  Similarly, insofar as income from Welton Electronics (derived from rental income in respect of the Chaiwan Property) had been applied towards the family, that did not mean the capital value of the Chaiwan Property had become a matrimonial asset.  That Welton USA and the Chaiwan Property were cash cows in providing valuable income for the family does not mean that the cows belonged to the family.

44.Besides, the husband did not have any interest in Welton USA or the Chaiwan Property.  The relevant shares in the former were held by Urban, which was wholly owned by the husband; the latter was registered in the name of Wallford, which in turn was a wholly owned subsidiary of Welton Electronics.  So both Welton USA and the Chaiwan Property were ring-fenced throughout the marriage.  There was no justification for piercing the corporate veil.  The fact that income derived from the husband’s indirect shareholding in Welton USA and his shareholding in Welton Electronics had been applied to the family did not mean that the capital value of the shares in those entities had over time transmogrified into matrimonial assets.

45.Furthermore, the increase in the value of the Chaiwan Property and the value of the investment in Welton USA was passive growth in the sense that the husband had not contributed to the growth in any way.  Passive growth should be regarded as non-matrimonial (Jones v Jones [2012] Fam 1 at 15 §46, per Wilson LJ).  Even if the Chaiwan Property could be regarded as in large part paid for by distributions from Welton USA, those distributions were the fruit of a pre-marital investment, and should not be characterized as a matrimonial property.  The indebtedness of Welton Electronics in favour of the husband (HK$143 million as at 31 December 2012) was incurred by advancing income from a pre-marital investment, so it too should be regarded as the fruit of a pre-marital asset.

The law – general guidance

46.The starting point must be the guidance given in LKW v DD as to how the broad discretion in section 7 of the MPPO should be approached.  That guidance does not purport to be comprehensive, as financial provision applications are highly fact-specific and the judges dealing with them must ultimately be guided by section 7 and the implicit aim of arriving at a fair financial outcome (LKW v DD, §52).

47.Four overriding principles that underpinned the White v White and Miller/McFarlane line of caseswere explained by Ribeiro PJ in LKW v DD.  We do not propose to repeat them as they have been set out when we dealt with the judgment below.  These principles were mentioned by the judge who must have borne them in mind when she embarked on the exercise under section 7.

48.Five steps were laid down by the Court of Final Appeal in this exercise.  They were applied by the judge below as mentioned earlier.  In relation to Step 1 (identification of the assets), Ribeiro PJ said at §71: “At this stage, the court need not attempt to distinguish between matrimonial and non-matrimonial property, that being an exercise best undertaken (if necessary) when considering distribution of the assets.”  This statement was repeated in Kan Lai Kwan v Otto Poon Lok To (2014) 17 HKCFAR 414 at §26.  The Court of Final Appeal does not favour the approach of quarantining non-matrimonial assets, they definitely fall within the Step 1 exercise.

49.When one comes to Step 4 (considering whether there are good reasons for departing from equal division), Ribeiro PJ said at §83: “The question for the court is whether the balance ought to be shifted from a point of equality to some other point in the circumstances of the case.  This is necessarily a complex question which raises a range of separate issues.”  In §84, he answered the question what are potentially good reasons for departing from equal division, namely, that they are to be found in section 7 and the implicit objective of a fair distribution of the assets.  In §85, he emphasised that a finding that one or more of the factors in section 7(1) are engaged does not necessarily mean a departure must occur and the weight to be given to such factors is in the court’s discretion.  These two paragraphs were specifically mentioned in the judgment below, so the judge was plainly aware that “the sharing principle must not be mechanistically applied”.

50.We do not understand Mr Sussex to have advanced a proposition that non-matrimonial assets should automatically be excluded from sharing as a starting point, although certain parts of his submission might seem have come close to it, such as his submission that “the Court should be astute to exclude pre-marital assets unless it has become impossible realistically to distinguish them from matrimonial property”, and “if property is pre-marital, and that property still exists in specie, and there is therefore no difficulty in disentangling it from matrimonial property, it should be excluded totally from the sharing principle”.  We agree with Mr Pilbrow this would appear to elevate non-matrimonial property into the status of a golden rule, when it is just one out of a number of possibly relevant factors potentially capable of giving rise to good reason for departing from equality.

51.Source of assets was considered by Ribeiro PJ among a variety of matters which may be material to the sharing principle’s operation as part of the Step 4 exercise.  He identified two classes of assets as possible candidates for exclusion from sharing on the basis of source: assets independently acquired (property acquired before marriage or during marriage by one spouse from a source wholly external to the marriage, such as by gift or inheritance), and unilateral assets (property derived from business or investment activities conducted solely by one party).  We are here concerned with assets independently acquired.

52.The rationale for drawing a distinction between assets independently acquired and matrimonial property and how the former should be approached was explained by Lord Nicholls in White v White at 610:

“This distinction is a recognition of the view, widely but not universally held, that property owned by one spouse before the marriage, and inherited property whenever acquired, stand on a different footing from what may be loosely called matrimonial property. According to this view, on a breakdown of the marriage these two classes of property should not necessarily be treated in the same way. Property acquired before marriage and inherited property acquired during marriage come from a source wholly external to the marriage. In fairness, where this property still exists, the spouse to whom it was given should be allowed to keep it. Conversely, the other spouse has a weaker claim to such property than he or she may have regarding matrimonial property.

Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property are acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant’s financial needs cannot be met without recourse to this property.”

53.Lord Nicholls developed this further in Miller/McFarlane:

“22. This does not mean that, when exercising his discretion, a judge in this country must treat all property in the same way. The statute requires the court to have regard to all the circumstances of the case. One of the circumstances is that there is a real difference, a difference of source, between (1) property acquired during the marriage otherwise than by inheritance or gift, sometimes called the marital acquest but more usually the matrimonial property, and (2) other property. The former is the financial product of the parties’ common endeavour, the latter is not. … As already noted, in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.

23. The matter stands differently regarding property (“non-matrimonial property”) the parties bring with them into the marriage or acquire by inheritance or gift during the marriage. Then the duration of the marriage will be highly relevant. …

24. In the case of a short marriage fairness may well require that the claimant should not be entitled to a share of the other’s non-matrimonial property. The source of the asset may be a good reason for departing from equality. This reflects the instinctive feeling that parties will generally have less call upon each other on the breakdown of a short marriage.

25. With longer marriages the position is not so straightforward. Non-matrimonial property represents a contribution made to the marriage by one of the parties. Sometimes, as the years pass, the weight fairly to be attributed to this contribution will diminish, sometimes it will not. After many years of marriage the continuing weight to be attributed to modest savings introduced by one party at the outset of the marriage may well be different from the weight attributable to a valuable heirloom intended to be retained in specie. Some of the matters to be taken into account in this regard were mentioned in the above citation from the White case[24]. To this non-exhaustive list should be added, as a relevant matter, the way the parties organised their financial affairs.”

54.The Court of Final Appeal emphasised that the warning issued by Lord Nicholls in Miller/McFarlane must be borne in mind, that effort and expense should not be wasted in trying to establish a sharp dividing line between matrimonial and non-matrimonial property.  As stated by Lord Nicholls at §§26 and 27:

“26. … Fairness has a broad horizon. Sometimes, in the case of a business, it can be artificial to attempt to draw a sharp dividing line as at the parties’ wedding day. …

27. Accordingly, where it becomes necessary to distinguish matrimonial property from non-matrimonial property the court may do so with the degree of particularity or generality appropriate in the case. The judge will then give to the contribution made by one party’s non-matrimonial property the weight he considers just. He will do so with such generality or particularity as he considers appropriate in the circumstances of the case.”

55.The upshot of the above guidance is as stated in LKW v DD at §91, that “there is no hard and fast rule as to whether [assets independently acquired] should be excluded.  It is very much a matter within the judge’s discretion to be exercised taking account of all the circumstances of the particular case”.

56.Lord Nicholls alluded to the significance of the duration of the marriage in the context of non-matrimonial property in the passages quoted in Miller/McFarlane.  Ribeiro PJ said in LKW v DD at §92 that this is “an important factor which comes into play”, this being a factor mentioned in section 7(1)(d), and quoted the explanation given by Baroness Hale in Miller/McFarlane at §148: “As the family’s personal and financial interdependence grows, it becomes harder and harder to disentangle what came from where.”

57.There was further discussion on the duration of the marriage as a material factor in LKW v DD:

“108. Section 7(1)(d) specifies duration of the marriage as a factor which the court must consider when exercising its discretionary powers. This is potentially of great importance to the question whether the court should depart from an equal division. While the sharing principle applies to both long and short marriages, it is clear that when a short marriage comes to an end, fairness may dictate that one party should exit the relationship with less than half of the total assets.

109. In Lord Nicholls’s words, this “reflects the instinctive feeling that parties will generally have less call upon each other on the breakdown of a short marriage”. Viewing marriage as a partnership of equals, the fruits of the partnership are likely to be less substantial after a short marriage. Mutual commitment being shorter-lived, the extent of any disadvantage brought about by separation may well be less profound. Moreover, as we have seen after a short marriage, the court may well treat property acquired by one of the parties before marriage or during the marriage by way of inheritance or gift or from some other wholly external source as excludable non-matrimonial property. We have also noted that Baroness Hale held that following a short marriage, unilateral assets in the sense explained above might be excluded. Accordingly, the duration of the marriage is highly relevant and an equal division is more likely to be sustained after a long, rather than a short, marriage”.

58.Valuable guidance was also given by Ward LJ in Robson v Robson [2011] 1 FLR 751:

“43. How then does the court approach the ‘big money’ case where the wealth is inherited? At the risk of over-simplification, I would proffer this guidance:

(1) Concentrate on s 25 of the Matrimonial Causes Act 1973 as amended because this imposes a duty on the court to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of 18; and then requires that regard must be had to the specific matters listed in s 25(2). Confusion will be avoided if resort is had to the precise language of the statute, not any judicial gloss placed upon the words, for example by the introduction of ‘reasonable requirements’ nor, dare I say it, upon need always having to be ‘generously interpreted’.

(2) The statute does not list those factors in any hierarchical order or in order of importance. The weight to be given to each factor depends on the particular facts and circumstances of each case, but where it is relevant that factor (or circumstance of the case) must be placed in the scales and given its due weight.

(3) In that way flexibility is built into the exercise of discretion and flexibility is necessary to find the right answer to suit the circumstances of the case.

(4) Like every exercise of judicial discretion, the objective must be to reach a just result and justice is attained when the result is fair as between the parties.

(5) Need, compensation and sharing will always inform and will usually guide the search for fairness.

(6) Since inherited wealth forms part of the property and financial resources which a party has, it must be taken into account pursuant to subs 2(a)[25].

(7) But so must the other relevant factors. The fact that wealth is inherited and not earned justifies it being treated differently from wealth accruing as the so-called ‘marital acquest’ from the joint efforts (often by one in the work place and the other at home). It is not only the source of the wealth which is relevant but the nature of the inheritance. Thus the ancestral castle may (note that I say ‘may’ not ‘must’) deserve different treatment from a farm inherited from the party’s father who had acquired it in his lifetime, just as a valuable heirloom intended to be retained in specie is of a different character from an inherited portfolio of stocks and shares. The nature and source of the asset may well be a good reason for departing from equality within the sharing principle.

(8) The duration of the marriage and the duration of the time the wealth had been enjoyed by the parties will also be relevant. So too their standard of living and the extent to which it has been afforded by and enhanced by drawing down on the added wealth. The way the property was preserved, enhanced or depleted are factors to take into account. Where property is acquired before the marriage or when inherited property is acquired during the marriage, thus coming from a source external to the marriage, then it may be said that the spouse to whom it is given should in fairness be allowed to keep it. On the other hand, the more and the longer that wealth has been enjoyed, the less fair it is that it should be ringfenced and excluded from distribution in such a way as to render it unavailable to meet the claimant’s financial needs generated by the relationship.

(9) It does not add much to exhort judges to be ‘cautious’ and not to invade the inherited property ‘unnecessarily’ for the circumstances of the case may often starkly call for such an approach. The fact is that no formula and no resort to percentages will provide the right answer. Weighing the various factors and striking the balance of fairness is, after all, an art not a science”.

The law – two schools of thought

59.In English cases, there is disagreement over the approach to be taken to sharing where the existence of pre-marital property is established.

60.The first approach is the technique of simply adjusting the percentage from 50% to take into account non-matrimonial assets.  This was the approach taken by the English Court of Appeal in Charman v Charman (No 4) [2007] 1 FLR 1246 and in Robson v Robson, and by Moylan J in C v C [2009] 1 FLR 8 and in AR v AR (Treatment of Inherited Wealth) [2012] 2 FLR 1.

61.Potter P in Charman explained how this technique works at §66:

“To what property does the sharing principle apply? The answer might well have been that it applies only to matrimonial property, namely the property of the parties generated during the marriage otherwise than by external donation; and the consequence would have been that non-matrimonial property would have fallen for redistribution by reference only to one of the two other principles of need and compensation to which we refer in para [68], below. Such an answer might better have reflected the origins of the principle in the parties’ contributions to the welfare of the family; and it would have been more consonant with the references of Baroness Hale in Miller at paras [141] and [143] to “sharing … the fruits of the matrimonial partnership” and to “the approach of roughly equal sharing of partnership assets”. We consider, however, the answer to be that, subject to the exceptions identified in Miller to which we turn in paras [83] to [86] below[26], the principle applies to all the parties’ property but, to the extent that their property is non-matrimonial, there is likely to be better reason for departure from equality. …”

62.The alternative approach is to identify the scale of the non-matrimonial property to be excluded, leaving the matrimonial property alone to be divided in accordance with the equal sharing principle.  This was the technique favoured by the English Court of Appeal in Jones v Jones, and by Mostyn J in FZ v SZ & Ors (Ancillary Relief: Conduct: Valuations) [2011] 1 FLR 64, N v F (Financial Orders: Pre-Acquired Wealth) [2011] 2 FLR 533, S v AG (Financial Orders: Lottery Prize) [2012] 1 FLR 651.

63.This is a two-step approach and the process was explained by Mostyn J in N v F at §§14 and 15 in this way:

“[14] I adhere to my view that the two-step approach is the right one, generally speaking. It is precisely what Wilson LJ did in Jones v Jones. It seems to me that the process should be as follows:

(i) Whether the existence of pre-marital property should be reflected at all. This depends on questions of duration and mingling;

(ii) If it does decide that reflection is fair and just, the court should then decide how much of the pre-marital property should be excluded. Should it be the actual historic sum? Or less, if there has been much mingling? Or more, to reflect a springboard and passive growth, as happened in Jones?

(iii) The remaining matrimonial property should then normally be divided equally;

(iv) The fairness of the award should then be tested by the overall percentage technique.

[15] Of course, all of this is subject to the question of need. …”

64.Mostyn J’s preference for this two-stage approach over the alternative approach which “telescoped” the consideration of matrimonial and non-matrimonial property was for these reasons:

“A telescoped approach runs the risk of insufficient logical rigour being applied to the identification and treatment of the two very different categories. It runs the risk of palm-tree justice being applied. It is so easy to say – ‘well there is a good deal of non-matrimonial property here so I will reduce the claimant’s share to 40%’, but that approach simply does not tell anyone what weight is being given to that factor” (FZ v SZ, §143).

65.See also the Law Commission Report on Matrimonial Property, Needs and Agreements, Law Com No 343, 26 February 2014, chapter 8, §8.81, in which the Law Commission in England expressed the view that the two-stage approach (simply to exclude the non-matrimonial property from the calculation) is preferable, “for the sake of clarity and because it may encourage settlement because it obviates the need to guess what proportions a judge would apply to the property once its nature as non-matrimonial has been established”.

66.Moylan J however took the view that the two-step approach may unduly fetter the exercise by the court of its discretionary powers.  He said this in AR v AR:

“78. In Charman, the Court of Appeal makes it clear that the sharing principle applies to all the parties’ property. To repeat what Ward LJ said in Robson, “No formula and no resort to percentages would provide the right answer. Weighing the various factors and striking the balance of fairness is after all an art not a science”. In addition in that case, Hughes LJ said at paragraph 95:

“That the origin of assets is a relevant factor in no sense means that the approach to inherited assets ought always to be the same. What is fair will depend on all the circumstances; those cannot be exhaustively stated but will often include the nature of the assets, the time of the inheritance, the use made of them by the parties and the needs of the parties at the time of trial.”

79. In N v F [2011] EWHC 586 , Mostyn J said, “the treatment of pre-marital wealth is highly fact specific and very discretionary”. In K v L itself, Wilson LJ said, I repeat, that, “non-matrimonial property also falls within the sharing principle.”

80. These brief extracts are sufficient to demonstrate that the sharing principle can apply to non-matrimonial property if such an approach is justified by the circumstances of the case. In my view, the court should not apply the guidelines identified by the House of Lords in Miller and McFarlane with undue rigidity. Fairness requires a broader approach. Further, if the courts were to limit the exercise of the discretion in the manner proposed by [counsel for the husband], this would in my view risk re-imposing the ceiling identified as resulting in unfairness in White and Miller and McFarlane . …”

67.In K v L (Non-Matrimonial Property: Special Contribution) [2011] 2 FLR 980, at §22 it was noted by Wilson LJ that when counsel for the husband was asked to show the court a reported decision in which the assets were entirely non-matrimonial and in which, by reference to the sharing principle, the applicant secured an award in excess of her or his needs, counsel confessed to be unable to do so.  Whilst Wilson LJ did not doubt that such a decision will be made in an appropriate case, he declined to do so on the facts in K v L.  Mostyn J also pointed out in S v AG at §7 that England awaits the first decision where the sharing principle has led to an award from non-matrimonial property in excess of needs.

68.The Law Commission in England has not recommended reform of the law relating to non-matrimonial property in its report in February 2014, as this is an issue that affects only a minority – those whose assets exceed their financial needs – and the better option is to enable legal self help by leaving those who wish to make arrangements for pre-acquired and inherited property to do so by making a qualifying nuptial agreement rather than to recommend controversial reforms when there is no consensus on the right direction for the development of the law.  So the response is to continue to leave it to the courts to resolve issues one by one, in response to the case that happens to raise a particular issue.

69.The judge in the present case applied the approach in Charman and Robson, rather than the two-step approach.  That was also the approach adopted in all except one of the District Court cases cited to us as mentioned in footnote 23 of this judgment.  The basis for adopting this approach would seem to be founded on WLK v TMC (2010) 13 HKCFAR 618, in which Ribeiro PJ said at §84:

“I do not agree with the Judge’s suggestion that the sharing principle is capable of being ‘displaced’ by such considerations [i.e. the shortness of the marriage and there was virtually no marital acquest, see §83], even where there are substantial assets surplus to the parties’ needs. There is nothing in White v White or Miller/McFarlane to support that view. If the Judge’s approach were to be adopted, one would have to define the conditions for such displacement, which in my view, introduces unnecessary complications. The better approach is to regard the sharing principle as always applicable when there are assets surplus to needs but accepting that, as part and parcel of that principle, an equal division should indeed be departed from if good reason exists for so doing. The shortness of a marriage, the absence of marital acquest and similar matters can all be considered as possible reasons for such a departure. The circumstances of a particular case may lead the court to decide, for example, that equal division should be departed from to the extent of restricting the award to a sum sufficient to meet one of the parties’ needs. But that is not to say that the sharing principle has been ‘displaced’. ”

70.In TCWF v LKKS & Ors [2014] 1 HKLRD 896, the Court of Appeal said at §194:

“… Since the discretion is unfettered and the factual matrix of each case would be different, the approach of Mostyn J [in N v F] should only be regarded as an illustration of how the discretion could be exercised as opposed to laying down a formula which should be followed mechanically in every case. There may well be factors which are not relevant in the previous cases which have to be considered on the facts and circumstances of another case.”

71.We do not understand Mr Sussex to have submitted that the judge was in error in not adopting the two-step approach in deciding whether to apply the sharing principle, although he might have been advocating this as the preferable technique in isolating non-matrimonial property and dividing up only matrimonial property equally subject to the question of need.  We are mindful that “the exercises on the one hand, of adopting A and of testing against B and, on the other, of adopting B and of testing against A may indeed have subtly different consequences” (Jones v Jones, §35, per Wilson LJ).  But we do not think it should impact on the resolution of this appeal whether the court should apply the telescoped approach or the two-step approach, as the same relevant factors should be considered in deciding whether and how to apply the sharing principle whichever approach is adopted.

72.Thus, in applying the telescoped approach regarding non-matrimonial property, and in deciding to what extent equal division should be departed from where needs have been satisfied, according to the guidance given by the courts relevant factors may include: the duration of the marriage; the nature and value of the non-matrimonial property; the way the parties organized their financial affairs; their standard of living and the extent to which it has been afforded or enhanced by drawing on the non-matrimonial assets; the way the non-matrimonial property was preserved, enhanced or depleted during the marriage.

73.Similarly, in applying the two-step approach, in deciding whether it is fair and just that the existence of non-matrimonial property should be reflected, as stated in N v F at §14, this “depends on questions of duration and mingling”.  And if it does decide that reflection is fair and just, in considering how much of the pre-marital property should be excluded, the court would be looking at factors such as the historic sum, the extent of mingling, springboard effect and passive economic growth, not dissimilar to some of the relevant factors considered in the telescoped approach.  In any event, the fairness of the award in applying the two-step approach is to be tested by the “overall percentage technique”.

74.We turn to consider if the judge was in error in considering the relevant factors in applying the sharing principle.

Duration of the marriage

75.The judge no doubt attached much importance to the duration of the marriage in considering how the sharing principle should be approached.  She mentioned this factor at the outset before she embarked on a discussion of the issue whether the Chaiwan Property should be excluded from sharing, and returned to this when she considered the matters in section 7(1) of the MPPO and whether there were good reasons to depart from equal division.

76.But far from regarding the length of the marriage of itself to have freestanding significance, or taking the view that a long marriage would automatically make it more difficult to disentangle non-matrimonial assets, the judge had explained why in the particular circumstances of this case much less weight should be attached to the pre-marital source of the assets.  She had not failed to recognize the importance of the source and ring-fencing of assets as relied on by the husband, but gave reasons why she considered the Chaiwan Property should not now be ring-fenced as being excluded from sharing, with regard to how the assets were treated in the course of the marriage.

77.Thus, the judge had regard to the fact that the Chaiwan Property was initially purchased with a mortgage loan that was 90% of the purchase price, and there were a couple of re-mortgages until the property was released from mortgage in 2009 when the husband decided to stop running the business of Welton Electronics.  There was no attempt of the husband to ascribe a value to the net equity of this property as at the date of the marriage.  Part of the substantial distributions from Welton USA earned during the marriage were used to repay the mortgage loans of the Chaiwan Property and a large part had gone towards meeting the substantial losses of Welton Electronics.  Hence, she took the view that the Chaiwan Property was “never kept separate from other assets”.

78.The duration of the marriage also impacted on other relevant matters in the discretionary balancing exercise, such as the high standard of living enjoyed by the parties throughout the 14-year marriage by drawing on the wealth generated by pre-marital assets (thereby showing acceptance by the husband of sharing the added wealth and the parties would have grown accustomed to the standard of living enhanced by the added wealth), and the period of time over which domestic contribution by the wife in looking after the family has continued and will continue (under the order for joint custody, the wife has to care for the children as the younger son lives with her and the elder son returns home during term breaks, and she will continue to be responsible for their day-to-day living expenses until they reach the age of 25 or finish full time education, whichever is later).  This is akin to the point made in Law Commission Report on Matrimonial Property, Needs and Agreements at §8.48 cited by Mr Sussex:

“The point is not that the status of the [pre-matrimonial] assets changes by virtue of time alone, but that as time goes on the lives of the two people become more intermingled, and it may cease to matter to them (at least while the relationship continues) who first owned (say) the shares or the piano”.

79.We do not think Mr Sussex was justified in criticizing the judge for attaching undue importance to the duration of the marriage.  Nor do we think the judge had failed to articulate any reason to justify the sharing of pre-marital assets in emphasizing the duration of the marriage.

80.Mr Sussex relied on this passage in the judgment of Wilson LJ in K v L at §18, which three examples were given of situations of diminution in the importance of the source of assets over time:

“… I believe that the true proposition is that the importance of the source of the assets may diminish over time. Three situations come to mind: (a) Over time matrimonial property of such value has been acquired as to diminish the significance of the initial contribution by one spouse of non-matrimonial property. (b) Over time the non-matrimonial property initially contributed has been mixed with matrimonial property in circumstances in which the contributor may be said to have accepted that it should be treated as matrimonial property or in which, at any rate, the task of identifying its current value is too difficult. (c) The contributor of non-matrimonial property has chosen to invest it in the purchase of a matrimonial home which, although vested in his or her sole name, has – as in most cases one would expect – come over time to be treated by the parties as a central item of matrimonial property. The situations described in (a) and (b) were both present in White v White. By contrast, there is nothing in the facts of the present case which logically justifies a conclusion that, as the long marriage proceeded, there was a diminution in the importance of the source of the parties’ entire wealth, at all times ringfenced by share certificates in the wife’s sole name which to a large extent were just kept safely and left to grow in value.”

81.On the view taken by the judge of the facts, the present case could be regarded as falling within situation (b).  No value was ascribed to the net equity of the Chaiwan Property as at the date of the marriage.  The husband’s business activities during the marriage through Welton Electronics and the net equity of the Chaiwan Property were inextricably linked.  As Mr Pilbrow had reasoned, if the mortgages of Chaiwan Property had not been paid off, there would essentially be no net equity – given that Welton Electronics owes the husband personally $143 million at the end and the Chaiwan Property was only worth $130 million mortgage free.  Similarly, the distributions received from Welton USA of $150 million during the marriage were deployed for the benefit of the family, the husband’s business activities, keeping Welton Electronics afloat and preventing the Chaiwan Property from being foreclosed by the bank.  There was mixing or intermingling with matrimonial activities and assets in circumstances in which it may be said that the husband must have accepted that the Chaiwan Property and Welton USA should not be excluded from sharing.

The way the assets were treated during the marriage

82.Mr Sussex took issue that there was mixing or mingling of pre-marital assets with matrimonial property in this case, and contended that the pre-marital assets did not transmogrify over time into matrimonial assets.

83.He submitted that the present situation was akin to K v L, in which substantial assets were “at all times ringfenced by share certificates in the wife’s sole name which to a large extent were just kept safely and left to grow in value.”  But the circumstances in K v L were very different and unusual.  There, the entire wealth and only means of support of the family came from the shares inherited by the wife from her grandfather, either by way of dividends or by sale of the shares when there was need to do so.  Both the husband and the wife stayed at home and participated equally in caring for the children and the family.  Throughout the marriage, they lived “an extraordinarily modest lifestyle” (at §7) and continued to do so in a modest way after separation.  In those circumstances, it was held that the shares had been ring-fenced as the wife’s property and there had been no mixing with matrimonial property.

84.In contrast, in the present case, the wealth generated from the husband’s substantial assets acquired before the marriage was mingled with the family budget to fund the high standard of living of the family.  It was used for family purposes and needs and for the husband’s business activities conducted through Welton Electronics during the marriage.  The fact that the shares of Welton USA were held by Urban (which was in turn wholly owned by the husband) and that the Chaiwan Property was owned by Wallford (which was in turn a wholly owned subsidiary of Welton Electronics) did not set these assets apart, in view of the way in which the financial affairs of the parties were organized, and the way in which some of the assets were preserved and others depleted during the marriage as mentioned earlier.  In the present situation, characterizing the income received during the subsistence of the marriage as the fruit of pre-marital assets is not particularly helpful.  It should be more pertinent to consider whether such assets were well and truly ring-fenced from the matrimonial budget.

85.Mr Sussex submitted that distributions from Welton USA and rental income from the Chaiwan Property should not be confused with the capital value of these assets, making the point that the capital value of pre-marital assets should not be regarded as matrimonial property for sharing.  But without the capital value of the assets, the needs of the parties, generously interpreted at $95 million for the wife and $61 million for the husband, could not be met.  So there was a valuation of the shares in Welton USA, and the parties agreed on the approach of obtaining valuations only for the underlying assets of Welton Electronics (club memberships), Wallford (Chaiwan Property), Katerini and Angelwings on the basis that such assets were treated as the parties’ personal assets for distribution.  This also deals with Mr Sussex’s submission that strictly speaking the husband did not have any interest in the Chaiwan Property and there should be no piercing of the corporate veil.

86.Mr Sussex further submitted that the increase in the value of the Chaiwan Property was passive growth without activity on the husband’s part and should be treated as non-matrimonial in nature, relying on the majority view of the English Court of Appeal in Jones v Jones at §46.  But unlike Jones v Jones, there has been no attempt by the husband to “ascribe to [the alleged non-matrimonial asset] a value, as at the date of the marriage, which is both realistic and apt to the context in which it is required” (at §37), nor was there attempt to assess passive economic growth or activity.  In K v L, evidence was adduced as to the values of the wife’s inherited shares at different times (at §5).  We agree with Mr Pilbrow that the husband cannot rely on passive growth in these circumstances.

Conclusion and costs

87.We are not persuaded that the judge had erred in principle or in law or was plainly wrong in applying the sharing principle to non-matrimonial property or in ordering a division of 45/55 of the total assets.  She had weighed the relevant factors and struck a balance of fairness.  The decision she made in the exercise of her discretion is well within the generous ambit within which reasonable disagreement is possible.  We therefore dismiss the husband’s appeal and make an order nisi that he should pay the wife’s costs of the appeal, with a certificate for two counsel.

Mr Charles Sussex SC & Mr Neal Clough, instructed by Henry Lam & Associates, for the Husband (Appellant)

Mr David Pilbrow SC & Jeremy S K Chan, instructed by Withers, for the Wife (Respondent)