Lsm v. Cmp

FCMC 7040 / 2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 7040 OF 2011

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J U D G M E N T
(Ancillary Relief)

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1.This is a trial on the ancillary relief of an undoubtedly long marriage.  Long as it is not only the marriage but also the length of separation.

2.The petitioner is the wife (“W”); she is now 68 years old.  The respondent husband (“H”) is now 73.  The couple was married in Hong Kong in 1965 by having gone through a traditional Chinese marriage ceremony.  They underwent a formal registration in October 1984 in order to facilitate their second daughter (“YL”)’s application for further education in the United States.

3.Five children were born out of this union:-

1.   YY, a daughter now aged 48. 

2.   YL, a daughter, now aged 47. She has been living in the United States since departing Hong Kong for education in about 1986;

3.   YS, a son, now aged 45.  He is also living in the United States;

4.   YK, a son, now aged 43, is in Hong Kong.  He is married, living apart from the parties and is working as a security guard; and

5.   TK, a son, now aged 24, is attending university in California.

4.On 30 May 2011, W petitioned for divorce on the ground of 2 years’ separation.  She pleads that the parties has separated since September 1994.

5.Initially, there was some dispute over when the parties started to separate from each other.  H’s version was that it was at a much later time, in about 2001, that he realized the parties had separated.  Be that as it may, H now accepts that for the purpose of the present proceedings the parties have separated as from 1994.

6.As H did not file any Form 4 contesting the petition, decree nisi was granted on 26 November 2012.

7.Both parties have issued Notice of Application for Ancillary Relief.  In addition, H has also filed an Application under s 17A of the Matrimonial Causes Ordinance, Cap 179 for the court to consider his financial position after the dissolution of the marriage.

8.Notwithstanding that W has her own application for ancillary relief, it has become clear that the trial is essentially on H’s application, for the reason that he is now on CSSA and is obviously impecunious.  W also applies for maintenance for the youngest son TK to be paid by H, but clearly the application is premised on H being successful in getting a share of her assets from which H would then be in a position to maintain TK.  As I will explain below, I believe W’s application is misconceived.

9.To start with, I need to highlight two unusual features in this case. 

10.The first is the length of both the marriage and the separation as I have mentioned above. 

11.The second is, whilst H is undoubtedly penniless, W puts forward an even bolder claim that she is in fact insolvent.  In this respect, it is of note that both parties are legally aided in the present proceedings.

12.It is rather unfortunate that the factual disputes spread over a period of more than three decades; and unusual as it is, the factual matrix of this case is rather complicated.  On this note, I bear in mind Ribeiro PJ’s guidance in LKW v DD (2010) 13 HKCFAR at paras 62-63 that there should be rejection of minute retrospective investigations:-

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

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

Some Salient Facts

13.The following are the salient facts of this case.

14.W is an indigenous villager of the L Village in the New Territories, but H is not.  As can be seen below, the fact that she is an indigenous villager has some bearings on the dispute of this case.

15.It is obvious that both parties received little education and had little skill.  In about 1965, H partnered with 2 friends to start a business of construction equipment rentals.  In 1977, ie some 12 years into the marriage, H withdrew from the partnership and started his own company in the name of PK.  The business of PK later expanded to roads and building constructions.  Apparently, the business grew and the parties were able to purchase a flat in Shatin (“the Shatin Flat”) on 1 August 1983 for use as PK’s office.  It was purchased in H’s name at a price of $286,000, with a mortgage of $140,000.  It is common ground that PK was the source of finance.

16.On 11 February 1987, the Shatin Flat was sold for $330,000.

17.From about February 1991 to June 1991, W purchased a piece of land (“the Land”) at a nearby village from another indigenous villager.  The Land was then partitioned into 3 sections, being Section A, Section B and Remaining Portion (“the RP Lot”). She built a 3-storey village house on Section B (“the 47D House”) which became her and TK’s home since 2001 up until now.

18.At about the same time, another 3-storey village house was built on Section A (“the 47E House”). According to the land search record, except for a brief period of time from 19 June 1991 to 10 December 1991 during which W was the owner of Section A, on the face of it the lot was developed by someone else which became the 47E House.  Again, according to the record, the three floors were sold to different purchasers in around September and October 2001 for a total price of $3,350,000.

19.Finally, as for the RP Lot, W transferred it to the eldest son YS on 19 June 1991.  Since then there was no activity till 31 January 2013 when YS apparently executed an assignment in favour of a developer for the consideration of $680,000. 

20.As much of the disputes revolve around the Land, I need to revert to what happened to it in greater details below.

21.Shortly after the Land was purchased, on 29 August 1991, a flat in Uptown Plaza (“the Uptown Property”) was also purchased, with mortgage finance, in the name of W for $1,438,000.  The Uptown Property was used by the parties as their matrimonial home; before then, the family used to live in rented accommodation.

22.On 13 May 1994, W entered into a second mortgage on the Uptown Property, apparently for the purpose of raising capital for PK.  However, shortly thereafter on 24 September 1994, the Uptown Property was sold for $2,780,000 and the parties then moved to a house (“No. 52 House”) in W’s native village, the L Village.  This house belonged to W’s younger brother LYM, who at all the material times was living in Canada.

23.W says it was when she moved to live in the L Village that she started to separate with H.  A while later, W, together with TK, moved to another house within the same village, leaving H in No. 52 House where W’s mother was also living.  H’s version that he took care of W’s mother until she died in 2001 is not challenged.

24.In 2001, when the construction of the 47D House was completed, W and TK moved in and they have since been living there until now.  Meanwhile, H continued and is still living in No. 52 House. 

The Business of PK 

25.As mentioned above, this company, a sole-proprietorship, was started by H in about 1977.  Though there are some disputes over the roles that the parties played and hence their contribution to the business, I think it is not inaccurate to say that the business once prospered in the early 90’s and then declined.  W’s case is that she had no involvement in the business after 1997 or 1998.  On the other hand, H denies this and says he and W was in the business together up to about 2001 when PK ceased business. 

26.The situation as it stands is that both are not working and H has been on CSSA since 2002.  Both are on legal aid in the present proceedings.  It is common ground that because of their age and ill health, both do not have any earning capacity.  H is facing eviction from W’s younger brother and if the 47D House is to be sold for division between the parties, W will have to look for alternative accommodation.  Finally, the education needs of TK would have to be catered for.

27.Since the children also play a part in the dispute, I need to set out their brief particulars.

28.The eldest daughter YY worked in the Netherland in her early years.  Unfortunately she became mentally ill upon return to Hong Kong and is now living in a rehabilitation home.  She has a daughter, now about 17 years old. 

29.The second daughter YL left for Hawaii for further education in about 1986.  After graduation in about 1990, she went to work in Singapore for a while and then immigrated to the United States.  She appeared to have a well-established career in information technology and is now residing in California.

30.The eldest son YS is about 2 years younger than YL. He followed YL and headed for further education in Hawaii but unfortunately for some reasons he was not able to complete his degree.  He however did not return, got married and has since been settling there.  I am told that because of his lacking in qualifications, in contrast to YL, he has been working in a rather insignificant position in a restaurant.

31.The second son YK received education up to Form 5 in 1988; and has since then moved out from the family.  He is married and is now working as a security guard.  He gave evidence for W in the present proceedings.

32.The younger son TK finished Form 5 in June 2008.  He worked for a while in Hong Kong and left for further education in California in November 2009.  Initially he stayed at YL’s home but he is now renting his own accommodation.  He is studying psychology in a university in California.  With the consent of the parties, he gave evidence via video conferencing at the Technology Court.  He is due to complete his degree in the summer of 2015 earliest.  As said, one of the issues in dispute is the quantum of TK’s educational expenses.

W’s Case

33.Ws’ primary case is that she is practically insolvent.  The only asset she has is the 47D House which has an agreed value of $6,540,000.  After the repayment of the outstanding mortgage in the tune of $1,300,000, it has a net equity of $5,240,000. However, she asserts that she owes family members, relatives and friends debts in the region of $7,574,783.  Hence, there is nothing left for distribution between the parties.  The reason why she has become so heavily indebted was due to the irresponsible conduct of H.  As from about 1995, PK was always short of funds for operation but H was neglectful of his duties.  Rather than attending to the business and showing up at construction sites, he spent most of his time in the Mainland.  Whenever there were funds available, H withdrew most of them for spending in the Mainland, leaving money barely sufficient for W.  She therefore had to borrow from relatives and friends in order to keep PK and the family afloat.  When the business of PK turned from bad to worse and because of her ill health, she decided to withdraw from PK.  Except one company chop, she returned all the cheque books, bank passbooks and chops to H.  She maintains that prior to 1996, the living expenses for her and TK were from PK, but after her withdrawal from PK, she had to support herself by engaging in various manual labour jobs.  Later, because of her ill health and fortunately with the financial assistance by way of loans from her maiden family and YL, she could afford cease working in about 1997.

34.Thus, W’s case is at all times she has been heavily indebted.  Essentially, she has been living on loans since 1997 and that explains why she has debts running up to $7,754,783. She has been raising TK single-handedly since 1996.  H was not only neglectful as a husband and a father, he also made little contribution to PK’s business.

H’s Case 

35.H recounts an entirely different version.  He asserts that at all times he had been maintaining the family up to 2001 when PK ceased business. 

36.Contrary to W’s assertion, the business of PK went from strength to strength.  In about 1991 the business was so good that not only W obtained all the monies she needed for the family including YL and YS’s education overseas, she also had monies for the purchase of the Land and to build the 47D House and the 47E House.  According to the records, in one single year alone from April 1990 to March 1991, W, being the authorized signatory of PK’s account, withdrew a total of $3,109,000; that was more than sufficient for the purchase of the Land and the Uptown Property.  The reason for the family to move from the Uptown Property to No. 52 House in 1994 was because W wanted to have the Uptown Property rented out for funding the building of their village house.  Rather than renting it out, in the absence of his knowledge, W chose to sell the Uptown Property in September 1994 for $2,780,000, and pocketed net proceeds of $1,560,111.

37.H continued to provide financial support to the family through PK until about 2001 when he ceased business.  However, unbeknown to him, W continued to use PK to obtain new business. 

38.As for the Land, W’s was its developer.  In order to meet the requirements of the Village House Policy of the Lands Department, W placed Sections A and B in the names of two indigenous villagers for the purpose of obtaining the relevant licenses for building 2 village houses (丁屋).  As mentioned above, the 47D House later became W’s home and the 47E House was sold for a total sum of $3,350,000.  As for the RP Lot, the eldest son was merely a nominee for W. 

39.All the alleged loans are in dispute.  H’s case is essentially that all the loans are fake, made up merely for the purpose of defeating his claim and W in reality has hidden assets.

W’s Response

40.In response to the allegation that she was the developer of the 47E House, W denies and says that it was developed by one Mr Cheng.  She has nothing to do with the profits arising from the sale of the house.

41.The transfer of the RP Lot to YS was a marriage gift since he was the eldest son in the family and was in financial need. 

42.The withdrawals of $3,109,000 were for the expenses of the family and PK.  The sale proceeds of Uptown Property were also returned to PK for its business.

W’s Open Proposal 

43.At the beginning of the trial, W offered a sum of $1,100,000 inclusive of interest in full and final settlement of his ancillary relief claim plus costs to be taxed if not agreed. W also agreed to withdraw her claim for ancillary relief against H and to bear all the expenses of TK.  The offer however is conditional upon the vacation of H’s Notice of Application for Ancillary Relief now registered at the Land Registry against the 47D House so that W may sell the house for paying the $1,100,000 to H.  H is also required to acknowledge that he has no right or claim on the RP Lot and on No. 52 House.

44.The $1,100,000 is arrived at as follows.  The 47D House is valued at $6,540,000.  W’s liabilities, exclusive of those owed to YL, are $4,017,028 and TK’s education costs are $456,000.  These two figures give a total sum of $4,473,028.  Deducting $4,473,028 from $6,540,000 gives a figure of $2,066,972.  Half of it is $1,033,486 and W is willing to round it up to $1,100,000.

45.At the conclusion of the trial, W maintained her stance regarding the offer saves and except that there be no order as to costs.

H’s Open Proposal

46.H asks for the transfer of the 1^st and 2^nd floors with roof of the 47D House free from encumbrances at the costs of W.  As for TK, he agrees to pay $190,000 a year for his maintenance for 2 consecutive years.  H is also seeking costs against W.

47.Despite the apparent discrepancy in actual figures, both parties in fact agree to the equal division of assets.  The parties only depart on what should go into the matrimonial pot.  On the part of W, it is the 47D House only but on H’s part, in addition to the 47D House, he is seeking to have the sale proceeds of Uptown Property and of the 47E House and also the value of the RP Lot to go into the matrimonial pot.

48.It also needs to be mentioned that both parties agree not to take any issue on whether they have any assets in the Mainland and not to claim for the other side’s monies in the bank accounts.

Issues to be Determined 

49.Given the long duration of marriage, both parties have sensibly refrained from putting forward ‘conduct’ as a ground for departing from equal division.  Initially, from the matters and the allegations raised in the affirmations, it would appear that W was trying to make out a case of “gross and obvious misconduct” on the part of H so as to warrant a departure from equal division.  This has become clear when Ms Leung, the solicitor for W, confirmed in her opening that these matters would only be relevant to the genuineness of the loans.  In my view, this is the correct approach.  Thus, I only need to look at the conducts of the parties in the context of this issue only.

50.In my view, there are 2 issues. 

51.The first is the genuineness of the loans as alleged by her; and the second, which goes hand in hand with the first, is whether or not she has any hidden assets.  The outcome of these issues would no doubt significantly affect the size of the matrimonial pot. 

52.In the determination of these issues, I need to deal with the following subsidiary factual disputes. 

53.The first batch is the issues in relation to the landed properties: whether W pocketed the sale proceeds of the Uptown Property or whether the same were put back for use of PK’s business, whether W was the developer of the 47E House and thus pocketed the sale proceeds; and whether W was and is the beneficial owner of the RP Lot.

54.The second batch of issues is relation to the business of PK at the material times.  This is relevant as to whether W was compelled to take loans in order the keep the business and the family afloat and whether the source of funds for the purchase of the Land was from PK as alleged by H or the source was from loans as alleged by W. 

55.All these factual disputes intertwined with each other; and at the end of the day, on the basis of the findings of these factual disputes, the court should be able to see the overall picture of what happened at that time.  In doing so, it must be stressed that I should refrain from investigating into the minute details of the marriage which spread over nearly 5 decades.

Whether W Pocketed the Sale Proceeds of Uptown Property?

56.The Uptown Property, purchased in W’s sole name on 29 August 1991, was the family’s matrimonial home up to September 1994 when it was sold for $2,780,000.

57.W’s case is that it was H who insisted on selling the property.  She was not the one who retained the solicitors.  It was H who decided and handled the sale and she simply signed the documents at his instructions.  After the sale, again at the instructions of H, she returned all the sale proceeds in the sum of $1,560,000 to PK and she moved to live in L Village.  It was at that point that she separated with H.  W agrees that the sale proceeds were deposited into her account but insists that the same were used for PK’s purpose. 

58.H’s case is that he was kept in the dark.  He agreed to move out of the matrimonial home because W persuaded him that it would be rented out for cashing some extra money for the building of their new home, which later became the 47D House. 

59.The net sale proceeds of $1,560,000 were paid to W by cheques.  Ms Hui, for H, argued that if W had returned them to PK’s account, there should be records and statements in support but none has been put forward.  To be fair, I accept that given the long lapse of time, it might be difficult if not impossible for her, or indeed for that matter for both parties, to produce the relevant bank statements. Nevertheless, even without this documentary evidence, I am able to come to a conclusion, on the balance of probability, that W did not return the money. 

60.To start with, upon enquiry for the purpose of the present proceedings, the handling solicitor at the time of sale has confirmed that H was not involved in the conveyancing transaction and no instructions were from him.  Thus, it cannot be the case that the sale was arranged by him.  To me, the logical implication is that instructions for sale must have come from W.  W is not truthful in this respect.

61.The land search record shows that the purchase was financed by a legal charge.  To me, that is nothing unusual.  However, shortly before the sale, W entered into a second mortgage in favour of the same mortgagee bank on 13 May 1994, apparently for raising finance.  Then in less than 3 months’ time, on 6 August 1994, W entered into a Sale and Purchase Agreement for the sale of the property, which sale was completed on 24 September 1994.  To me, this is unusual and it suggests that there was a change in the plan.  However, both H and W have not explained why this happened. 

62.What makes the whole situation suspicious – and that is heavily relied upon by Ms Hui – is the Occupier’s Confirmation annexed as a Schedule to the Agreement for Sale and Purchase entered into by W for the sale of the Uptown Property.  The Confirmation was purportedly signed by H.  The signature there, which was said to be H’s, was in stark difference from his other numerous signatures appeared in other contemporaneous documents laid before the court such as the Memorial of the Second Mortgage registered with the Land Registry.[1]  H is adamant that it was not his signature.  On my part, one does not need a signature expert to tell that the Confirmation was signed by someone other than H.  What is more, contrary to the usual practice that the Confirmation should normally be signed before a solicitor or his clerk, the signature was attested by someone whose identity was unknown.  In other words, it lacked the usual formalities such as the capacity of the attesting witness and the identification document and number of the signatory; and there was also no interpreter.  This supports H’s contention that he was kept in the dark about the sale.

63.Further, there was presence a strong incentive that W kept the money for her own use.  Ms Hui correctly pointed out that the time of sale was also the time when W said she was dissatisfied with H and he was so untrustworthy that she had decided to separate with him. 

64.Finally, W has different versions as to where the money has gone.  At one point, W claimed she used part of the proceeds to repay her maiden family but then at another she alleged that she paid the whole of the net sale proceeds to PK.

65.For the above reasons, I find that on the balance of probabilities, W pocketed the sale proceeds of $1,560,000.

Was W the developer of the 47E House?

66.W says she borrowed a total of $530,000 from one Madam Cheung and her younger brother LYM for the purchase of the Land.  Though there is some dispute over whether the purchase price was $530,000 as now claimed by W or it was merely for $104,544 as shown on the Assignment, I do not think this is material.

67.As mentioned above, W had the Land crafted into Section A, Section B and the RP Lot.  In October 1994 and April 1995 the Government issued the relevant building licenses in respect of Section A and Section B so that building works could be commenced.  I agree with Ms Hui’s observation that the timing matched with W’s timely sale of the Uptown Property in September 1994, from which W received $1,560,000 net.

68.As mentioned above, W says the house was in fact developed by one Mr Cheng.  Since she had no money to build the 47D House, she therefore joint-ventured with Mr Cheng.  The bargain on her part was to give Section A to Mr Cheng, in return Mr Cheng would have a house built on each of Section A and Section B.  W was to have the 47D House free and Mr Cheng was to have the 47E House.  On that footing, W had nothing to do with the profits from the sale of the 47E House.

69.W has been able to recall the names of her creditors and the relevant documents that were decades old but has not been able to recall the full name of Mr Cheng and the joint-venture agreement.  Quite apart from this, what is material is that the premium of about $703,600 for the 47E House was paid by W to the Lands Department in August 2001.  She was evasive as to the source of finance for the premium.  Obviously, her case must be that she managed to pay the same only by raising a loan on the mortgage of the 47D House.  It is hard to believe that if she had no interest in the house she would have taken the trouble of raising money for the payment of premium and at the same time in so doing would also have put her own house in jeopardy if she should fail to pay the mortgage instalments, bearing in mind that according to her case, she was living entirely on loans. When being asked why she did not ask Mr Cheng to repay the premium, amazingly her answer was that she thought it was the end of the matter. 

70.The house could not be sold if the premium remained unsettled according to the government’s Village House Policy.  W is an indigenous villager and living in an indigenous village, I have no doubt she must be fully aware of the ‘rules of the game’ in this respect.  The only logical inference for W to pay the premium was to effect completion of the sale between September and October 2001 and to pocket the sale proceeds.

71.I have also not lost sight of fact that the money in the sum of $100,000 paid to an indigenous villager for the right to build the house (丁權) was also paid by W. 

72.For these reasons, I am able to come to a conclusion that she was the developer of the 47E House and that she pocketed the sale proceeds of $3,350,000. 

Whether W is the Beneficial Owner of the RP Lot?

73.W’s case is that the transfer of the RP Lot to YS in 1991 was an outright gift.  Since YS was the eldest son in the family, was getting married and was in financial difficulty, she therefore gave the piece of land to YS as his wedding gift. 

74.In her Form E dated 10 October 2013, W enclosed a development agreement dated 30 January 2013 purportedly signed by YS with a development company.  According to the agreement, YS joint-ventured with the development company for the building of a village house on the RP Lot.  The agreement further recorded that YS had previously borrowed $60,000 from the development company and by the agreement, he borrowed a further sum of $300,000 which sum was to be paid by 3 instalments of $100,000 each, the last instalment being 1 June 2013.  YS further agreed in the event that he is not able to repay the said total of $360,000, he is obliged to transfer the RP Lot to the development company at the consideration of $680,000 in which event he will be entitled to the balance of $320,000.

75.The land search record shows that on the same date, YS transferred the RP Lot, by way of an assignment, to the development company at the consideration of $680,000.  In evidence, W said she found this document by accident when she tidied up her things at home.  She did see YS upon his return to Hong Kong but she was not aware of this agreement nor was she ever told of the transfer.

76.The transaction as per the agreement raises a number of question marks.

77.First, the transaction is dubious.  The assignment does not sit well with the development agreement. As at the date of the development agreement, the condition for the transfer of the land simply did not exist but what we see is there was already an assignment on the same date.  Further, the development agreement does not contain any particular terms as to how the land is to be developed.

78.Secondly, YS has been away from Hong Kong for decades, it is hard to believe that he managed to locate a developer secretly and single-handedly without the involvement of W or other family members.  Even if he could have done so, it is hard to believe that W was not aware of the transaction.  Her evidence that she found the document in the house by accident is utterly unbelievable.  If YS was careful enough not to tell W about this transaction, there is no reason why he would have left, by way of a slip, a copy of this agreement at home.

79.Thirdly, the transfer of the RP Lot to YS is itself dubious.  As of now, this piece of land remains a barren site.  YS had left Hong Kong for good since 1988; the transfer served no practical purpose in alleviating his financial difficulty at that time and what transpired is that the land had been laid idle for over 2 decades.  From April 1990 to April 1991, within one year, W remitted at least $408,598 to YS and YL in Hawaii (ie about $34,000 per month).  Ms Hui also rightly pointed out that at the time of transfer of the RP Lot in 1991, on W’s own case, she was still owing creditors in the region of $690,000, PK’s business was going down and TK was just born, in such circumstances there was no reason why she did not reserve the RP Lot for urgent use, and still chose to give a gift to YS.  To this, her reply was that the lot was useless because it was just a piece of agricultural land.  If that is the case, I wonder why she would have given a useless gift to YS, bearing in mind it is her evidence that YS was in financial difficulty at that time.

80.On the above analysis, I find that the transfer was not intended to be a gift to YS; the son was and is just her nominee holding the RP Lot on trust for her.  I have every reason to believe that the transaction with the development company, if it is a genuine transaction at all, is in truth her agreement with the development company.

Genuineness of the Loans as alleged by W

81.W did not report any debts or liabilities in her 1^st Form E dated 25 November 2011.  The earliest point she disclosed her debts was on 13 February 2012 when she disclosed a list of 14 items (“the 1^st List”).  Then a year later, in her 2^nd Affirmation dated 6 March 2013, she disclosed another list of 12 items (“the 2^nd List”).  Finally, there was a 3^rd list of 24 items.  That was enclosed in her Form E dated 10 October 2013 (“the 3^rd List”).  According to the 3^rd List, inclusive of her debts of $4,469,796.08 owed to YL, her total liabilities are $7,574,783.08.

82.W’s case is all along since 1997 she has been living entirely on loans.  She ceased work in 1997 and later on as from about 2004 she relied on the maintenance from YL which maintenance included the mortgage payments of the 47D House.  However, as from September 2011 due to YL’s own financial problem, YL’s maintenance was not sufficient to meet her needs; she therefore had to resort to loans from relatives and friends.  That is the situation up to now.

83.YK worked in PK for about 4 months in March 1994.  He testified that at that time due to the continual absence of H, the daily operation and payments of PK were left with W.  He confirmed having seen on many occasions W borrowing monies from relatives and friends.

84.Many of the loans are ages old.  W gives a long list of loans and the creditors are said to be members of her maiden family, relatives, friends and even an employee of PK, dating as early as 1979 and down to September 2013.  Apart from YL, there are altogether 22 creditors and the total liabilities are said to be in the region of $3,104,987.  By and large, the earlier ones in 70’s and 80’s are said to be for the operational expenses of PK, repayment of debts of PK and the wages of its employees and for her own living expenses.  There is also a loan in about 1999 for repayment of PK’s debts.  The loans in the 90’s and thereafter are mainly for her and TK’s living expenses and for the purchase of the Land. 

85.Further, notwithstanding that PK had already ceased its business in 2001, W alleged she borrowed $500,000 on 25 February 2010 from one Mr Lee for repayment of PK’s debts.  In her 2^nd Affirmation dated 6 March 2013, she also said she borrowed a total of $530,000 from her younger brother LKM and a Madam Cheung for the purchase of the Land in 1991.

86.In addition to these ‘outside’ creditors (if I may so call them), W says that as from 2004 YL lent money to her for her monthly mortgage payments of the 47D House and for part of her living expenses.  From April 2004 to August 2011, the money lent to her was about $10,000 to several ten thousand dollars per month but as from September 2011, for the reason that YL also met with financial difficulty arising from the illness of her partner, the daughter was able to lend her $5,500 per month only.

87.In support of her case, W produced the pro forma acknowledgements of 10 of her creditors. Despite most of the debts were ages old, all these acknowledgements were signed in 2013, clearly for the purpose of the present litigation.  As a matter of fact, W admitted the pro forma acknowledgement was drafted by her solicitors.

88.W also produced certain pro forma receipts signed by her acknowledging receipt of various loans.  However, it is clear that these receipts were from the same receipt book that one could purchase from stationery shops.  Though the receipts bear different dates, thus suggesting that they were issued at different times, their serial numbers suggest otherwise.  For instance, W’s receipt of $70,000 from one of her relatives Mr L was dated 3 March 1994 with serial no. 102564, her receipt of $20,000 from one Mr CTW was dated 27 November 2012 with serial no. 102576 and also the receipt that she said she requested the vendor of the Land to acknowledge receipt of $530,000, to prove that the purchase price was $530,000 and not $104,544, was one dated 18 August 1995 with serial no 102558. With these dates so much apart from each other, it could not possibility be the case that W issued the relevant receipts from the same receipt book at the time she received the loans as she has testified in court.  Also, it is to be noted that not all the loans are supported by these so-called receipts.  The evidence suggests that all these were made up aftermath.

89.Shortly before the trial, there were waves of claims by her creditors in the Small Claims Tribunal and the District Court.

90.There were 2 lots of claims, a total of 14 cases, taken out by her creditors in the Small Claims Tribunal.  For those claims that were within the limitation period, W consented to judgments being entered against her.  I was told by W in evidence that for those claims that were time-barred and because of this reason the Small Claims Tribunal declined to deal with, W entered into an out-of-court written admission of liability. 

91.Similarly for those debts that exceeded $50,000 and fell within the jurisdiction of the District Court, the creditors took legal actions against her shortly before the trial of the present proceedings.  Before me are 3 District Court cases, all of which W, as the defendant, did not contest and had judgments entered against her.  What makes thing looked even more dubious is that all the plaintiffs in these cases were represented by the same solicitors.

92.The burden is on W to prove on the balance of probabilities that each and every of her alleged debts exists.  However, none of the creditors were called to give evidence.

93.I will deal with the 3 District Court Actions first and then the rest of the alleged debts.

1^st District Court Action:  Loan from younger brother LYM

94.On the Statement of Claim, it was pleaded that between 1995 and 1996 LYM loaned $500,000 to her and between March 2013 to September 2013, he loaned a further sum of $122,000, totalling $622,000. 

95.W also produced a handwritten note purportedly written and signed by LYM confirming that since 1991, on divers dates, he had loaned a total of $662,000 to W for the purchase of the Land and for her living expenses.  For reasons only known to LYM and W, the figure of $662,000 clearly does not tally with the figure ($622,000) claimed on the Statement of Claim.

96.In the 1^st List, W stated she owed him $162,000 and CAD2,600.  These were borrowed in 2010 and 2011 respectively.  But in the 2^nd List and the 3^rd List, she added another sum of $500,000.  She alleged it was borrowed from him as part of the purchase price of $530,000 for the Land, but she did not mention the CAD2,600 anymore.  Hence, her final version is that there were 2 sums:  $500,000 and $162,000.  She testified in court that $500,000 was borrowed in 1991 and $162,000 was in 2010. 

97.Apparently, on her own evidence, she had frequent contacts with her brother and her relationship with him was good. W was not able to provide any plausible explanation as to why she changed her version and why LYM’s version was different from hers.  In my view, this discrepancy is material. 

98.Under cross-examination, W was not able to tell whether the said $500,000 was advanced to her in one go or it was an accumulative sum.  Further, there is no doubt that $500,000 is at any rate a substantial sum of money, it was more so back in 1991.  I fail to see why W would have missed it in the 1^st List.

99.W’s bank passbook shows there was a deposit of $162,000 on 22 September 2010 that W alleged was loaned from LYM; and further that there was a cheque dated 20 September 2010 for the same amount issued by the managers of the Tso (祖堂) of W’s clan directly in favour of W.  W explained this was the money distributed to LYM as a male descendant of the clan and she borrowed it from the brother but clearly LYM was not suing for this sum.  The entries also show that within a period of 12 days cash of $110,000 in total was withdrawn.  Clearly, it was not for TK’s education because even on her version, TK was maintained by YL at that time.  When being asked of the purpose of the loan, W was not able to give a plausible explanation. 

100.LYM never mentioned the CAD2,600 that W said was for TK’s expenses in the United States.  W’s bank passbook does show there was a withdrawal of CAD2,600 from her account on 30 September 2011 but TK’s bank statements does not show a relevant receipt entry of this amount.

2^nd District Court Action:  Loan from Madam Cheung

101.Again, this is an action taken out on the same date as the other 2 actions and by the same firm of solicitors.  The plaintiff was one Madam Cheung who was the wife of W’s cousin and who alleged had advanced $500,000 to W.  Again, the same modus operandi occurred:  W did not contest and judgment was quickly entered.

102.According to W, this $500,000 was borrowed in about 1987.  As for the purpose of the loan, W has given 2 versions.

103.To start with, in her Chronology of Events (verified by a Statement of Truth) dated 12 March 2012 (the same date of the 1^st List), W said she purchased the Land with the financial assistance of her parents and YL in 1991; and subsequently, upon the sale of the Uptown Property, she made use of part of the sale proceeds to repay the debt owed to her parents.  Clearly, according to this Chronology, whatever debt she owed to her parents regarding the purchase of the Land, it had already been repaid. Attached to the Chronology of Event was the 1^st List in which W listed Madam Cheung as her creditor and claimed she borrowed $500,000 from her in about 1987 and in the Chronology, she stated that it was for PK’s work.  Clearly, W was not saying that any part of the said $500,000 was relating to the Land and her case at that time was that she had fully repaid the debt relating to the purchase of the Land after the sale of Uptown Property.  Ms Hui also correctly pointed out that in her 1^st Form E dated 25 November 2011, W also named no person as the financier or lender in the purchase of the Land.

104.Then W offered a second version by way of her 2^nd Affirmation on 6 March 2013 where she said out of this $500,000, $30,000 was used as part of the purchase price of the Land in 1991.  The balance of the purchase price of $500,000 was loaned from LYM.

105.That is not the end of the story; W offered a slightly different version in her 3^rd Affirmation dated 9 April 2013, where she said the purchase price was borrowed from her brother LYM and “friends”.  In this respect, it is to be noted that Madam Cheung is the wife of her cousins.

106.Also of particular note is that in the same year (ie 1987) that W said she borrowed the money from Madam Cheung, the Shatin Property was sold for $330,000 only.  To most of the people in the street $500,000 was at that time a handsome wealth.  Even as of now, it is by no means a small sum of money.  It is incredible that neither the creditor nor the debtor kept any record of such loan.

107.Even assuming for one moment that Madam Cheung did lend $500,000 to W in 1987, the implication is that W kept an unused portion of $30,000 for about 4 years till 1991 when it came to the purchase.  If there was any unused portion of the loan and if W was such an honourable debtor who was readily prepared to admit her liability I wonder why she did not return it to Madam Cheung first.  This is contrary to TK’s testimony that W would repay her loans once she had spare money.

108.Lastly, Madam Cheung’s claim was clearly time-barred but W readily admitted liability.

109.With all these discrepancies, I agree with Ms Hui that the subsequent version that the loan is relating to the Land is an after-thought; and also with all these discrepancies, I hold that W failed to prove her case.

3^rd District Court Action:  Loans’ From TK’s Former Teachers

110.This action has 3 plaintiffs.  The 1^st plaintiff is seemingly unrelated to the 2^nd and 3^rd plaintiffs.  For the purpose of the present analysis, I propose to deal with the 2^nd and 3^rd plaintiffs only.  The 1^st plaintiff will be dealt with generally together with other creditors.  As an initial observation, it is rather strange that the 2^nd and 3^rd plaintiffs would have grouped with another creditor (ie the 1^st plaintiff) who, according to W, did not know each other in suing against her in a single District Court action. 

111.The loans in questions are the most recent ones that she said borrowed from one Mr YKM and Mr YTC who were TK’s secondary school teachers for the respective sums of $222,000 and $394,000 and on various occasions.  W claimed the money was mainly for TK’s use in the United States and a small part of it was for her expenses and mortgage payments.

112.I accept that on evidence, it can be seen that 3 cheques for the sums of $30,000, $190,000 and $300,000 were deposited into W’s account with DBS Bank and were withdrawn shortly thereafter; and the fact that the purported lenders were TK’s former teachers are not challenged.  However, as W too admitted in cross-examination, the mere fact that money was deposited into her account per se does not necessarily mean it was a loan.  W tried to explain that the teachers were willing to lend her money because she owned a house and she was old.  Without hearing the evidence of the teachers to convince me that it was the case, I fail to see how these could be valid reasons.  The necessary implication of being old, coupled with the objective fact that she had no earning capacity, is that she had no ability to repay any money lent to her.  It is true that she owns the 47D House but it is her home, it is not something extra that she could be in a position to utilize without affecting her place of abode.  Further, it is too obvious that what is important is the net equity she has in the house. There is nothing to suggest nor is it W’s evidence that the 2 teachers enquired into the value of her net equity before lending.  If the teachers could and were willing to wait until TK would be in a position to repay upon graduation then there was no reason why they chose to commence the action in such haste.

113.Ms Hui also rightly pointed out that $17,000, which was part of the loan of $222,000, was allegedly lent by Mr YKM on 19 October 2012 but W failed to mention this in her Affirmation dated 6 March 2013.  Similarly, Mr YTC was said to have advanced $17,000 cash to W in April 2013 but she failed to mention this in her Affirmation dated 10 June 2013.

114.There is a handwritten confirmation produced as evidence stating that the 2 teachers lent $490,000 to W for TK’s study but strangely, for reasons only known to them, this confirmation was neither signed by them nor by W.

115.Finally, what makes the situation even more dubious is that the last loan, a sum of $30,000, that was said to have been advanced by Mr YTC, was allegedly made on 29 September 2013 but shortly after that, 10 days later on 8 October 2013, he caused his solicitors to issue a letter of demand for the repayment of all the monies and then 3 days later, he issued the Writ against her in the District Court.  The same situation occurred for Mr YKM who instructed the same solicitors to issue a letter of demand on 8 October 2013 and commenced legal proceedings on 11 October 2013.  To me, everything appears to be too artificial.  I incline to believe that all these were merely window-dressing, putting up in time to ensure that judgments were to be obtained as soon as possible.

116.With all these doubts unclear, I do not find W has proved her indebtedness to the teachers on the balance of probabilities.

Other Debts

117.Not all the debts on the Lists have been specifically referred to in W’s evidence.  I now turn to those which have been dealt with in trial.

Debt of $500,000 owed to one Mr Lee (李XX)

118.W stated in the 1^st List, the 2^nd List and the 3^rd Lists (ie from February 2010 to October 2013) that she borrowed $500,000 from one Mr Lee on 25 February 2010 to repay PK’s operation costs.  It means that the money was borrowed about 10 years’ after PK had ceased business.  For the first time during cross-examination, W claimed that the loan was in fact borrowed in the 80’s (ie time-barred) and it was an accumulative sum.  This explanation is contrary to the acknowledgement purportedly signed by Mr Lee and the promissory note that W signed on 25 February 2010 where it was clearly stated that the loan was advanced on 25 February 2010.  The promissory note was prepared by a solicitor who, according to W, was retained by Mr Lee.  If the loan was actually advanced in the 80’s it begs the question of why the promissory note was prepared in the way it was.  There is no secret that PK was owned by H.  Over all these years, H has been living at the same address.  There is no suggestion that Mr Lee was not aware of the situation.  I agree with Ms Hui that if PK had any debts, it should be H who would have to face it and had there been any creditors of PK, Mr Lee or any of them would have found H and sued him.

Debt of $50,000 owed to one Mr Cheng (鄭XX)

119.W claimed that she borrowed $50,000 from Mr Cheng in 1979 for paying wages to PK’s workers.  It is not in dispute that Mr Cheng was also one of PK’s workers, and according to PK’s Financial Statements, he earned $49,190 in the financial year 1988/1989.  I agree with Ms Hui that to Mr Cheng, or for that matter to any waged worker, $50,000 was by no means a small sum of money back in 1979.  I find it hard to believe that W would have been able to borrow such a substantial sum from a worker in order to pay for the wages of some other workers.  The debt is over 30 years old.  There is a dearth of evidence as to what steps or actions were taken by Mr Cheng to chase for its repayment over all these years.  If Mr Cheng was not eager to chase for repayment or did not take any action at all, in reality it has no difference from an outright gift.

Debt of $70,000 owed to one Mr Law (羅XX)

120.She testified that this loan of $70,000 is repayable after she has sold the 47D House and TK has completed his university education.  At the time when the alleged loan was made, ie back in 1994, the 47D House was not constructed yet and TK was merely 4 years old.  Without Mr Law’s evidence confirming that this was the case, it is incredible that Mr Law would have allowed such a long repayment period. 

The Alleged Debts Generally

121.W’s case on her debts changed in the course of the proceedings, from none in her 1^st Form E dated 25 November 2011 to $1,592,000 plus CAD2,600 in her Chronology of Events dated 13 February 2012, then an additional $500,000 allegedly borrowed in 1991 from LYM was mentioned in her 2^nd Affirmation dated 6 March 2013 and finally, a sum of $3,104,987, exclusive of YL’s loans, in her 2^nd Form E dated 10 October 2013. 

122.W claimed she recorded each loan in a book instantly when she borrowed.  If this were the case, she should have no reason for different versions; and further that, she did not produce the book in support of her contention. 

123.I agree with Ms Hui that had W had so many debts as alleged, she would not have the need to fight this case.  In all likelihood whatever asset preserved by her would not even be sufficient to satisfy the first charge of the Director of Legal Aid and the claims of her so-called creditors.  The fact that she has been fighting this case till the very end means she cares how much she can preserve for herself.

124.Ms Hui also reckoned that out of her alleged debts owed to the ‘outside’ creditors, $1,899,000 should have been statue-barred.  This is not challenged. 

125.The undisputed evidence is that the couple purchased a brand new BMW vehicle, purchased the Shatin Property and sent YL and YS abroad for education in the 80’s.  After having sold the Shatin Property in 1987 they purchased the Uptown Property and the Land in 1991.  I agree with Ms Hui that if she did ‘borrow’ from others, she was more like a crook than a needy.  A crook has no intention to repay the money; and the victims may not expect repayment.  Of all these loans one thing is in common : before the present trial, not a single creditor over all these years, extending to as long as 3 decades, seemed to have ever cared about their loans or the depreciation in the value of their monies, or have taken action against W.  According to W, most of the creditors are her relatives, clansmen and friends in her neighbourhood.  It is unbelievable that they were unaware of her living standard and gave her money as alleged.  If W were really such an honourable debtor that she tried her best to clothe into, what she could have done was to repay her debts long back in the early 90’s instead of generously remitting on average $20,000 to YL (a total of $153,000) when she was working in Singapore or instead of purchasing the Uptown Property or the Land.  Even if she should have missed all these opportunities, what she could have done at the later stage was to utilize the proceeds of sale of the 47E House or sell part of the 47D House, for instance, one of the floors in order to repay part of her indebtedness. 

126.The Claims in the Small Claims Tribunals were taken out just a few months before the trial.  She enlisted the assistance of YK in meeting the creditors and paid the required court fees and in so far as the creditors were available, arranged them to go to court.  For those who were not able to attend court hearings or were not keen on obtaining judgments, W arranged one Madam Y to sue and attend hearings on their behalves.  On the evidence before me, it is clear that W orchestrated the claims, missed no opportunity to admit liability and to ensure that judgments were entered against her.  Her relationship with these people must have been very good; otherwise she would not have been able to summons her clansman, fellow indigenous villagers and friends to line up for her. It is clear to me that all these proceedings were sheer litigation dressing.

Loans from YL

127.In her 1^st Form E dated 25 November 2011, W clearly stated that she was receiving $10,000 on monthly basis from YL as her maintenance.

128.Later on, in her Answers dated 15 February 2012, the figure was changed to “from $5,000 to $10,000”.

129.Then in her 2^nd Affirmation dated 6 March 2013 she changed the nature of the money from maintenance to one of loan.  All along, YL’s monies were sent to YK who then handed over to W.

130.It is also W’s evidence that starting from the summer or November 2009 and up to September 2011, YL was supporting TK’s study.  YL only stopped supporting TK when her husband or partner was diagnosed with brain tumour.  Things went from bad to worse when YL ceased giving her living expenses entirely as from March 2013 because of the daughter’s own deteriorating financial situation.  From that point onward, YL only paid some miscellaneous expenses on her behalf.

131.According to YK, it was in about 2004 or 2005, when YL enlisted his assistance of handing over the money to W, that he learned of YL’s financial support to W but he was not clear when it started.  As from about February 2005, YL’s money, in the region of $10,000 odd or above per month, would be remitted into his account for him to hand over to W.  As from September 2011, the maintenance was reduced to $5,500 and was entirely ceased in March 2013.  He also confirmed that after that, YL’s support was limited to the form of paying miscellaneous expenses for W. 

132.In addition to this, YL also paid the monthly mortgage payments of the 47D House for W from September 2004 to October 2011.  They were by way of direct payments from YL’s own bank account.  He has no ideas as to who was paying the mortgage payments before September 2004.

133.I now turn to the quantum.

134.According to the records and schedule provided by YL, from April 2005 up to March 2013 YL transferred $1,623,500 to YK’s account only and not $2,069,000 as calculated by her.  This does not include the mortgage payments.

135.The total figure of $4,469,796 that is said to have been advanced by YL over all these years includes virtually everything and when I say “everything” I do mean it. It includes not only the larger sums such as mortgage payments or TK’s tuition fees but also those miscellaneous items like utilities charges that she paid for W.  She even assigned a value to TK’s costs of accommodation while he was staying in her house in California.  Again, it strikes me as all too artificial and is definitely an after-thought.  At all events, the figure is proved to have been exaggerated (as accepted by YK).

136.The fact that YL made financial contributions to W and TK since 2004 is not challenged.  Ms Hui however argued that it does not automatically mean W had to rely on YL for a living.  W apparently remitted more than enough for the needs of YL when the latter was earning an income in Singapore.  By the same token, YL’s financial contributions do not necessarily mean W needed them or was penniless.  Ms Hui also submitted that generally speaking, a child’s financial contribution to his parent or the amount of it depends more on the child’s own affordability than the parent’s financial position.

137.W’s evidence is that since YL does not want H to have the 47D House out of the present proceedings, and if H could have a share in the house, she would also want to have a share because she also contributed to the mortgage payments.  In evidence, YK also confirmed that according to YL, the monthly payments were for family expenses (家用).  When YL came to know of H’s ancillary proceedings, YL treated these monies as loans.  That was in about the mid of 2012.

138.The reason for YL’s substantial reduction in her support as from September 2011 is said to be due to her husband or partner’s illness.  I have great doubt over the truth of this matter.

139.First, regardless of whether YL had gone through any formal marriage registration, on W’s own evidence, it was clearly a stable relationship.  She said that the couple held a wedding banquet in Hong Kong and W also went to the United States to meet the partner’s parents.  However, on the part of TK, it is surprising that he seemed to have no recollection of these events and he was not even sure who the husband or partner was in question.

140.Secondly, as for the brain tumour, W testified that other family members should have known of the illness because YL did not ask her to keep it as a secret.  Though she did not inform TK, she believed TK should have known of this.  Again, surprisingly, TK informed the court in his evidence that he was not aware of the illness.  There was a time when TK was staying at YL’s home attending college in California and it was exactly about more or less the same time when the husband or partner was said to have been diagnosed with the illness.  YK seemed to have suggested in his testimony that TK was not aware of this because incidentally he was back to Hong Kong for the summer.  Even if it was really the case, yet there is still no reason why TK was utterly unaware of this unfortunate crisis.  Ms Hui suggested it was not a mere coincidence that it was also exactly in September 2011 that H was granted legal aid to claim for ancillary relief and in the same month, YL was said to have reduced her support.  I agree.

141.Lastly, W was evasive when being asked if she had any contact with YL.  To me, it is unbelievable that she have not spoken to YL for the last 3 to 4 years.

142.On the evidence before me, I doubt very much W’s version that YL ceased her financial assistance because of her husband or partner’s illness.

143.I accept Ms Hui’s submissions that all along nobody treated YL’s provisions as loans until after H had made his application for ancillary relief.  On W’s admission in court, the “loan” was YL’s own idea.  It is apparent that the motive is to defeat or reduce H’s claims for ancillary relief.  As a matter of fact, the impression I got throughout the trial is that W has not been serious in arguing that YL’s monies are loans.

144.On the above analysis, and also on the basis of my findings in relation to the sale proceeds and PK’s business, I have to reject W’s claim regarding her indebtedness. 

The Business of PK 

W’s Case

145.I have already referred to W’s case in earlier part of this judgment.  I would not repeat the same here.  In brief, she complains that H was neglectful of PK’s business and was just minded in enjoying himself in the Mainland. 

146.All along PK was managed by H; in particular, it was H who handled the accounting books and records, bank statements, taxation matters and gave instructions to accountants.  As for her, she was mainly responsible for miscellaneous matters, preparing meals for the workers, going to banks, payment of wages and PK’s expenses and the work progress at site.  However, when H’s involvement in PK became less and less, she was forced to involve in the implementation of work and to attend meetings with contractors and engineers.  Due to H’s neglect, PK’s business turned from bad to worse but at the same time, H kept on withdrawing monies for his use in the Mainland.  Starting from 1995, PK was always short of cash; in order to keep the business afloat, she had to borrow from relatives and friends.

H’s Case

147.All along, it was W who kept the company chop and PK’s money; and she also controlled the books and ledgers and engaged accountants.

148.H’s case is found on the documents that he managed to retrieve from the Inland Revenue in about 1992.  Many of the documents were kept by the authorities because there had been some investigations into the genuineness of PK’s tax returns at the relevant time.  It is from these documents that H says W withdrew a total of $3,109,000 in one singe year of 1990/1991.  W also once changed PK’s business address to a Post Box and then to No. 59 House of L Village, her cousin’s address.  Consequently, he was not aware that W had in fact submitted tenders in the name of PK and was awarded contracts and pocketed the profits.  He managed to track down 2 contracts, one being a sewage contract (“the Sewage Contract”) and the other a contract in the Cyberport (“the Cyberport Contract”).  W also secretly negotiated with a principal contractor and conceded to certain discounts in relation to a site at SF Terrace without his knowledge and consent in June 1998, causing PK substantial loss of profits.  He also managed to track down some documents that show W forged his signatures.

149.He repeated himself time and again in court that the main contractor had unlawfully obtained discount from W without his consent and he had reported the matter to ICAC and even the Chief Executive.  Notwithstanding that the limitation period has long expired, he would sue the principal contractor. 

150.He admitted he was the one responsible for the finance of PK but he was just focusing his attention on the carrying out of the construction work. 

151.At one point, he testified that even when he asked W for money for his own use, she treated him like a dog by throwing the money onto the floor, but then at another point, he claimed whenever he needed money, he could simply sign the cheques and have W, who was keeping the company chop, to affix the chop onto cheques.

152.He ceased PK’s business in 2001 when he thought the business was hopeless.  Unbeknown to him, W carried on the business for some time after that.

Discussion

153.I think it is common ground that both parties participated in the business of PK.  Equally, it is not in dispute that PK was the only source of the family’s income.  I do not think it is material to come to a conclusion as to what their roles were or who was more important.  However, for the reason that I am going to set out below, I believe W’s role was more active and substantial than she wished to put it.

154.Probably because of his age, H presented himself as a confusing witness, especially when it comes to the sequence or time of events.  Further, at times, he appeared to have some difficulty in articulating questions and hence much effort was spent in extracting answers from him. 

155.Contrary to W’s testimony, H described himself to be a devoted person.  He was totally devoted to the business of PK.  He was always working busily, operating various heavy machines such as digger or bulldozer and training up workers in the day time while at night, he diligently prepared tenders for construction contracts.

156.H’s evidence is that since the 70’s PK’s business prospered; and from 1990 up to 1997 he made a lot of money.  He even claimed that the tax returns lodged with the Inland Revenue were false because PK earned much more than reported. 

157.He was shown a number of signatures on various contemporaneous documents.  He was adamant that the signature on the Occupier’s Confirmation was not his.  It seems clear to me that even a layman can say this signature is different from the signatures on other documents produced in trial. There is also a Sub-contractor Assessment Form dated 21 October 2002 which stated that PK was involved in the Sewage Contract and the Cyberport Contract.  H expressly denied PK having engaged in these contracts.  The form purportedly bore H’s signature but again, one does not need the assistance of an expert to say that it was not H’s.  On the other hand, W claimed she has no recollection or impression about these contracts.

158.W claimed that since about 1996 she no long featured in PK but the documents show that was not the case.  There was a contract that was concluded between PK and the principal contractor regarding the site on SF Terrace on 19 June 1998 but the same was signed by W with the chop of PK.  She explained that because H was not available and together with the fact that the principal contractor was familiar with her, she was therefore asked to sign it for PK so that construction work could be commenced as soon as possible.  This is contrary to her assertion that at the time she had dropped out of PK’s picture entirely.  It is also unconvincing to me.  If she had long dropped out from the picture, there is no reason why the principal contractor would still have taken her as the one who was able to represent and act for PK.

159.If what H said is truth: that he worked day and night and totally devoted to the business of PK, there is no reason why he was not aware that PK was awarded various contracts and that he thought they were awarded to someone else, whether before or after 2001.  Being a devoted entrepreneur, he should have maintained contacts with principal contractors or other contractors in the field; and if he had submitted a tender and he was really “in the business”, there is no reason why he did not know who was awarded the contract unless he did not care or he actually did not participate in the exercise.  In this respect, H failed to explain why the principal contractor would have looked to W and not him for negotiation.  The only explanation is that W was active and was the contacting person for PK at that time.  At one stage, in cross-examination, H leaked that the Tai Kok Tsui project, a contract that PK obtained in about 1995, was obtained by W.  There were also other contracts obtained by W but he said the actual works were performed by him.  To me, this explains why even as late as 2002, there were still documents signed by W with the principal contractor.

160.On the change of business registration address to her cousin’s address at House 59 of L Village on 5 June 1996, W admitted it was the case but she explained that her cousin, who did not want to incur money in obtaining a new registration, had used the business registration of PK for running a truck business.  In evidence, she also said she subsequently changed it to No. 52 House but the record from the Business Registration Office shows she did not.  Be that as it may, this indicates nothing but only that W was very much in control and that if H was really mindful of his business as he now alleges, he should have known whether he had received mails for PK or should have noticed the address on the mails. There is no reason why he was kept in the dark. 

161.Thus analyzed, what I can gather is, on the evidence before me, probably from the mid of the 90’s or close to the turn of the century H was not clear about PK’s business because he had little involvement in it.  I would not go so far as to say that he had no involvement at all.  There is some evidence, for instance, some photographs, showing that he was at the sites but they do not alter my finding that H had little involvement in the business. This is also consistent with W and YK’s evidence that H was rarely seen at the sites.

162.The natural consequence is that PK was left in the hands of W.  On the evidence before me, I believe that W controlled PK up to at least 2001 or even a while thereafter. This explains why H was not aware of the contracts awarded to PK and of the change of the business registration address. This also explains why W was able to manipulate the sale of the Uptown Property and the purchase of the Land.  I also believe probably because of the breakdown of his relationship with W in 1994 and because of his neglect in PK business, later on even when he had to rely on CSSA as from 2002 he raised no objection with or did not take issue with W on the whereabouts of PK’s money.

163.H’s allegation that W withdrew $3,109,000 from PK in the year 1990/1991 provides a snapshot of the state of the affairs at that time. 

164.W does not dispute that she withdrew the money as alleged.  As a matter of fact, the income ledgers, the significant numbers of cheques together with the financial statements produced before the court show this was the case.

165.The cheques and the ledgers show over a period of 12 months from April 1990 to March 1991, W withdrew a total of $3,109,000; of which $1,696,000 (on average $141,333 per month) was withdrawn in cash and the remaining  $1,413,000 (on average $117,750 per month) was withdrawn by way of transfer into her accounts.  Apart from $40,000 that was transferred to one in the name of Lee on 15 October 1990, all the other transfers were to W’s own bank accounts.

166.Ms Leung challenged that H failed to produce the full set of ledgers.  I take what she meant is that in the absence a full set of ledgers, one would not be able to come to a conclusion that W took all the monies for her own use.  My role is not to conduct an audit on the accounts and ledgers of PK, nor is it necessary for me to conduct a minute retrospective examination of the ledgers at that time. 

167.Ms Leung also tried to argue that the monies were for PK’s use.  In particular, she submitted that, according to the ledgers, the non-cheque payments for the same period were as much as $2,153,000.  I have no doubt that she was caught by her own argument regarding the absence of a full set of ledgers.  Her attack against H applied equally to her own argument.  That said, I accept that part of the monies might have been utilized for PK’s business operation but I do not think this gives a complete or convincing answer to the query.  Even allowing that some of the cash in her hands were used for PK’s purpose, the monies that were deposited into her personal accounts in all likelihood would not have been used for this purpose.  There is no reason why she would have the need to deposit the monies into her own accounts if the same were for the use of PK.

168.Back in the early 90’s, it was still the requirement of the Mainland immigration or customs authorities to have the value of assets and amount of cash carried by residents of Hong Kong or foreigners entering the Mainland be reported.  According to the report made by H on his Mainland Home-return Permit (回鄉証), the amounts of cash reported to have been carried by him were by no means substantial.  From January 1990 to early May 1991, over a period of about 16 months, he reported a total sum of $102,800 only.  This is inconsistent with W’s allegation that H withdrew substantially from PK.

169.According to W, YL’s monthly expenses inclusive of tuition fees in Hawaii in 1986 were $20,000 to $30,000 per month and when the eldest son YS also joined YL in 1989, she increased the amount to around $40,000 and $60,000 per month.  After YL had obtained her Bachelor’s degree, she worked for a while in Singapore.  The record shows that from 2 October 1990 to 6 May 1991 when YL should be earning some income from her job W remitted $153,000 to her.  Meanwhile, over roughly the same period of time, from 27 April 1990 to 27 April 1991, W remitted a total of $408,598 to Hawaii.

170.This snapshot is indicative that PK was making good money at the time and W was making use of a good portion of it if not the whole; either for herself or for the family.  On the basis of the above evidence, I am able to agree with W that H was neglectful in the business of PK but I am not able to agree with her assertion that she had to borrow substantially from friends and relatives in order to keep the family and PK afloat.  On the contrary, I find that PK was making good money; and I have already found W’s evidences in relation to the loans dubious. I agree with H’s version and I find that W was very much in control of PK as from probably the mid of the 90’s, that she had the money from PK and from the sale of the Uptown Property for the purchase of the Land, for YL and YS and for her and TK’s living expenses after her separation with H in 1994; and even some of these monies were used in the subsequent development of the 2 houses on the Land.  As there is no suggestion that the parties had other sources of income and the court should refrain from going to the minute retrospective examination, I do not think I need to know how much W had got and how she had spent over all these years nor is it possible to do so. 

Does W have Hidden Assets?

171.I have come to the conclusion that W pocketed the sale proceeds of Uptown Property and of the 47E House and that she is the beneficial owner of the RP Lot; and with the conclusions that I have come to regarding PK’s business and various dealings between the parties, I need to consider whether W has any hidden assets.

172.Ms Hui submitted that W must have hidden assets.  She reckoned that from September 2011 to September 2013, on the basis of the figures provided by W, her receipts were about $1,094,202.  These included YL’s monthly contribution of $5,500 from September 2011 to March 2013, the Old Age Allowance that W received from the Government and all the loans disclosed by her.  However, again entirely on the basis of her own version, her expenditure including her and TK’s expenses were in the region of $1,457,384.  Hence, there should be a deficit of $363,182 ($1,457,384 - $1,094,202).[2] This contention is not disputed and there is a dearth of explanation from W.

173.If one is in a dire financial situation, commonsense tells me that, generally speaking, there are two options open to him.  The first is to tighten up his budget and the other is to increase his financial resources.

174.In W’s case, due to her advancing age and ill health, it would not be possible for her to engage in any gainful employment.  There is also nothing to suggest that she has some other investments.  That said, she is the owner of a 3-storey house that has been occupied by her and TK alone.  W said because she had no money to renovate and to buy furniture, despite the construction of the 47D House was completed in 2001, she and TK did not move in until 2004.  However, TK, in evidence, confirmed that they moved to the new home in 2001.  When being asked why she did not try to improve her finance by renting out part of the 47D House, her evidence was that the 2^nd Floor was used by YK until he married but this contradicts YK’s own evidence that he moved out from the family upon completion of secondary school education in 1988.  Even if what she said is true, YK was married way back in 2005.  To me, it is clear that despite her alleged dire financial situation, she did not have the need to find some extra cash by renting out the vacant floor or some place of the house to help her sail through the difficult days as she has alleged.

175.W acquired a brand new vehicle in July 2006.  W claimed it was a gift from YL and her husband or partner when they returned to Hong Kong.  She was caught by surprise because it was after they had left Hong Kong that the dealer delivered the car to her.  However, TK absolutely had no recollection of this event.  He said, in evidence, that all he knew was W had changed her car.  He even had no impression that YL returned to Hong Kong at the relevant time.  TK at that time was already a young man studying Form 5.  The undisputed evidence is that the car was worth about $140,000.  From any perspective it was a handsome gift and given that it fell into her hands in such an eventful manner, it is hard to believe that TK would have no recollection whatsoever if what she said is true.  Further, the new car bore the registration mark that W had been using for years, at least since the 80’s, but there is no satisfactory explanation on how the dealer was able to register the car with W’s registration mark without her knowledge or consent. 

176.W said initially YL supported TK’s education by paying tuition fees for him and allowing him to stay at her home.  But unfortunately YL’s husband or partner was diagnosed with brain tumour and had since ceased her support.  As I have already mentioned, it is utterly unbelievable that TK would have been unaware of the crisis if it was true. 

177.Further, there are also certain inexplicable transactions in W’s account. 

178.W’s bank passbook shows that $304,000 was deposited into her DBS Saving Account on 9 September 2013 and $303,962.15 was immediately withdrawn on the same day.  By a letter dated 8 November 2013, W’s solicitors explained that before returning to Canada, W’s brother LYM remitted the money to his bank account in Canada via W’s bank account instead of carrying the cash around with him.  Her explanation that it was her brother’s money raises a number of question marks.  First, there is no explanation from W as to where LYM got the money.  For instance, it is not her case that it was the money distributed from the Tso.  At one point, under cross-examination, W was driven to say that the money was either a loan from the teachers or from friends.  Secondly, W was not able to explain why her brother did not have an account and needed to make use of hers.  Lastly, I agree with Ms Hui’s observation that the withdrawal of $303,962.15 was in odd figure and apparently it was for a specific purpose. 

179.That said, I am conscious of the fact that the transaction in question took place just about 2 months before the trial.  Given the imminence of the trial, it is difficult to understand why she would have left a trace in her account so as to invite suspicion.

180.Another example is a deposit of $700,000 on 7 October, 2011 into her DBS Bank saving account.  This sum was quickly withdrawn in 3 lots from 10 October 2011 to 22 October 2011. In her Answers dated 29 January 2013, W explained it was the money distributed by the Tso of her clan to LYM who, being a male descendant, was entitled to receive and he placed the cash with her temporarily while LYM was visiting the Mainland.  However, there is nothing to show that the money was from LYM.  W did produce 3 cheques, all dated 28 September 2010 and totalling $1,251,612 to prove that LYM received monies from the Tso but none of these cheques show the $700,000 in question.  Furthermore, the 3 cheques were drawn in favour of LYM and their date between that of $700,000 was nearly one year apart.  These cheques, being crossed, indicate that LYM had his own bank account in Hong Kong otherwise he would not have been able to deposit them.  I accept it is not W’s suggestion that these cheques were deposited into her account.  But the question is if that is the case, why the brother needed to place the money with her for safe keeping?  Under cross-examination, W shifted to say if the deposit was not for safe-keeping it must be a loan to her, but LYM was not suing her for this sum in the 1^st District Court Action.  At one point W was not able to explain how she returned the said $700,000 to LYM but then she changed to say that she handed over the money in cash to LYM.  This is contrary to her Answers dated 15 February 2012 where she claimed having remitted the money to LYM; but there is no documentary proof on this.

181.In my view, whether the said $700,000 was LYM’s money is highly questionable.

182.On the other hand, Ms Leung drew my attention to the fact that YL’s financial contributions to W, in particular her contribution towards the mortgage instalments are not challenged. 

183.Ms Leung also relied on some pawn shops receipts (10 in total) to show that W was financially tight.  I note that apart from two which were in 2003, the other 8 receipts were from 2008 to 2010.  It was the time when YL was making generous support towards her living including the mortgage instalments.  In such circumstances, I wonder why she still needed to pawn her valuables.  As these receipts are rather sporadic when it comes to the dates, in my view, at most they are indicative that W might have occasional cash-flow problem.

184.I do take note that upon completion of the 47D House, it was mortgaged more than once for finance. One of the reasons, according to my finding, was for the payment of the premium of the 47E House.  To me, it can be seen more as a financial arrangement rather than indicative that she was in financial difficulty.

185.Piecing all these evidences together, I believe that, on the totality of evidence, W does have some hidden assets and for this, she has failed to give full and frank disclosure of her financial situation.

186.However, I believe these assets are not too substantial.  W has not been working for many years. Whatever monies she had retained or gained from PK, the Uptown Property and the development of the 47E House were subject to depletion as times went by and together with the fact that she had been supporting TK’s education.  Accurate figure can never be known.  Doing the best I can, I would put it at $500,000. I find that she has undisclosed assets of at least $500,000.

A Little Summary

187.It is hard to believe W’s assertion that she has been living on loans for 17 years since 1997.  The ability to borrow is also a financial resource and if she were telling the truth, she must be one of the most successful debt-makers on earth.

188.To sum up, I have come to the findings that:

1.   W pocketed the sale proceeds of $1,560,000 of Uptown Property;

2.   She was in control in the latter years of PK, ie from about the mid 90’s up to 2001 and even for a while thereafter;

3.   She withdrew substantially from PK and made use of the monies for the purchase of the Land and for her and the children’s expenses;

4.   She was the developer of the 47E House and thus pocketed sale proceeds of $3,350,000;

5.   She is the beneficial owner of the RP Lot which value is agreed at $700,000;

6.   The alleged loans are either fake or unsubstantiated; and

7.   She has hidden assets of at least $500,000.

The Law and Legal Principles

189.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:-

“4. Financial provision for party to a marriage in cases of divorce, etc.

(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of section 25(1), make any one or more of the following orders, that is to say-

(a) an order that either party to the marriage shall make to the other such periodical payments and for such term as may be specified in the order;

(b) an order that either party to the marriage shall secure to the other to the satisfaction of the court, such periodical payments and for such term as may be so specified;

(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified.

(2) Without prejudice to the generality of subsection (1)(c), an order under this section that a party to a marriage shall pay a lump sum to the other party-

(a) may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before making an application for an order under this section;

(b)     may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments to be secured to the satisfaction of the court.”

190.Section 5 of MPPO provides for the financial provision for children of the family in cases of divorce.  I do not think I need to set out the provisions here.  In short, similar to section 4, the court is empowered to give an order of periodical payments or a lump sum.

191.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,

“7. Matters to which court is to have regard in deciding what orders to make under sections 4, 5 and 6

(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

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

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

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

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

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

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

192.As regards the financial provision for the children of the family, the relevant provisions are in subsection (2) of the same section 7,

(2)   … it shall be the duty of the court in deciding whether to excise its power under section 5, 6 or 6A in relation to a child of the family and, if so, in what manner, to have regard to all the circumstances of the case including the following matters, that is to say-

(a) the financial needs of the child;

(b) the income, earning capacity (if any), property and other financial resources of the child;

(c) any physical or mental disability of the child;

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

(e) the manner in which he was being and in which the parties to the marriage expected him to be educated;

and so to excise those powers as to place the child, so far as it is practicable and, having regard to the considerations mentioned in relation to the parties to the marriage in paragraphs (a) and (b) of subsection (1), just do so, in the financial position in which the child would have been if the marriage had not broken down and each of those parties had properly discharged his or her financial obligations and responsibilities towards him.

193.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.

Pre and Post-Separation Assets

194.The modern law of ancillary relief treats marriage as a marital partnership with husband and wife each pulling their weight and discrimination between roles impermissible:  White v White [2001] 1 AC 596. 

195.It is common ground that the parties separated in 1994.  Given that the parties separated for a significantly long period of time before the matter has come to court, the court needs to consider whether this should justify a proper consideration of parties’ financial position as at the time of the separation, rather than at the time of trial, being some 20 years apart.

196.In Rossi v. Rossi [2007] 1 FLR 790, there had been a very substantial passage of time between the separation of the parties and the hearing of the husband’s claim for ancillary relief. Quite apart from the independent question of whether delay, per se, was a relevant factor in the exercise of the statutory discretion (which I will come to in due course), there was the critical question of whether money or property that had been acquired after separation formed part of the matrimonial property.  Mr N Mostyn QC, sitting as the Deputy Judge of the English High Court (now Mostyn J), summarized the principles in relation to post-separation assets as follows:

‘24.1 The statute requires all the assets to be valued at the date of trial.

24.2  For the purposes of establishing the matrimonial property in respect of which the yardstick of equality will ‘forcefully’ apply the value of assets brought into the marriage by gift and inheritance (other than the former matrimonial home), together with passive economic growth on those assets, should be excluded as non-matrimonial property.

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

24.4  If the post-separation asset is a bonus or other earned income then it is obvious that if the payment relates to a period when the parties were cohabiting then the earner cannot claim it to be non-matrimonial.  Even if the payment relates to a period immediately following separation I would myself say that it is too close to the marriage to justify categorisation as non-matrimonial.  Moreover, I entirely agree with Coleridge J when he points out that during the period of separation the domestic party carries on making her non-financial contribution but cannot attribute a value thereto which justifies adjustment in her favour.  Although there is an element of arbitrariness here, I myself would not allow a post-separation bonus to be classed as non-matrimonial unless it related to a period which commenced at least 12 months after the separation.

24.5  By this process the court should, without great difficulty, be able to separate the matrimonial and non-matrimonial property. The matrimonial property will in all likelihood be divided equally although there may be deviation from equal division: (a) if the marriage is short; and (b) part of the matrimonial property is ‘non-business partnership, non-family assets’ (or if the matrimonial property is represented by autonomous funds accumulated by dual earners).

24.6  The non-matrimonial property is not quarantined and excluded from the court’s dispositive powers.  It represents an unmatched contribution by the party who brings it to the marriage.  The court will decide whether it should be shared and, if so, in what proportions.  In so deciding it will have regard to the reality that the longer the marriage the more likely non-matrimonial property will become merged or entangled with matrimonial property.  By contrast, in a short marriage case non-matrimonial assets are not likely to be shared unless needs require this.

24.7  In deciding whether a non-matrimonial post-separation accrual should be shared and, if so, in what proportions, the court will consider, among other things, whether the applicant has proceeded diligently with her claim; whether the party who has the benefit of the accrual has treated the other party fairly during the period of separation; and whether the money-making party has the prospect of making further gains or earnings after the division of the assets and, if so, whether the other party will be sharing in such future income or gains and if so in what proportions, for what period, and by what means.’ (emphasis added)

197.The Land was acquired in 1991, well before the separation; also was the transfer of Sections A and B into the names of 2 indigenous villagers for the purpose of application for building licenses.  It is true that the building licenses were issued and hence, the 2 houses were built after the separation; and that W must have put in her entrepreneurship in having the houses developed and in the course of it, raising finance by having the 47D House mortgaged but in my view, it was a single venture spreading over a substantial period of time, both before and after separation.

198.Furthermore, according to my findings, W was in control of PK after 1994 and made use of the monies from PK in the purchase and the development of the Land.  Even on W’s own version (which is not accepted) she used Section A, which was acquired pre-separation, in exchange for the building of the 47D House with a fictitious Mr Cheng.  In any event, it is W’s case that the 47D House should be divided equally between the parties, as can be seen in her open offer.

199.I would therefore include all the assets as at the date of the trial.

Financial Resources of the Parties.

200.As mentioned, H is virtually penniless.  The entire trial is essentially on his application for the division of the assets now under W’s name or controlled by her.

201.The values of the assets are not in dispute.  Now with the findings that I have come to, the assets are identified as follows:-

	Schedule of Assets
Items	Description	Amount
1.	The 47D House (net of an outstanding mortgage of about $1,300,000)	$5,240,000
2.	The RP Lot	$700,000
3.	W’s Undisclosed Assets	$500,000
	Total:	$6,440,000

Financial Needs of W

202.As said, it is common ground that because of their age and ill health, both do not have any earning capacity. 

203.Her 2^nd Form E dated 10 October 2013 reported a monthly expense of $7,750.  This is exclusive of the monthly mortgage instalments of $16,600 and TK’s expenses.  I consider $7,750 is reasonable.  If the 47D House is to be sold for division, she would require a roof over her head.  According to YK, he has enquired with his uncle LYM who indicated that he was willing to allow W to live at No. 52 House.

Financial Needs of TK

204.The parties are not too much apart from each other in terms of the son’s education and living expenses in the United States.  The major differences between them are in housing and meal expenses.  TK estimates that he needs about $500,000 up to 2014 and about $456,000 up to summer of 2015 when he will complete his bachelor’s degree.  As for H, he considers that TK only requires $420,000 for 2014 and the expenses should not exceed $400,000 for 2015.  H’s stance is mainly based on the estimates provided on the website by the university that TK is attending. 

205.TK estimates that after obtaining a bachelor’s degree in psychology in 2015, he would need 2 more years after that for the master’s degree so as to become a counselling psychologist, a career that he is endeavouring to achieve.

206.After having heard TK’s evidence, my impression is that when it comes to his expenses, he is quite credible in this respect but having said that, I note he did have entertainments with friends and also consumed fragrances.  I accept that as a young man, he may occasionally need all these but I believe there is room to economize.  Taking a board brush approach, I would less 10% from TK’s figure. This leads us to $450,000 and $410,400. 

207.As said in Para 8 above, W’s application for ancillary relief for TK is misconceived.  It is clear that H has no means to support himself not to mention TK.  Her application is simply premised on H being successful in getting a share of her assets from which H would then be in a position to maintain TK.  To me, it does not make any sense.  The proper way to do is for the court to give due regard to the financial obligations and responsibilities that W has towards TK, as she always has since 1997 (according to her case) in dealing with H’s application: see section 7(1)(b), MPPO. 

Financial Needs of H

208.H is now staying in the No. 52 House which is belonged to W’s younger brother LYM.  He is facing eviction in a legal action instigated by the younger brother.  I agree that he needs a secured place to live.  Though it is not in the evidence, I think it can be presumed that in a couple of years’ time, H should be able to obtain public housing but in the meantime, he probably needs to rent a shelter.  Any property or lump sum recovered by him is subject to the first charge of the Director of Legal Aid and furthermore, he has to repay the Social Welfare Department for the CSSA that he has received, which is in the region of about $400,000. 

209.His 2^nd Form E dated 10 October 2013 reported a monthly expense of $4,290.  This is reasonable.  As a matter of fact, this has never been challenged.  I will add another sum of say $5,000 to reflect his housing need for the time being, this gives a figure of $9,290.  I round it up to $9,300.

The Sharing Principles

210.This is a relationship lasting in reality nearly 30 years up to their separation in 1994, which by today’s standard is undoubtedly long.  Further, the parties have raised a family of 5 children.  Apparently, the yardstick of equality should apply.  As a matter of fact, this is what the parties have agreed. 

Whether there are Good Reasons for Departing from Equal Division

211.The family court has an inquisitorial role.  In my view, a very important factor that must be taken into account is the delay of the parties in the present ancillary proceedings. As for the effect of the delay, again in Rossi v Rossi, supra, where there was undue delay on the part of the husband in pursuing his ancillary relief claim, Mr Mostyn QC, as the Deputy Judge of the English High Court, said:-

25.   In some cases delay will receive at least some reflection by the characterisation of assets acquired after separation as non-matrimonial. But as I have tried to explain above, this is by no means an invariable consequence. The question is whether delay per se should be reflected in the exercise of the discretion.

26.   In Jackson's Matrimonial Finance and Taxation (7th Edition) at Paragraph 5.7 it is stated:

Whatever the length of the marriage, a claim may fail if it is left dormant for too long, in which case one factor may be that the husband's assets have been built up with another woman. It has been said that after a long lapse of time a party to a marriage should be entitled to take the view that there would be no revival or initiation of financial claims against him; the longer the lapse of time the more secure he should feel in the rearrangement of his financial affairs and the less should any claim be encouraged or entertained.

27.   The authorities for these propositions are all very old: Foster v Foster (1977) 7 Fam Law 112, Chambers v Chambers (1979) 1 FLR 10 and Fraser v Fraser (1981) 3 FLR 98. I consider them to have equal validity in the post-White era.

28.   These propositions were foreshadowed in the even earlier case of Chaterjee v Chaterjee [1976] Fam 199 where Ormrod LJ stated:

Delay, if it really is delay in the sense of prejudicing the other party, may have an important influence on the justice of the case. So may conduct which can be described as "lulling" the other party into the belief that all claims have already been dealt with. Similarly it may be unjust to interfere with property rights after a lapse of a reasonable and proper manner in the belief that the financial consequences of the divorce have been settled.

29.   A vivid example of the vice of delay is the decision of Booth J in D v W (Application for Financial Provision: Effect of Delay) [1984] 14 Fam Law 152. There the delay was 6 years and the parties were found equally responsible for it. That aside the applicant wife had a meritful claim. She was seeking to recover the value of her half share of the former matrimonial home. That half share was worth £14,000. On that basis she would waive the £2,000 unpaid periodical payments that H owed her. Booth J stated:

There are certain detrimental consequences of delay. The first is that delay engenders bitterness and hostility between the parties which is detrimental to the whole fairly and, in particular, to any children of the family. The husband in this case is aggrieved at the attack that is now made upon the home in which he has been living for the past 10 years. The wife, on the other hand, feels deprived of her money and the right to live there. The delay inevitably increases costs. It leads to a multiplicity of affidavits which are filed in order to deal with the ever-changing position of each of the parties. Inevitably, it lead to an exchange of correspondence over a protracted period between solicitors and, no doubt, also leads to attendance of the parties upon the solicitors. And all those matters adds up in costs.

Further, with the change in property values and with inflation as it is in our present economic situation, as well as with the changes in the parties' own situation and the commitments they take upon themselves, the whole case can be materially altered, and the ability of the parties to cope with any orders that the court might otherwise properly have made upon the merits of a case may be put in jeopardy. Indeed, delay can put the court in the simple position of not being able to do justice between the parties according to the merits of each case. Unless it can be clearly shown that one party bears the greater responsibility for the delay that does the other, the court may be left with no alternative but to make an order which does not reflect the merits of the case.

In the result Booth J felt that all she could do was to award the wife a mere £2,500 (inclusive of the arrears of maintenance). I would emphasise the risk of injustice that is caused by delay. The longer the time that passes the more likely it is that documents will disappear and memories cloud with the result that there is a greatly enhanced risk of the court rendering imperfect justice.

30.    Almost every other field of civil litigation has statutory anti-delay measures in the form of limitation periods. Even where limitation periods do not exist the equitable of doctrine of laches may apply to debar a delayed claim. Limitation periods and the doctrine of laches embody the public policy consideration expressed by Wood J in Chambers namely that the longer the lapse of time the more confident a party should be that no claim will be initiated against him, and the more secure he should feel that his financial structures will not be disturbed. It seems to me that there is no substantive difference between the dicta in Chaterjee and Chambers and the oft-quoted formulation of the doctrine of laches by Sir Barnes Peacock (later Lord Selborne) in Lindsay Petroleum Company v Hurd (1873) 5 App Cases 221 at 239:

Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases are the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking one course or the other, so far as relates to the remedy.

31.    Of course there can be no question of implying an actual limitation period into the law of ancillary relief (Twiname v Twiname [1992] 1 FLR 29). It is simply a question of how delay should be treated in the exercise of the statutory discretion.

32.    While of course no rigid rule can be expressed for the infinite variety of facts that arise in ancillary relief cases I would have thought, generally speaking, that it would be very difficult for a party to be allowed successfully to prosecute an ancillary relief claim initiated more than six years after the date of the petition for divorce unless there was a very good reason for the delay. I agree whole -heartedly with the statement of Wood J in Chambers that:

Where a marriage is irretrievably broken down, the parties are to be encouraged to deal with all outstanding issues as reasonably expeditiously and succinctly as possible.

212.The old authorities referred to by Mr Mostyn QC are instructive.

213.In Chambers v Chambers (1979) 1 FLR 10, the wife left the husband in 1956 to live with another man, by whom she had a son in the following year.  She made no claims for financial support against her husband until 1978 when, on the grant of a decree nisi for dissolution of the marriage she sought a lump sum order and an order for the sale of the former matrimonial home and a division of the proceeds of sale.  The relief was refused.  Wood J said, that on the breakdown of a marriage there should, if possible, be a clean break financially.  The financial issues should be decided within a reasonably short time of the break-down.  Further, after a long lapse of time, a party to a marriage should be able to take the view that there would be no revival or initiation of financial claims against him.  The longer the time the more secure he should feel in the arrangement of his financial affairs and the less should any claim against him be encouraged or entertained:  at p 13 at ii/iii.  The learned judge expressly referred to these considerations to fall within the words “all the circumstances of the case”.  The Hong Kong equivalence is section 7(1) of MPPO.

214.In Fraser v Fraser (1982) 3 FLR 98, the parties were married in 1952 and separated in 1964.  It was not until in 1977 when the husband obtained a divorce that the wife made a claim for financial provision.  The trial judge found that when the parties separated the husband was left firmly with the impression that he was not required to make the wife any periodical payments; and he decided it would be unjust to order periodical payments or a lump sum of any substance.  The wife’s appeal was dismissed.  In his judgment, Lord Denning, in dismissing the wife’s appeal, agreed with Chambers v Chambers (1980) 1 FLR 10 and said that “when a wife lives on her own and keeps herself for a long time, it is very unusual for her to be able to come down on the husband afterwards claiming that he ought to maintain her”: at p 99 at H. 

215.What we have here is not a case where there was a delay in the application for ancillary relief after the divorce petition, what we have here is a long lapse of time between separation and divorce petition but the authorities show the same consideration applies.

216.H could have taken out a petition for divorce and applied for ancillary relief in the last 20 years.  That aside, where appropriate, it would also be open to him to apply for maintenance under the Separation and Maintenance Orders Ordinance, Cap 16.

217.I have no doubt that the court is entitled to have regard to the delay by the applicant in the exercise of the discretion:  see also S v S [1989] FCR 582, [1990] 2 FLR 252.

218.As mentioned above, back in the early 90’s there was an investigation by the Inland Revenue on the profits of PK.  For this reason H had been to his accountants and the Inland Revenue for a couple of times.  In my view, it could not possibly be the case that he was not aware of PK’s financial situation at that time, in particular that W had withdrawn the money that he now claims. When being put to him that even after the IRD investigation, he continued to allow W to issue cheques as before, he acknowledged this was the case and commented that it was because his daughter and son’s education needed a lot of money. He expressly said that he was not interested in how W did with the money or whether or not the spending was on the children.  What he minded at the time was his work.  He frankly admitted that if W had not petitioned for divorce, he would not have raised all these issues.

219.On the Land and the construction of the 47D House, initially H testified that he knew of the purchase at an early stage and then later on, he said it was only when he was engaging in the Tai Kok Tsui project in about 1995 and when he made use of the rubbles there for the foundation of the Land that he realized W had purchased the Land.  He also said he did not know when the house was completed because he was busily working for the HKUST contract. 

220.H also said he was not aware that the Uptown Property had been sold; he always thought it had been tenanted for income.  W had informed him that she intended to rent out the Uptown Property in order to generate some extra cash for building their village house; for this reason the family moved to L Village. He, however, admitted that subsequently he never asked W whether the Uptown Property was actually rented out because he presumed that it was.  Be that as it may, the objective fact is that he did not raise it in the last 2 decades.

221.If H’s version is true, the parties moved out from the Uptown Property with the understanding that they would build a village house, it is incredible that he was not aware of the purchase of the Land at the time of purchase in 1991 and did not know when the house was completed.  The only explanation is that the parties had separated by then. 

222.H never moved in to live with W and TK in the 47D House.  H’s explanation that he had to take care of W’s mother and that the location of the house was not convenient because he needed to walk about 15 minutes to reach there are incredible.  Likewise, equally incredible is his assertion that it was not until 2001 when he was not invited to the house-warming party for the 47D House that he realized he had separated with W. 

223.According to H’s own evidence, he had been to the site and was at some stage in around 1994 or 1995 aware of the fact that a house was being erected.  Over this long period of time since 1994 he never asserted his right or exercised his interest as if he did not have any right or interest at all.  He did not conceive any intention or idea to move to live in the 47D House.

224.H repeatedly affirmed in evidence that all along he was not interested in PK’s money.  Up until W’s divorce proceedings, he never contemplated of chasing after her on that.  He claimed even when the business turned bad (I presume it must be in the late 90’s), he did not make enquiry with W as to where the money had gone, nor was he interested to know. 

225.On the RP Lot that was allegedly given to YS, he said it was not until the present proceedings that he came to learn of this, but he does not care and it does not really matter even if it was a gift to YS. 

226.In evidence, he admitted that all along he did not care at all how P disposed of the Land.  Likewise, he did not care whether or not P had given the RP Lot away and had not taken any action over all these years even when he was under CSSA. All in all, upon his own admission, the reality is that despite the fact that he knew of W’s taking the money and in control of the landed properties and his own financial predicament, he chose not to raise any issues over all these years.  That said, he explicitly stated that he wishes to get as much as he could from W in the present proceedings because it was the money he earned and he wanted to air his grievances (“為啖氣”). 

227.Despite his admission that he is not interested to live in the 47D House, he is seeking 2 floors of it and he said he would just liquidate it for money.  He would possibly donate the money to orphans.

228.Finally, despite his alleged absence of interest in W’s assets, he has been fighting the ancillary relief proceedings up to its end.  He has taken issues on nearly every aspect, yet he remained silent over all these years.

229.Thus analyzed, I am drawn to the conclusion that the long interim between separation and the proceedings is an outstanding feature of this case and is the magnetic factor influencing how the discretion of the court is to be exercised: see Gordon (formerly Stefanou) v Stefanou, [2011] 1 FLR 1582, at para 22.

230.H had been contented with the situation for nearly 20 years.  He chose to take no action to assert his right over all these matters and now it seems to me that he grabbed W’s divorce petition as an opportunity to ride on it in order to perpetuate his wishes.  After having heard what he said in court, to me it would appear that what H wants is more of retribution on W rather than anything.  If he does not care what W has, why does he care to fight?  At the end of the day, the ultimate question is, W and TK have been having their own way of life for the last 20 years, is it equitable or just to have their lives turned upside down just because of H’s vindictive desire?  It is glaringly apparent that he aims at destroying.  To me, the answer must be a resounding “No”.

231.I am therefore driven to the conclusion it is only right that there is a departure from equal division.

Deciding the Outcome

232.Considering his own admission that he does not really need the money, I consider there should be a substantial departure from equal division.  I also bear in mind that the outcome should not be destructive of W and TK’s lives.  They have had their settled way of life for the last 20 years.  They deserve to continue with it.  TK should be able to continue with his education, which is part of W’s responsibilities.  I also give some consideration to the fact that the assets are traceable to PK’s business.  Putting all these factors into the balance and taking a broad brush approach, I am prepared to award a sum that is more than nominal but reflective of my criticism and all the considerations that I mentioned.  I would award a lump sum of $900,000 which is about 14% of the matrimonial assets. 

233.I need to step back and look at the overall impact.  Even in the premise that H has to repay some money to the Social Welfare Department (which is not challenged by Ms Leung), the balance should provide for his living for rather a long period of time.  On the other hand, I believe W should have no difficulty in paying this sum while at the same time TK can continue with his education. She could have the 47D House further mortgaged or have one of the floors sold for cash.  I would allow her 3 months’ time to process and to pay.  The Notice of Intention to Proceed with an Application for Ancillary Relief now registered against the 47D House is to be vacated from registration for this purpose. This is a clean break arrangement.

234.I give the following orders:-

1.   The petitioner do pay the respondent a lump sum of $900,000 within 3 months from the date of decree absolute; and

2.   The Notice of Intention to Proceed with an Application for Ancillary Relief is to be vacated from registration at the Land Registry

Costs

235.W has been able to achieve a sum more advantageous than her open offer.  Prima facie she should be entitled to the costs of the present ancillary proceedings.  However, she has put forward a couple of issues regarding her financial situation all of which consumed a significant portion of the trial but are rejected.  It is only fair that W should only be able to get part of her costs.  I assess it at one-third.  I give an order nisi that the respondent do pay the petitioner one-third of her costs of the ancillary proceedings, including costs reserved, to be taxed if not agreed.  The parties’ own costs to be taxed in accordance with Legal Aid Regulations.

Representation

The Petitioner:  Ms N Leung of Wan and Leung, Solicitors, on the instructions of the Director of Legal Aid, appeared for the petitioner

The Respondent:  Ms A Hui of Wong, Hui & Co, on the instructions of the Director of Legal Aid, appeared for the respondent