Read the full judgment text of FCMC 6171/2014 on BabelCite. This Family Court judgment was delivered on 23 July 2015 before HH Judge C.K. Chan.
Matrimonial Causes – Ancillary Relief – Division of Matrimonial Home – Financial Resources – Contributions – Conduct – Repayment Claims – LKW v DD principles – Sale of Property – 60/40 Split – Judgment Debt – Clean Break – District Court – MMWD v CLM – Former matrimonial home at Robinson Road valued at $16,940,000 – Wife claimed 50% plus repayment of education costs, loans, mortgage and judgment debt – Court held only judgment debt of $255,000 recoverable – Education and loan payments not proven as loans – Wife made greater financial contribution – Departure from equal division justified – Wife awarded 60% of proceeds – Husband ordered to pay $300,000 towards judgment debt – No costs order – The parties were married in 1985 and separated in 2002. Divorce was granted in 2015. The main asset is the former matrimonial home at Robinson Road, valued at $16,940,000. The wife claimed 50% of the proceeds plus repayment of $4,955,000 for education, loans, mortgage, and judgment debt. The husband claimed 45%. The court found the wife made greater financial contributions. Only the judgment debt of $255,000 was recoverable. Education and loan payments were not proven as loans. The court awarded the wife 60% and the husband 40% of the home proceeds. The case was listed for trial on 23-24 June 2015. A FDR hearing was held previously but was unsuccessful. Judgment was delivered on 23 July 2015. The petitioner acted in person while the respondent was represented by Ms E Lo of Messrs King & Co, solicitors. The jurisdiction of the Court in granting financial relief upon the sale of the family property is governed by section 6(1) (e) of the Matrimonial Proceedings and Property Ordinance, Cap. 192. In deciding on how to exercise its power in this regard, the Court is bound to consider Section 7 of MPPO. In LKW v. DD, Ribeiro PJ gave a detailed discussion on how a Hong Kong court should approach the issue of ancillary relief. The principles underpinning the White v. White line of cases can be summarised as follows: The implicit objective of a s.7 exercise is to arrive at a fair distribution of the assets as between the parties. The concept of fairness requires the refutation of any gender or role discrimination. With a view to eliminating insidious discrimination and promoting fairness, judges should check their tentative views on distribution against a yardstick of equal division which should be departed from only for good, articulated reasons. The court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tends to deplete the parties and the court resources and increase antagonism and discourage settlement. The actual steps to be taken by a court in undertaking the s.7 exercise should be as follows: The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing. The assessment of the parties financial needs. If surplus assets would remain after the parties needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties total assets, with a yardstick of equal division as part of that principle. In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of s.7 and the implicit objective of a fair distribution of the assets. Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations. The weight to be given to each of the factors is a matter of discretion for the court. The wife is now aged 62. She graduated from an American University in 1973 with a Bachelor Degree in Business Administration. In 1974, she joined a local bank starting as an Officer Trainee until her retirement as a bank manager in 2002. She was in the banking industry for a total of 28 years and at the peak of her career, she was able to earn an annual salary of over $1,000,000. Unfortunately, in about 2002, she was diagnosed to have breast cancer, followed by a period of depression thus forcing her to retire early at the age of 49. After retirement, she had remained unemployed most of the time living on her savings and the retirement funds from her previous employer. According to her, the husband had failed to support the family adequately throughout the marriage and this had continued even after the wife retirement. As a result, the wife had to pay for most of the family expenses, including a sum of about $4,000,000 on the son 6 years education in the US. According to her, this has depleted most of her savings and investment gains during the past few decades. She even had to obtain bank loans and financial assistance from her siblings to support her living generally and to finance her purchase of a flat at North Point in 2014. In her latest Form E and apart from the former matrimonial home, she listed her current assets and liabilities as follows: DIVA (a flat in North point ) (net value) $4,880,000, Australian Property $426,000, Bank Accounts $12,000, Jewellery $100,000. According to the wife, she also has liabilities in the sum of about $2,100,000. If those liabilities are taken into account, the net assets owned by the wife, over and above the former matrimonial home, will be about $3,300,000. The wife is currently working as a part time financial planner earning an average monthly income of about $1,000 to $2,000. She also receives a monthly sum of $5,000 from the son. As to her monthly outgoings, she said she is now spending a sum of about $117,000 per month. As the wife has already retired and received no regular income for more than a decade, the wife monthly spending is way beyond her means. The might explain why she is now being in debt of over $2,000,000. I understand the wife stance is that as she has been leading a frugal life for so long for the sake of the family and providing for the education of the son, it is now time for her to be reborn and enjoy a new life. While I have some sympathy for the wife as I accept that she might have contributed a lot to the welfare of the family in the past, but that does not mean that she has a license to dissipate the family assets recklessly. I understand that the wife is accusing the husband being financially irresponsible by leading a very comfortable life in the past while leaving all the family financial burdens to her, I am afraid that such complaint cannot be justified now if she is also doing the same in depleting the assets of the family in a similar fashion. The husband is now aged 67, an entertainment manager by occupation working in a karaoke, earning a monthly sum of about $23,000. In view of his age, it is the husband plan that he will retire in about 2 to 3 years time when he reaches the age of 70. The current monthly outgoings of the husband are as follows: Utilities $2,000, Management fees $2,876, Food $4,500, Car expenses $10,950, Meals out of home $3,000, Transport $1,000, Personal grooming $500, Entertainment $1,000, Holidays $1,000, Medical/dental $1,140, Rates/government rent $1,666, Tax $1,368, Insurance premia $5,888, Contribution to parents $3,000, Loan repayment (1) Hang Seng $8,643, Loan repayment (2) Hang Seng $1,986, Instalment payment (car) $5,000. According to the husband, the first loan repayment of $8,600 will be finished very shortly, after which his monthly expenses will be reduced to about $46,000. In his Form E, the husband stated his assets (other than the former matrimonial home) as follows: Bank accounts $40,000, Shareholdings in private companies $188,000, Stocks $30,000, Insurance policies $198,000, Personal item (car JE 2889) $140,000. By adding up the above figures, the total family assets are as follows: Former matrimonial home (to be shared) $16,940,000, Wife other net assets (retained by her) $3,300,000, Husband other assets (retained by him) $596,000. Age and Length of Marriage: The wife is aged 62 and the husband aged 67. Both are either retired or approaching retirement very shortly. They were married in 1985 and separated in 2002. It was a long marriage of 17 years. Physical and Mental Disability: The wife did suffer from breast cancer and depression but it seems that she should have recovered by now. Contributions: It is the wife case that she has made substantial contribution to the welfare of the family, by way of paying most of the family outgoings and the son education in the US. Furthermore, it is also her case that due to her hard work and wise investment, the purchase of the past landed properties and eventually the former matrimonial has become possible. From the evidence of the husband, I do not think he is disputing that the wife has made more contributions, at least financially than him. But it is also his case that he has also made some contributions in the form of mortgage repayments or family outgoings. After considering the parties respective case, overall speaking, I am inclined to accept that the wife had made more contributions to the welfare of the family, at least financially. However, I also accept that the husband had made certain contributions, though less than the wife, due to the not very successful business ventures undertaken by him in the past few decades. Conduct: At trial, the wife tried to convince the court that the husband was so irresponsible in terms of lack of support to the family and that this negative conduct has to be taken into account in the final ancillary relief order. For conduct to be taken into account, it has to be conduct which is gross and obvious. I do not think the so called negative conduct of the husband can be regarded as so obvious and gross that the court has to take them into account. In any event, the husband so called misconduct or negative conduct is just the opposite side of the wife good conduct in making substantial contribution to the welfare of the family, which fact has already been taken into account in the final ancillary relief order. Ancillary Relief: After considering all the circumstances of this case, in particular, the parties financial circumstances, the length of marriage, the parties respective contribution to the welfare of the family, I am of the view that a departure from the yardstick of equal division of the former matrimonial home is justified. I would award 60% of the former matrimonial home to the wife and 40% to the husband. In monetary terms, the wife would get about $10,164,000 ($16,940,000 x 60% = $10,164,000) whilst the husband would get about $6,776,000 ($16,940,000 x 40% = $6,776,000). As stated in paragraphs 29 to 30 above, I have already ruled that the husband should pay back the judgment sum of $255,000 to the wife. In order to achieve a finality of the parties dispute, I am minded to order the husband to pay a further sum of $300,000 to the wife from his share of the former matrimonial home to cover his liability under the judgment, the additional sum of $45,000 should be enough to cover all the interest and costs of that litigation. After the above distribution, the wife would be in possession of assets in the sum of about $13,764,000 ($10,164,000 + $3,300,000 +$300,000 = $13,764,000) whilst the husband would be in possession of about $7,072,000 ($6,776,000 + $596,000 - $300,000 = $$7,072,000). Orders: Based on the above reasons, I hereby make the following orders in full and final settlement of the parties respective claim for ancillary relief: The former matrimonial home to be sold in the open market with vacant possession at the best available market price within 3 months from the date of this order, and after the deduction of all necessary outgoings including but not limited to government taxes (if any), agent fees, legal fees, outstanding mortgage (if any) and other reasonable expenses (if any), the wife shall have 60% and the husband shall have 40% of the net proceeds of sale. The husband shall pay a further sum of $300,000 from his share of the former matrimonial home to the wife towards the satisfaction of the judgment in DCCJ 1669/2014. Each party is allowed to keep all the other assets that are currently under their respective name. Costs: In the circumstances of this case, it is difficult to say who the winner is. Therefore, there should be no order as to costs, including all costs reserved. This will be in the form of an order nisi, to be made absolute upon the expiry of 14 days from the handing down of this judgment.
Legal issues: Entitlement to Repayment Sum · Ancillary Relief Orders
Outcome: Ancillary relief granted. Former matrimonial home sold. Wife awarded 60% of net proceeds, Husband 40%. Husband ordered to pay $300,000 to wife from his share.