WSW v. CKU

FCMC 3040/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 3040 OF 2008

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JUDGMENT
(Ancillary Relief)

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1. This is the Respondent Husband’s ancillary relief application against the Petitioner Wife essentially for a fair division of their marital assets consisting mainly of landed properties upon the dissolution of their 10 odd years marriage which was a second marriage to both, but which has sadly taken far too long to come to trial and conclusion after an unsuccessful FDR hearing back in June 2010 due mainly to a wholly unsatisfactory process of disclosure and discovery. While it is true that the facts of this case are somewhat unusual and more complicated than the run-of-the-mill financial disputes, as there were clearly serious factual issues over what should constitute the marital assets pool for their fair and proper distribution, which for reasons apparent below necessitated forensic tracing exercises over many various financial dealings between the parties going back for more than 20 years, which should in fact have been carried out and dealt with first by way of preliminary issues before any FDR hearing was to take place, and why it did not occur to anyone involved at that time that FDR in the circumstances would doom to fail, as it did after 3 substantive hearings, and that it would be just a waste of time and costs is indeed puzzling, and above all, it simply failed the whole purpose of that scheme as well as proper case management. 

2. At the heart of the parties’ disputes was whether the Petitioner Wife had used part of the estate of her late husband of her 1^st marriage who passed away in 1992, of which she was made an executrix and trustee under his last will holding on trust for herself and other beneficiaries namely the 3 children of her late husband, to fund the acquisitions of various landed properties during her subsequent relationship and marriage to the Respondent Husband in these proceedings, and hence the shares of those beneficiaries should, according to her, first be taken into account and excluded from the marital pool of this marriage before the court is to decide on the fair division of their marital assets.   

3. The matter is further compounded by the facts that the funding of those acquisitions were mainly sourced from various dividends and other payments from the deceased husband’s surviving toys manufacturing business, and which the Wife had subsequently taken over, from 1993 to 2008 over the span of some 15 years and which she claims to have included the shares of the other beneficiaries on trust for them, but which were disputed by the Husband and thus necessitated the discovery, production and examination of the company’s accounts during those years, and that one of the beneficiaries happened to have subsequently launched an action in the High Court against the Wife for damages for allegedly breaching her duty as a trustee under the said will, which thus formed part of the Wife’s unspecified or potential liabilities that this court is required to take into account in assessing her claims in these proceedings.  

4. In addition there were also serious factual issues over the parties’ respective financial means such as the Wife’s savings and investments situation after the cessation of her business in 2008 which she was accused to have concealed from the court, or those of the Husband who was running his father’s business with expansions into China of which the Wife suspected to be actually owned by him instead of just part of his father’s business, or of her claims for various monies due and owing from him for their financial dealings made during their marriage in excess of HK$16 million. With all these factual issues over what were essentially the true size of the marital pools and the parties’ respective financial means remained outstanding prior to the FDR hearing, it was simply an inexplicable failure on the part of all those involved to assist the court in what is essentially the first step of the exercise which it is required to undertake in deciding on what order to make in ancillary relief applications.  

5. Worse still, as will be apparent from the background information below, notwithstanding various orders and directions as to disclosure and discovery required of both parties made well over a period of more than 2 years before the trial finally commenced, many of them were inexplicably either ignored or neglected thereby unnecessarily prolonging and disrupting the trial into 5 separate sessions which span over some 18 months, forcing an adjournment on at least two occasions thus wasting the court’s time and resources, not to mention the parties’ own costs for which they were clearly not the only guilty ones, and the obvious difficulties and problems in recalling the evidence given at the earlier hearings. In fact, it would not be unfair to say that this was one of the worst prepared cases that I have ever come across in my court.

Background

6. The Wife who is now aged 52 was born and raised in China. In 1987 when she was 25 she married her said late husband Mr Wong who was a Hong Kong resident and joined him in Hong Kong making their home in his property known as House No.T8, Tat Chee Avenue, Kowloon (“House T8”) with his teenage daughter EW from his former marriage who later went to a boarding school in California, USA. Mr Wong was then running a successful exporting toys manufacturing business known as EToys Company Ltd (“EToys”) which had its own factory in Dongguan, China with an annual turnover of more than HK$100 millions, and it is not in dispute that their standard of living was fairly comfortable.

7. During that marriage the Wife was a full-time housewife and mother having given birth to 2 children by Mr Wong, a son WKL in 1988 and a daughter WKK in 1990. Sadly in 1991 Mr Wong was diagnosed with liver cancer and subsequently died on 15^th August 1992 shortly after making his last will and codicil (“The Will”) appointing the Wife and 2 directors of EToys as its trustees and executors, and bequeathing House T8 to her, EW, WKL and WKK in equal share at 25% each upon all the children reaching the age of 21, with his residuary estate to the 4 of them in the following shares : 35% to the Wife, 20% to EW, 25% to WKL and 20% to WKK upon each of the children reaching the age of 21 except for EW when it was to be at the age of 28.  

8. According to the Provisional Schedule of Property issued by the Estate Duty Office, the estate of Mr Wong at the time of his death was assessed at just over HK$35.2 millions, with his shareholding in EToys and his interests in House T8 making up the bulk at HK$24,291,683 and HK$7,125,000 respectively.

9. Perhaps in view of his failing health Mr Wong also made the Wife the managing director of EToys in 1991 to prepare her for taking over his business, and shortly before his death also transferred to her most of his bank savings of about HK$4 million. As a result the Wife took over EToys and managed the business with the assistance of the other directors and the senior staff, for which she regularly received HK$200,000 or more per month by way of director fees/salary on top of substantial annual dividends for herself and the 3 other beneficiaries under the said will who were then all minors.   

10. Meanwhile in about 1992 the Wife started a relationship with the Husband, now aged 60 who was then still being married to his first wife but in the process of a divorce, and was a company director assisting his father running his plastic and furniture manufacturing business known as SC Foam Rubber Manufactory Limited (“SC Manufactory”). The Wife soon became pregnant with their first child CMH who was later born on 23^rd August 1993. In 1992 she lent HK$3.5 millions to the Husband to buy out his former wife’s half share in their joint property at Village Gardens, Kowloon (“Village Gardens Property”) as part of their divorce settlement, for which the Wife then became the registered owner jointly with the Husband. That property was subsequently sold in 1993 and she received HK$4.5 millions from the sale proceeds.   

11. In about April 1993 the Wife formed a company known as TJ Investment Limited (“TJ Investment”) with herself and the Husband being registered as the only directors and shareholders each holding 1 nominal share of the company. On the same day of TJ Investment’s incorporation, the Husband also made a declaration in writing that he was holding his said share and all dividends and interest accrued and to be accrued upon trust for the Wife. It is her case that she used this company as a vehicle to invest those dividends received from EToys for herself and the other 2 beneficiaries WKL and WKK in the property market during their minority until distribution could be made to them under the said will. 

12. As a result TJ Investment purchased the following 3 properties in 1993/94:

(a)  Town House T7, Tat Chee Avenue, Kowloon (“House T7”) situated right next to the said House T8 for HK$14.5 million;

(b)  Flat X, XX/F, Block 11, Hong Kong Gold Coast, New Territories (“Gold Coast Property”);

(c)  Flat X, X/F and car park, Kowloon Tong Garden, Cambridge Road, Kowloon (“Kowloon Tong Garden Property”).

13. In addition the following properties were also purchased in the Wife’s sole name in the next several years:

(a)  A flat in South Horizon, Hong Kong in May 1994 for HK$5,850,000 which was sold in May 1995 at a loss for HK$5,550,000;

(b)  A duplex at Parc Oasis, Kowloon in October 1996 for HK$9,600,000 which was sold in February 1997 for HK$11,600,000;

(c)  A flat at Convention Plaza, Hong Kong in May 1998 for HK$11,180,000 which was sold in June 2006 at a loss for HK$7,000,000.

14. The parties eventually registered their marriage on 15^th March 1996 and in September of the same year the Wife gave birth to their youngest child, daughter CMS, and upon completion of renovation works the parties then made their home in Houses T7 and T8, with the couple and their own children mainly occupying the latter, while her 2 children with the late Mr Wong, WKL and WKK who had been treated as children of this marriage, occupied the former.   

15. In or about the year 2000, as his family business expended into China the Husband began to spend less time in Hong Kong. Meanwhile 7 more properties were purchased in China either in the parties’ joint names or the Wife’s sole name, and with one being occupied by the Husband whenever he was in China (collectively called “the 7 China Properties” in the order used by him in his first affirmation which had since been adopted by the parties in their evidence) as follows:

(a) 東莞市厚街鎮環崗海逸豪庭倚湖居海逸路X號purchased in 2003 for RMB1,488,285 in the Wife’s sole name in exchange for another unit in the same estate purchased earlier in 1999 (“1^st China Property”);

(b) 深圳市匯展閣22XX室purchased in about 1997 for HK$1,036,000 in the parties’ joint names (“2^nd China Property”);

(c) 北京新世界中心X樓X號purchased in about 1995 for HK$2,932,300 in the parties’ joint names (“3^rd China Property”);

(d) 東莞市東城西路XXX號雍華庭紫微園12XX房purchased in about 2003 for RMB318,982 in the Wife’s name for use by her parents (“4^th China Property”);

(e) 蘇州三路嘉登大廈X層X室purchased in about 1993 for the equivalence of about HK$630,000 in the Wife’s name (“5^th China Property”);

(f) 東莞市厚街鎮大逕村海逸豪庭逸澄軒第10座X層X號房purchased in about 2006 for HK$3,440,583 in the parties’ joint names (“6^th China Property”);

(g) 東莞市花園商貿廣場X室purchased in about 1994 for RMB4,079,786 in the Wife’s name (“7^th China Property”).  

16. As a result these China Properties together with House T7 essentially formed the crux of the parties’ disputes of whether or not the Wife had used the shares held on trust for the other beneficiaries under the said will for their purchases and hence would form part of her investments for them and their share should accordingly be excluded from the parties’ marital pool for distribution.

17. In 2005 the Wife sold House T7 with both WKL and WKK moving into House T8 and subsequently going aboard to study in the US, while the Husband would continue to spend most of his time in China. In about 2008 EToys closed down its business after what the Wife claimed to be a production debacle over certain defective product and various legal disputes in respect of its manufacturing factory in China.

18. Shortly thereafter on 19^th March 2008 the Wife filed for divorce under these proceedings on the ground of the parties’ separation since about 1^st March 2006, in which she also sought custody of the children then under 18 namely WKK, CMH and CMS, and for an order for the Husband to pay her HK$20,000 per month for the maintenance of CMH and CMS. Somehow and significantly she made no financial claims for herself or over any properties mentioned above in her petition.

19. Initially the Husband filed an Answer to oppose the divorce, but he subsequently agreed to withdraw it and the decree nisi was eventually granted to the Wife on 26^th August 2008 together with the custody care and control of their 3 minor children as WKL was then already over 18 and studying in a boarding school in US together with WKK. The Husband was also ordered by the FDR Judge to pay HK$20,000 per month for the maintenance of his 2 children CMH and CMS who were then attending school in Hong Kong, which were as noted above all that the Wife had sought in her petition.

20. By then of course the parties had filed their Form E, with the Wife’s on 28^th May 2008 [A/54] in which she stated that House T8 was inherited from the late Mr Wong prior to this marriage and hence did not form part of the marital assets, nor were some of the China Properties as the Husband had never made any financial contribution towards their purchase, that she had about HK$670,000 in bank savings and a monthly income of HK$50,000 but with a monthly expenditure 3 times more at HK$181,000 including HK$49,000 spent on the children, and that she maintained that her only financial claim against the Husband was for monthly maintenance of HK$20,000 for the children as she had prayed for in her petition. She was however unable to give any indication as to her total net worth in the absence of any formal assessment of her various properties, but more significantly she also stated that probate of the said will of Mr Wong had still not been granted notwithstanding the lapse of almost 16 years then of his death, for which the total estate duty and interests chargeable would exceed HK$7 million but yet unpaid.

21. In his Form E filed around the same time the Husband was somehow able to provide his valuation of those properties in which he was interested including House T8 and 3 of the jointly owned China Properties which he put at close to HK$30 million in total, plus bank savings of HK$225,000, his 15% shareholding in his father’s business estimated to be worth HK$1.5 million, and personal belongings including a Porsche totalling HK$1.8 million, with an average monthly income of HK$45,500 and a monthly spending of HK$34,000 of which his payment for the children was only HK$2,500 being school fees of one of them.   

22. The exchange of Form E between the parties was of course only the start of their litigation, as soon after the Husband applied and obtained, first on ex-parte basis on 24^th October 2008 and later on inter-parte on 4^th November 2008 an injunction order restraining the Wife from dealing or disposing of those 7 China Properties. How was that possible is another puzzle in this case when there was no application for financial or ancillary relief by him up to that stage, since that application which was required by PD 15.11 by way of notice in Form A (Form 25) was only filed by him some 2 years later on 1^st September 2010, and that was only after 3 FDR hearings had taken place.   

23. Nevertheless, a FDR 1^st Appointment was fixed at the time of the issue of the Wife’s petition for hearing back on 10^th June 2008, presumably on the basis of her said claim of HK$20,000 per month for the maintenance of the 2 minor children of the parties, for which both of them had filed their Form E shortly before that hearing, where the Husband had still not revealed the nature of his claim, if any, when the only order which he proposed to seek at that stage was to restrain either parties from disposing their assets as so stated in his Form E.

24. It was in his 1^st Affirmation of 23^rd October 2008 in support of his ex-parte injunction application that the Husband first asserted that those 7 properties were acquired by the parties as investment during the marriage and to which he had contributed towards their purchase price or mortgage payments, but that the Wife had threatened to sell or dispose of them after the breakdown of their marriage. 

25. At the return hearing of the Husband’s injunction application on 4^th November 2008, upon the Wife’s indication of her intention to oppose it, the hearing was adjourned for argument and pending which the injunction was extended. Meanwhile the Wife filed her affirmation in reply on 23^rd January 2009 claiming that she had no intention of selling any of the China Properties, of which she alleged that the Husband never had any interest in the 1^st, 4^th, 5^th and 7^th China Properties, and that while he did pay for his half share of the initial deposit for the other 3 joint properties, he did not share their mortgage payments afterwards.

26. Eventually the parties were able to compromise the matter by the Husband accepting the Wife’s undertaking not to dispose of 4 of the 7 China Properties namely 1^st, 2^nd, 3^rd, and 6^th unless with his written consent or further direction of the court, and as a result the injunction was suspended and the hearing vacated by the court on 15^th April 2009.

27. As noted above the parties then proceeded to 3 FDR hearings with the last one held on 14^th June 2010, and when it turned out to be unsuccessful, the FDR Judge then directed that the PTR hearing on the ancillary relief application be held before this court on 31^st August 2010, and it was only at that hearing when it was realised that the Husband had up to then still not properly formulated his financial claims. Accordingly I ordered him to file his notice of application for ancillary relief (Form A) within 7 days, whereupon both parties were to file their narrative affirmation setting out their respective case relevant to their disputes, and adjourned the PTR hearing to 15^th December 2010. For reasons apparent below it was to be only the 2^nd of a total 5 PTR hearings before the parties were finally ready to proceed to trial, or so it seemed.

28. Thus it was only on 1^st September 2010, more than 2 years after the commencement of these proceedings and after 3 FDR hearings that the Husband at last filed his notice by Form A on 1^st September 2010 formally stating his claims against the Wife for a lump sum order, a settlement of property order and a transfer of property order.

29. In his supportive affirmation filed pursuant to the said order on 29^th September 2010, the Husband claimed that it was in about 1993 when he agreed with the Wife to jointly invest in the property and stock markets through inter alia TJ Investment and to share equally all profits generated from their joint investments, with him mainly responsible for the stock market and the Wife in the property market, and that the source for financing these investments were to come from the profits generated from the previous ones, but that given the lapse of time, he could not recall all the properties that they had jointed invested save for 4 properties in Hong Kong including House T7 all of which had been sold by the Wife during the marriage without accounting to him for the gains.

30. The Wife in her affirmation filed on 16^th November 2010 with further details of how she and the Husband had always been financially independent from each other throughout the marriage, save for their joint investments in those 3 China Properties in their joint names but of which he had failed to contribute his share of the mortgage payments or other expenses, that the source for all her other investments were mainly from the cash and assets given to her by the late Mr Wong and from the dividends from EToys for herself with WKL and WKK since 1992 until its cessation of business in 2008, that the Husband had persistently neglected the family while spending most of time womanising in China with little financial contribution towards the maintenance of the children or the family, that he had taken or kept various monies of hers and as a result in debt to her of as much as HK$16 million, and that he had failed to make full or frank disclosure of his means in particularly his interests in various business in China.

31. In his affirmation in reply filed on 7^th December 2010 (4^th Affirmation), not only did the Husband take issue with what the Wife claimed about the source of the various investments referred to above, he also suspected that the Wife had concealed her interest in a substantive piece of land in Dongguan used to be occupied by EToys’s factory which he believed to be worth RMB180 million and should be included in their marital pool.

32. With such abundance of detailed revelation of numerous serious allegations by the parties in their latest affirmation, many of which for the first time in these proceedings, and with their major issues at long last properly identified, it is not surprising that both sides at the 2^nd PTR hearing found it necessary to seek, and was granted, directions for extensive disclosure and discovery by exchanging questionnaires and requests for further and better particulars, with the PTR adjourned to its 3^rd hearing on 4^th March 2011.

33. That hearing was subsequently postponed at the parties’ request so that they could attend mediation. Meanwhile the volume of the documentary evidence disclosed by the parties including bank records and financial reports of the parties’ respective business and companies started to grow rapidly and exponentially to eventually 11 Trial Bundles of almost 4,000 pages of documents and exhibits by the time of the trial.

34. Meanwhile EW, the eldest daughter of the late Mr Wong and one of the beneficiaries under his will, launched an administrative action in the High Court against the Wife for payments due to her under the said will, for directions that she be allowed to take proper accounts of EToys, and for compensation/damages for wrongful disposal of EToys’s factory in China, against which the Wife argued that she would strenuously defend but such claims should potentially form part of her liabilities which this court should take into account in these proceedings.   

35. Given the numerous issues between the parties, it is not surprising that they were unable to resolve their disputes through mediation, and hence after 3 more PTR hearings when they were eventually able to agree on the list of issues, the ancillary relief application was finally set down for trial for 3 days to commence on 21^st November 2012, with directions that the parties were to update their Form E no later than 2 months before the trial, which means by 21^st September 2012, and to submit single-joint valuation reports on all the properties in dispute no later than 14 days before the trial.

36. Sadly that was not to be the case, as both parties were late with their updated Form E, with the Husband filing his only on 22^nd October 2012, while the Wife was even later on 13^th November 2012. Worse still, 3 days thereafter on 16^th November 2012 and only 5 days before the start of the trial, the Wife filed a further and very substantive affirmation (4^th Affirmation) including not only the latest changes as to her financial means but also new evidence on what she claimed to be the Husband’s undisclosed or concealed business interests in China as well as certain financial provision allegedly already put in place by his father for him which he had not disclosed amongst her 380 pages of exhibits, of which Ms Lai conceded for the Wife as very late of the day but were essential information and materials to assist the court to arrive at a fair determination of the ancillary relief application.

37. Not surprisingly that action of the Wife met with strenuous opposition from Mr Wong for the Husband, but upon examining those exhibits many of which I accepted as probably relevant, and given my quasi-inquisitorial role in ancillary relief litigation, I allowed with grave reluctance their admission as evidence and adjourned the trial to enable the Husband to file his affirmation in reply, but not before the parties had sprang another surprise by conceding that they had yet obtained the valuation report on the former matrimonial home, House T8, of which they now agreed to do so 2 months before the adjourned trial on 7^th May 2013, with the Wife being penalised with costs to the Husband for the adjournment.

38. With more than 4 years down the road it was inevitable that the parties’ financial situation would have experienced significant changes since 2008, and as far as the Wife’s assets situation was concerned the difference was indeed striking in that her net worth was now in the negative at minus HK$4.3 million due mainly to her sale of the 1^st and 4th China Properties in 2011 and 2009 respectively, and with no longer any cash or savings but with debts and liabilities grown to more than HK$30 million after taking into account of EW’s claims in her High Court action. After the closing down of EToys she disclosed another business venture in cosmetics and beauty service in China which lasted for several years but eventually ceased with substantial losses, and now with no regular income except for some meagre rental received from the 6^th China Property, but her monthly expenses had somehow almost doubled to more than HK$320,000 mainly as a result of 3 of the children having gone aboard for university, and that she now sought to increase her claim for their maintenance to HK$35,000 per month in total and for the sale of the 3 China Properties in joint names with the Husband with all their sale proceeds be given to her save for HK$15,000 to him for what he had allegedly contributed towards their purchase.

39. Not surprisingly the Husband’s updated Form E also disclosed a worse financial situation with his cash in the bank reduced to only HK$45,000 and a somewhat lower income of HK$35,000 per month, and had ceased his financial contribution towards the children’s maintenance. However, unlike the Wife, he had disclosed no debts or liabilities.   

40. It would be relevant to further note that the parties had by then agreed to put their 3 joint China Properties namely 2^nd, 3^rd, and 6^th for sale and upon each party being allowed to draw 20% of the sale proceeds as advancement payment presumably to meet their legal costs which by then no doubt would have grown substantially, with the remaining 60% to be paid into court pending the final outcome of the trial.

41. The trial eventually got started on 7^th May 2013 but given the number of issues involved and the amount of evidence necessary, it was inevitable that it overran and not just on one occasion, as noted above when both parties were guilty of failure to comply with the many court’s orders and directions for disclosure and production of documents either being late or not at all, although some of which might not have been within their control, such as the developments and outcome of the concurrent High Court Action brought by EW against the Wife.

42. As will be apparent below, while some of the terms may have become outdated by the conclusion of the trial 2 years later, it would still be relevant to refer to the parties’ open proposal made shortly before the commencement of the trial in November 2012 to note the wide gulf between them over the division of the marital assets.  

Wife’s Open Proposal

43. The Wife’s open proposal made on 19^th November 2012 can be summarised as follows:

(a)  The Husband was to pay HK$15,000 per month for the maintenance of their elder child CMH and HK$30,000 per month for their younger child CMS commencing 1^st December 2012 until their age of 18 or completion of full time education whichever the later;

(b)  The Husband was to repay her the total sum of HK$18,510,337 being HK$16 million in various debts owed to her during the marriage, and HK$2,510,337 being arrears and shortfall of maintenance for the children dating back to 2006, his share of management fees and other charges in respect of the 1^st China Property used and occupied by the Husband from June 2008 to November 2012, and other loans and money due and owing from him;

(c)   The 2^nd and 3^rd China Properties were to be sold and that HK$15,000 out of the net sale proceeds be paid to the Husband being the share of his contribution towards their purchase, with the remaining balance to be paid to her;

(d)   The 6^th China Property was to be sold and the net sale proceeds were to be divided between the parties in equal shares but with the Husband’s share to be set off against the children’s maintenance due and owing by him referred to above. 

44. Given the amount of lump sum sought by the Wife under term (b) of her proposal, the Husband in effect would not be getting any payment out of any of the properties of the parties including those already sold by the Wife of which she made no mention at all. No surprisingly her proposal was outright rejected by the Husband with his open proposal came one day later below.

Husband’s Open Proposal

45. The Husband’s proposal essentially sought one-half of all the disclosed landed properties as follows:

(a)  The Wife was to pay him a sum equivalent to half of her share in House T8;

(b)  The Wife was to pay him a sum of HK$7,750,000 being the profit gained from the sale of House T7;

(c)  The Wife was to pay him his half share of the sale proceeds of 3 of the China properties already sold by her;

(d)  The remaining 3 China properties were to be sold and their net sale proceeds to be divided equally between the parties;

(e)  As for the maintenance for the said children namely CMH and CMS, he offered HK$5,000 per month for each totalling HK$10,000 per month until their age of 18 or completion of full time education whichever was the alter.   

46. The Husband’s proposal was as expected also wholly rejected by the Wife, but before proceeding to consider the various issues between the parties, it would be useful to first set out the applicable principles of which I understand for once the parties have no major issue.  

Applicable Principles

47. It is quite clear that the major issues between the parties are factual rather than legal the applicable principles of which are set out in section 7 of Matrimonial Proceedings and Property Ordinance, Cap. 192, which requires the court to have regard to the follow matters:

(1) It shall be the duty of the court in deciding whether to exercise its power 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.

(2) Without prejudice to subsection (3), it shall be the duty of the court in deciding whether to exercise its powers 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 exercise 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 to 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.   

48. When embarking on this section 7 exercise, the Court of Final Appeal has in the case of LKW v DD, FACV No.16 of 2008 laid down the following 4 principles that the court should bear in mind :

(a)  Arrive at a distribution of assets which is fair as between the parties;

(b)  Rejection of any gender or role discrimination;

(c)  Yardstick of equal division which should be departed from only for good, articulated reasons;

(d)  Rejection of minute retrospective investigations.

49. With these principles borne in mind, the court shall then embark on the section 7 exercise according to the steps set out in LKW and summarised as follows:

(a)  The first step is for the court to ascertain the financial resources of each of the parties calculated as at the date of the hearing, as per section 7(1)(a) above, with the objective to compute the net financial resources after taking account of all material liabilities, for which the parties have an important duty to make full and frank disclosure to ensure that the court has sufficient information regarding their assets, and a party who fails to do so runs the risk of the court drawing adverse inferences and robustly attributing assets to him or her, or making adverse costs orders;

(b)   The next step is for the court to assess the parties’ financial needs under section 7(1)(b) and those of their children, when the section 7 exercise often stops at this point if the total resources are insufficient to go beyond or even to meet both parties’ needs, in which case no room is left for the application of any sharing principle, as needs have become determinative and should be “generously interpreted”, with those matters referred to section 7(1)(c) to (e) such as standard of living, age and disability often become relevant;

(c)  If surplus assets would remain after the parties’ needs and those of their children have been catered for, the next step in the exercise should generally be for the court to apply the sharing principle to the parties’ total assets with the “needs” question to be dealt with under that principle, which involves the court taking the view that the total assets should be divided equally between the parties unless there are good reasons for departing from an equal division, by taking into account of those matters listed in section 7(1)(a) to (e) as well as any “conducts of the parties” and “all the circumstances” of the case to arrive at the implicit objective of a fair distribution of the assets between the parties.  

50. As already noted above, there does not seem to be any real issue between the parties on the application of the correct legal principles for the distribution of their assets, but rather the proper identification of those assets which should be included in the marital pool for consideration and fair distribution between the parties which is indeed at the heart of their disputes, and which in turn are essentially questions of fact to be found on the evidence before the court, and they invariably centred on how the Wife funded her acquisition of those assets which she claims to be holding on trust for the other beneficiaries under the will of the late Mr Wong, and the true extent of the Husband’s business in China, plus various other issues as set out below.

Issues

51. It should first be recalled that at the last PTR on 18^th January 2012 the parties did submit quite a lengthy list of issues, but as noted above some of which were no longer relevant or had fallen away by the end of the trial such as the one over the piece of land in China suspected by the Husband to be owned by EToys, and as I see it the real issues for determination have come down to the following:

(a)  Whether any of the identified properties were purchased with moneys held by the Wife on trust for WKL and WKK under the will of the late Mr Wong;

(b)  Whether the Wife has fully and truthfully disclosed and accounted for all her other assets in particularly her cash in the bank;

(c)  Whether or not the Husband owes the Wife various debts in the total sum of HK$18,510,337 during the marriage and if so whether they should be taken into account in the determination of the distribution of their assets;

(d)  Whether the Husband has any beneficial interests in various shops/outlets in China;

(e)  Whether his father has made any financial provision for the Husband and/or his future inheritance from his father’s estate;

(f)  Whether the sharing principle should in the circumstances apply.   

Any Properties Held in Trust by Wife for Beneficiaries

52. It is not in dispute that the Wife has never made any express declaration of trust for any beneficiary under the said will in respect of her interests in any of the properties purchased prior to or during the marriage, and she relies on the fact that she being the appointed executrix and trustee of the estate of the late Mr Wong and having collected and received their shares of the estate for WKL and WKK during their minority, she had invested them on those properties as of right and duty for which Ms Lai submits on her behalf that the presumption of resulting trust therefore applies, hence it is necessary to determine the source of the funding for the purchase of the properties in question which can basically be divided into 3 groups namely the former matrimonial home House T8, the property held by TJ Investment and sold in 2005 which is House T7, and the 7 China Properties.

53. There is no question that House T8 was a pre-marital asset inherited from the estate of the late Mr Wong in which the Wife has only 25% share or interest under the will, and hence its source of funding is not an issue, and that by the end of the trial the parties were able to compromise on the 6^th China Property by agreeing to share its net sale proceeds equally, while the Husband has since abandoned his claim against the 5^th China Property on the ground that it was purchased for the Wife’s parents, leaving only Houses T7 as well as 1^st to 4^th and 7^th China Properties which are still in dispute as to whether they were purchased on trust for the beneficiaries as alleged by the Wife, or otherwise the Husband argues should be included in their marital pool to which the sharing principle shall apply.   

54. That of course does not make it any easier in the determination of the remaining issues given the Wife’s case that all the payments of their shares of dividends from EToys for WKL and WKK were mixed with her own share and paid into her own bank accounts which went back more than 20 years instead of any separate designated trust account for each beneficiary, as someone in her role should have done, and from which she would from time to time withdraw money to pay for those properties purchased as far back as in the early 90s without any documentary evidence that any of the beneficiaries’ shares or moneys were indeed involved, hence in the absence of any direct paper trail of any payments received for those beneficiaries, it has become necessary to have to first consider the Wife’s financial ability to purchase these properties on her own, as it is the Husband’s case that she did keep the beneficiaries’ moneys separate from her own and that she purchased those properties only with her own money.

55. Details of the Wife’s financial background were first set out in her 2^nd Affirmation of 12^th November 2010 [A/187] in which she claimed to have been given cash of about HK$4 million and a property at Plover Cove Garden by the late Mr Wong during their marriage, and that after his death she regularly received salary from EToys in the sum of HK$168,000 per month being HK$73,500 for herself, HK$52,500 for WKL and HK$42,000 for WKK in accordance with their entitlement under the said will of Mr Wong, plus substantial annual dividends for herself and the beneficiaries.  

56. Her evidence is that when she paid HK$3.5 million to the Husband to enable him to buy out his former wife’s interest in the said Village Garden Property in 1992, the money came from the HK$4 million given to her by the late Mr Wong, and hence after the sale of the Village Garden Property for which she received HK$4.5 million, that would constitute all her personal savings which she could utilise for her future investments before taking into account of the dividends from EToys.

57. Then came the watershed years for her investments in 1993/94 when she incorporated TJ Investment as the vehicle for the purchase of the 3 properties including House T7 which alone cost HK$14.5 million, plus the unit in South Horizon and the 5^th and 7^th China Properties in her sole name, even if only down payments were involved for all these purchases which were all funded by bank mortgages, and even taking into account of the Husband’s alleged contributions from him which were disputed by the Wife, the total costs paid by the Wife would have been far greater that those savings of hers and in my view clearly impossible for her not to have to resort to the dividends from EToys.

58. According to her evidence and the documents produced including the account records of EToys which were not challenged by the Husband at the trial, the dividends declared by EToys and paid to her together with the 3 other beneficiaries over the relevant period are as follows:

1993  HK$7,940,000  Wife’s Share HK$2,779,000  [B2/871, B6/2094]

1994  HK$7,520,000  Wife’s Share HK$2,632,000  [B6/2112]

1995  HK$2,520,000  Wife’s Share HK$882,000   [B6/2112, 2132]

1996  HK$2,520,000  Wife’s Share HK$882,000   [B6/2132, 2154]

1997  HK$2,730,000  Wife’s Share HK$955,500   [B6/2152, 2154]

1998  HK$2,520,000  Wife’s Share HK$882,000   [B6/2176]

2007  HK$7,725,125  Wife’s Share HK$2,703,793  [B2/837]

2008  HK$4,600,000  Wife’s Share HK$1,610,000  [B2/837, 809]  

59. Of the dividends for 1993 and 1994 totalling HK$15,460,000, the Wife’s 35% share would amount to HK$5,411,000 which together with her savings would have provided her with almost HK$10 million, which leads to the question of whether that would enable her to purchase those 6 properties without involving the dividends for WKL and WKK which combined at HK$6,957,000 during that period?

60. It would be relevant to first note the Wife’s duties and power as a trustee stipulated in the will and codicil of the late Mr Wong [B2/760 – 765] in which she was given absolute discretion to apply the income of the residuary estate for the maintenance of WKL and WKK and to invest the balance of such income for their benefit and in trust for them until they attained the age of 21 years, and as noted above of the Provisional Schedule of the Property of the late Mr Wong [B2/767 – 768], the residuary estate therefore not only consisted of House T8 and the shares of EToys but also their income and dividends declared and accumulated over the years during the minority of WKL and WKK.   

61. For the Wife to purchase those 4 properties in Hong Kong at that time on her own where their down payments would require not less than 30% of their purchase price given the current practices were already adopted by our banking system at that time, it would have exhausted her entire savings even before taking into account of the other incidental expenses such as stamp duty and legal costs, not to mention any renovation expenses which were required at least for House T7 of which I understand to be quite substantial given the original intention was to tear down the walls adjacent to House T8 to turn it into one single home for their family, let alone any money left for the purchase of the other 2 China Properties.

62. Similarly, in 1996 when the Park Oasis Duplex was purchased for HK$9,600,000, of which the down payment and expenses would have required HK$3 million or so, with her share of the dividends from EToys for that year at only HK$882,000 and even with the return of some of the money invested in the South Horizon Unit which had earlier been sold but at a loss, it is doubtful that she could manage without resorting to the dividends of the other beneficiaries.

63. Again when the even more expensive Convention Plaza Apartment was purchased in May 1998 for HK$11,180,000 when it would have required more than HK$3.4 million for its down payment and expenses, the Wife’s share of the dividends of HK$882,000 in that year would clearly not be possible to cover that amount. In fact the entire dividends declared and paid out by EToys for that year would not have been sufficient, and that it is plain that she would have to resort to some other resources such as the dividends from preceding years when by then she had also purchased the 2^nd and 3^rd China Properties.

64. It is of course the Husband’s case that most of these properties were their joint investments and hence he would have contributed his share which would render the Wife’s case that she had used the dividends of those beneficiaries unsustainable. However, not only was there no documentary evidence of his such contributions but he was unable to provide even their amounts. This is in fact what he said about these investments in his 3^rd Affirmation [A/177, 179 – 182] as follows:

“9. Since making profit from the sale of our first jointly invested property (the Village Garden Property), the Petitioner and I orally agreed that all future profit generated our joint investment, either landed properties or stocks, would be shared equally between us.

10. Basing on our agreement, I was mainly responsible for investing in stocks market when the Petitioner was mainly responsible the landed properties investment.

11. Later in the same year, we acquired a private limited company, namely TJ (“the Company”), for the purpose of accomplishing our investment planning…

12. In August 1993, we, in the name of the Company, purchased … House T7 … for HK$14.5 millions.

13. As the disposal of the landed properties requires the signature of the registered owners, some of the landed properties were acquired in the Petitioner’s sole name for the purpose of speculating in the property market.

14. In about 1997, the highest value of our stocks was about HK$12 millions …

15. However, since the coming of the financial crisis in 1997, the value of our stocks was shrank substantially to about HK$4.2 millions in 1998. As at January 2003, the value of the stock was only HK$495,235.30. All of the stocks were sold finally …

16. It was lucky that the value of our joint invested properties were not much affected by the financial crisis.

17. The joint investments had been going during the marriage between the Petitioner and I. The source of financing the joint investments came from the profit generated by the gain of our previous joint investments.” 

65. This evidence of the Husband that the financing of all these properties came from the profit generated from the previous ones not only sound too simplistic to me in the absence of any details or documentary proof but is factually incorrect upon close scrutiny of the evidence before the court.

66. Firstly, of the properties purchased through TJ Investment, the Husband’s declaration of trust made at the time of the corporation of the company clearly shows that he had no beneficial interest in TJ Investment or its assets namely those properties including House T7, and if he now takes issue with the real purpose or intention of that declaration, he has never given any explanation or evidence to argue otherwise save for perhaps the excuse that it would be more convenient for the Wife to speculate in the property market, when it is plain that she being a director of the company could do so in any event without his declaration of trust. 

67. The Husband has of course also alleged to have paid HK$500,000 towards the purchase of House T7 in support of his claim that it was one of their joint investments, which payment was not disputed by the Wife but she claims that it was made in advance on her behalf and for which she had afterwards repaid him, hence she argues that it was not a contribution as otherwise not only would it contradict the intention and purpose of his Declaration of Trust but also why he had never contributed towards its monthly mortgage payments. I find the Wife’s argument more consistent with the facts before the court in particularly with the intention under the Declaration of Trust.

68. Furthermore, it is disputed by the Wife that her payment of HK$3.5 million for his former wife’s half share in the Village Garden Property was their 1^st joint investment or even a joint investment at all, as it is her evidence that he came to her for help to buy out his former wife’s share in their divorce settlement but as security for her loan she was registered as a joint owner, and after the property was sold he repaid HK$3.5 million to her but also threw an additional HK$1 million as he had made a substantial gain from the sale, as otherwise if it were indeed their joint investment she would have received her equal half share of the sale proceeds of HK$5.4 million instead of only HK$4.5 million as the property was sold for HK$10.8 millions. This was in fact conceded by the Husband under cross-examination to be the case.

69. Above all, even if that Village Garden Property were indeed their joint investment, and that its entire sale proceeds of HK$10.4 million were to be used to finance other investments, of which he had never specifically admitted, it would still be far from sufficient for the purchase of those 7 properties in 1993/94 as demonstrated above, and there is no evidence to suggest that during that period some other properties had also been sold to finance those purchases.

70. Which brings me back to those very first purchases by TJ Investment in 1993/94 and in fact the purpose of its formation, and this is what the Wife said in her 2^nd Affirmation from §25 [A/193 – 195] as follows:

“25. Since September 1992 (i.e. the death of late Mr Wong), EToys has regularly distributed dividends … to me, EW, WKL and WKK …

26. In short, a total sum of approximately HK$27,547,000 in the form of dividends have been paid to me up to about March 2006 (as to HK$9,641,450 was entitled by me, as to HK$6,886,750 was entitled by WKL and as to HK$5,509,400 was entitled by WKK).

…

29. Further, on 22 April 1993, I have acquired a shell company namely TJ for property investment. However, at that time, it was required that a company had to have a minimum of two directors and shareholders and therefore I have required the respondent to act as the director and to hold 1 share (i.e. 50% shareholder) on my behalf. I aver that as at the time of activation of TJ, the Respondent has executed a Declaration of Trust to confirm that one share of TJ (i.e. 50% of the issued shares) was held on my trust …

30. In the year 1993/94, TJ has been actively invested in the property market, such as …

31. Apart from the properties that have been purchased in the name of TJ, I also have purchased some other properties in Hong Kong in my sole name, such as the properties in South Horizon, Tat Chee Avenue and Convention Plaza.

   32. As such, before the marrioage with the respondent, I have been actively involved in properties investment. I aver that the moneys (including the purchase price, costs of purchase and the monthly repayment instalments) that have been used in the property investment in the name of TJ or in my sole name were all from me, particularly the sources of funds were cash or assets given by late Mr Wong as gift to me before his death and the dividends from EToys paid to me receiving on my behalf and on behalves of WKL and WKK.”   

71. She then proceeded to give her reasons in the same affirmation as to why those properties could not be joint investment with the Husband:

“38. I aver that during the marriage, I and the Respondent were financial independent and did not have any intention to fix up our assets and business because:

(1) It was the second marriage of me and of the respondent;

(2) I and the respondent have had our own assets, investment and business before the marriage;

(3) I and the respondent have had our own respective financial resources and incomes which were sufficient to support our respective daily expenses;

(4) I and the respondent have had our own children in our respective first marriage;

(5) I am well aware and recognize that part of the moneys that I have kept and used for investment were belonged to WKL and WKK;

(6) The Respondent is self-centered, money-orientated and money-minded;

(7) I and the Respondent did not have any family life because we did not have much time to live together after marriage; particularly the Respondent spent most of his time in China and cohabited with numerous women in China.

…

44. During the marriage, I continued to invest in the stock markets and in the property markets in Hong Kong and in China. The sources of my funds were mainly from:-

(1) the cash and assets that were given by late Mr Wong before his death;

(2) the dividends from EToys receiving on my behalf and on behalf of WKL and WKK since September 1992.

45. All along I and the Respondent did not have any joint bank account during our marriage save the joint account … with Bank of East Asia which was opened in 2006 and maintained for the purpose of paying the monthly repayment instalments of the property known as … the 6^th China Property …

   46. I further aver that all along I and the Respondent have had our own investment and business separately and independently. In 1997, I invested in the stock market solely in my sole name and the value of stocks purchased by me were over HK$7 million …”   

72. Even ignoring her allegations against the Husband’s money-minded character and numerous affairs with other women in China which if true only came about much later stage of the marriage and certainly not in 1993/94 when they were not even married, I find the Wife’s case of her decision on investments involving the moneys of her children much more consistent with the timing and the formation of TJ Investment as an investment vehicle and the fact that the Husband did make a declaration of trust in respect of his 1 share in that company, and when the Wife mixed up her share of the dividends from EToys with those of her children then at the age of only 3 and 5 years, I do not find anything suspicious when she said that her duty as a trustee to account to them of their shares when they reached the age of 21 as stipulated under the will just seemed like a life time away and that it never crossed her mind that she should keep clear separate accounts for them when she started purchasing various properties with their shares of the dividends, of which she claimed not to have known in any event.

73. Mr Wong for the Husband however argues that the Wife must have set aside the children’s shares of the dividends in some secret accounts separated from hers and from which she had been drawing funds to meet their living expenses and expensive school fees in boarding school, as otherwise how would she be able to do so since the closing down of her business and that she now appears to have run out of money?

74. This argument of course has had the benefit of hind sight, but the Wife’s investment started more than 20 years ago in 1993 and clearly it would not have occurred to her then, or to anybody of course for that matter, that EToys would not be in any business some 18 years later and hence no more income or dividends. I simply have great difficulty accepting that argument of the Husband in the circumstances of the case and in the absence of more solid evidence that the Wife did just that back in 1993.  

75. After all, if it was indeed her intention to invest those dividends received by her for better gains or yields in the stock and property markets, I fail to see why she would not do the same with those of her children as well. For all the reasons aforesaid and on the evidence before the court I have no doubt that when the Wife invested in those properties through TJ Investment she did so on behalf of herself as well as WKL and WKK, and hence the sale proceeds of House T7 would include their respective shares and therefore only the Wife’s share equivalent to 35/80 or about 44% of its sale proceeds should be regarded as part of her assets for present purpose.

76. The same however may not be said about her investments in those China Properties as 3 of them were purchased in joint names with the Husband without any declaration of trust that he was holding them on trust for her or the children, and that he did actually contribute towards their purchases. His evidence is simple as set out in his 1^st Affirmation: He did contribute either towards their down payments and/or the monthly mortgage payments, and for those which had been let out, their monthly mortgage payments were met by such rental income. As noted above he no longer disputes that the 5^th China Property was purchased for the Wife’s parents and hence makes no claim against it.

77. The appropriate question however is not just over his contribution but more relevantly whether the Wife did involve the  moneys of WKL and WKK, and here there is no evidence that she did, as it was not even her own case either in her 2 Form Es or any of her earlier affirmations filed in response to the Husband’s injunction application to restrain her from disposing those China Properties when she went into great length about their purchases without ever mentioning using or spending any of the children’s money or share of dividends for any of the properties.

78. Furthermore, given the fact that these properties were purchased over a long period of 13 years from 1993 to 2006 and at their relatively cheaper prices than those Hong Kong properties purchased via TJ Investment within a relatively short time, I accept that the Wife with her own substantial income from EToys as the managing director, it would not have been necessary for her to involve any money of the children even if the Husband’s contributions were as limited as alleged by her, and hence the Wife’s share or interests in them could not be on trust for the children, which brings me to the remaining issue of whether all the remaining 6 properties were the parties’ joint investments as alleged by the Husband.

79. For those 3 properties purchased in the parties’ joint names, namely 2^nd, 3^rd and 6^th, the Wife accepts that they were their joint investments but disputes the Husband’s alleged half contribution in that he had only paid HK$15,000 towards their down payments but no contribution whatsoever to either the remaining amount or the subsequent mortgage payments. For the 1^st, 4^th and 7^th in her sole name the Wife insists that they were her own investments which had nothing to do with the Husband.

80. Given the limited documentary evidence before the court and the fact that some of the purchases were made more than 10 years ago and hence not possible to obtain the necessary bank records to support the parties’ case one way or the other and hence the difficulty for a proper determination with confidence, a common problem that had prevailed throughout this case. In the premises I ask myself this question: If all of the properties were joint investments, why were some purchased in the Wife’s sole name only?

81. The Husband’s explanation that it just happened to be convenient for the Wife to do so is again too simplistic in my view given the fact that he actually spent more time in China than the Wife, and the way the parties had mostly conducted their financial affairs separately during the marriage with no joint bank account save for mortgage payments of their joint properties, I find the Wife’s case more consistent with the facts and evidence before the court, and I accept her evidence that any of their joint investments was always conducted and held in joint names like those 3 China Properties.   

Alleged Debts of HK$18 million due from Husband

82. The Wife first raised this issue which arose mainly from her investment in the stock market in her said 2^nd Affirmation when she stated as follows [A/200 – 201]:

“46. I further aver that all along I and the respondent have had our own investment and business separately and independently. In 1997, I invested in the stock market solely in my sole name and the value of stocks purchased by me were over HK$7 million. There is now produced and shown to me … copy of the Bought Notes of the stocks invested in my sole name.

47. Further, I and the Respondent did have the intention that we owned our assets and investments separately and each of us should bear the gain or loss of our respective investment. For instances, in 1997 and 1998 the Respondent has suffered substantial loss in stock investments and in his own business and therefore has borrowed moneys from me to resolve his financial problems.

48. In order to confirm his outstanding indebtedness due to me, the respondent signed a letter confirming that he has owed a debt in the total sum of HK$16 million to me. There is now produced and shown to me marked … copy of the letter from the Respondent which clearly showed that I and the Respondent were financial independent and each of us intended and preferred to bear the gain or loss in our own investment and business.

49. The Respondent acknowledged and confirmed his outstanding indebtedness to me because:-

(1) he failed to repay me HK$5,400,000 being the half share of the sale proceeds of the Village Gardens Property;

(2) he had used my stock in the sum of HK$8,000,000.00 to settle his loss in the stock market;

(3) I had borrowed him a sum of about HK$2,700,000.00 for his investment in the business of ….

50. I further aver that the Respondent has not repaid the debt of HK$16 million or any part thereof up till now.

   51. The above incidents clearly showed that I and the Respondent have had our own investments and each of us intended and preferred to bear the loss and gain from our own investments. I aver that all along I invested in the stock market and in the properties market in China and Hong Kong in my personal name or in the name of TJ Investment Limited because I recognize and are well aware that the moneys that I have used in my investment should also be belonged to WKL and WKK and that I should pay them the moneys when they reach the age of 21.”   

83. The so-called letter in which the Husband was said to have confirmed his debts in the total sum of HK$16 million to the Wife was a hand-written document in Chinese dated 26^th October 1998 under the title of “Transfer Document” in which the Husband had signed and declared his agreement to forthwith transfer his assets worth HK$16 million to the Wife [B2/982].   

84. The Husband does not dispute that he did sign that document, but in refuting the Wife’s allegations, he gave this explanation in §22 of his 4^th Affirmation [A/223]:

“I say that the reasons given by were not sustained. The first reason was my failure to repay her HK$5,400,000 being half share of the sale proceeds of the Village Gardens Property. Earlier in this affirmation, I have shown that a sum of HK$4,612,500 was paid to the petitioner. Secondly, the Petitioner made use of her stock of HK$8,000,000 to settle my loss in the stock market. I say that the stock investments were our joint investment, the petitioner just made use of the profit gained from our other joint investments to cover those losses. Lastly, the investment in the business of 海暉魚翅was also a joint investment of us. That joint investment, the Petitioner made a contribution of HK$1,200,000 and I made a contribution of HK$1,500,000. However, that joint investment finally was found to be a fraud and I reported the incidence to the police. There is now produced and shown to me exhibit … a copy of my witness statement taken by the police and the copy of the relevant cheques. The real reason for me to attach my signature on the acknowledge was because the petitioner strangled my neck and asked me to sign such acknowledgment. I do not have any knowledge as to how the sum of HK$16,000,000 was mentioned in the acknowledgment.”

85. In her 3^rd Affirmation in reply to this affirmation of the Husband, the Wife however never responded to these allegations, but under Mr Wong’s cross-examination and after being confronted with a copy of the cheque for the said sum of HK$4,612,500 issued by the solicitors for the sale of the Village Garden Property in her favour representing her share of the sale proceeds [B3/1215–1216], she conceded that the Husband did not owe her the half share of the sale of that property, and that she might have forgotten that the value of her shares taken by the Husband was in fact HK$12 million instead of HK$8 million, to which Mr Wong submits was just a desperate step by her to try to justify the total amount of HK$16 million stated in that debts acknowledgment.

86. The Husband’s evidence on that document was more elaborate in his oral evidence at the trial when he explained that the Wife’s shares investment account was opened at his suggestion with his broker firm by buying shares on margin, but that during the market crash in 1997/1998 and with the value of their shares portfolios decreasing rapidly and urgently, it was on his advice that she sold all her shares to avoid a total loss due to margin call, and as a result she had always blamed him for her losses, including those on the failed business of海暉魚翅 as it was also his advice in the first place to invest in that business, hence on that occasion when they were playing around in their bedroom when the Wife jokingly demanded that he should let her have all his assets to make up her losses, and so he playfully made out that note and gave it to her. He insists that it was just a joke between them during happier times of their marriage and that the evidence before the court shows that he does not owe her those debts.   

87. There is no question that HK$16 million is a very substantial amount of money even for this couple, and if indeed the Wife was owed these debts by the Husband notwithstanding that they went back many years ago, and if she was truly serious about their repayment, it begs the obvious question of why did she not include such an important claim in her divorce petition, as surely it must be at the fore-front of her mind when she decided to end their marriage and gave instruction to her solicitors to file for divorce?

88. As noted above, the only financial claim that the Wife had pleaded in her petition was maintenance for the 2 younger children at the rate of HK$20,000 per month, and when she was asked at the trial as to why she had not included the obviously much more substantial and clearly more significant claim for the repayment of the said HK$16 million from the Husband, she put the blame on her former solicitors for failing to do so despite her instruction, which was why she said she had subsequently changed to her present solicitors.

89. If indeed that was the case, 2 months later when she through the same solicitors filed her 1^st Form E where she was specifically asked under Part 2.9 to give details of all monies owed to her, she only stated a personal loan of a much smaller sum of HK2.7 million owed by the Husband, and in the annexed Explanatory Note (2) to her details of those 7 China Properties under Part 2.2, while she did mention the said document of 26^th October 1998, she merely stated that the Husband had agreed to transfer his properties or assets to her in the total value of HK$16 million without clarifying that they were for repayment of his debts to her, and in Part 6 of her Form E where she set out the kind of orders she was asking the court to make, she again merely asked for HK$20,000 per month as maintenance for the children, and that only in the event of the Husband did not agree to her terms that she would include a claim for full ancillary relief for herself and the children against him [A/69, 86]. 

90. While I can understand her desire to achieve a quick and hassle-free divorce from the Husband, and hence agreed to withhold any substantial claims against him unless he refused to cooperate, I however find it too convenient for her to simply blame everything on her former solicitors, and that I have great difficulty accepting that she would be prepared to forego such a substantial claim if indeed the Husband did owe her these debts, especially when her business was at that stage closing down and that she would soon be without any income to meet her monthly expenses of more than HK$180,000 which she claimed she needed to support her children as stated in her Form E, especially with all of them still at school.

91. On the other hand, I find the Husband’s explanation in his 4^th Affirmation referred to above that the said personal loan of HK$2.7 million mentioned in the Wife’s Form E was in fact in relation to their joint investment in that restaurant business海暉魚翅more credible, in particularly when he has produced copies of cheques as evidence of his contribution of HK$1.5 million and hers of HK$1.2 million which added up to HK$2.7 million, which evidence were not challenged by the Wife at the trial, and hence even putting her case at the highest she was owed only HK$1.2 million and not HK$2.7 million as alleged in her Form E.

92. With her evidence on these 2 alleged debts now in dither, what remains in that so-called Husband’s acknowledgment of debts is over the Wife’s shares investment which she alleged to have been used by him to cover his own losses, which is inherently impossible as her account was in her own name and hence could not have been operated by him without her consent, and that his evidence that she had been blaming him for advising her to sell all her shares to avoid margin call when the market was crashing and hence demanded him to sign that acknowledgment sounds credible to me, while the fact that it was dated about one year after the market crash seems to dovetail well with his evidence as far as timing is concerned.

93. Furthermore, given the severity of that stock market crash in 1997 when almost no investors would be able to come out unscathed, I fail to see how the Husband would be able to use her HK$8 million worth of shares to cover his own losses when her own portfolio was not crashing as well.

94. In the premises and considering all the evidence over this note in their totality, I have grave doubts over the Wife’s claim that the Husband owes her these moneys as alleged, and that even if she did somehow provide him with some financial assistance or even loan him any money, whatever they may be it would not be appropriate for this court to embark on further minute retrospective investigation into such dealings between the parties going back so many years ago. I therefore reject this claim of the Wife and move to consider the next issue over whether she has any undisclosed assets in particularly as to her cash or savings position, when her credibility was again call into question by the Husband.   

Any Undisclosed Assets of Wife

95. As noted above the Wife disclosed to have total HK$675,936 in bank savings from her 7 bank accounts in her 1^st Form E filed on 28^th May 2008 [A/54, 66], and by the time of her 2^nd Form E updated on 13^th November 2012 for the trial some 4 years later [A/295, 303], virtually all her savings were gone, which naturally aroused the Husband’s suspicion when she had earlier sold House T7 for more than HK$20 million without giving particulars of their whereabouts, and when she was questioned under cross-examination as to how she had been able to maintain herself and the children while claiming to have no further income since ceasing her toys business, she explained that she relied upon selling some of the China Properties and drawing on the overdraft facility granted by the Standard Chartered Bank to her in June 2009 to the extent of US$1.3 million, but failed to give any further information in particularly about the security, which she insisted to be none, upon which the bank must have obtained to lend that kind of money which was in excess of the equivalence of HK$10 million to her.

96. This naturally further fuelled the Husband’s suspicion and caused him to issue a subpoena on the bank whose representative subsequently attended the trial to reveal that the overdraft facility was secured by a Letter of Credits for that sum issued by a company known as VL Corporation from Singapore, of which the Wife refused to disclose any further details other than it was owned by a relative of hers whose identity she also refused to reveal. With such mystery and secrecy shrouded about the source of the security provided for such a substantial overdraft at her disposal, it is small wonder that the Husband suspects that in fact the Wife has hidden substantial amount of cash in that tune or even more in some secret accounts overseas to avoid his detection in these proceedings.   

97. One may of course recall earlier the Husband’s argument that the Wife may have put aside the children’s shares of the dividends in some secret off-shore accounts which she has never disclosed, and which he believes may explain about this Letter of Credits from Singapore, but it begs the question of why would the Wife found it necessary to hide the children’s dividends in this way in the first place, as after all, she could not have foreseen or anticipated these divorce proceedings so many years later, and that in any event any such moneys that belonged to WKL and WKK would not be affected by these proceedings as her claim here is only for maintenance for the 2 other children born to the Husband.

98. It is in my view more likely that the security may have come from the sale proceeds of House T7 and/or some of the those China Properties sold by the Wife during the course of these proceedings which led Standard Chartered Bank to grant the overdraft facility to the Wife, as after all, House T7 was sold for more than HK$20 million, which would have been good enough security for an overdraft of US$1.3 million.

99. The exact nature and value of this security is of course not known to this court, and so how is one to assess how much money that the Wife may have kept from the marital pool for distribution? There is no doubt in my mind that the sole responsibility for this dilemma is on the Wife, for which it can be said that any unfairness occasioned by the court’s necessary imprecise assessment of the extent of the parties’ financial resources should fall on the defaulting party rather than the innocent party. Such approach has been supported by authorities, starting with the classic passage in J-P C v J-A F [1955] P215, [1955] 2 All ER 617, CA when Sach J said at p227:

“In cases of this kind, where the duty of disclosure comes to lie on a husband; where a husband has – and his wife has not – detailed knowledge of his complex affairs; where a husband is fully capable of explaining and has had opportunity to explain those affairs, and where he seeks to minimize the wife’s claim, that husband can hardly complain if, when he leaves gaps in the court’s knowledge, the court does not draw inferences in his favour. On the contrary, when he leaves a gap in such a state that two alternative inferences may be drawn, the court will normally draw the less favourable inference – especially where it seems likely that his able advisers would have hastened to put forward affirmatively any facts, had they existed, establishing the more favourable alternative.”

100. In the case of F v F [1994] 1 FLR 359 where the husband obtained a bankruptcy order shortly before the wife’s application for ancillary relief was heard, and in the wife’s subsequent application to set aside the bankruptcy order, Thorpe J (as he then was) in holding the husband’s explanation of his financial position as fundamentally implausible and the bankruptcy order an abuse of the process and must be set aside, ordered the husband to pay a lump sum of £150,000 to the wife and explained at 367C:

“So if he has conducted his affairs throughout the marriage in such a covert fashion as to relieve him of the ordinary obligations of citizenship to support the State through tax contribution, if he has conducted these proceedings in a vain endeavour to maintain that camouflage, if in consequence the obscurity of my final vision results in an order that is unfair to him it is better that than that I should be drawn into making an order that is unfair to the wife. If at the end of this case he feels that the lump sum that I order is unfair in reflection of his present retrenchment then he should remember that he has brought that consequence upon himself by the fashion in which he has chosen to arrange his affairs over the course of the last decade, coupled with the fashion to which he has chosen to conduct these proceedings.”

101. These principles were endorsed by the Court of Appeal in Baker v Baker [1995] 2 FLR 829 where it held that the trial judge was entitled to draw adverse inference against the husband and the standard of proof in a case where material non-disclosure was alleged was the ordinary balance of probabilities, and that failure of such duty to make full and frank disclosure would severely undermine the integrity of the legal process, Butler-Sloss LJ (as she then was) said at p835D:

“Mr Posnansky pointed to an utterly fake case and asked us to consider why the husband was lying and what did he have to hide. If the cupboard was bare, it was in his interests to open it and display its meagre contents. But on the contrary, the husband, despite his protestations to the contrary, continued to live the life of an affluent man. I agree with the submissions from Mr Posnansky that if a court finds that the husband has lied about his means, lied about other material issues, withheld documents, and failed to give full and frank disclosure, it is open to the court to find that beneath the false presentation, and the reasons for it, are undisclosed assets. Wilmer LJ said in Payne v Payne [1968] 1 WLR 390, at 396:

‘In such circumstances it is well established that the court is entitled to draw inference adverse to a husband who has not made a proper disclosure of his available resources.’

  The judge carefully considered the relevant criteria set out in s 25(2) of the matrimonial Causes Act 1973, including the shortness of the marriage. In my judgment, there was ample evidence upon which the judge was entitled to draw inferences adverse to the husband and to make findings that there were assets available to meet the order he made. To accept Mr Holman’s alternative proposition that, unless the assets can be shown positively to be available an order cannot be made, flies in the face of the principles enunciated in the judgment of Sach J and would send a clear message to spouses unwilling to make full and frank disclosure. It would indeed, as Mr Posnansky said, be a cheat’s charter …”

102. In the present case, as pointed out by Mr Wong for the Husband, not only did the Wife lie in her evidence when she insisted that it was her long-term relationship with Standard Chartered Bank as a client which went back for years to the time of EToys that she was granted the overdraft facility without pledging any cash, deposits or other securities, which was later shown to be incorrect by the bank’s representative under the Husband’s subpoena, and that she had continued to refuse to disclose anything about the Letter of Credit issued by the Singapore company that this court is entitled to draw inferences against her that she has undisclosed assets substantial enough to cause the bank to grant such overdraft facility to her.

103. Likewise, adverse inferences can also be drawn against the Husband if he is similarly guilty of non-disclosure of his means as alleged by the Wife as to his business interests in China, which I shall next turn to.   

Husband’s Business Interests in China

104. The Wife believes that the Husband has failed to make full and frank disclosure of his interests in 3 companies in China namely新昌皮革有限公司[深圳], 新昌皮革(東莞)有限公司and新昌皮革(順德)有限公司to which he had brought her to attend their opening ceremonies, that the staff would call him their boss while he had given them ‘lai see’ during Chinese New Year and had told her details of their operations, that he had used his nephew and other mainlanders to front the companies, and that the business were very profitable with annual sales volume well over RMB 1 million according to her 4^th Affirmation [A2/334.6 – 334.7].

105. She gave further details of why she believes that the Husband is the true owner of these companies in her 7^th Affirmation [A/334.33 – 334.41] which are essentially that the Husband wanted to form his own business in China trading leather materials and hence formed a company known as SC Leather Limited (“SC Leather”) in 1997 and asked her to be one of its directors and shareholders as well as accompanying him to Singapore to meet with some suppliers, and when the leather materials were shipped to Hong Kong, he would store them in the warehouse of SC Manufactory while he would proceed to set up those 3 companies in China in 1997, 2000 and 2003 respectively, and thereafter the goods would be shipped to China for sale via those companies, which she argues to have nothing to do with SC Manufactory but are instead the Husband’s own business.   

106. The Husband does not dispute the existence of these companies but insists that they are merely outlets of his father’s business SC Manufacturing in which he has only 15% share holding, as it was he who suggested to his father to set up these outlets to promote the business of SC Manufactory, for which he was assigned the responsibility to do so, and when he brought along the Wife for various business meetings and the opening of these outlets, it was only normal for the staff to regard him as one of their boss given his position in his father’s company, but since the global financial crisis of 2007 his father’s business had been declining to the extent that 2 of the outlets had since been closed as well as the Hong Kong head office of SC Manufactory in 2013, leaving now only the one in Dongguan still in operation trying to sell off the remaining stocks, with all their profits and income all along being reported and accounted to the head office in Hong Kong and incorporated as part of its gross profits in its annual audited report, and hence could not have been his own business. 

107. While it is true that the Wife was able to provide numerous first-hand knowledge and details of the operation of these Chinese companies in her said 7^th Affirmation, many of which were however at best circumstantial evidence, and given his role and position in SC Manufactory, the fact that it was the Husband who set up these companies in China does not of course necessarily follow that he must be their beneficial owner, while those sale figures relied on by the Wife in fact came from one of the former staff of SC Manufactory who was however never called to testify at the trial, hence all these evidence of the Wife do not in my view show rule out the possibility that these companies may indeed be part of the business of SC Manufactory as alleged by the Husband.

108. Ms Lai however argues that neither is there any direct evidence from the audited report of SC Manufactory for the year ended 31^st March 2013 [B10/3344 - 3361] produced by the Husband to show that the profits of those shops had indeed been incorporated into SC Manufactory’s accounts as alleged.

109. While that may be correct, the Notes for Inventories on page 3357 of the report did refer to resale of goods of the company at costs and transferred to a director with provision for slow-moving and obsolete inventories, all of which seem to dovetail with the Husband’s evidence that they were indeed for accounting purpose accurate references to resale of those surplus furniture and other goods via those 3 outlets in China that is his case.  

110. Perhaps more significantly, it was also stated by the report on page 3348 under the title “Emphasis of matter” as follows:

“ … However, the Company had no operating activities from 1 April 2013 and up to date of this report. This condition indicates the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern…”

111. This clearly supports the Husband’s case that his father’s business had been declining, which is further evidenced by the income statement of the report on page 3349 showing a drop by almost half in revenue from the previous year with a resultant net loss of more than HK$1.5 million for the year when there was a net profit in excess of HK$8 million in the previous year of 2012, which would indeed be a most alarming decline by any account, and which may explain why SC Manufactory no longer showed any operating activities in 2013, and goes to support the Husband’s case that his father has planned to retire and to wind down his business of SC Manufactory.

112. In the premises and for these reasons I am satisfied that the Husband has told the truth that those 3 companies were sale outlets of SC Manufactory and not his own business, which brings me to the next issue, given what transpired above as to his father’s plan of retirement.  

Financial Provisions and Inheritance from Husband’s Father

113. The Husband’s father who is the founder of the family business of SC Manufactory which also holds various landed properties is now aged 89, and has according to the Wife been selling off some of those assets and making distribution to his children including the Husband, and with more to come in future, which means the Husband’s inheritance of his father’s estate much more substantial in terms of both prospect and value given his father’s wealth.

114. According to the Wife’s 4^th Affirmation [A/334.1 – 334.10], the father had sold a property with car parking space in each of 2011 and 2012 for more than HK$12 million in total and distributed the money amongst his children including the Husband, and had also over the past few years transferred some of his properties to them. She believes that he still has at least 1 factory unit and several car parking spaces which he intends to sell off for further distribution to his children.

115. The Wife further alleged in her said affirmation that in a meeting with the father in 2012 when he tried to persuade her to reconcile with the Husband, she was told that he had reserved HK$6.9 million in his HSBC account for future distribution to the Husband, hence she believes that not only would the Husband stand to inherit substantial inheritance from his father’s estate, but that he may have already received the said sum of HK$6.9 million from his father by now for which he has failed to disclose.

116. The father has in fact filed an affirmation in reply [A/334.23] in which he did not dispute his meeting with the Wife on that occasion but insisted that their conversation was on a without prejudice basis without admitting or denying ever mentioning that sum of money. He did however deny making any distribution of his estate other than the one property given to his eldest daughter whom he said had devoted all her life looking after him and his wife, that he has no concrete plan as to how to distribute his remaining estate, and that in any event some of his estate may have to be used to pay off the outstanding bank loans of SC Manufactory. Despite his age he was concise and straight forward with his testimony at the trial.

117. While it is not certain of the size of the father’s estate, but given his age and the Wife’s evidence over that meeting with him in 2012, I agree with her that the prospect of the Husband’s inheriting his father’s estate in the foreseeable future is real and that it can be substantial, but the sum of HK$6.9 million mentioned by the Wife at that meeting which even if true took place more than 2 years ago, and hence it cannot be certain that the money is still there, although I suspect it may very well be as otherwise the father would have said so in his said affirmation or his evidence.   

The Section 7 Exercise

118. Having dealt with the various major issues over the parties’ assets, I shall now embark on the section 7 exercise, starting with the financial resources of each of the parties.

The Wife’s Financial Resources and Needs

119. According to her 4^th Affirmation [A/334.1, 334.7], the Wife since the closing of the business of EToys did engage in another business running a beauty services company in Dongguan in 2007 but by 2010 it had run up a loss of about RMB2.5 million and was eventually closed down in the same year, of which she has also produced various documents including its financial report and account [B6/2190 – 2212], none of which were seriously challenged at the trial.  

120. The Wife now at the age of 52 claims to have no other business or income and is essentially relying on the sale proceeds of some of the China Properties and the said overdraft facility from Standard Chartered Bank, of which as I have found above she has not been truthful with her disclosure and that by drawing adverse inferences against her that she should have cash or other undisclosed assets worth the equivalence of at least HK$10 million and probably more, most likely from the remains of EToys’s dividends and the sale proceeds of House T7 and hence would have included the shares of WKL and WKK which be excluded from her own, it would therefore be reasonable in my view to notionally bring the Wife’s share down to perhaps not less than HK$5 million.

121. Henceforth by including that sum in the Schedule of Assets prepared by Ms Lai in her Closing Submission, the Wife’s identified assets would be as follows:

House T8 (25%)	HK$8,750,000
2nd China Property (50%)	HK$  187,500
3rd China Property (50%)	HK$2,350,000
6th China Property (50%)	HK$  700,000
Undisclosed cash and/or other assets not less than	HK$5,000,000
Total:	not less than HK$17 millions

122. More controversial is the extent of her liabilities put forward by her counsel Ms Lai in her closing submission at more than HK$24 million which would have swallowed up all her assets and left her in negative value by as much as HK$7 millions as follows:

Estate Duty on the estate of late Mr Wong	HK$ 7,000,000
Dividends due to WKL and WKK	HK$12,396,150
Agreed Sum due to EW under HC Action	HK$ 1,670,000
Loans due to Standard Chartered Bank	HK 3,000,000
Total :	HK$24 million

123. The last 2 items were not challenged by the Husband at the trial, while the argument for the first 2 are both inherently flawed in that firstly, the estate duty is chargeable against the estate instead of the Wife personally, while there was never any proper explanation as to why it has not been paid all these years when there were certainly more than sufficient means at that time to do so. In any event, when it is ultimately paid out of House T8 upon which I understand has been charged by the Estate Duty Office, where its estimated value of HK$35 million should manage without difficulty, it follows that the Wife’s 25% share in that property should only come down to HK$7 million instead of Ms Lai’s figure of HK$8,750,000 (HK$35m – HK$7m = HK$28m of which 25% being the Wife’s share is HK$7 million).

124. As for the dividends due to WKL and WKK, Ms Lai’s calculation simply based on their respective shares of the total dividends received from EToys years ago is in my view similarly flawed and is in fact inconsistent with her own case that she had all along invested their shares in various properties and upon sale of these properties spent their shares of the sale proceeds on the children’s expenses in particularly after 2008 when she was no longer getting any income from EToys or any other sources.

125. I do not of course mean that the Wife would not have to account to the children of what remains of their shares of the dividends from EToys, but since she has never produced any such account properly recorded their respective shares throughout the trial that I do not accept that her figure of HK$12,396,150 truly and accurately represent the amount due to WKL and WKK, other than what I have found above of their possible shares behind the security which led to the overdraft facility granted to the Wife by Standard Chartered Bank but of which the Wife has failed to make proper disclosure. 

126. By assessing the Wife’s share of that undisclosed asset notionally at only HK$5 million instead of the total sum of not less than HK$10 million as found above, I have in fact already taken into account of any possible shares of the dividends due to the children and hence this item should not be included as part of the Wife’s liabilities which should more realistically be at less than HK$5 million to be set off against her total assets revised at just over HK$15 million, thus giving her a net worth of at least HK$10 million and possibly more, but without any regular income and in the absence of any evidence of undisclosed business, the Wife will of course have to rely on these assets to meet her needs and those of the children, of which I shall next turn to.

127. As noted above the Wife in her 1^st Form E in 2008 disclosed a total monthly expenditure of just over HK$180,000 when all 4 children were still at full-time schooling with the 2 elder ones namely WKL and WKK in expensive boarding school in the US. By the time of her 2^nd Form E 4 years later in 2012 her monthly expenses had jumped to more than HK$320,000 when she claimed that both WKL and WKK were still in university, and that part of the hefty increase was due to their expensive school fees [A/313 – 318].

128. However, as pointed out by Mr Wong for the Husband, there were other items of expenses especially those for the 2 children in US which made up for such hefty increase which call into questions, such as for example for WKL HK$9,360 for food, similar sum for his car, almost HK$4,000 for clothing and grooming, similar sum for books and stationary, HK$2,340 as medical/dental expenses for a perfectly healthy young man, HK$4,680 for extracurricular activities, and more than HK$7,500 for entertainment and holiday expenses, totalling more than HK$72,000 per month or HK$870,000 per year, and for WKK it is even more expensive at just over HK$80,000 per month and almost HK$1 million for the year.

129. Given the Wife’s wealth and resources as well as the high standard of living enjoyed by the family during the marriage, those levels of expenses of course would not raise any eyebrows, but when she was crying financial difficulties in the middle of what had clearly been expensive litigation which had gone on for years and without any income and had to sell her properties and liquidate her investments to meet her needs, it seems incredible that she had not tried to economize her budget and those of the children at all but instead had allowed her expenses to almost double over the years, for which to me there can only be one of 2 plausible explanations: Either she had grossly exaggerated her expenses or that she had other undisclosed resources that enable her to meet them. In reality, I suspect it is a case of both, as exemplified by the said overdraft facility and the security provided therefor, and which is why she was initially content with just seeking HK$20,000 per month for the 2 younger children CMH and CMS.

130. By now WKL is aged 26 and should have completed his tertiary education, and the same can be said about WKK who at her age of 24 should also be finishing her university studies soon if she has not already done so. In any event their needs if any will have been secured by their inheritance from their father’s estate and are no longer the concern of this court.

131. The situation with the 2 younger children CMH and CMS now respectively aged 21 and 18 is quite different, as they are both still on full-time education and will no doubt continue to be wholly dependent on their parents for a few more years to come, especially for CMS who is now in boarding school and is said to require about HK$60,000 per month for her expenses according to the Wife’s updated Form E, while CMH who is apparently studying in Hong Kong and hence his expenses are much lower at about HK$16,000 per month.

132. The Husband obviously took issue with the quantum of CMS’s monthly expenses, and I agree that some of her items such as HK$13,000 for medical/dental mainly for dental braces appear excessive and may by now no longer apply, while her guardians fees and charges of almost HK$7,000 also appear to me to be a case of double-counting and at her present age should no longer be necessary either. This should bring her monthly expenses down to a more realistic level of about HK$40,000 per month for studying in overseas. In any event it seems that the parties are now agreed that the Husband shall pay HK$10,000 per month for each of them according to their respective closing submission, although it is the Wife’s request that the payment be dated back to January 2009 when the Husband ceased his maintenance payment altogether, to which he seems to have agreed but only to be upon receipt of his award.

Husband’s Financial Resources and Needs

133. The Husband is still a director and 15% shareholder of SC Manufactory from which he receives HK$35,000 per month to meet his stated monthly expenses of about HK$33,000, but at his age of 60 and given the declining business of his father’s company and his father’s expressed wish to close it down, the Husband’s case is similar to the Wife’s that he will have to rely on his own assets and whatever award he is to receive in these proceedings to meet his future needs.

134. His updated assets situation as set out in Mr Wong’s closing submission is in essence not much different to that in Ms Lai’s closing submission ignoring any alleged undisclosed business in China as follows:

15% Shareholding in SC Manufactory	HK$ 1,500,000
2nd China Property (50%)	HK$ 187,500
3rd China Property (50%)	HK$ 2,350,000
6th China Property (50%)	HK$ 700,000
Jewellery and car	HK$ 1,000,000
Cash in Bank	HK$ 45,000
10 gold bars	HK$ 200,000
MPF	HK$ 365,600
Total:	HK$ 6,348,100

135. There is of course the very real prospect of his inheritance from his father’s estate in the foreseeable future in which he stands to receive something substantial. It is of course not certain when will that materialize, nor can one exclude the possibility that he may end up receiving much less, but I am unable to see how he would not be one of the beneficiaries of his father’s estate.

Application of Sharing Principle

136. This is one of those unusual cases that both parties had their own assets, investments and business well established prior to their marriage to the extent that they were able to by and large support themselves with their own income and resources throughout the marriage without having to rely on the other, as well as their own obligations committed prior to their marriage and which they had maintained separately throughout its course, in the Wife’s case her long term responsibilities towards her children born to her former marriage not just as the surviving parent but also as a trustee of their inheritance to their father’s estate during their minority and the course of the marriage, while the Husband’s duty to his father’s business took him away from his family to spend years in China in particularly during the latter part of the marriage.  

137. Henceforth when the Wife insisted in her evidence that she and the Husband were financially independent during the marriage and did not have any necessity or intention to mix up their assets or get involved in each other’s business was in fact telling the truth about how they had conducted their own affairs by and large separate from each other save for those few joint investments in China as the only remaining connection between them financial wise, and leaving each of them in fact with more or less similar position now at the end of their marriage in terms of financial resources, with the Wife having a net worth of more than HK$10 million, and the Husband with similar amount of assets including his real prospect of inheritance from his father’s estate in the foreseeable future, and that each will no doubt need all their remaining assets to meet their future needs given their present age and lack of any regular income.

138. Ms Lai for the Wife submits that this is an appropriate case for the court to depart from equal division of the parties’ assets given that the bulk of the Wife’s assets were independently acquired from the estate of her late husband well before this marriage which was not a lengthy one in any event. For the last point I agree with Mr Wong for the Husband that even putting the Wife’s case at the highest this marriage would still have lasted at least 10 years and does not justify departing from equal division.

139. As for the argument that most of the assets were independently acquired prior to the marriage, the same also applies to the Husband’s assets which were mostly also acquired from his income and shareholding in his father’s business long before he even met the Wife, with the exception of their joint investments in those 3 China Properties which both parties agree would have to be sold. 

Conclusion

140. In the premises and for all the reasons articulated above, it is my firm view that fairness between the parties will be achieved for each to exit the marriage retaining their own assets under their own name or possession and with their half share of their joint investments which they will no doubt require to meet their own needs in future under a clean break situation which is clearly their common intention, and this means that the 3 China Properties in their joint names shall be sold with their net proceeds be divided equally between the parties .

141. As for the financial support of the 2 younger children CMH and CMS, it seems from their respective closing submission that the parties are in agreement that the Husband shall contribute HK$10,000 per month for the maintenance of each child totalling HK$20,000 per month until they complete full time education, and that such payment be dated back to January 2009 when the Husband ceased his maintenance and to be set off against his half-share of the sale proceeds of the 3 China Properties.

142. Lastly on the question of costs, given my criticisms of their litigation conduct of both parties and my various findings against them as well as the result of my decisions, it would be fair and appropriate that there be no order as to costs save that the Wife shall reimburse the Husband of the costs of his subpoena on Standard Chartered Bank which would have been unnecessary had the Wife been forthcoming with the information sought by the Husband.

143. Accordingly, my orders are as follows:

(a)  The 3 China Properties namely 2^nd, 3^rd and 6^th shall upon the decree absolute of divorce be sold and that their net sale proceeds be divided between the parties equally in full and final settlement of their claims against each other which claims shall stand dismissed;

(b)  The Respondent Husband shall pay to the Petitioner Wife HK$10,000 per month as maintenance for each of the 2 younger children namely CMH and CMS totalling HK$20,000 per month to be dated back to 1^st January 2009 with credit to be given for any payments made by the Respondent in between, and payable thereafter on the 1^st day of each month until their completion of full time education, with the payments in arrears to be set off against the Husband’s half-share of the net sale proceeds under (a) above;

(c)  There be no order as to costs of and incidental to the application of ancillary relief save that the Wife shall pay the Husband’s costs of the subpoena at HK$25,000. This is an order nisi to be made absolute at the expiration of 14 days.

(d)  Section 18 to issue.