TCW v. LC

CACV 139/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 139 OF 2006

(ON APPEAL FROM fcmc nO. 12816 OF 2004)

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J U D G M E N T

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Hon Cheung JA:

1.  The facts of the case are fully set out in the judgment of Yeung JA.  I agree with the orders made by Yeung JA on the appeal, cross appeal and costs.  The only matter I will deal with in this judgment is the basis upon which the financial provision is made for the petitioner.  For the purpose of this appeal, I will also refer to the petitioner as the wife and the respondent as the husband.

Overview

2.  The overview of the case is that the joint assets of the husband and wife are in the sum of $42,700,000.  The judge awarded the wife $22,000,000 which  is about 51.522% of the joint assets.

White v. White not relied upon

3.  The division of the joint assets was not based on the principle of division of property enunciated in the recent House of Lords decision of White v. White [2001] 1 A.C. 596.  That case was concerned with a situation where ‘The available assets substantially exceeded the amounts required by Mr and Mrs White for their financial needs, in terms of a home and income for each of them.  The general observations I make later should be read with this in mind’ per Lord Nicholls of Birkenhead at page 602.

4.  The present case is not concerned with how substantial excess assets after taking care of the needs of the parties should be dealt with.  The wife’s claim was based solely on her ‘reasonable needs’.  This position was clearly stated by Mr. Egerton, counsel for the wife, at the appeal.  He disavowed any reliance on White v. White.  He informed the Court that the value of the wife’s claim was originally less than 50% of the joint assets but due to the fluctuation in the price of the shares in the United Metals Holding Ltd (‘United Metals’) which forms the bulk of the joint assets, the eventual division resulted in an 51.522% to the wife.

5.  The parties have not addressed us on the application of White v. White.  For my part, I will refrain from expressing any view on the case.

6.  Ms Lisa Remedios, counsel for the husband, submitted that the binding authority on this Court is the earlier decision of this Court (Fuad VP, Clough and Hunters JJA) in C v. C [1990] 2 HKLR 183.  Again this case does not call for a discussion on the effect of C v. C in the light of the decision of White v. White.

The husband’s concession

7.  This case also does not call for a close scrutiny on the wife’s reasonable needs.  The husband, through Ms Remedios, agreed that the wife is entitled to 50% of the joint assets.  I am satisfied that this will satisfy her reasonable needs.  She will be provided with a mortgage free accommodation which she is already occupying and substantial amount of capital which she can spend.  This clearly satisfies her ‘reasonable needs’.

Structure of the division

8.  The real issue here is how her entitlement is to be funded.  As the shares of United Metal forms the bulk of the joint assets, both parties should share the risk associated with such a fluctuating asset.  It is incorrect as a matter of principle to order the husband to be given all the shares and the risks associated with them and to fund the wife’s entitlement from this asset.  The wife, on the other hand, under the judge’s order was given properties which are not subject to the same degree of risk. 

9.  I disagree with Mr. Egerton’s submission that this should be left to be dealt with by way of a variation application by the husband to the judge’s order.  The structure of the financial provision clearly is of vital importance as well.  In my view the orders set out in Yeung JA’s judgment provide for a fairer distribution of the joint assets having regard to the circumstances of the case as required by section 7(2) of the Matrimonial Proceedings and Property Ordinance (Cap. 192).

Hon Yeung JA:

Introduction

10.  The husband and the wife, aged 55 and 46 respectively, married in November 1989 and they have two children (both boys) aged 15 and 13. The elder boy studies in Canada. The younger boy was expected to do the same. However as of November 2006, he remains in Hong Kong and does not intend to leave Hong Kong until 2008.

11.  Prior to their marriage, the husband was involved in a die casting business and the wife worked as a tourist guide. The wife stopped working and became a full time housewife when she was pregnant with the elder boy.

12.  In 1985, the husband became a shareholder of United Metals Holding Ltd (United Metals), and the company prospered to the extent that its shares were listed on the Hong Kong Stock Exchange in January 2003.

13.  The husband and wife separated in June 2004 and in November 2004, the wife petitioned for divorce based on one year’s separation with consent. A decree nisi was pronounced on 29 April 2005.

14.  Prior to the decree nisi, the husband, by consent, agreed to provide accommodation for the wife. He also agreed to pay $70,000 for the wife, and $10,000 for each of the boys as their maintenance.

15.  On 3 March 2006, Deputy District Judge Jenkins (the judge), on the wife application for ancillary relief, made the following orders:

“(1) Custody of the children of the family….be to the (wife)

(2) The (husband) do pay to the (wife) $15,000 a month for (the elder boy) and $10,000 for (the younger boy) from 1 April 2006 until each boy reaches the age of 18 or ceases full time education whichever is latter. In the event of (the younger boy) attending full time education in Canada the payment for him to be $15,000 a month;

(3) The (husband) do transfer to the (wife) his share and interest in the Paramount Property forthwith;

(4) The (husband) do transfer to the (wife) his share and interest in the South Horizon Property at the expiry of the current tenancy (May 2007);

(5) The costs of transfer be shared equally by the parties;

(6) The (husband) do repay fully the outstanding mortgage loans on each property no later than the date of transfer of the South Horizon Property;

(7) The (husband) do pay a lump sum of $9,382,000 to the (wife) by the following instalments:

i. 60 monthly instalment of $100,000 with the first instalment on 1 April 2006;

ii. The balance of $3,382,000 as follows: -

$800,000 by 31 December 2006

$800,000 by 30 June 2007

$800,000 by 31 December 2007

$982,000 by 30 June 2008

These instalments be secured against the (husband’s) shareholding in United Metals Holdings Ltd and in the event that the (husband) sells or otherwise disposes of more than 30% of the said shares then the whole amount of the lump sum then outstanding be payable forthwith;

(8) The (husband’s) claim for financial relief be dismissed; and

(9) There be liberty to apply.”

16.  When making the orders, the judge also recorded the husband’s undertaking to pay the mortgages referred to in paragraph 6 (6) above and to pay for the costs of three round trip economy tickets between Hong Kong and Canada each year for each of the boys.

17.  The husband sought leave to appeal against the orders. On 27 March 2006, on an ex parte application by the husband, the judge granted leave to the husband to appeal and stayed the orders on his undertaking to pay interim maintenance to the wife and the two boys.

18.  The order of stay was revoked as a result of an inter partes hearing on 21 April 2006 and the husband has since been complying with the judge’s orders except the orders for the transfer of two properties.

19.  On 3August 2006, the wife filed her notice of cross appeal. She seeks further payments from the husband in relation to the maintenance of the boys in the following terms:

“1. The children’s educational costs up to and including tertiary level and all  reasonable ex curriculum activities associated thereto.

2. The children’s travel and accommodation costs of such education (including return flights to HK p.a.)

a. The children’s medical and dental expenses until they each (attain) the  age of 18 or cease full time education whichever is later

b. Periodical payments of :

i. HK$15,000 per month whilst (the younger boy) is at school in Hong Kong (Sept 2006)

ii. Thereafter until each child attains the age of 18 or ceases full time education HK$ 2,500 per month per child.”

The Assets and Expenses of the Parties

20.  Apart from a property in Castle Peak Road (the Castle Peak Road property) which was sold in December 2005 and the net proceeds of $1,652,540 were shared equally, the husband and wife jointly hold the following properties:

“1. Mei Ka Court, South Horizon (the South Horizon property), which is leased to a tenant until May 2007. The value of the South Horizon property was $4,3000,000. With an outstanding mortgage loan of $807,772, its equity is $3,492,228;

2. The Paramount, Tai Po (the Paramount property), which is also leased until March 2006, has a market value of $6,200,000. With an outstanding mortgage loan of $1,948,512, its equity is $4,251,488.”

21.  The husband, through a BVI company, holds 62,292,000 shares (28.31%) in United Metals. The value of those shares, at its market price of 52 cents a share at the time of the hearing, was $32,391,840.

22.  The husband is the executive director, president and chief executive officer of United Metals, earning a monthly salary and allowance (including double pay) of $186,000.

23.  The husband has bank balances of $264,000, a mandatory provident fund of $145,000 and two watches worth $95,000. However, with three bank loans totalling $671,000, the husband has a negative asset value of $167,000.

24.  The husband pays maintenance for the wife and the two boys. The husband supports the boys’ other expenses and pays the $40,000 monthly rent for a flat, leased by United Metals but occupied by the wife. The husband is responsible for the monthly mortgage instalments of $185,878 for the two properties and he also has to make the loans repayment of over $51,000 per month. The husband’s own monthly expense is about $52,000.

25.  The wife’s assets of $1,292,000 consist of bank balance of $304,000, jewellery of $426,000, an insurance policy of $170,000, a car valued at $50,000, shares and unit trusts worth $72,000 and $270,000 respectively.

26.  The wife’s reasonable requirement was assessed at $61,000 per month.

The Judge’s Approach

27.  The judge assessed the total family assets to be $41,788,096 [$32,391,840 (value of the United Metals shares) + $1,652,540 (Castle Peak Road property) + $3,492,228 (South Horizon property) + $4,251,488 (Paramount property)]. The judge added the wife’s assets of $1,292,000 and deducted the husband’s negative assets of $167,000 to produce the parties’ net joint assets of $42,700,000.

28.  The figures may not be completely accurate as on the judge’s figures, the net joint assets should be $42,913,096 ($41,788,096 + $1,92,000 – $16,700). However, the parties are content with the judge’s findings that the joint assets are $42,700,000 and we proceeded on such findings.

29.  Based on the Duxbury calculation, the judge concluded that a capital sum of $15,383,714 would be required to produce $61,000 to meet the wife’s monthly expenses.  The judge also concluded that the wife required $6,300,000 for a property as residence for her and the boys as well as $150,000 for a car. The judge decided that the wife’s reasonable need was $22,000,000 ($15,383,724 + $6,300,000 + $150,000) and therefore granted her such a lump sum under s. 4(1)(c) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“the Ordinance”) on the basis of a “clean break” of the relationship between husband and wife.

30.  $22,000,000 represents about 51.522% of the parties’ joint assets of $42,700,000.

31.  The judge, having deducted from the figure of $22,000,000 the value of the South Horizon property of $4,300,000, the value of the Paramount property of $6,200,000, the wife share of the net proceeds of the Castle Peak Road property of $825,000 and the wife’s own assets of $1,293,000, ordered the husband to pay the balance of $9,382,000 as set out in paragraph 6(7).  

32.  In coming to the conclusion as he did, the judge rejected the husband’s suggestion that the wife had not contributed to the success of the husband’s business. The judge took the view that although the wife did not directly participate in the business, she performed the role of a full time mother/wife and thus directly contributed to the welfare of the family and indirectly contributed to the success of the husband’s business.

33.  The judge found that the wife had knowledge of and interest in the husband’s business and felt hurt when the husband excluded her from the celebrations when the United Metals shares were listed on the Stock Exchange. The judge rejected the suggestion that the wife’s claim should be limited simply because her contribution to the success of the husband’s business was an indirect one rather than a direct one.

34.  The judge also pointed out that “the wife’s requirements for housing ($6,300,000) and a motor car ($150,000) were not challenged” and that “both sides agree in principle that the two remaining properties in joint ownership should be transferred to the wife free of mortgage and that after the assets held by the wife are taken into account the balance in cash should be paid by instalments.”

Grounds of Appeal

35.  Mrs Lisa Remedios, counsel for the husband, raises a number of grounds.

36.  Mrs Remedios suggests that it was wrong to award more than 50%, namely about 51.522%, of the joint assets to the wife (Ground 1) and that the judge erred in not giving consideration to the reasonable requirement of the husband (Ground 2).

37.  Mrs Remedios argues that the judge had not given due consideration to the health of the husband and his future earning capacity (Ground 3) or the parties’ contributions to the family (Ground 4).

38.  It is submitted that the husband simply is not capable of complying with the orders made by the judge (Ground 5), that the timing for the transfer of the two joint properties is impracticable (Ground 6), and that having ordered the husband to pay over 50% of the joint assets to the wife, the judge was wrong to order the husband to bear full responsibility for the maintenance of the two boys (Ground 7).

39.  Mrs Remedios emphasizes that the family accumulated the assets mainly by the husband’s hard works and his frugal lifestyle, and that the wife had little contribution. She suggests that adopting the same Duxbury calculation, the husband’s total requirement would also be about $22 million and the family assets would not be sufficient to meet both parties’ requirements.

40.  Mrs Remedios points out the husband’s ill health and his wish to retire as soon as possible and that if he stops working, his income will cease immediately. She suggests that the judge had overlooked the husband’s medical expenses and housing needs after he retires, and in so far as the judge placed sole reliance on the wife’s reasonable requirement, the judge had overlooked other relevant factors under s 7(1) of the Ordinance.

41.  Mrs Remedios suggests that in any event, it is impossible for the husband to meet the orders of the judge when his total monthly commitment is over $350,000 and by 31 December 2006, he has to pay $800,000, and another $800,000 every six months until 30 June 2008 when he has to pay $982,000.

42.  In order to meet the payments under the judge’s orders, the husband has to sell a very large part of his shareholding in United Metals, when its marketability is in doubt. In any event, the disposal of a large volume of United Metals shares would no doubt depress its price substantially.

43.  Mrs Remedios suggests that the wife should not be awarded a car as she already has one or housing as she can stay at the Paramount property and should therefore only be given $15,383,714, which will produce a monthly sum of $61,000 to meet her reasonable expenses.

44.  In her written submissions, Mrs Remedios suggests that the figure of $15,383,714 is to be partly met by the value of the South Horizon property ($4.3 million), the value of the Paramount property ($6.2 million), half share of the Castle Peak Road property (826,570) and the net rental income from the South Horizon property over five years ($556,020), and the balance of $3,501,124 will then be paid by the husband in the following manner:

“(A) $1 million to be paid within 3 months of the order;

(B) $1 million to be paid within 6 months after (A);

(C) $1 million to be paid within 6 months after (B); and

(D) Balance of $501,124 to be paid within 3 months after (C).”

45.  Mrs Remedios further suggests that the wife should consent to the husband obtaining re-financing of the South Horizon property and the Paramount property by executing all necessary documents to enable the husband to raise further funds to meet the payments that he has to make.

Cross Appeal

46.  Mr Robin Egerton, on behalf of the wife, seizes upon what the husband stated in one of his affirmations in opposition to a judgment summons taken out by the wife against him in the following terms:

“In any event, I am always prepared and willing to pay all reasonable expenses of my children, even though such expense may exceed the level I am obliged to pay under the interim Maintenance Order and the Final Order, provided that such expenses are reasonably and justifiably incurred.”

47.  Mr Egerton argues that the sums of $15,000 and $10,000 as maintenance for the two boys should not include their education costs and in any event, the maintenance for the younger boy should be increased to $15,000 even if he remains in Hong Kong.

Discussion

48.  The Ordinance empowers the court to order one spouse, upon or after divorce, to make periodic payments to the other, to transfer property to the other or to sell property so that the proceeds can be used to ensure an equitable sharing of the family assets. The court can “order that either party shall pay to the other such lump sum or sums as may be so specified” [s. 4(1)(c)].

49.  As between the spouses, s 7(1) of the Ordinance stipulates the following matters that the court must have regard to when exercising its powers, namely:

“(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 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.”

50.  However, the ultimate aim must be fairness to the parties. As Lord Nicholls of Birkenhead put it in White v White [2001] 1 AC 596 at 604 H:

“In consequence, the legislation does not state explicitly what is to be the aim of the courts when exercising these wide powers. Implicitly, the objective must be to achieve a fair outcome. The purpose of these powers is to enable the court to make fair financial arrangements on or after divorce in the absence of agreement between the former spouses: see Thorpe LJ in Dart v Dart [1996] 2 FLR 286, 294. The power must always be exercised with this objective in view, giving first consideration to the welfare of the children.”

51.  From a relatively modest beginning and only after the marriage,the husband was able to expand successfully the business that he was previously involved in. The judge had clearly found, based on the evidence of both parties, that the wife had contributed indirectly to the success of the husband’s business, hence the family assets.

52.  This is, with respect, a classic case of “the husband and the wife by their joint efforts over many years, his directly in his business and hers indirectly at home, have built up a valuable business from scratch…” (per Lord Nicholls in White v White (supra) at p 608)

53.  One of the relevant factors under s 7(1) of the Ordinance is “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”.

54.  Clearly the wife had made contribution by looking after the home and caring for the family, in particular the two boys. When Mrs Remedios, in her written submissions, has to rely on the suggestion that the family always had a maid to do the housework and to look after the boys, and that private tutors were engaged to help with their school works, it is a clear demonstration of how weak her argument on this point is.

55.  She must realize that it is very common for families in Hong Kong to rely on maids and perhaps tutors in bringing up children and in no way would such matter affect the wife’s contribution by looking after the home and caring for the family.

56.  I am not persuaded that the judge had failed to give due consideration to the contribution made by each of the parties.

57.  It appears not in dispute that the wife requires a monthly sum of $61,000 to meet her reasonable expenses and to produce such a monthly sum, a capital of $15,383,714 is required under the “Duxbury” calculation. A detailed discussion of the “Duxbury” calculation appears in Hartmann J’s judgment in F v F [2003] 1 HKLRD 836 at 894 to 898 and will not be repeated.

58.  However, the figure of $61,000 per month as the wife’s reasonable expenses does not include her housing need.

59.  The judge did indicate that the wife and the two boys should live at the Paramount property when they are in Hong Kong, and hence the figure for the wife’s housing need was set at $6.3 million which is more or less the value of the Paramount property.

60.  If the wife and the boys stay at the Paramount property, it cannot be utilized as part of the capital to produce the $61,000 a month to meet her reasonable expenses and a further sum of $6.3 million has to be injected. The wife can of course spend $6.3 million to acquire another property to meet her housing need, thus allowing the Paramount property to be part of the $15 million capital necessary to produce the monthly income of $61,000. In either event, the award of $6.3 million is necessary to meet the wife’s reasonable requirements.

61.  There is no valid basis for Mrs Remedios’s suggestion that there should be no award for the wife’s housing as she can stay at the Paramount property when the tenancy expires on 30 April 2006.

62.  The judge, in ordering the payment of the balance of $9,382.000, had already deducted from the figure of $22,000,000 the value of the two properties, the wife’s own assets and half of the net proceeds from the disposal of the Castle Peak Road property.

63.  The wife may already own a $50,000 car, it is however not unreasonable to allow her $150,000 for perhaps a replacement car.

64.  I note from the judgment that “the wife’s requirements for housing ($6,300,000) and a motor car ($150,000) were not challenged” and the judge also accepted those figures as reasonable. I fail to see how Mrs Remedios can now argue against those figures as representing the reasonable needs of the wife.

65.  The wife’s financial needs is of course a relevant factor, an important one if I may add, however, it is not the only relevant factor under s 7(1) of the Ordinance.

66.  Quite apart from the husband’s suggestion of deterioration in health due to his age and his wish to retire as soon as possible, and his financial commitment in terms of the mortgage and loan repayments, one must not ignore that he is required to meet all of the boys’ reasonable requirement until each of them reaches 18 or ceases full time education whichever is latter, an onerous commitment indeed.

67.  In ordering the husband to make the lump sum payment of $22,000,000, the judge did not appear to have sufficient regard to the husband’s advancing age, and his financial needs, obligations and responsibilities.

68.  In any event, I have yet to come across a “clean break” case where the award of a lump sum to the wife exceeds 50% of the joint family assets.

69.  I am persuaded, having taken into consideration the relevant factors that a fair outcome is that the wife should only be entitled to 50% of the joint family assets of $42,700,000, namely $21,350,000.

70.  Deducting the value of the South Horizon property ($4,300,000), the value of the Paramount property ($6,200,000), the half share of the Castle Peak Road property ($825,000) and the wife’s own assets ($1,293,000), the balance due to the wife is therefore $8,732,000.

71.  The remaining issue is how this sum of $8,732,000 is to be paid and when the two properties should be transferred to the wife, which issues appeared to be the main bone of contention at trial.

72.  The judge rejected the husband’s suggestion that transfer should only take place in five years’ time and that the wife should vacate the property rented by United Metals as that would result in the wife being homeless.

73.  The judge clearly took the view that the lump sum payment due to the wife should come from the husband’s disposal of part of the United Metals shares. The judge ordered payment by instalments to avoid the need to dispose too many shares at any one time. The judge was right as the husband’s only assets lie in the United Metals shares that he owns.

74.  However, the judge appears to have overlooked the feasibility of disposing such part of the United Metals shares as to enable the husband to meet his payment obligation ordered by the judge.

75.  From January 2003 to the end of November 2004, except for the first few days, the average volume of traded United Metals shares was no more than 200,000 to 300,000 shares.

76.  The trading of the United Metals shares became very sparse as form December 2004. For the 13-month period from 1 December 2004 to 30 December 2005, the total traded volume was 2.3 million shares, i.e. only about 177,000 shares per month were traded.

77.  To meet the payment obligation as ordered by the judge, the husband would have to dispose of about 10 million shares before December 2006 and thereafter about 2 million shares every six months. That, on the evidence before the judge, was impossible to achieve.

78.  Mr Egerton, relied on the opening proposal made by the husband on 24 November 2004, which suggested that the husband was in a position to offer cash $9.5 million to the wife, $1 million within two weeks of the order to be made and then $1 million every six months thereafter.

79.  It is to be noted that part of the open proposal referred to the wife consenting to the husband obtaining refinancing of the two properties. In any event, the open proposal was quickly replaced by another one dated 6 December 2005, containing transfer of $23 million worth of United Metals shares and cash payment of only $1.5 million.

80.  Mr Egerton’s suggestion that the husband can meet the payment obligation ordered by the judge is contradicted by the facts as found by the judge and I reject such suggestion.

81.  As the family assets consisted mainly of the United Metals shares, it would have been fair to order the transfer of shares by the husband to the wife instead of cash payment to satisfy the major part of the lump sum payment ordered by the court, particularly when, on the facts as found by the judge, the husband cannot afford cash payment. In such a way, both the husband and the wife, would take the benefit as well as the risk involved.

82.  However, the wife clearly prefers cash payment and the husband is prepared to met the lump sum with the payment of $6 million over a period of about 5 years although he requires re-mortgaging of the South Horizon property to pay off the mortgage of the Paramount property.

83.  I am persuaded that the husband’ s suggestion is a fair one in the circumstances of the case.

84.  In place of the judge’s orders on ancillary relief for the wife under s 7(1) of the Ordinance, we make the following orders:

“1. The husband do transfer to the wife his share and interest in the  Paramount property, free from mortgage forthwith;

2. The husband do transfer to the wife his share and interest in the South Horizon property free from mortgage on or before 1 December 2011;

3. The husband do repay fully the outstanding mortgage loans on each property no later than the date of their transfer;

4. The wife do consent to the husband obtaining re-financing of the South Horizon property at his own costs for the purpose of paying off the mortgage of the Paramount property by executing all necessary documents forthwith upon presentation of the same;

5. Until the transfer of the South Horizon property to the wife, the husband is entitled to receive its rental income and is responsible for all its outgoings;

6. The costs of the transfer of the properties be shared equally by the husband Wife;

7. The husband do pay the lump sum of $8,732,000 to the wife, as to $6,000,000 by cash and the balance by United Metals shares valued at 52 cents per share in the following manner:

“i The balance of $1,200,000 (after deducting the payment of $100,000 per month by the husband to the wife from April-November 2006), i.e. $400,000 on or before 31 January 2007;

ii. $600,000 on or before 30 June 2007;

iii. $600,000 on or before 31 December 2007;

iv. $600,000 on or before 30 June 2008;

v. $600,000 on or before 31 December 2008;

vi. $600,000 on or before 30 June 2009; 

vii. $600,000 on or before 31 December 2009;

viii. $600,000 on or before 30 June 2010;

ix. $600,000 on or before 31 December 2010;

x. the balance of $2,732,000 in the form of 5,254,000 shares of United Metals to be transferred by the husband to the wife on or before 31 December 2006.

The instalments under i to ix hereof be secured against the husband’s shareholding in United Metals and in the event that the husband sells or otherwise disposes of more than 30% of those shares (other than those transferred to the wife), then the whole amount of the aforesaid instalments then outstanding be payable forthwith;

8. The husband’s claim for financial relief be dismissed; and

9. There be liberty to apply.”

Ancillary Relief For The Two Boys And The Cross Appeal

85.  S. 7(2) of the Ordinance obliges the court to take into consideration the interest of any child of the marriage and in particular, to place the child in the same financial position he or she would have been in if the marriage had not broken down. The court should take into consideration the following matters, namely:

“(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 brown down and each of those parties had properly discharged his or her financial obligations and responsibility towards him.”

86.  The elder boy studies in Canada and it was originally expected that the younger boy would do the same although he chooses to remain in Hong Kong for the time being. The judge correctly took the view that if the boys study in Canada, it would require more money to maintain them and hence he ordered the husband to pay the wife $15,000 a month for the elder boy and $10,000 for the younger boy unless he attends full time education in Canada when his maintenance will be increased to $15,000 a month. The wife has custody of the boys and they will stay with her whenever they are in Hong Kong.

87.  If one gets down to the nitty-gritty, maintaining a child would of course involves many items of expenditure, some major and many minor ones.

88.  The judge found that a reasonable maintenance for the elder boy is $15,000 as he studies in Canada and that of the younger is $10,000 unless he chooses to study in Canada in which event it will also be increased to $15,000. The judge also recorded the husband’s undertaking relating to the provision of air-tickets.

89.  There is no indication at all that such maintenance is not reasonable, having taken into consideration the interest of the boys and in particular, placing them in the same financial position they would have been in if the marriage between the husband and the wife had not broken down.

90.  Indeed even on the wife’s own case, the amount ordered by the judge is more than enough to cover the reasonable expenses of the two boys.  I see no reason to reverse the decision of the judge.

91.  On ancillary relief for the two boys under s 7(2) of the Ordinance, we make the following orders:

“1. The husband do pay to the wife $15,000 a month for the elder boy and  $10,000 a month for the younger boy from 1 April 2006 until each boy reaches the age of 18 or ceases full time education whichever is the latter. In the event of the younger boy attending full time education in Canada the payment for him to be $15,000 a month; and

2. We record the husband’s undertaking with regard to the costs of three Round trip economy ticket between Hong Kong and Canada and we grant the parties liberty to apply.”

Conclusion

92.  I therefore allow the husband’s appeal to the extent indicated and we dismiss the wife’s cross appeal. In accordance with the parties’ wish, we make a declaration under s 18 of the Ordinance that arrangements for the welfare of the two boys have been made and are satisfactory. We also make an order nisi that there be no order as to the costs of the appeal.

Hon Sakhrani J:

93.  I agree with the judgment of Yeung JA. There is nothing that I can usefully add.