NSK v. KRW

FCMC 7594 / 2015

[2019] HKFC 89

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO 7594 OF 2015

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J U D G M E N T
(Section 17 application and final ancillary relief)

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Introduction

1.  This is a judgment to determine, firstly a Notice of Application issued by the Petitioner wife dated the 29 July 2016 to set aside a number of dispositions relating to three family trusts and secondly, after that matter has been decided, to determine the issue of final ancillary relief.

2.  This case brings into sharp focus the difficulties caused when parties act in person and perhaps do not, as a consequence, fully understanding the litigation process. In this case each party makes significant allegations against the other with respect to disclosure. Each accuses the other of material non disclosure and each maintains that the other has hidden assets.

3.  The wife makes many many allegations against the husband, some of which have absolutely no basis in fact or have very little if any substance, whereas others are of a little more import. It is though a difficult and time consuming task to sift through this myriad of allegations in order to determine what is substantive and what is not. In addition, the wife has not complied with her own duty to make full and frank disclosure and as at the time of trial had not provided copies of bank and credit card statements as agreed. (Initially the parties had agreed that disclosure would go back to 2011 – although this was not infact fully complied with by either side). Other difficulties include the fact that the wife seeks to rely on documents that have been improperly obtained. This was first raised substantively at the maintenance pending suit hearing on the 27 May 2016 when the wife’s then lawyers withdrew her affirmation in Reply dated the 20 May 2016 because it had exhibited a contract of employment from the husband, which had allegedly been obtained by the wife by dubious means. Notwithstanding this the wife then sought to reintroduce this document under cover of one of her six affirmations filed on the 17 July 2017. For the avoidance of doubt this affirmation shall be expunged from the court file and the court will not refer to contract of employment exhibited to it.

4.  Similarly, the wife filed a huge affirmation dated the 2 January 2018 initially without leave. This document exhibits hundreds of documents, some of which had been exhibited before. The document also includes a running commentary from the wife, which is more in the way of submissions and should not form the basis of affidavit evidence in any event. In addition, there are a number of e-mails exhibited seemingly from the husband to his new partner, which can only have been obtained illegally. For the avoidance of doubt I do not intend to rely on these e-mails. Further, there is a typed up document headed “Attachments” which on the face of it seems to be written in the same sort of language as a company report. The husband took great exception to the inclusion of this document during the trial and said that it was a false document. The wife said she had the original at home and I gave her the opportunity to produce it. She was unable to do so. Consequently, the only inference that can be drawn is that the husband was correct and that the wife had knowingly produced a false document to the court possibly with a view to deliberately misleading it.      

5.  The husband for his part also maintains that the wife has undisclosed assets in Malaysia. He also sought to produce evidence at the trial from a private detective, which he said went to support his case in this respect. For the avoidance of doubt and as indicated during the trial, the court does not intend to attach any weight to this evidence either.

6.  In addition, neither party has produced valuations, agreed or otherwise of the three properties in dispute in Malaysia and the further three properties allegedly beneficially owned in part by the husband in China. Further and perhaps more importantly, the shares which are the subject of the section 17 application have not been valued by a Single Joint Expert, or at all, although both parties make reference to various share pricings.

7.  There are also issues with respect to the position of the adult daughter, who I will refer to as KE. She provided an affidavit on behalf of the mother and also gave oral evidence in court, but she has not been joined as a party to the proceedings, notwithstanding the fact that on the face of it she is the legal joint owner of two of the properties in Malaysia and the sole owner of a further property in Hong Kong. KE is 27 years old and is currently studying full time.

8.  It is then against this background that the court seeks to determine the issues currently before it.

The Notice of Application

9.  In the wife’s Notice of Application dated the 29 July 2016 she seeks to set aside the following dispositions:

1.   A declaration of trust dated 30^th October 2013 in favour of KR [the son] in respect of one share standing in the Respondent's name in the books of RK Company Limited;

2.   A declaration of trust dated 1^st September 2015 in favour of KE [the daughter] in respect of the 245,770 of HH Ltd shares holding at bank standing in the Respondent’s name held under the Citigroup Global Markets Inc. shares Account No. XXXX44; and

3.   A declaration of trust dated 27^th June 2014 in favour of KR in respect of the cash at bank standing in the Respondent's name held under the Standard Chartered Bank (Hong Kong) Limited Multi Currency Saving Account No. XXX71-1 and Current Account No. XXX71-0.

10.  It is of note that neither party has made a formal application in relation to the property held by the daughter in Hong Kong – i.e. the L property.

Background to the marriage

11.  By all accounts this was a long, but not a particularly happy marriage. It seems that the parties met in 1988 and married on the XX December 1992, in Hong Kong. The wife is Malaysian and the husband is German. It is the husband’s second marriage and the wife’s first. The parties only daughter, KE, was born on the XX October 1991.

12.  Prior to the marriage the wife worked as Cabin Crew for a well-known airline in Hong Kong, whereas the husband has always been a businessman. Although the wife worked for a short while at the beginning of the marriage, for one of HH’s wholly owned subsidiaries, and later for a hotel on the Gold Coast, she has mainly been a full time mother and housewife. The husband was responsible for maintaining the wife and daughter and he paid for all household expenditure and all of the daughter’s expenses including her educational costs. He also provided the wife with a monthly allowance. He says, and this does not appear to be disputed, that in so far as the assets are concerned these were largely kept separate. He says that he believed that the wife had some savings when they married but he did not know what these where and likewise the wife did not know about his financial affairs. They did not hold any assets jointly.

13.  In or about 2007 the husband began a relationship with another woman from Mainland China and he had a child with her on the XX October 2011. For a while he maintained two households, only telling the wife and KE of the existence of his son and new partner, in February 2015 after he had been (wrongly) diagnosed with terminal prostate cancer. It seems by that stage that the parties were largely living separate lives with the wife spending increasing amounts of time in Malaysia and the husband in China. The wife issued proceedings for divorce shortly thereafter.

14.  It is of note that the wife is now aged 53 and the husband has just turned 70 years of age. The husband continues to work as the Chief Executive Office of a small US publicly listed company. The wife is not currently working.  

The litigation

15.  On the 16 June 2015, the wife issued a petition based on mild unreasonable behaviour particulars. She was legally represented at the time. Although the husband initially indicated his intention to defend the proceedings, no Answer was ever filed and the matter consequently proceeded on an undefended basis. The decree nisi was pronounced on the 28 October 2015 and a section 18 declaration was granted on the same date. Notwithstanding this the wife has never filed an application for a decree absolute. The husband issued a Form 5 on the 29 November 2018, but it was subsequently explained to him, that as the Respondent it was necessary for him to apply for a decree absolute on summons. To date this issue remains in abeyance. The parties do however need to resolve this point as final orders for capital can only be made after the decree absolute has been pronounced.    

16.  On the 11 January 2016 the wife issued a summons for maintenance pending suit and asked that any order be backdated to August 2015. Shortly thereafter, on the 21 January 2016 interim interim maintenance was ordered at HK$10,000 per month. The husband continued to pay for the wife’s rent and for all of her other general monthly outgoings. On the 28 February 2017, at the maintenance pending suit hearing, it was agreed, inter alia, that the husband would continue to pay for the wife’s rent at HK$50,000 (now HK$55,000) per month and utility costs, plus her car expenses and all medical bills together with an additional HK$30,000 per month as maintenance pending suit. It is the husband’s case that this totals approximately HK$100,000 per month. The wife originally sought HK$120,200 per month plus provision for her legal costs.

17.  The parties have attempted mediation on several occasions, but without success. There have been two rounds of questionnaires. Updated Form E’s were filed prior to or at the trial.

18.  The matter eventually came on for trial in July 2018 and then went part heard until September 2018. On the first day of trial it became clear that the wife’s affidavit dated the 2 January 2018 did not appear to have been properly reproduced as a court bundle. The husband complained in a letter to the court dated the 3 July 2018 as follows:   

During the preparation for the case it came to my attention, that the petitioner supplied me with a bundle, which does not match her last affirmation.

The petitioner was instructed by you to prepare part of the trial bundle which should consist only of her latest affirmation.

I found out in the bundle the petitioner supplied to me, following pages had been added.

(new information)

Page Number:

69, 103, 104, 119, 174, 175, 187, 188, 189, 190, 197, 198, 289, 294, 295, 296, 297, 299, 300, 301, 302, 304, 308, 309, 310, 311, 312, 313

All these pages are not part of her latest affirmation.

Also I noticed many more pages had been modified mostly with hand written comments and explanations.

You can easily compare her affirmation and her bundle by yourself.

Either she supplied me with a wrong bundle, or she is trying to sneak in additional information into her evidence.

If the latter is the case, I must strongly complain about her continuous dishonest behavior, which is surely designed to be detrimental to my case.

She also did not follow your latest order within 7 days to provide a statement of proposal, at least I never received it.

Please consider, to allow her repeatedly to disregard your court orders is unfair to me, the respondent, it puts a lot of additional burden on my case.

Please instruct the petitioner to file a new bundle with exactly the same information as stated in her affirmation and supply me with her statement of proposal.

Thank you for your consideration

19.  On the first day of trial I raised this with the wife and explained that the court bundle needed to be an exact replica of the affidavit that she had filed in court. She asked for time to do this and the case was adjourned to the following day. I was led to believe that the matter had been satisfactorily resolved. However, on review it seemed that this was far from the case.  

The following pages appear in the trial bundle but not the exhibit to the affirmation as it appears in the court folio:

•   174 (narrative from Ms N).

•   175 (declaration of trust).

•   187 to 190 (narrative from Ms N).

•   197 (HSBC statement, 21.11.2011 page 2)

•   294 to 296 (letter from P re management fees, water bill and electricity bill). Nb#1 a differently dated (1) letter from P re management fees and (2) electricity bill is exhibited (but no water bill).

•   299 (P invoice).

•   300 to 301 (Gold Coast club invoice) Nb#2 two differently dated Gold Coast club invoice are exhibited).

•   309 to 310 (Bupa certificate and schedule).

Additionally:

•   198 does appear in the exhibit but not at the equivalent of 194, but at the equivalent of 194.

•   An un-paginated letter from R’s landlord re the rent increase at P to HK$55K appeared after page 198 of the trial bundle, but does not appear in the exhibit.

•   306 (car license) appears in the trial bundle but not the exhibit.

•   There are several pages in the (unpaginated) exhibit that have not been put in the trial bundle.

20.  Consequently, it has proved difficult to work with the affirmation that was reproduced in the court bundle. Where issues have arisen with respect to this affirmation I have referred back to the original that was filed at court.      

Discussion

21.  I must now turn to consider the issues, the law and the parties evidence as set out in their affirmations, including the affirmations previously filed with respect to the wife’s maintenance pending suit application and as given orally by them during the hearing. For the avoidance of doubt, in so far as the matters set out in this judgment differ from the evidence of the husband or wife, that is because I have preferred the evidence of one of the party’s over the other or it is because I do not find the evidence given credible, or because I consider that the documents produced confirmed my findings of fact.

Setting aside dispositions

The law - generally

22.  Section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 states as follows:

(1) Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as "financial provision") are brought by a person (hereafter in this section referred to as "the applicant") against any other person (hereafter in this section referred to as "the other party"), the court may, on an application by the applicant-

(a) if it is satisfied that the other party is, with the intention of defeating the claim for financial provision, about to make any disposition or to transfer out of the jurisdiction or otherwise deal with any property, make such order as it thinks fit for restraining the other party from so doing or otherwise for protecting the claim;

(b) if it is satisfied that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payment or the disposal of any property);

(c) if it is satisfied, in a case where an order under the relevant provisions of this Ordinance has been obtained by the applicant against the other party, that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies, make such an order and give such directions as are mentioned in paragraph (b);and an application for the purposes of paragraph (b) shall be made in the proceedings for the financial provision in question.

(2) Paragraphs (b) and (c) of subsection (1) apply respectively to any disposition made by the other party (whether before or after the commencement of the proceedings for financial provision), not being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such intention as aforesaid on the part of the other party.

(3) Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application or to a disposition or other dealing with property which is about to take place and the court is satisfied-

(a) in a case falling within subsection (1)(a) or (b), that thedisposition or other dealing would (apart from this section) have the consequence, or

(b) in a case falling within subsection (1)(c), that the disposition has had the consequence,of defeating the applicant's claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property.

(4) In this section-

“disposition” (財產處置) does not include any provision contained in a will or codicil but, with that exception, includes any conveyance, assurance or gift of property of any description, whether made by an instrument or otherwise;

“the relevant provisions of this Ordinance” (本條例的有關條文) means any of the provisions of sections 3, 4, 5, 6, 6A, 8, 11 (except subsection (6) ) and 15; (Amended 69 of 1997 s. 33)

and any reference to defeating an applicant's claim for financial provision is a reference to preventing financial provision from being granted to the applicant, or to the applicant for the benefit of a child of the family, or reducing the amount of any financial provision which might be so granted, or frustrating or impeding the enforcement of anyorder which might be or has been made at the instance of the applicant under the relevant provisions of this Ordinance.

(5) The provisions of this section shall not apply to a disposition made more than three years before the commencement of this Ordinance.[cf. 1970 c. 45 s. 16 U.K.]

23. Therefore, if I am satisfied that the husband set up the three trusts, referred to in paragraph 9 above, with the intention of defeating the wife’s claim for ancillary relief, then I may set those trusts aside. I accept that I need to look at the actual intention of the husband at the time that the dispositions were made. I also accept that it must be clear that there was an intention to defeat the wife’s claim for ancillary relief, although it may not be the only or even the dominant intention of the husband given that “It is enough if it played a substantial part in his intentions as a whole”. (See Kemmis v Kemmis [1998] 1 WLR 1307).

24. In addition, reference should be made to the rebuttable presumption found in section 17(3) Matrimonial Proceedings and Property Ordinance, Cap 192, referred to above. This states that if the dispositions were made less than three years before the s.17 application was made, as here, then there is a rebuttable presumption that it was done with the intention of defeating the wife’s claim for ancillary relief. In this instance the dates of the dispositions are the 30 October 2013, 1 September 2015 and the 27 June 2014 and the application was made on the 29 July 2016. Thus the burden is on the husband to show that he did not make these dispositions with the intent of defeating the wife’s claim for ancillary relief. The burden does not rest on the wife.

The section 17 application

25. In this instance there is no dispute that the husband set up the three trusts as alleged. He said that he did so in order to provide financial security for both of his children and in order to secure his long term employment. He has repeatedly said that his intention was not to defeat the wife’s claim for ancillary relief.

26. The husband explained the situation thus in his affirmation dated the 26 January 2017:

Intentions to setting up my trusts:-

General explanations

5.(i) To secure my children future well being and education, including both my daughter and my son, particularly to protect my 4 year old son’s [now 7 year’s old] up-bringing and education, in case of my untimely departure. It was not made in any way to defeat potential claims of the petitioner, all the trust had been done and kept in the jurisdiction and being fully aware that a court order could set them aside. I am an international person and could have easily secured the money and shares outside the jurisdiction.

…

7. To secure my employment, my monthly ability to earn money, requires that most of the HH shares will not be sold and remain under my voting rights.

8. As CEO of a public company and more so a chairman of the board directors, in his position mostly because of supportive shareholding, which is necessary to stay in control of a publicly traded company. If I lose control of the management of HH Ltd, I most likely will lose my position as Chief Executive Officer, and so with my income.

9. Due to my advanced age (67) [now 70], I would most probably not be able to secure another employment with a simi1ar income. That implies that the control of the share votes is in my utmost interest to secure my future and a good future of all these persons depending on me. Since the petitioner is seeking a high class monthly support, this in my interest should be shared by the petitioner too.

10. More so if any of the shareholding standing in my name would be put up for sale, and/or even change of name on the shares would most likely have a great diminishing effect on the share price the values of the shares. If a CEO of a public company sells his shares, the confidence of the shareholders will diminish whatever the reasons for it.

27. The husband set up the first trust on the 30 October 2013, when his son KR was about 2 years old. The husband said that he made an irrevocable declaration of trust in favour of his son and arranged for 245,770 restricted shares from the company to be held on trust for him. These shares were held in one share certificate and were to be vested in a BVI company. However, the husband ran into some difficulty in this respect, which he explained as follows:

Unfortunately the BVI companies at the time, when it had been set up to hold the trust, came under the wrath of the USA politics with intention to cut off all the money laundering of gangsters and terrorist and also prevent illegal tax shelters. Especially BVI Trust companies were extremely suspect and no bank agreed to open an account for it. This rendered the intention of the trust invalid, since the trust could not receive the dividend payments for the share in its name. The USA stock transfer agent who made it extremely difficult to transfer the share into the RK Company name, was not ready to make further changes especially not because it concerned restricted shares of the company.

…

44. Since the USA Stock transfer agent could not pay the dividends, therefore they became uncollected dividends, which according to my knowledge, by USA California law, would become public property within a 3 (or 5) years time period. So time was running and in desperation I set up a company in Hong Kong with the identical name called RK Company Ltd, and thought that the dividend payments could be collected in this company with the same name. After the set up of the company, my lawyer informed me that it would be illegal to do so, even probably nobody would report it since it was all under my name.

45. Nevertheless, I never used it, instead I requested the help of our corporate counsel, who just recently figured out a legal way to receive these dividends directly from the company rather than through the standard requirement, the stock transfer agent.

46. Even this was not easily be done and was very time consuming, since it required the stock transfer agent to return the money for these dividends back to the company. Anyhow all these troubles with the BVI company made it very clear, that this was not a good security for my son in case anything would happen to me, at least it could not help them in the short term to get money to get by.

28. This led to the husband setting up a second trust for his son – the so called cash trust, on the 27 June 2014. It is not clear how much money is currently held in the trust bank accounts with Standard Chartered Bank, but according to the husband he initially deposited Euro 260,000, which he had received from pensions and other insurances, when he turned 65 years of age. This amounts to approximately HK$2.3 million. Consequently, I accept that there is at least that amount in the bank account.

29. It is the husband’s case, that in order to be fair, he then set up a third trust in favour of his adult daughter, KE for the exact same number of shares, although these are not restricted shares. This trust is dated the 1 September 2015 i.e. just two and a half months after the divorce petition was issued. It is the husband’s case that KE uses the dividends from these shares to pay for her post graduate legal studies in Australia. He says that funds from here were also used to pay for the completion of the L property, the small Hong Kong property that is held in the daughter’s sole name.

30. The wife argues in her affirmation dated the 26 July 2016 as follows:

5. Obviously, the 30^th October 2013 Share Trust, the 1^st September 2015 Share Trust and the 27^th June 2014 Cash Trust:-

(1) covered the assets owned by the Respondent during the marriage with me and before (though near to) my petition for divorce herein, despite the deliberate departure of beneficial ownership of the same by the Respondent;

(2) effectively and substantially diminished the volume of the wealth of the Respondent family pot (especially when the underlying assets of the 30^th October 2013 Share Trust and the 1^st September 2015 Share Trust are the shares of HH Ltd, a listed company in the United States under Nasdaq as admitted by the Respondent);

(3) effectively defeated and/or avoided my claim for ancillary relief against the Respondent (at least without the benefit of having the 30^th October 2013 Share Trust, the 1^st September 2015 Share Trust and the 27^th June 2014 Cash Trust being taken into account in the division of family assets);

(4) were not one made for valuable consideration to a party acting in good faith and without notice and were in fact gift with nil consideration; and

(5) all took place less than 3 years before my application for financial relief.

Discussion

31. Bearing all of the above in mind and although I accept that the husband’s primary purpose in setting up the trusts for his son was to provide some financial security for him and by implication the husband’s new partner also, it is also clear that by so doing he took steps to significantly undermine the wife’s claim for ancillary relief. The same can also be said with respect to the third trust in favour of KE.

32. The daughter’s position in this respect was somewhat unclear. It seems that she initially supported her mother, but then seemingly changed her mind. The husband produced a letter from her dated the 18 September 2016, which stated as follows:

I am EK, daughter of the petitioner and the respondent in this action.

In reference to the trust my father, the respondent made in my name, I was under the impression that this trust can be changed anytime by the respondent. I now understand that only a court ruling or a consensual agreement can change this trust. Therefore I want to revoke my prior letter, which would allow to dissolve this trust agreement.

I intend to stop working and go back to school and enhance my education with a post graduate study.

My father the respondent actually set up this trust to allow me to do just that, I therefore want to be the beneficiary of this trust agreement.

I apologize for the change of mind and for any inconvenience caused.

Sincerely yours

33. In the witness box she said, inter alia, that the funds for the purchase of L came from the father directly and not from the trust. It is not clear on what basis she said that. She also said that the father made her sign the letter set out above, because he did not wish to pay for her school fees (i.e. the fees for her jurist doctorate). She also rather strangely denied the existence of the trust at all – although this does go to support the notion that the husband continued to ultimately control them and that they may have been sham instruments in any event. It was not clear whether or not she supported her mother’s application to revoke the trust or not.

34. In any event, although I accept that the husband had very believable reasons for setting up both trusts for his son (i.e. the trust holding the restricted shares dated the 30 October 2013 and the cash trust dated the 27 June 2014) and that his intent to make things equal between the two siblings was also commendable (i.e. the main reason for setting up the trust for his daughter dated the 1 September 2015), it also follows that by so doing he significantly undermined the wife’s claim for ancillary relief. I don’t believe that this was his main intention, but I do accept that it must have formed a substantial part of his intention overall.

35. I also accept that he has very cogent reasons for wishing to maintain control of his voting rights with respect to the shares i.e. in order to secure his employment, maintain shareholder confidence and to uphold the informal agreement that he has with the other two main shareholders with respect to the shares. However, this also goes to the question of whether or not these are genuine trust instruments or whether in fact the husband continues to control every aspect of the shareholding as if he were the owner of them in any event.

36. Bearing all of this in mind I shall make the order that the wife seeks. Consequently, there shall be an order in terms of paragraphs 1, 2 and 3 of the Notice of Application dated the 29 July 2016. The issue of costs shall be dealt with, in the round, at the end of the judgment. Thus the value of the shares and the value of the cash held in the third trust shall prima facie be included in the “matrimonial pot”.

The law on Ancillary Relief

37. The relevant law is not in dispute. The Court of Final Appeal’s decision in LKW v DD (FACV no 16 of 2008) 13 HKCFA 537 sets out the approach that the lower courts must take when determining issues relating to final ancillary relief.

38. Mr Justice Ribeiro PJ reiterates that there are four underlying principles that must guide ancillary relief proceedings namely fairness, the absence of discrimination, the upholding of the concept of the yardstick of equality and the rejection of a need for a minute retrospective investigation of the parties’ finances. The last point is of particular relevance in the context of this case. At paragraph 69 of the judgment Mr Justice Ribeiro says as follows:

The essence of this fourth principle is reflected in Thorpe LJ’s illuminating comment in Parra v Parra:[1]

“... the outcome of ancillary relief cases depends upon the exercise of a singularly broad judgment that obviates the need for the investigation of minute detail and equally the need to make findings on minor issues in dispute. The judicial task is very different from the task of the judge in the civil justice system whose obligation is to make findings on all issues in dispute relevant to outcome. The quasi-inquisitorial role of the judge in ancillary relief litigation obliges him to investigate issues which he considers relevant to outcome even if not advanced by either party. Equally he is not bound to adopt a conclusion upon which the parties have agreed. But this independence must be matched by an obligation to eschew over-elaboration and to endeavour to paint the canvas of his judgment with a broad brush rather than with a fine sable. Judgments in this field need to be simple in structure and simply explained.”

With respect I agree.

39. There are many issues in dispute in this case some of which are unlikely to have any bearing on the final outcome. Consequently, the court does not intend to go into each and every one of them, but will attempt to concentrate on those that appear to be the most relevant to the outcome.

40. In addition Mr Justice Ribeiro identifies a five step approach to be adopted in all ancillary relief trials, which if I may I will summarize as follows:-

1) The identification of the assets. It is of note that Mr Justice Ribeiro states that a broad brush approach is generally considered sufficient for these purposes and that the assets should be valued as close to the date of the trial as possible.

2) An assessment of the parties’ financial needs

3) Whether or not the sharing principle should be adopted?

4) Whether or not there is a good reason to depart from an equal division of the assets?

5) Deciding the outcome

41. The section 7 factors (s. 7 Matrimonial Property and Proceedings Ordinance, Cap 192) are largely dealt with within this general framework. They are: -

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

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

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

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

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

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

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

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

Reference will be made to the relevant sections when discussing each of the issues in turn.

42. When discussing pre-marital or non-marital assets Mr Justice Ribeiro added that

92. … an important factor which comes into play is the duration of the marriage, the factor mentioned in section 7(1)(d). As Baroness Hale[2] pointed out, “the importance of the source of the assets will diminish over time”. Her Ladyship explained:

“As the family's personal and financial interdependence grows, it becomes harder and harder to disentangle what came from where.”[3]

93. So where it is a short marriage, the court may well be inclined to regard as excludable non-matrimonial property, assets acquired by one of the parties before the marriage or acquired in the course of the marriage from some wholly external source. But after a long marriage, those factors are likely to have much less weight. Thus, in White v White itself, Mr White had benefited from an initial cash contribution made by his father but, as Lord Nicholls commented, that could not carry much weight 33 years later.[4]

Each party’s open proposals

The wife’s open proposals

43. The wife ultimately set out her open written proposals prior to trial as follows:

To Be 'Adding Back To The Matrimonial pot’ of the following Dissipating Sums which dissipating by Respondent K to his mistress LGY:

Respondent KRW has dissipating huge matrimonial assets in favor his mistress LGY of more than ++HK$12,000,000- where dissipating assets consisted of H Common Shares 245,770 units, Cash In Standard Chartered Bank HK$3.5million; the Sale Proceeds of K’s investment real estate of 2 properties. That respondent K did provided a house in the beneficial-interest to his mistress LGY in Shenzhen.

A flat under mortgage in Festival Walk Tai Wai that worth at least HK$10mil.

TO BE ADDING BACK TO THE MATRIMONIAL POT:

614,067 Units of HIHO Common Shares which in receiving Annual Dividends. The HIHO Preferred Stock Value of K at USO$10- upon its exercise as per rights agreement of HH Ltd that documented on May 08 2018. HIHO Common Shares 614,067 X USD$10-each unit=USD$6,140,670.00- which is equivalent to HK$48,196,600.00-

TO BE ADDING BACK TO THE MATRIMONIAL POT:

SHARES NO.1 of Respondent KRW is registered at Computershare in the quantity 3,404,491.00 units (It is the Restricted Shares of Respondent KRW) Now standing in his name in the Book of RK Company Ltd BVI No.XXXXXX5; this is also in relates to Respondent K ‘Declaration Of Trust 2013 October’.

The HIHO Preferred Stock Value of K at USD$10- upon its exercise as per rights agreement of HH Ltd documented on May 08 2018.

HIHO SHARES NO.1 AT recorded quantity of 3,404,491.00 units X USD$10-each unit=USD$34,044,910.00-

TO BE ADDING BACK TO THE MATRIMONIAL POT:

Massive Cash Transferred Out of HK$3,166,445.00 from the pot in the middle of the parties divorce process, transaction incurred of a flat L where his action of purposely squanders the money out from their matrimonial pot.

TO BE ADDING BACK TO THE MATRIMONIAL POT:

- HSBC AccidentInsurance Policy NO.XXXXXXX7 Sum Insured HK$l,000,000.00 matured in Jan 2014

- HSBC Preferred Care Insurance Policy No.XXXXXXX6 Sum Insured Amount in USD$2,000,000.00 matured in Jan 2014, renewal to per policy thereafter,

- HSBC MPF SuperTrust Fund Vested Value of HK$1,197,272.54-.

- German Government Pension Fund Policy No. 7XX-XX-XXXXX9-K0XX-X1 sum Insured Euro$?? The Capital To Be Determine with respondent K.

- German Private Pension Fund Policy No.5X-XXXXX9-K-0X4, 5542 Sum Insured Euro$?? The Capital to be determine with respondent K.

Petitioner N also seeking the reimbursement of my incurred legal fees, reimbursement of previous credit card bills. reimbursement of medical bills and related expenses.

Having regard to the aforementioned circumstances of the case, the reasonable needs of me/the Petitioner N that it would have to be considered in against the good living standard of the family during the matrimonial period.

I attached the Lists of Assets & Liabilities, current monthly Living Expenditure that to assist in accounting for the future, this is more than a fair separation settlement in consideration to the Marital Standard Of their living.

In addition, I sincerely need that the BUPA Health Care Insurance to be UPGRADED to ‘BUPA CRITICAL-ESSENTIAL CARE POLICY’ for better coverage of my Old Age of up to 100 years old. I sincerely need this Critical Care coverage of Inpatient & outpatient health coverage for my health. This is the only medical insurance policy that Respondent K has subscribed for me since year 1993. I have approached respondent K for out of court discussion in order to save the court time, but respondent K had refused any discussion. Currently the health care my annual subscription is HKD$68,000- per year covered only basic hospitalization & surgical, but the policy do not coverage for the Treatment of critical illnesses such as cancer, illnesses related to major organs and functions, illnesses related to the heart, illnesses related to nervous system and other critical illnesses.

I sincerely hope that I may be granted an Ancillary Relief based on a Clean Break of Sum USD$10million; or Sum on a Secured Periodical Payments;

This is a more than fair amount to be calculated based out of the Respondent K HH Ltd/HIHO Shares Vested Value of USD$40,185,580.00; and this amount is excluded other funds held in his others financial institutions Pershing LLC, New York M Bank, DBS Bank, Standard Chartered Bank, Deutsche Bank AG, Bank Of America, UBS Financial.

Respondent KRW held multi accounts at ‘CGMI’ or ‘Citigroup Global Market Asia Limited where in Asia Pacific itself, this special unit of Citi Private Banking serves only high profile clients with a minimum net worth of USD$10million.

In addition I hope that Respondent K may be ordered to pay the Costs of this Divorce Suit, given that Respondent K has been very successful financially in his business ventures at HH Ltd (NASDAQ: HIHO) its subsidiaries, associated and affiliated companies.

The husband’s open proposals

44. The husband for his part proposed as follows:

Statement of Proposal:

In order to bring this case to end, I, the respondent, am willing to settle.

Since it will be almost impossible to find out the assets hidden away by the petitioner, therefore in order to conclude and close this case, I would be willing to forfeit any rights to anything what is there in Malaysia, including the 3 properties.

In addition, I would be willing to share 50:50 the approximately HK$ 7 million, which I have available in cash.

» HK$ 3.5 million

In addition:

I would be ready to pay for the apartment and facilities, which the petitioner occupies until 31 March 2018 [now 31 March 2019].

I would be ready to pay a monthly allowance of HK$ 30.000.- for as long as I can get a CEO salary. This is very likely until end of my working contract in 2019. But since I do not want to retire，if my health allows it, most likely I can get another 5 years contract. For the years beyond I do not dare to make any prediction.

I do not think this is a fair separation arrangement, but in order to conclude the case and get on with my live and fulfill my responsibility towards my son and daughter. I am willing to settle.

Schedule of Assets (Respondent):

	Breakdown	Value (HK$)
Total value of in all bank accounts	- HSBC as of 12.12.2017 - CitiBank as of 30.11.2017 US149,893.65	$5,623,187.24 $1,169,166.02
Total value of in all holdings (e.g. stock) Unrealized market value HIHO shares are Insider shares which can only be sold under very restrictive terms in the open market	- STOCK code: HIHO US$483,981.65 - AXM Pharma (AXMP) US$16.00 - Ping An Insurance (2318	$86,200.00
Total value of valuable personal items By now they must have substantial depreciated	Car –Toyota Car – Honda Furniture Estimated	$100,000.00
Total value of other assets	Club Membership in Gold Coast Club	Estimate to be $178,000.00
	Sub-total	$7,156,553.26
Total value of pensions as per 30.6.2017 statement	MPF	$1,197,272.54
	Total	$8,35,825.80
LESS: Total value of liabilities	Liabilities Est. Tax for the tax year 2016/17	$22,676.30 $350,000.00
Net Assets of Respondent	Plus restricted shares in estimated value of US$483,997.65	HK$7,981,149.50

Discussion

45. I now need to go through the protocol as prescribed in LKW v DD. Consideration will also be given to the section 7 factors as part and parcel of that exercise. The issues then are as follows:

The issues

An identification of the assets

What are they assets? And what value should be attributed to those assets?

An assessment of the parties’ financial needs

Whether or not the sharing principle should be adopted?

In the event that this is a sharing case how should the assets be notionally divided at this stage?

Whether or not there is a good reason to depart from an equal division of the assets?

Deciding the outcome

Further how much maintenance should the husband pay for the wife going forward?

How much maintenance should he pay for KE, if anything at all?

What order should be made for costs?

What should be the final order?

An identification of the assets

What are they assets? And what value should be attributed to those assets?

46. The biggest difficulty in this case relates to the computation of the “matrimonial pot”. As indicated above there is no valuation of the company shares, nor of the properties in Malaysia (or indeed China). The wife bases her open offer on a number of assumptions and includes a significant number of “add backs”. These assumptions/add backs will be dealt with when discussing the different categories of assets as set out below.

47. In his closing the husband took a broader approach and divided the assets according to whether or not they came under the wife and the daughter on one side or the husband and son on the other. Unusually for an asset schedule, this document also included some income and/or maintenance payments. For ease of reference this is also set out below.

Mother and daughter	Father and son
(Following values in the listing are based on roughly estimated numbers, but they should be accurate enough for a possible assessment) (Questionable assets are specifically marked in cursive font)
1. HK$1.0 mill given by the petitioner in cash to the daughter 2. Daughter holds HK$ 4.0 mill from mother inMalaysian bank account . Malaysian bank account. 3. Trust for daughter 245000 HIHO shares 4. Accumulated dividend money from trust fund paid HK$1.0 mill to Daughter for second study in Sydney plus leftover cash balance in account HK$0.3 mill 5. Down payment for daughter apartment in Hong Kong from trust fund dividend account HK$1.6 mill 6. Petitioner/daughter apartment Astana in KL HK$1.8 mill 7. Petitioner/daughter apartment Sophia in KL HK$0.4 mill (net after deduction loan amount) 8. House in Petitioners name BU2 in KL HK$2.4 mill 9. Respondent supported daughter with HK21000/month +++ during the last 40 months HK$0.8 mill 10. Maintenance payment and expenses paid for petitioner during the last 40 months HK$3.5 mill 11. Money given by the petitioner to mother and siblings app. HK$0.4 mill 12. Accident and life insurance transferred to daughter in an app. Amount of HK$0.2 mill 13. Potential investment in brother’s company could be worth many millions??	1. Trust Standard/Charter bank HK$3.2 mill cash for the son 2. Respondents HSBC account HK$5 mill 3. Respondent CITI account cash portion HK$1.5 mill 4. Trust for son 245000 HIHO shares 5. Accumulated dividends from Trust fund For son app. HK$2.6 mill 6. Sold 2 apartments in China for HK$2.8 mill 7. HIHO shares 122000k in CITI Bank 8. MPF Pension account HK$1.2 mill 9. A club membership value about HK$0.2 mill
Total	Total
HK$17.4 mill plus 245000 HIHO shares Plus unknown investments in siblings business	HK$16.5 mill plus 245000+122000 shares

The assets in “matrimonial pot”

48. The law is quite straightforward in this respect. Unfortunately, its application can be less so. In LKW v DD Mr Justice Ribeiro explained it thus: -

E.2 Step 1: Identification of the assets

The first step in the exercise is to ascertain the financial resources of each of the parties calculated as at the date of the hearing. In particular, under section 7(1)(a), the court must have regard to “the income, earning capacity, property and other financial resources” which each of the parties “has or is likely to have in the foreseeable future”. The object will of course be to compute the net financial resources, taking account of all material liabilities. At this stage, the court need not attempt to distinguish between matrimonial and non-matrimonial property, that being an exercise best undertaken (if necessary) when considering distribution of the assets.

With this in mind I will now turn to what should and should not be regarded as being in the so called “matrimonial pot”.

HH shares

49. As indicated above, the husband is the founder and CEO of a small US publicly listed company known as HH. It is the husband’s case that there are 14 companies in the HH group. In addition, there are two companies that the husband set up in relation to the trusts for the son, referred to above and a further company known as RD Ltd which was involved in the investment of real estate in China. Thus on the husband’s case there are 17 companies in total. On the wife’s case there are 18 companies.

50. The husband is paid through one of the subsidiary companies known as NPMM Ltd. He has an income of just over HK$240,000 per month inclusive of a housing allowance, which is currently utilized by the wife and double pay. In addition, he receives a small pension from Germany of approximately HK$4,000 per month. He will also continue to receive dividend payments from HH going forward, together with other dividends from his other small shareholdings.

51. The wife made several outlandish claims with respect to the husband’s shareholding in HH and maintained in particular that the husband held 44% of the shares. I accept that there is no truth in this assertion. It is clear that the husband holds 16.2 % of the shares i.e. 614,067 shares in total. This is clear from the HH’s Annual Reports, two of which were produced for the trial (2014 and 215). It is the husband’s case that it is imperative that he retain voting rights with respect to all of these shares and that they cannot realistically be sold at this time. I accept what he says in this respect.

52. The difficulty, however, now that the trusts holding the children’s shares have been set aside, is that nowhere are these shares valued. The husband says that the “restricted founder shares” – originally held on trust for the son, are insider shares and can only be sold under very restrictive terms in the open market. It is not therefore clear what their value might be and how this might be different from the rest of the shares.

53. I have though taken judicial notice of the fact that as at the first day of trial, on the 17 July 2018, the share price for HH closed at US$4.37 per share and that on the first day of the adjournment – i.e. on the 26 September 2018, it had gone up slightly and closed at US$4.40 per share. I accept that the share value is likely to fluctuate considerably from time to time and that there have been occasions when the share price has dropped to below US$1 per share. In the husband’s affidavit of the 7 March 2016 he comments on this inter alia as follows:

53. The petitioner also states a very high share value, to show the court how much assets are at stake. Whereas the share value varies greatly, during the last 12 months the highest values was US$5.84 and the lowest value was US$2.61. When compared back to 2009 the lowest value in between this time period was US$0.55, the difference is more than 10 fold, therefore an accurate evaluation for the future price level is not possible. At The time of writing this affirmation the share price was US$ 2.82.

54. Taking all of the above into account and bearing in mind the fact that I am charged with valuing the shares as at the beginning of the trial, it seems to me that the starting point must be to value the non-restricted shares according to their share value as at the first day of trial i.e. 368,297 (245,770 + 122,527 = 368,297 shares) x US$4.37 = US$1,609,458 (or say HK$12,553,770).

55. If all of the shares were valued at this rate, then the maximum value for all of the shares as at the first day of trial would be US$2,683,473 (i.e. 614,067 x US$4.37 = US$2,683,473 (or say HK$20,931,089).

56. The actual value on that day, is likely to be somewhere in between these two figures. I also accept that this is by way of an indication only, bearing in mind the fact that there is no official valuation available in relation to the same.

57. For the avoidance of doubt the wife’s suggestion that the shares should be valued at US$10 per share each is not accepted.

Other shares

58. I accept the value provided for the husband’s other small shareholdings. In his opening proposal he put the value as HK$86,200. This figure is included in the schedule.

The cash trust for KR

59. According to the husband he originally deposited Euro260,000 (or approximately HK$2.3 million) into a Standard Chartered bank account, to be held on trust for his son in case anything was to happen to him. No evidence has been produced in relation to this fund, although the husband did refer to the sum of HK$3.2 million in his closing submission as set out in paragraph 47 above. Given that this trust has been set aside, this sum shall also be included in the “matrimonial pot”. I accept that there is no disclosure in relation to this bank account, so that a more definitive figure other than this is not possible.

Properties

60. There are similar difficulties with respect to the properties in dispute.

The L Property

61. It seems that in or about September 2016, over a year after the wife issued divorce proceedings the husband assisted KE in purchasing a small flat in Hong Kong called L. It is not clear what the purchase price was and information about this property is very scant. As indicated above, neither party has issued any application to set this transaction aside and KE has not been joined as a party to the proceedings. The wife exhibited a copy of a letter from the husband’s solicitors dated the 5 September 2016, to an affidavit dated the 9 December 2016. In that letter the husband asks for permission to use HK$3,166,445 of family funds in order to enable the daughter to complete on this purchase. It is the husband’s case that when the wife refused this request, and that as a consequence of that refusal, funds were taken from KE’s trust to enable this purchase to proceed. In contrast it is the wife’s case that the husband did infact use family funds. She now asks that those funds be returned to the family pot, without making any related application with respect to the purchase of the property. It is of note that no primary evidence has been produced by either party with respect to this matter. For example, no bank accounts have been produced showing where the funds were ultimately transferred from.

62. It is the husband’s case that since the purchase of the property he has been paying the daughter an additional HK$6,000 per month so that she is able to discharge the mortgage. (He also pays her a further HK$15,000 per month as a general monthly allowance).

63. Given that neither party has made any formal application in relation to this property, I do not intend to take this matter any further. The property shall continue to be held by KE. It is a matter for her what she decides to do with this property. In such circumstances the deposit monies shall not be returned to the “matrimonial pot”, notwithstanding the fact that the trust has been set aside.

Malaysian properties

64. Despite several court orders no formal valuations were produced with respect to the Malaysian properties. Prima facie it is the husband’s case that all of the properties were purchased with matrimonial funds and that he is entitled to a 50% share of those properties. Later he suggested that instead account should be taken of the fact that the wife is beneficially entitled to 100 % share of the value of all three properties. He estimated their total value at approximately HK$6 million. The wife gave an estimated value for the first property only, as she accepted that she owned this property in its entirety. She maintained that the remaining two properties were 100% beneficially owned by KE.

BU

65. This property was purchased in August 1995 and appears to be 100% owned by the wife. She values it at HK$2.4 million. No formal valuation was produced in this respect, but the husband does not appear to be seriously challenging the value in any event. It was purchased during the marriage and the husband maintains that at some point he arranged for the mortgage to be paid off. Subsequently it seems that the wife may have used it in order to guarantee the mortgage on a subsequent purchase (i.e. the Sohia property). This property shall be included in the “matrimonial pot”.

Astana

66. This is an apartment and it was purchased on the 27 November 2012. It is the wife’s case that although she holds this property jointly with the daughter KE, that KE owns the property wholly and beneficially 100%. It is the husband’s case that he provided 100% of the purchase price and that this is a matrimonial property and that as such it should be included in the “matrimonial pot”. There is no formal valuation of this property, although the wife originally valued it at HK$1.8 million in her first Form E dated the 4 September 2015. There is no updated information. Notwithstanding that the husband does not seriously challenge this value.

67. It is trite but worth repeating, that from a legal perspective he who alleges must prove. In this instance it is the wife’s case with respect to both this property and the Sophia property referred to below, that despite the fact that she and KE are joint legal owners of the property, that KE owns this property wholly and beneficially herself. There was no evidence produced to support this bare assertion. Consequently, on the 6 June 2017 the court ordered inter alia as follows:

7. Leave for the parties Daughter namely KE to file and serve her Affirmation in relation to the beneficial ownership of some of the properties in questions and whether she is in fact the beneficial owner within 42 days thereafter;

68. The wife then attached a copy of a statement from KE to her second affidavit dated the 17 July 2017. It was a very short statement and said as follows:

Statement by EK in respect of ownership or beneficial interest in the following properties:

In respect of the property: “Apartment in X, ABC, Sophia, Kuala Lumpur, Malaysia”, I, EK, had taken a bank loan solely under my name an of which I solely mortgage. As per attachment of my bank statement, the mortgage account of the said property in held under my sole name. I, therefore, confirm that the petitioner, NSK, holds 50% share in the said property on trust for myself. The purchase price is entirely funded by myself, as I am solely responsible for paying he mortgage and I confirm that I am the sole beneficiary, holding 100% of the equitable interest of the said property.

In respect of property: “Apartment in X, CDE Astana, Kuala Lumpur, Malaysia”, I, EK, confirm that I have full beneficial interest in the said Property and the Petitioner, N holds 50% share on trust for myself as this property was bought as a gift by the respondent, RWK, for my 21 year-old-birthday. This is apparent as the date of purchase is 27^th November 2012 and my birthday is on 15^th October.

69. It is of note that this was not a sworn document. Two further orders followed. On the 13 September 2017 I gave the daughter an extension of time to file an affidavit pursuant to the court order referred to above. On the 25 September 2017 she filed an affidavit in exactly the same terms as the statement. It was simply a bare assertion and took the matter no further forward.

70. Consequently, on the 9 January 2018 a further order was made as follows:

4. K shall re-file and re-serve her affidavit dated the 25th September 2017 to include the bank and mortgage statements referred to, such documents to be attached to the affidavit as an exhibit.

71. Subsequently KE filed a further affirmation in which she said that she was attaching a mortgage account for the second property – Sophia. She did not produce anything at all in relation to Astana. The document produced allegedly in relation to Sophia was one page only. It did not refer to any mortgage repayments and is wholly unfit for purpose as a result.

72. In such circumstances the wife has been given every opportunity to prove her case with respect to Astana, but has clearly not come up to proof in that respect.

73. It is also noted that the wife has largely been a full time mother and housewife and the daughter has, apart from a short period in the workforce, been a student. In such circumstances I tend to accept the husband’s assertions in this respect namely that that Astana was purchased with family funds primarily in order to provide the wife with a base in KL and as a 21^st birthday present for KE. He says that the wife lives there when she is in KL as she is now nervous about staying in BU following a break in.

74. In such circumstances I can see no reason to depart from the stated legal ownership of Astana. The wife has not been able to prove that KE owns the property beneficially and legally 100%. The husband concedes that it was purchased in part for KE. Consequently, a 50% share or HK$900,000 of its estimated value shall be included in the “matrimonial pot”, being the wife’s 50% share of the same.

Sophia

75. A second apartment was purchase in the joint names of the wife and KE in June 2014. Again although it is jointly held by the wife and KE, it is the wife’s case that it is wholly and beneficially owned by KE and that she is responsible for the mortgage repayments. As with Astana no documentary evidence was produced to support this assertion. The wife originally estimated its value at HK$1,560,000 and on the face of the documents there is currently an outstanding mortgage on it. The original purchase price was RM780,000 and the original mortgage was for RM568,000. It is not clear who is currently paying for the mortgage or how the mortgage is paid.

76. In any event there is unlikely to be very much equity in this property. I do though accept, as with Astana, that the wife has not been able to prove that it is held legally and beneficially 100% by KE. I will therefore, include 50% of its estimated net value in the “matrimonial pot”. The husband estimates its net value as HK$400,000. I will therefore include 50% of its value or HK$200,000 in the “matrimonial pot”.

Other Hong Kong properties

77. In addition to the L property the wife also makes completely unfounded allegations with respect to a property in TW, where the husband resides with his new partner and son. There is no evidence to support the suggestion made by the wife, that this is somehow beneficially or legally owned by either the husband or his new partner. The husband rents this property and he has exhibited a copy of the tenancy agreement in that respect.

Shenzhen properties

Mw

78. The wife makes a similar allegation with respect to a property in Shenzhen known as Mw. I accept that these are company quarters and have in the past been provided to the husband on a rent free basis. There is no evidence to support the wife’s contention that the husband owns this property either legally and/or beneficially.

G

Mn

79. The circumstances surrounding alleged property investment in China, through a company set up by the husband and known as RD Ltd, is a little more problematic. In this instance the husband only attaches a draft affidavit from a Mr A, who did not subsequently give oral evidence at the trial. Consequently, it is not possible to attach any weigh to what Mr A allegedly says. Mr A is also a Director of HH. The wife is suspicious about these transactions and maintains that these properties should form part of the “matrimonial pot”. In particular, she is suspicious of the husband’s new partner’s role with respect to them. There is though no hard evidence to support the wife’s contentions in this respect. Consequently, I do not intend to add anything into the “matrimonial pot” in this regard.

Bank accounts

Wife’s bank accounts

80. The wife says that she only has one bank account in Hong Kong and no bank account in her sole name in Malaysia. She refers to one joint account with KE only. The difficulty is that despite a number of court orders the wife has never disclosed anything other than a very small number of bank statements with respect to these two accounts. The statements that she has produced only show a minimal amount of money in them. The updated Form E showed an aggregate figure of HK$32,000.

81. It is the husbands case that he wife has significant and undisclosed assets in Malaysia. In particular, he maintains that she should have somewhere between HK$5 – 8 million in cash reserves and he also suggests that she has invested in her brother’s company.

82. Given the fact that the wife has not disclosed copies of her bank statements as ordered, I think it is more likely than not that she has some undisclosed assets. I cannot though comment on the amount or on the suggestion that she has invested in her brother’s business, which is at best a rather speculative suggestion and amounts to little more than a bare allegation on the husband’s part. I am though of the view that it is unlikely that the wife has vast undisclosed assets as has been alleged by the husband.

Husband’s bank accounts

83. In addition to the monies held in the Standard Chartered Bank account the husband also says that as at the date of the trial he had just under HK$7 million in cash assets (i.e. HK$5,623,187.24 + HK$1,169,166.02 = HK$6,792,353.26).

Husband’s MPF account

84. As at the 23 May 2018 there was also HK$1,197,272 in the husband’s MPF account.

Other assets

Gold Coast Membership

85. In addition, there is a Club membership at the Gold Coast Club valued at HK$178,000.

Insurances

86. Again the wife makes a number of largely unsubstantiated allegations with respect to a number of insurance policies, including a key life insurance policy that was taken out by HH. (Preferred care insurance policy no xxxxx126). I accept that this is common practice within publicly listed companies and big corporates generally. This is not something that has a monetary value that can be attributed to the “matrimonial pot”. There was also a Lifestyle Protection Policy, with KE as the beneficiary plus some accident insurance. Again these insurances do not appear to have a monetary value that can now be attributed to the “matrimonial pot”.

Other miscellaneous and personal items

87. There are other items including two cars of minimal value and furniture in Malaysia and Hong Kong.

Other alleged undisclosed assets

88. For the avoidance of doubt, and as indicated above, I do not intend to attach any weight to the production of private e-mails between the husband and his partner where reference is made to the sum of HK$12 million. The wife uses this as a basis for a request for an add back of the same amount. This is not accepted.

89. Further the wife has alleged that the husband has undisclosed assets in Germany. Again this is a highly speculative accusation that has very little substance to it. I accept that the husband receives a German pension in the sum of Euro530 per month (or say HK$4,000 per month). He also received some other funds when he turned 65 years. These formed the basis of the cash assets in the trust fund originally set up for his son. I tend to accept what he says in this respect.

90. During the trial it became clear that shortly before the petition was issued in May 2015, the wife removed two sums of HK$500,000 each from her bank account. It was her evidence that she gave those sums to KE – who took the money in cash. In addition, the sum of HK$90,000 was paid out as a house cheque. She said that she gave this money to her mother. It is not clear where those funds went, but I accept that they should be added back into the “matrimonial pot” and should be notionally attributed as belonging to the wife. I do not accept the argument that these should be regarded as belonging to KE notwithstanding the fact that the husband had given some funds to the wife earlier on in the marriage as a safety net, to be used for the daughter’s educational expenses in the event that something unforeseen occurred.

91. In addition, the husband says that he has previously transferred funds to the wife, to a bank in Malaysia and during the trial he produced evidence of doing the same again more recently. This is further evidence to support the notion that the wife has other undisclosed Malaysian bank accounts and probably some undisclosed assets as discussed in paragraph 80 - 82 above.

Schedule of assets

92. Bearing all of the above in mind and doing the best that I can in the circumstances, it seems to me that the schedule of assets in the “matrimonial pot” is as follows:

Schedule of assets

	Husband	Wife
Assets
Shares
HH share	(12,553,770 - 20,931,089)
Other shares	86,200
Cash	6,792,353	32,000 (Plus other undisclosed assets)
Standard Charted Bank (Originally in trust	3,200,000 (Approximate figure)
Cash add back		1,000,090
Properties Malaysian properties BU Astana Sophia		2,400,000 900,000 200,000
MPF fund	1,197,272
Gold Coast Club membership	170,000
Cars, furniture etc	100,000	100,000
Total	11,545,825	4,632,090
Less Liabilities
Tax	350,000
Final Total	11,195,825	4,632,090

Conclusion

93. In conclusion therefore, if one takes the shares out of the equation, there is approximately HK$11,195,825 in the husband’s name and HK$4,632,090 in the wife’s name. This totals HK$15,827,915 – or say HK$15,830,000 rounded up. In addition, I have accepted as set out above, that the wife may have some undisclosed assets. I also accept that the husband may have more than HK$3.2 million held in the Standard Chartered bank account. Generally, though I found the husband to be credible and I do not believe that he has other undisclosed assets as alleged by the wife. It is of note that the value of the HH shares may increase the size of the matrimonial pot significantly.

An assessment of the parties’ financial needs

94. In considering this stage reference will also be made to the following section 7 factors:

(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;

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

95. The husband is currently 70 years old. He has said that he hopes to continue working for another 5 years – but there is no absolute guarantee in this respect. Thus he has an earning capacity of sorts – but it is limited by time. As indicated above the husband currently earns just over HK$240,000 per month inclusive of a housing allowance (currently used by the wife) plus his small German pension and other dividend payments.

96. The wife for her part is only 53 years of age, but she has been out of the workforce for a considerable period of time. Thus although she also has an earning capacity of sorts, it is unclear how much she could realistically earn going forward. The wife has property in which she can live in Malaysia. Both parties currently rent in Hong Kong. The husband has no property in which he can live with his new partner and son either in Hong Kong or elsewhere.

97. Thus in broad terms both parties need somewhere to live and sufficient money to live on. I also accept that the husband needs to make reasonable financial provision for his young son and partner. In so far as KE is concerned it does not seem to me that the husband should be obliged to make any further financial provision for her unless he chooses to do so. KE is 27 years old. She is a graduate and a qualified accountant. She has chosen to go back to University in order to take a post graduate law degree. She has a half share in two properties in Malaysia and she is the sole owner of a property in Hong Kong. She will need to make whatever financial arrangements for herself that she deems appropriate in the circumstances, including taking out loans to fund her studies. She may also need to work part time.

98. As indicated above, this is a reasonably long marriage of some 23 years, which produced one child, who is now an adult.

Whether or not the sharing principle should be adopted?

In the event that this is a sharing case how should the assets be notionally divided at this stage?

99. I accept that prima facie the sharing principle should be adopted, although as indicated above there are difficulties with assessing what is actually in the “matrimonial pot”. I also accept that on the face of it, it is not possible for the husband to immediately sell the shares. Consequently, I intend to make a notional capital division as follows:

a) There shall be an immediate 50:50 split of all of the assets in the “matrimonial pot”, as identified above, save for the shares.

b) The husband shall pay the wife maintenance whilst he is still employed and pending the sale of the shares.

c) Upon the husband’s retirement and the shares being sold, the net proceeds of sale of the shares shall be split 50:50.

100. There is approximately HK$15,830,000 in the pot, if one does not include the shares – or HK$7,915,000 each. Of that the wife already holds 4,632,090. Thus on the face of it the husband needs at this stage to pay the wife an equalisation amount of HK$3,282,910.

Whether or not there is a good reason to depart from an equal division of the assets?

101. Notwithstanding the arguments raised by both sides with respect to possible non-disclosed assets, it does not seem to me that there is a good reason to depart from an equal division of assets in this case. I am not convinced that there is a pot of gold at the end of this particular rainbow. In particular, although I accept that the wife may have other undisclosed bank accounts I am not convinced that she has hidden assets of the magnitude suggested by the husband. As indicated above I basically found the husband credible and I do not believe that he has additional undisclosed assets as claimed by the wife.

102. The husband also raised some argument early on with respect to the fact that he had brought more assets into the marriage than the wife and that account should be taken of this. In that respect reference should be made to paragraph 42 above. Although what the husband says may be true, the fact remains that the financial situation has changed during the course of the marriage and that this is a long marriage. Consequently, there shall be no departure from the yardstick of equality on that premise.

Deciding the outcome

103. In deciding the outcome reference will also be made to the remaining section 7 factors as follows:

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

104. Much has been said about the standard of living enjoyed by the parties before the breakdown of the marriage. It seems to me, however, that the parties enjoyed a comfortable middle classed lifestyle with ex patriate over tones. They lived in nice accommodation and the daughter attended a good international school. They travelled on occasion and the wife returned to Malaysia regularly. But they did not belong to high end Clubs nor did they spend excessively on restaurants, clothes or other items.

105. On the face of it neither party has any mental or physical disabilities, save that the husband is a little hard of hearing and he has some age related health concerns.

106. I accept that both parties made a valuable contribution to the marriage both in terms of finances and in raising their daughter, who was their main focus.

107. In so far as other benefits are concerned, it is of note that the wife is concerned about medical insurance. It seems to me though that she will need to make her own arrangements for this from the financial resources that will be available to her. These will be similar to the financial resources that will be open to the husband. Similarly he will also need to make his own arrangements for medical insurance for himself and his partner and son.

How much maintenance should the husband pay for the wife going forward?

How much maintenance should he pay for KE, if anything at all?

108. The husband has said on several occasions that it is important that he retains the ability to control HH’s shareholding as that is the key to him maintaining his earning capacity going forward. He has offered to continue to pay the wife HK$30,000 per month. It is not clear whether or not he was willing to continue to undertake to pay for her accommodation etc. On the premise that the husband will continue to earn approximately HK$240,000 per month plus the pension and other dividend amounts, I shall order that he pay maintenance to the wife of HK$100,000 per month. This will enable the wife to continue to enjoy the same standard of living in Hong Kong in the short to medium term. He shall be released from his previous undertakings as set out in the court order dated the 28 February 2017 to pay for the wife’s rent, utilities and car and medical expenses in Hong Kong. The wife will therefore be responsible for all of her own expenses going forward. I will not order that the husband pay maintenance for KE. She is now an adult with her own financial resources and it is a matter for her how she should fund her studies going forward. If the father continues to support her financially then this will be on a voluntary basis.

What order should be made for costs?

109. The wife seeks an order for costs. In particular, she seeks her actual legal costs of approximately HK$900,000. The husband for his part suggests that there should be no order as to costs.

110. Although the wife was successful in her s.17 application, it is clear that she has not been successful overall. Her litigation conduct has also been appalling. She refused to comply with court orders, she sought to rely on improperly obtained documents, she seemingly manufactured other documents, she filed affidavits without seeking leave and when leave had been given she did not faithfully reproduce the latest affidavit in the court bundle for trial. Consequently, much more time was spent on this litigation than was merited.

111. However, given the husband’s stance on this and the fact that for the majority of the time the parties represented themselves, I shall make an order nisi to be made absolute in 14 days time that there shall be no order as to costs. In doing so it is of note that the husband was also responsible for his own legal fees at the beginning of the litigation.

What should be the final order?

112. There shall be a final order as follows:

1. As stated in paragraph 36 above there shall be an order in terms of paragraphs 1, 2 and 3 of the Petitioner’s Notice of Application dated the 29 July 2016.

2. Upon pronouncement of the decree absolute the Respondent shall pay the Petitioner a lump sum of HK$3,282,910.

3. Upon pronouncement of the decree absolute and the sale of the husband’s 614,067 shareholding, or any part thereof, in HH Ltd the Respondent shall pay the Petitioner a lump sum representing a 50% share of the net proceeds of sale.

4. The Respondent shall pay the wife periodical payments in the sum of HK$100,000 per month with effect from the 1 April 2019 until payment of the lump sums in paragraphs 2) and 3) above.

5. The Respondent shall be released from the undertakings given by him in the court order dated the 28 February 2017.

6. Upon payment of 2) and 3) above all of the Petitioner’s claims against the Respondent for both capital and income shall be dismissed.

7. The Respondent’s claims against the Petitioner for all forms of ancillary relief shall be dismissed upon the making of this order.

8. There shall be an order nisi to be made absolute in 14 days time that there be no order as to costs.

9. There shall be liberty to apply.