YSC v. YWK

FCMC 2247/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 2247 OF 2001

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JUDGMENT
(ANCILLARY RELIEF)

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1.  This is a trial on the parties’ respective claim for ancillary relief.   For the sake of convenience, I shall continue to call the Petitioner “the wife” and the Respondent “the husband” despite the fact that a decree of divorce had already been granted in this case.

The Parties’ Respective Positions

2.  The wife’s latest open offer is that she is willing to pay the husband a lump sum of $4,500,000 in full and final settlement of both parties’ claims for ancillary relief.

3.  On the other hand, the husband’s open offer is that he is willing to accept the following properties in full and final settlement of the parties’ respective claim for ancillary relief:

4.  In monetary terms, the difference between the parties’ respective offer is a sum of $3,360,000.

Brief History

5.  The wife was born in 1949 and she is now 65 years of age.

6.  The husband was born in 1941 and he is now 74 years of age.

7.  The husband had a former marriage in which he had 2 children, who are now fully independent. He is now living with one of the 2 children from this first marriage.

8.  The husband’s first wife died in 1967 after which he met his second wife (ie the Petitioner).   In about 1973, the parties went through a customary marriage ceremony and they formally registered their marriage in 1974.

9.  Within wedlock, they had 5 children:

(1) The eldest daughter in 1974;

(2) The second son in 1976;

(3) The third daughter in 1979;

(4) The fourth son in 1983; and

(5) The fifth daughter in 1987.

All these children are now grown ups and leading independent lives.

10.  It is common ground that starting from the 1960s, the husband had started his own plastic bag business in Hong Kong, from which he was able to accumulate certain capital. After marriage, the wife had joined in the management of the business which started to prosper.   In about 1993, the husband began to expand his operation by building a factory in the Mainland located at 中國廣東寶安石岩水田村. From then on, the arrangement was for the husband to stay mainly in the Mainland looking after the factory there, whilst the wife would stay in Hong Kong looking after the Hong Kong side of the business.

11.  From the evidence in court, I note that the parties have spent quite a lot of time arguing on the names and identities of the factory in the Mainland and the various companies in Hong Kong. Various names were mentioned and argued upon, including:

(1) WK Plastic Bag Factory (永X膠袋製品廠);

(2) WK Company (永X公司);

(3) WK Plastic Bag Company (永X膠袋公司); and

(4) 永X膠袋廠

12.  I think all those arguments were misconceived as it is abundantly clear that overall speaking, there was only one family business engaged in plastic bag manufacturing with the actual production being carried out in the Mainland whilst the marketing of the business were done mainly in Hong Kong.   There might have been changes in the names of the Hong Kong companies over the years but there was only one core business under the name of “WK” (永X) which is the name of the husband’s eldest son from his first marriage. The tracing of which company being registered under whose name is really not necessary. From now on, I will simply refer to the factory in the Mainland as “the Wing Kuen Factory” and the overall family business of plastic bag manufacturing as the “family business” in this judgment.

13.  During the marriage and with the success of the family business, the parties were able to acquire a number of landed properties:

It is common ground that all the above properties are family assets (“the agreed family assets”).

14.  Apart from the agreed family assets, the wife does not dispute that the following properties or assets are also held under her name:

15.  It is the wife’s case that all the above properties were acquired after the parties’ separation in 1997 and therefore, they do not form part of the family assets that should be shared between the parties on divorce.   Furthermore, she also said the moneys for the purchase of the two 祈福新邨 properties (ie properties (2) and (3) in the preceding paragraph) were from his son and she does not hold any beneficial interests therein.   As to the 2 taxis, it is her case that she only owns 1/8 of them with the rest being owned by other family members.

16.  It is common ground that the parties separated in about 1997 but they have different versions on the reason leading to such separation.  The wife said she was deserted by the husband whilst the husband’s case is that he was very sick at the time and needed to go away for recuperation.

17.  In about 2001, the wife issued the present proceedings for divorce, which was based on 2-year separation as from the year of 1997.   Despite there is evidence to show that the parties at least had some contact in the year of 1998, it was the wife’s case at the time that she had no contact with the husband and had no idea of his whereabouts after 1997.    Based on her affirmation to such effect, she was able to obtain from the court an order for substituted service of the petition by way of putting up a notice of advertisement in a newspaper.   The husband did not enter appearance and a decree nisi was granted on 18 November 2002, which decree was later made absolute on 23 May 2003.

18.  Although there is no dispute from the husband that the marriage should come to an end, I still mention the wife’s application for an order for substituted service here for 2 reasons. First, it goes to the general credibility of the wife.  Second, if at the end of the day, this court finds that the wife might have lied in her affirmation in obtaining such an order for substituted service, I am duty bound to report this to the Department of Justice for investigation of any suspected criminal offence.  I will come to this issue again later in this judgment.

19.  For the wife’s application for ancillary relief, she was able to obtain an order for nominal maintenance in the sum of $1 per annum but with her application for other forms of ancillary relief to be adjourned sine die with liberty to restore.  

20.  According to the husband, he only came to notice of the decree absolute sometime in 2012. As he was not longer interested in keeping the marriage, the husband therefore only asked for a property transfer order in this case. After this issue was being raised, the wife also applied for her application for ancillary relief to be restored.

21.  The parties then went through the processes of mediation and FDR but all were unfortunately unsuccessful.  Eventually, this case was transferred to my court for a final hearing.

Issues

22.  After hearing the parties’ evidence for 3 days, these are the issues to be resolved by this court:

(1) Whether the husband has left any valuable assets to the wife when they separated in 1997;

(2) Whether the 2 taxis wholly owned by the wife or just 1/8 as alleged by her;

(3) Whether the wife owns the 2祈福新邨 properties beneficially;

(4) Whether the wife has the debt owed to her brother in the sum of $1,100,000;

(5) Whether the wife has the debt owed to her mother in the sum of $1,350,000; and

(6) What kind of ancillary relief orders should be granted under the circumstances of this case?

Whether the husband has left any valuable assets to the wife

23.  It is the case of the husband that in about 1997 his health was deteriorating to such a stage that he needed a break and so decided to go back to his native place to take a long rest.   He said during a meeting in about September or October 1997 between the parties, two of the children and also a village party official to discuss the future of the factory.  In that meeting, it was agreed that he would leave the Wing Kuen Factory to the wife.  He said the purpose of so doing was to provide for the future living expenses of the wife and the youngest 3 children.  The total value of the factory including the factory building, the dormitory, all the machineries and raw materials was in the region of about $10,000,000.

24.  On the other hand, it is the wife’s case that such a meeting never happened. She said the husband simply deserted her and the family in 1997 leaving behind the WK Factory for her to run. She said the machineries were old and only some defective products were left behind.   Worse still, she was required to pay the arrears of government taxes alone. She said she eventually sold the factory to her Chinese partner for a sum of RMB2, 300,000 in about 2003.

My views

25.  In resolving this issue, I note that the parties’ evidence in this regard is very different and without any documentary evidence in support.   I am faced with a task of balancing their oral evidence in order to decide on whose version is more credible.

The wife’s lying in obtaining an order for substituted service order

26.  In this regard, I think the parties’ propensity to tell the truth, or otherwise, is relevant. In paragraph 17 of this judgment, I have already described how the wife obtained an order for substituted service of the petition on the husband by affirming in 2 separate affirmations that she had no contact with and had no knowledge of the husband’s whereabouts since the year of 1997 (Bundle A1, pages 83A-I). However, under cross examination, the wife admitted that she had at least seen the husband for a few times in the years of 1998 and 1999. That had to be the case because according to the land search records (Bundle B6, pages 1339-1354), both parties had actually signed a Further Charge in front of a solicitor in securing further banking facilities from the Kwong On Bank on 2 June 1998. In other words, a material part of her 2 supporting affirmations (that she had no contact with the husband since 1997) must be incorrect.

27.  To be fair to the wife, both supporting affirmations were drafted in English and the wife did explain in court that she did not read the language. However, there were declarations at the end of the affirmations by the solicitors’ clerks saying that the contents of the affirmations had been duly explained to the wife in the Punti dialect.    Furthermore, I find it quite unlikely that a solicitor would not have enquired if the wife had any contact with or knew the whereabouts of the husband when he applied for an order for substituted service on behalf of his client.   It would be even more unlikely that if his client did tell him the truth, that they had a number of contacts in the years of 1998 and 1999, he would still make up the story on his own to say that there was no such contact. Therefore, it is more likely than not that it was the wife who had told her solicitors that she had no contact with or knowledge of the husband’s whereabouts when she applied for an order for substituted service of the petition. All in all, I am satisfied, at least on a balance of probabilities that the wife had lied in her 2 affirmations in obtaining the said order for substituted service on the husband. Faced with such a lying witness, I have to be very careful in assessing the veracity of her evidence in other respects.

28.  Having ruled that the wife had lied in her previous affirmations, I now turn to the version of the husband’s story, which is also not without difficulties, especially in respect of quantum.

29.  In his evidence, whether in his affirmations or in court, the husband had given different versions on the value of the factory, including:

(1) The factory including a piece of land of 50,000 sq ft, factory building of 15,000 sq ft and dormitory of 12,000 sq ft at the total value of about RMB 2,000,000, with a monthly turnover of about RMB 500,000 (Bundle A1 page 106).

(2) In about September and October 1997, the husband had gifted the factory to the wife which included $1,500,000 cash and raw materials (Bundle A1, page 198).

(3) In the factory, there were more than 1,000 tons of raw materials (Bundle A2, page 353).

(4) Not less than $1,500,000 in cash (excluding machinery and raw materials) (Bundle A2, page 355).

(5) He left raw materials with value not less than $10,000,000 (Bundle A2, page 409).

(6) While being cross examined in court, the husband did mention the value of the raw materials being at RMB 5,000,000.

30.  After considering the evidence of the husband carefully, and in view of the inconsistencies concerning his valuation of the factory in 1997, I am afraid that I cannot accept his version that the factory was worth the sum of $10,000,000 when it was gifted to the wife in 1997.

31.  On the other hand, I also cannot accept the wife’s version because her valuation of RMB2, 300,000 was based on a purported sale value in 2003.   Apart from lacking any documentary evidence in support of such a sale and figure, I have to remind myself that I am concerned with the value of the factory in 1997, not 2003.  

32.  Doing the best as I could under the circumstances, it is my ruling that the value of the factory in 1997 had to be something more substantial than RMB 2,300,000 as quoted by the wife because we all know that the general economic environment at the time of gift (ie 1997) had to be much better than the time it was allegedly sold in 2003.    Furthermore, the undeniable fact is that the wife had run the factory for a period of 6 years (from 1997-2003) from which she was able to earn sufficient profits or income to maintain herself and the 3 younger children (according to her, she had paid over $4,000,000 for the 3 children’s education) and not only that, subsequent evidence reveals that the wife was able to purchase 2 taxis and 3 landed properties thereafter.   Therefore, I am satisfied that when the factory was left to the wife in 1997, it had to be worth quite a substantial amount, most probably more than RMB 2,300,000 but may not be as high as $10,000,000.

Whether the wife only has 1/8 interest in the 2 taxis

33.  It is common ground that there are currently 2 taxis being registered under the wife’s sole name:

(1) Taxi MH 67XX, purchased in 2002; and

(2) Taxi JK 66XX, purchased in 2003

with an agreed market value of $6,950,000 each. But as both taxis are subject to hire-purchase agreements, it is common ground that the net value of MH 67XX is being $4,930,819.48, to be rounded up to $4,930,000 for the ease of calculation.  As for JK 66XX, the net value is agreed at $4,641,979, to be rounded up to $4,640,000 for the ease of calculation.   The combined net value of the 2 vehicles is $9,570,000.

34.  According to the wife, in the years of 2002 and 2003, she and her family members decided to invest in taxis and so MH 67XX and JK 66XX were purchased.   There were 8 parties investing in the taxis and they were: herself (1/8), her younger brother Yiu (1/8), her eldest daughter (1/8) and son-in-law (1/8), her second son (1/8) and daughter-in-law (1/8), her 4^th son (1/8) and 5^th daughter (1/8).   

35.  In considering her evidence, I must remind myself that it is well established that, prima facie, legal ownership and beneficial ownership will go hand in hand. This was the approach adopted by Baroness Hale in the House of Lords case of Stack v Dowden[1]:

“56. Just as the starting point where there is sole legal ownership is sole beneficial ownership, the starting point where there is joint legal ownership is joint beneficial ownership. The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. So in sole ownership cases it is upon the non-owner to show that he has any interest at all. In joint ownership cases, it is upon the joint owner who claims to have other than a joint beneficial interest.”

36.  The 2 taxis are registered under the wife’s sole name and therefore, prima facie, they are also owned by her beneficially. The burden is on her to prove otherwise.  In this regard, I see that the wife has produced no other supporting evidence apart from her own bare assertion.   There is no evidence at all on who has paid what amount and how those payments were made.  Furthermore, there are 2 anomalies on which the wife has failed to give a reasonable explanation:

(1) There is no evidence at all from any of those other “owners” to prove their ownership of the taxis. In the course of the trial, the wife has in fact called her second son to testify on her behalf on some other aspects of the case , but strangely there was no evidence from him to support the notion that he has 1/8 interest in the taxis.

(2) In the year of 2002, the wife’s 4^th son was only 19 years old and the 5^th daughter 15 years old. Both of them were students and the bare assertion that the others were investing on their behalf is simply incredible.

37.  In the circumstances, I do not accept the wife’s evidence that she is only having 1/8 in the beneficial interest in MH 67XX and JK 66XX.  Instead, I am satisfied that she is now holding the 2 taxis as their sole beneficial owner with a total net value of $9,570,000.   Furthermore, I see that there is no evidence to suggest that the wife had carried on any other trade or business activities in the years of 2002 and 2003 except the family business. Therefore, I think a reasonable inference to be drawn is that the initial purchase moneys for these 2 taxis had to be originated from the profits generated by or the proceeds of sale of the family business. In other words, I am prepared to accept that the family business has at least given the seed moneys in the investment of these 2 taxis.

Whether the wife owns the 2祈福新邨 beneficially

38.  In the wife’s affirmations all along, it was her case that the 2祈福新邨 properties were purchased by her after the parties’ separation and divorce.   She said those properties had nothing to do with the family business or the husband.  Therefore, they are not family assets and should not be considered in this ancillary relief application.

39.  However, her case suddenly changed when she was giving evidence in court. During cross examination, the wife suddenly said the purchase moneys for the 2 properties were in fact provided by the second son and thus suggesting that she is not the beneficial owner of those properties. However, she failed miserably in providing any explanation for such a sudden change of stance. Furthermore, the second son has also failed to give evidence to this effect. Under these circumstances, I am satisfied that the wife is indeed the beneficial owner of the 2祈福新邨 properties.   Again, there is no evidence to explain the source of fund of the wife’s investment in these properties, including another property in the Mainland (深圳市皇都廣場單位). I am therefore prepared to accept that the profits generated by and the proceeds of sale of the family business had to be the seed moneys for all these property investments.

Whether the wife has the debt owed to her brother in the sum of $1,100,000

40.  It is the case of the wife that she now owes her brother the sum of $1,100,000, to which the husband does not agree.

41.  According to the wife, her younger brother had lent various sums of money to her over the years. On balance, I do not accept it was indeed the case and my reasons are:

(1) According to the wife, her younger brother is a taxi driver who is now living at the former matrimonial home (measuring about 300 odd sq ft) with his wife and family and also the wife herself. The wife has failed to give credible evidence on how her brother could have afforded to give her these loans.

(2) According to the wife, there are no transaction records in terms of bank withdrawals or deposits concerning those loans.  She said her brother would carry cash and lend to her $100,000 in cash each time. This explanation is simply inherently improbable, especially when there is no explanation on why her younger brother is not called to give evidence to prove such fact. 

(3) The only evidence produced by the wife is an IOU (Bundle B4, page 818). It is a one-page document being handwritten by the wife herself, purportedly covering the period from 1 February 1999 to 2 July 2003. If one should read this document carefully, one would immediately realise that it was not a contemporaneous record of the purported loans, but instead a self serving document prepared by the wife alone.

(4) Finally, the loans were made from 1999 to 2003 and remained outstanding for over 12 years. There is no reasonable explanation on why such loans were not being repaid when the wife’s present finances is undoubtedly in a very healthy state.

42.  Based on these reasons, I do not accept the wife is now being indebted to her brother in the sum of $1,100,000.

Whether the wife has the debt owed to her mother in the sum of $1,350,000

43.  It is the wife’s case that she owes her mother a sum of $1,350,000.    In her oral evidence, she said she borrowed the money not because of financial difficulty, but for investment purposes. This evidence is inconsistent with her earlier Answer to Questionnaire in which she said those moneys were for the operation of the family business and the living expenses of the children. Furthermore, there are again no transaction records in terms of bank account entries to prove the existence and flow of those loans. The only evidence is another 1-page IOU prepared by the wife herself (Bundle B5, page 1003). Under cross examination, the wife admitted that this self-serving document, albeit dated 11 August 2009, was actually prepared by her in 2013 after she had been served with a Request from the husband.

44.  On balance, I do not accept the wife is indebted to her mother in the sum of $1,350,000.

What kind of ancillary relief orders should be granted under the circumstances of this case?

The Law on Ancillary Relief

45.  The jurisdiction of the Court in granting financial relief for a party is governed by section 4 of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) which provides:

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

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

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

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

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

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

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

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

46.  In addition, the Court can also grant property transfer orders under section 6 of the MPPO with the more relevant sub-sections under (a) and (e) providing:

“(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation, or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of sections 10 and 25(1), make any one or more of the following orders, that is to say-

(a) An order that a party to the marriage shall transfer to the other party, to any child of the family or to such person as may be specified in the order for the benefit of such a child such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion;

….

(e) an order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion, and for the use of the proceeds of such sale,

and the court may make an order under paragraph (c) notwithstanding that there are no children of the family.

(2) Subsections (2) to (6) of section 6A apply in relation to orders under subsection (1) (e) as they apply in relation to orders under subsection (1) of that section. “

Section 7 Considerations

47.  In deciding on how to exercise its power in this regard, the Court is bound to consider Section 7 of MPPOwhichprovides:

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

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

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

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

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

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

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

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

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

Case Law

48.  In LKW v. DD[2], Ribeiro PJ, after considering the recent line of English authorities of White v. White [2001] 1 AC 596; Miller v. Miller and McFarlane v. McFarlane [2006] 2 AC 618, has given a detailed discussion on how a Hong Kong court should approach the issue of ancillary relief. The following is a brief summary of His Lordship rulings in the case:

(1) The old Hong Kong Court of Appeal case of C v. C [1990] 2 HKLR 183 should be over ruled (paragraph 22 of the Judgment).  In other words, the principle of “reasonable requirements” as laid down therein should no longer be followed.

(2) When the court exercises its discretionary powers under s.7 of the MPPO, guidance may properly be sought from the White v. White line of cases (paragraph 46 of the Judgment).

(3) Ancillary relief applications are highly fact-sensitive and judges dealing with them must ultimately be guided by s.7 of MPPO and the implicit aim of arriving at a fair financial outcome as between the parties (paragraph 52 of the Judgment).

(4) In most cases, the available assets are usually not sufficient to cater for the needs of both parties so that the exercise does not progress beyond consideration of their needs (paragraph 54 of the Judgment).

(5) The principles underpinning the White v. White line of cases can be summarised as follows:

(i) The implicit objective of a s.7 (of MPPO) exercise is to arrive at a fair distribution of the assets as between the parties (paragraph 56 of the Judgment);

(ii) The concept of fairness requires the refutation of any gender or role discrimination (paragraph 57 of the Judgment);

(iii) With a view to eliminating insidious discrimination and promoting fairness, judges should check their tentative views on distribution against a “yardstick of equal division” which should be departed from only for good, articulated reasons (paragraph 58 of the Judgment); and

(iv) The court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tends to deplete the parties’ (and the court’s) resources and to increase antagonism and discourage settlement (paragraph 62 of the Judgment).

(6) The actual steps to be taken by a court in undertaking the s.7 exercise should be as follows:

(i) The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing (paragraphs 71 to 73 of the Judgment);

(ii) The assessment of the parties’ financial needs.  If the total resources are not enough to meet the parties’ needs, the s.7 exercise should stop here and there is no room to apply any sharing principle (paragraphs 74 to 79 of the Judgment);

(iii) If surplus assets would remain after the parties’ needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division as part of that principle.  This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division (paragraphs 80 to 82 of the Judgment);

(iv) In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of s.7 and the implicit objective of a fair distribution of the assets.  Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations (paragraphs 83 to 130 of the Judgment); and

(v) The weight to be given to each of the factors is a matter of discretion for the court (paragraph 131 of the Judgment).

49.  I shall bear the above legal provisions and principles in mind when I come to consider the final ancillary relief order to be granted under the circumstances of this case.

The circumstances of the wife

50.  The wife is now aged 65.  She is the sole proprietor still running the family business. According to her, she is now residing at the former matrimonial home with her younger brother, the brother’s wife and their 3 children.   In her latest Form E, she stated her monthly income at about $48,000 but with monthly outgoings at $43,000, out of which about $22,000 is for various mortgage repayments.

51.  As far as the agreed family assets are concerned, whilst the former matrimonial home is registered under the sole name of the husband, the others are all registered under the joint names of the parties:

52.  Apart from the agreed family assets, I have already ruled that the wife is the beneficial owner of the following properties which were acquired after the parties’ separation or divorce:

53.  I understand that it is the case of the wife that as the investments in the preceding paragraph were all acquired after the parties’ separation (1997) or formal divorce (2003), the fact that the wife is in possession of those assets as in 2015 is totally irrelevant and therefore should not be taken into account when the court makes the final ancillary relief order.

54.  I do not think that is the right approach.  I have already ruled that the gift of the WK Factory by the husband had provided at least some of the seed moneys for the wife’s post separation/divorce investments. Furthermore, under section 7(1) (a) of MPPO, the “property and other financial resources which each of the party to the marriage has or is likely to have” is always a relevant and important factor to be considered.  Of course, the husband is not saying that he should have a share in those post separation/divorce investments, but when this court comes to decide on the final ancillary relief order, the fact that the wife is in possession of the above investments in the sum of $15,370,000, over and above the agreed family assets has to be considered.

55.  During the course of submission, counsel for the husband raised an issue about the wife transferring a sum of $2,000,000 to one of her sons in the year of 2012. It is the husband’s case that this transfer of $2,000,000 should also be taken into account in the final ancillary relief order.

56.  In this regard, I note that one of the special features of this case is that the trial on ancillary relief only takes place 18 years after separation and 12 years after the formal dissolution of the parties’ marriage. During this long lapse of time, the wife was able to accumulate quite substantial assets on her own by using some of the profits or proceeds of sale of the family business. There is no application by the husband to have a share in those post separation/divorce investments. Equally, there is no suggestion that the wife’s transfer of money to the son was to defeat the husband’s application for ancillary relief. Under these circumstances, I think the wife has every right to decide on the use of her acquired wealth, be it in the form of a gift to her son or for other purposes. Therefore, I will not take this transfer of $2,000,000 into account in this ancillary relief application.

The husband’s circumstances

57.  The husband is now aged 74, a retired person.  Before this marriage in 1974, he was a widower and had 2 children from the previous marriage. He is currently living with one of the children from the previous marriage in a public housing unit in Tuen Mun. His only incomes are $1,180 old age allowance and $2,000 monthly maintenance from his daughter. In his Form E, he stated his current monthly outgoings are $2,880 but as he intends to return to live in the former matrimonial home (which is registered under his sole name), he said a further sum of $300,000 for renovation and additional monthly outgoing of $4,000 are needed.

58.  At the hearing, it was pointed out to the husband that he should be in possession of some other landed properties in his native place.   After hearing his explanations, I accept that the husband is in fact entitled to some ancestral rights in his native place but I do not think they can be readily liquidated or turned into any substantial financial income.

59.  Apart from the agreed family assets and those non-liquidated ancestral rights, I accept the husband is in possession of no other valuable assets, or debts.

Length of marriage

60.  The parties were married in 1974 but separated in 1997.   A decree absolute of divorce was granted in 2003.   Even if one should take the year of 1997 as the effective date of the end of the marriage, this was still a very long marriage of 23 years.

Contributions

61.  There is no dispute that the husband started the family business in the 1960s.  After the parties’ marriage in 1974, the wife had fully participated in the business and at the same time, raised 5 children of the family. When the WK Factory was opened in the Mainland in 1993, the division of labour was that the husband would be responsible for the Chinese operation whilst the wife would take care of the Hong Kong business. Therefore, it is fair to say that the parties’ contribution to the family and the family business can be regarded as more or less equal up to 1997.

62.  However, as from 1997, it was the husband’s decision that he needed a break and left for his native place leaving behind the family business to the wife. The wife said the husband’s sudden abandonment of the family and business put her in a difficult position at the time.    Although by 1997, the eldest 2 children were already adults and could have assisted in the family business, I accept that the wife had to be facing a rather uncertain future with the husband’s sudden departure.   However, it turned out that she had done an excellent job in not only keep running the family business but was even able to raise the 3 younger children, provided them with tertiary education, and even was able to accumulate substantial wealth in the form of post separation /divorce investments. Overall speaking, I am prepared to accept that the wife had made substantially more contribution to the family than the husband.

Conduct

63.  It is the wife’s case that the fact of the husband’s desertion of the family should be regarded as a reprehensible conduct to which regard has to be given in the final adjudication of the ancillary relief issue.

64.  Concerning his departure in 1997, the husband did at one stage explain that he was experiencing bad health at the time and therefore was in urgent need of rest. In this regard, I note that the husband has produced no concrete evidence to prove his physical conditions at the time.   Furthermore, there is evidence to show that after his return to his native place, the husband had developed a romantic relationship with another lady out of which a daughter was born.   In any event, his explanation of recuperation does not sit well with his over one decade’s complete absence from the family, during which he had shown no concern at all towards the family, nor the children, three of whom were still minors at the time.

65.  Having said the above, I have to make it clear that the fact of the husband’s so called “misconduct” should not be over emphasised because this is just the opposite side of the wife’s “good conduct” in making substantial contribution to the welfare of the family (ie continue running the family business, raising the children, accumulating the post separation/divorce investments, etc) which will certainly be taken into account in the final ancillary relief order. 

Ancillary Relief

66.  The agreed family assets are in the sum of $15,790,000.

67.  The husband is now retired and has no substantial income or other assets.

68.  The wife is still holding the family business and other assets in the sum of $15,370,000, over and above the agreed family assets.

69.  After taking into account the circumstances of this case, in particular, the fact of long marriage, the parties’ respective financial circumstances, the substantial contribution to the welfare of the family by the wife, I think a slight departure from equal division of the agreed family assets in favour of the wife is justified.   I am minded to award 55% of the agreed family assets to the wife and 45% to the husband.   In monetary terms, the wife will get $8,684,500 ($15,790,000 x 55% = $8,684,500) and the husband will get $7,105,500 ($15,790,000 x 45% = $7,105,500).

70.  By this division, the husband will possess assets in the sum of $7,105,500 and the wife $24,054,500 ($8,684,500 + $15,370,000 = $24,054,500).

71.  In his claim for ancillary relief, the husband asks for the former matrimonial as his future residence. I see that the former matrimonial home is currently occupied by the wife and her younger brother and family.   As the former matrimonial home is registered under the sole name of the husband, I think it is reasonable for it to be retained by him as his future residence in Hong Kong.   There is also no dispute that the 3 shops in東莞樟木頭 are to be given to the husband. The combined value of the former matrimonial home and the shops is $3,900,000 ($3,600,000 + $100,000 + $100,000 + $100,000 = $3,900,000), leaving a lump sum of $3,205,000, rounded up to the sum of $3,200,000 to be paid by the wife.

72.  It is also common ground that there should be a clean break and therefore the nominal maintenance order granted in 2003 should be cancelled as well.

Orders

73.  Based on the above reasons, I hereby make the following orders in full and final settlement of the parties’ respective claim for ancillary relief:

(1) The wife shall deliver all title deeds and vacant possession of the former matrimonial home (which shall be free of any encumbrances or interest of the wife) to the husband within 2 months from the date of this judgment.

(2) The wife shall transfer all her rights and title in the 3 shops at 東莞樟木頭 to the husband at nil consideration within 2 months from the date of this judgment at the sole costs of the husband.

(3) The wife shall pay a lump sum of $3,200,000 to the husband within 2 months from the date of this judgment.

(4) The husband’s retention of the above properties and the lump sum payment shall be subject to the first charge of the Director of Legal Aid.

(5) The husband shall transfer all his title and interest in WF Industrial Building Units 25XX and 22XX to the wife at nil consideration within 2 months from the date of this judgment at the sole costs of the wife.

(6) Subject to the above, each party is allowed to retain whatever other properties that are currently held under his or her name.

(7) The nominal maintenance order in favour of the wife to be cancelled forthwith.

Costs

74.  The husband is able to obtain an order very close to his open offer and should therefore be considered as the prima facie winner of the case.  There is no reason why the husband should not be allowed the costs of his claim for ancillary relief, including all costs reserved with a certificate for counsel. The husband’s own costs to be taxed in accordance with Legal Aid Regulations.  This will be in the form of an order nisi, to be made absolute upon the expiry of 14 days from the handing down of this judgment.

Referral to the Secretary for Justice

75.  In paragraphs 17-18 and 26-27 of this judgment, I have alluded to the fact that the wife had, at least prima facie, lied in her application for an order for substituted service of the petition on the husband. I hereby request the Registrar to refer this matter to the Secretary for Justice for further investigation.

[1] [2007] 2 AC 432-480,at 454A

[2] [2010] 13 HKCFAR 537