B v. Z

FCMC 14535/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 14535 OF 2005

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J U D G M E N T

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1. This is the Respondent Wife’s application for ancillary relief against the Petitioner Husband upon the dissolution of their 10 odd years marriage. He is a 39 year old American lawyer originally from Palo Alto, California, while she is a 42 year old Chinese from Nanjing who used to play the piano in a hotel but now works as a casual piano teacher with little income. They came to Hong Kong in about 2002 on the Husband’s job together with their 2 children, both boys now aged 14 and 12 respectively, and whose sole custody has earlier been granted to the Husband after a bitterly contested 5-day trial before Judge Melloy, with shared care and control to both parties, the details of which it is not necessary to recite here, but basically the boys spend roughly about 2/3 of their time with their father and 1/3 with their mother during school days, with equal sharing by their parents of their school holidays.

2.  The Husband now works for the U.S. firm D at an average monthly income of $462,150, and resides with his girlfriend (whom he has never named and just referred to as his partner in his evidence, while the social investigation report called her his fiancée, but for convenience purpose I will just refer to her as the girlfriend in this judgment), their 2-year old daughter, the boys, as well as 2 domestic helpers in 2 adjourning 1,300 sq. ft. apartments (total 2,600 sq. ft.) in Kennedy Road, Central, Hong Kong, with one rented by him while the other owned by the girlfriend.

3.  The Wife on the other hand resides by herself in a 900 sq. ft. rented apartment in Conduit Road, Hong Kong but the tenancy of which is due to expire in end of February 2009. She has been living on a monthly sum of $38,000 from the Husband under a maintenance pending suit order plus additional sums of $4,000 per month for the boys’ maintenance when they come to stay with her, and $20,000 twice a year for their expenses when they go on holidays.

4.  The assets position of the parties is quite straightforward as although the Husband has a fairly high income, there seems to be no capital, savings or properties of any significance between the parties that would require the court’s decision over their distribution, and as far as the Husband is concerned, this is primarily a “needs” case where it is all about the Wife’s reasonable needs including her accommodation against his ability to meet those needs while taking into account of his own as well as his obligations towards his children and his other liabilities.

5.  It is on this basis that the Husband has offered, in his 17th affidavit filed shortly before the start of the trial (PB7 : 3098), to pay $45,000 per month for the Wife for their joint lives or until her remarriage, $7,500 per month for each of the boys to cover their expenses when they stay with her until the age of 18 years or finish full time education, to be reviewed when they leave for the U.S. for college, $30,000 per half year for their holiday expenses when they are with her, again to be reviewed when they leave for U.S. for college, and lastly to pay a further sum of $30,000 per year for 3 years for a music degree course which she has expressed her wish to attend in one of the local universities in order to enhance her future earning capacity.

6.  The Wife who used to be represented by a counsel on Legal Aid in the earlier custody hearings but has thereafter been acting in person, however seeks a much bigger award totalling $30 millions by way of periodical payments and/or lump sum to meet her future needs including for a bigger apartment in line with the standard of living that she claims she used to enjoy prior to the breakdown of the marriage and also in order to accommodate the boys and a live-in domestic helper, to purchase a new piano and to pay for her dental treatment, her necessary medical and life insurance coverage, and to compensate her for her devotions to the marriage as well as for the loss of her career as a pianist.

7.  Given the huge gulf between the 2 proposals, it is not surprising that the trial had to run its full course during which the Husband was represented by Ms Francis Irving of counsel while the Wife as aforesaid was acting in person but had the assistance of a non-professional McKenzie Friend.

8.  I should also mention that the originally scheduled hearing for the parties’ closing submission on 12^th November 2008 was postponed to 20^th November 2008 so as to give the Wife more time to prepare her written submission, but without any prior notice or warning she failed to appear at that hearing, nor did she serve her written submission until 2 days later on 22^nd November 2008, to which she also attached new documents including receipts and invoices of her recent spending which have never been properly admitted as evidence at the trial, and to which the Husband naturally objected their production at this late stage. As a result a separate hearing on 23^rd December 2008 had to be held to hear the parties’ further arguments and submissions. At the end I allowed the Wife’s late closing submission but refused the new evidence as not entirely relevant or justified.  

The Background

9.  The parties first met when the Husband was in graduate school and had an internship in Beijing while the Wife was working in a hotel playing the piano. They married on 4^th January 1993 in Nanjing and subsequently returned to the Husband’s home in Palo Alto, California, where their first son E was born on 22nd February 1994. Their second son A soon followed a year later when he was born on 6th December 1995.

10.  The family then moved to New York where the Husband studied law at Columbia University funded by loans during which the Wife also worked to help out with the family’s tight finance, and there was a time when her parents came to assist in the care of the boys, although the Husband’s case is that he invited them to stay with the family to help stabilize his relationship with the Wife which he described as difficult as she was said to have a furious temper.

11.   Upon his graduation in 1999 the Husband started to work for (the legal firm)L in New York but from November 2000 to February 2001 the parties had a brief separation during which the Husband applied for a restraining order against the Wife and the social service in New York City was also involved to look into a child abuse report against her. The parties eventually reconciled and the family went on a Disney cruise.

12.   In early 2002 the Husband was posted to the Hong Kong office at a total package of almost US$300,000 per annum, and the family joined him in August of the same year. After staying in a hotel for 4 weeks at the employer’s expenses the family moved to an apartment in Parkview at Tai Tam, Hong Kong at a rental of $50,000 per month.

13.  In March 2003 the Wife brought the boys back to Palo Alto during the outbreak of Sars where they stayed with the Husband’s family. In their absence the Husband moved into a smaller serviced apartment in Happy Valley. When the Wife and the boys returned to Hong Kong, the Husband asked for a divorce but eventually the parties reconciled.

14.  In July 2003 the Husband joined another U.S. law firm at a higher income, and in October 2003 the family moved to a 1,500 sq. ft. apartment in Blue Pool Road at a monthly rental of $25,000, but according to the Husband things were not working out with the marriage and so he finally moved out 2 months later, first to a small studio apartment in Happy Valley, and then to a 600 sq. ft. flat in King Kwong Street, Happy Valley at a rent of $12,500 per month, while the Wife and the boys remained in the Blue Pool Road apartment.

15.  In about March 2005 the Husband began his relationship with his girlfriend, an investment banker from Taiwan, and started to spend more time at her Kennedy Road property, while maintaining his King Kwong Street apartment where he would stay with the boys during access until 2006 when he gave it up and moved into his girlfriend’s property. It was in July of the same year that his girlfriend gave birth to their daughter. Meanwhile on 20^th December 2005 he filed for divorce in these proceedings on the ground of 2 years separation and proposed to have joint custody of the boys with the Wife with their care and control to her.   

16.  Unfortunately, and perhaps not unexpectedly, the Wife reacted quite badly towards the divorce proceedings, apparently not accepting that the marriage was at an end and still hoping to reconcile with the Husband, she initially refused to return the Acknowledge of Service (Form 4) to court or to file her Financial Statement (Form E) despite a court order requiring her to do so, and later inundated the Husband’s home and office with daily non-stop phone calls and e-mails to him, caused all sort of difficulties to his access to the boys, took his passport from his office on one occasion, and when the lease of her Blue Pool Road apartment came to an end in April 2006, she refused to discuss with him either to renew the lease or to move elsewhere which eventually led the landlord to take legal proceedings to repossess the apartment in October 2006 with the Husband left to pay $32,000 for the legal costs to the landlord.

17.     Meanwhile there was a chain of incidents in September 2006 over the Wife’s actions or behaviour towards the boys including one occasion when she refused to collect them from school, and another when she left them at the gate of the building of the Husband’s apartment, which eventually led to their coming to live with him and to a subsequent court order granting him their interim custody, and shortly thereafter the Wife moved out of the Blue Pool Road apartment first into a studio apartment at Convention Plaza until February 2007 when she moved to her present 900 sq. ft. 2-bedroom apartment in Conduit Road at the monthly rental of $21,500 after obtaining a consent order on 4^th December 2006 for maintenance pending suit of $38,000 per month from the Husband.

18.  By then the Husband had decided to claim for sole custody care and control of the boys, which was however strenuously opposed by the Wife and its trial, which took place for 5 days in mid-July 2007, eventually led to the said order of Judge Melloy granting sole custody to the Husband with care and control shared with the Wife on 10^th September 2007. Shortly before that the Husband changed job to his present firm. 

19.  On 24^th October 2007 Judge Melloy further ordered the Husband to pay the Wife additional sums of $4,000 per month for the boys’ expenses during their stay with her, and $20,000 twice a year for their travelling expenses when they go on holiday with her. The decree nisi of divorce was then made absolute on the same day, but the parties had still one more battle to do, i.e. the matter now before me after an unsuccessful FDR hearing before the learned judge on 26^th November 2007.

The Law and Applicable Principles

20.  The powers of the court to make orders for periodical payment and lump sum payment, which is what the Wife is seeking, are derived from section 4 of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (‘MPPO’), and in the exercise of this power, the court shall take into account of those matters set out in section 7(1) of the Ordinance, which I set out in full for the benefit of the Wife as follows :-

‘(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.’

21.  When undertaking these inquiries the over-arching objective of the court is to reach a fair outcome between the parties with no place for discrimination between a husband and a wife and their respective role, as held by the landmark decision of the English House of Lords in the case of White v White [2001] 1 A.C. 596.

22.  This fair outcome can be achieved by applying the three elements or strands of principle identified by Lord Nicholls of Birkenhead of The House of Lords in another landmark decision of the joint appeals of Miller v Miller and McFarlane v McFarlane [2006] 2 WLR 1283 as financial needs, compensation and sharing, of which His Lordship elaborated as follows :

Financial needs

‘This element of fairness reflects the fact that to greater or lesser extent every relationship of marriage gives rise to a relationship of interdependence. The parties share the roles of money-earner, home-maker and child-carer. Mutual dependence begets mutual obligations of support. When the marriage ends fairness requires that the assets of the parties should be divided primarily so as to make provision for the parties’ housing and financial needs, taking into account a wide range of matters such as the parties’ ages, their future earning capacity, the family’s standard of living, and any disability of either party. Most of these needs will have been generated by the marriage, but not all of them. Needs arising from age or disability are instances of the latter.’ [11]

‘In most cases the search for fairness largely begins and ends at this stage. In most cases the available assets are insufficient to provide adequately for the needs of two homes. The court seeks to stretch modest finite resources so far as possible to meet the parties’ needs. Especially where children are involved it may be necessary to augment the available assets by having recourse to the future earnings of the money-earner, by way of an order for periodical payments.’ [12]

Compensation

‘Another strand, recognised more explicitly now than formerly, is compensation. This is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage. For instance, the parties may have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned. Then the wife suffers a double loss : a diminution in her earning capacity and the loss of a share in her husband’s enhanced income. This is often the case. Although less marked than in the past, women may still suffer a disproportionate financial loss on the breakdown of a marriage because of their traditional role as home-maker and child-carer.’ [13]

‘When this is so, fairness requires that this feature should be taken into account by the court when exercising its statutory powers….’ [14]

Sharing

‘A third strand is sharing. This ‘equal sharing’ principle derives from the basic concept of equality permeating a marriage as understood today. Marriage, it is often said, is a partnership of equals. In 1992 Lord Keith of Kinkel approved Lord Emslie’s observation that ‘husband and wife are now for all practical purposes equal partners in marriage’ : R v R [1992] 1 AC 599, 617. This is now recognised widely, if not universally. The parties commit themselves to sharing their lives. They live and work together. When their partnership ends each is entitled to an equal share of the assets of the partnership, unless there is a good reason to the contrary. Fairness requires no less. But I emphasise the qualifying phrase : ‘unless there is good reason to the contrary’. The yardstick of equality is to be applied as an aid, not a rule.’ [16]

23.  In terms of the equal sharing principle Lord Nicholls was of the view that it applies to both short and long marriage as well as to all the matrimonial assets of the parties and not just to capital or property, as statute requires the court to have regard to the income, earning capacity, property and financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, and in cases where there are no capital or property assets, as is this case, fairness may require a periodical payment order be made for the purpose of not just meeting the financial needs of the other party but also affording compensation to that party, of which his Lordship said this in the same judgment :-

‘In particular, I consider a periodical payment order may be made for the purpose of affording compensation to the other party as well as meeting financial needs. It would be extraordinary if this were not so. If one party’s earning capacity has been advantaged at the expense of the other party during the marriage it would be extraordinary if, where necessary, the court could not order the advantaged party to pay compensation to the other out of his enhanced earnings when he receives them. It would be most unfair if absence of capital assets were regarded as cancelling his obligation to pay compensation in respect of a continuing economic advantage he has obtained from the marriage.’ [32]

24.  These authorities have since been considered by our Court of Appeal in the case of DD v LKW [2007] CACV 91/2007 to be highly persuasive and their approach has been firmly embraced by Cheung JA who said this in the leading judgment :

‘…I would firmly embrace the approach in White and Miller on the division of family assets on divorce. On marriage the parties commit to sharing their lives. It is a partnership of equals. The husband may work while the wife stay at home to take care of the family. Their contributions are nonetheless equal. As more frequently happens these days, with domestic helpers being available, both the husband and wife work and make equal contributions to the welfare of the marriage.[63]

On divorce the principle and spirit underlining the union should be reflected in the division of the family assets. The division should proceed on the basis of fairness and this necessarily means there is no room for discrimination between husband and wife. The starting point is equality in division unless there is a good reason to depart from it.’[64]

25.  His Lordship then went on to lay down the applicable principles when our courts consider ancillary relief applications as follows:

‘In the majority of the cases where the parties only have limited financial resources, the focus of the inquiry on fairness is to divide the assets of the parties so as to make provision for their housing and financial needs. It may be necessary to augment the available assets by making orders for periodical payments (Miller [11][12]).

Where there are assets which are available beyond satisfying the immediate housing and financial needs, equality in division of the assets should be made unless there is a good reason to the contrary (Miller [16], Charman [65]). This approach is not confined to ‘big money cases’ but to cases where the assets are available beyond satisfying the needs of the parties. (Rayden and Jackson on Divorce and Family Matters Vol 1(1), para 16.26).

The inquiry should be conducted in two stages :

First, computation of the available assets of the parties such as property, income (including earning capacity) and other financial resources which the parties have and are likely to have in the foreseeable future (Charman [67]).

Second, distribution of the assets by reference to the three principles of need (generously interpreted), compensation and sharing. These principles can be gleaned from section 7(1) and each of the matters set out in section 7(1)(a) – (g) can be assigned to one or another of the three principles (Charman [68]).

The principle of need requires consideration of

1)   the financial needs, obligations and responsibilities of the parties (section 7(1)(b));

2)   the standard of living enjoyed by the family before the breakdown of the marriage (section 7(1)©);

3)   the age of the parties (section 7(1)(d)); and

4)   any physical or mental disability (section 7(1)(e)) (Charman [70]).

The principle of compensation relates to, among others,

1)   the prospective financial disadvantage which upon divorce some parties face as a result of decisions which they took for the benefit of family during marriage.

2)   In short marriage the financial disadvantage a party suffered, if any, on entering into the marriage.

3)   Any loss of possible pension rights : section 7(1)(g) (Charman [71]).

The relevant factors for the principle of sharing are,

1)   the contribution of each of the party to the welfare of the family (section 7(1)(f)).

2)   The duration of the marriage (section 7(1)(e)).

3)   Conduct of the parties which it would be inequitable to disregard (Miller [65]; Charman [72]).

 As to any conflict between the three principles,

1)   the criterion of fairness is to apply in irreconcilable conflicts between the three principles (Charman [73]).

2)   When the result suggested by the needs principle is an award of property less than the result suggested by the sharing principle, the latter result should in principle prevail (Miller [28], [29], [139]; Charman [73]).

3)  When the result suggested by the needs principle is greater than the result suggested by the sharing principle, the former result should in principle prevail (Miller [142], [144]; Charman [73]).’ 

26.  With these principles in mind, I shall now proceed with the section 7 inquiry, starting with the Wife’s financial situation.

The Wife’s Financial Situation

27. As aforesaid the Wife was playing the piano at a hotel when she first met the Husband, but has since the marriage not formally worked save for a period when the Husband was in law school in New York in the late 1990s, and quite understandably she was in the main a housewife and a mother, until after the separation with the Husband when she admittedly gave some piano lessons.

28. The Husband believes that she had actually obtained a teaching degree before they met, to which she denies and insists that she had only attended a 2-year course, and that she has no or little earning capacity unless she re-educates herself by obtaining more credentials and teaching experience, hence her proposal to apply for a course at the Chinese University called ‘Advanced Diploma in the Art of Piano Teaching and Performing’, as evidenced by her production of the receipt for the course.

29. There is however a problem about her status, according to the Wife, that she needs to overcome before she can undertake any study programme in Hong Kong, as she is at present holding a visiting visa only which she says would not allow her to become a student, and she blames the Husband for not assisting her in this matter, to which he denies and insists that he has in fact paid an emigration lawyer to help her to obtain the necessary visa to remain in Hong Kong.

30. As I see it, the Wife may have unnecessarily confused herself over what should essentially be a simple matter which can be easily resolved by first getting herself enrolled for the said course with the Chinese University, or for that matter with any other institution, and then apply for the necessary change to her visa with the Immigration Department. Given my understanding of the current government policies which are not at all restrictive of foreigners studying in Hong Kong, and the fact that the Wife has already been residing in Hong Kong for almost 7 years and will by next year be eligible for a permanent Hong Kong identity card with all the rights and status that come with it, I do not foresee any problem that she may have with the Immigration Department if she is to indeed take up such a course in the university.

31. Ms Irving submits on behalf of the Husband that he is not suggesting that the Wife should be self-supporting in order to reduce his liability as he accepts his obligation to contribute to her maintenance, but he does say that she has an earning capacity which she at her age and with no resident children has an obligation to utilise, and that his offer will have provided her sufficiently to cover her living expenses, but if she now wishes to live at a standard higher than that which was enjoyed during the marriage, and if she wants to pay for expensive things for herself such as a grand piano as she seems to have suggested, then it is only right that she utilise her own earning capacity to do so.

32. While I have no doubt that the Wife does have some earning capacity playing the piano, there is little evidence to translate that into actual dollar and cent even if she is indeed to become qualified as a piano teacher upon the completion of the university course, save that she had charged $250 per hour and earned between $1,000 – 2,000 per month doing so a few years back, and as conceded by the Husband, she will still be totally dependent on his maintenance in the foreseeable future, and any income from her giving piano lessons in the meantime, on the evidence so far before me, will likely be insignificant and supplemental only.

33.  There is also no dispute that she has no savings or assets of any significance save for some watches and jewellery worth no more than $100,000, and that while there was a time that the Husband suspected that she might have some interest in a flat in China of which he lent some money for its purchase during the marriage, but which she has denied and insisted that it belonged to her parents, he now seems to have taken the issue no further. What is much more contentious between the parties is clearly over her financial needs, which is my next consideration.

The Wife’s Financial Needs

34. The Wife has set out her expenses in her updated Form E (PB7: 3128-9), basically $58,700 - $78,700 for renting her accommodation, food and household expenses, $42,833 for her personal expenses, and $13,500 for the boys’ expenses, totalling $115,033 - $135,033 per month, which is 3 times more than the current maintenance she is getting from the Husband.

35.   Some of these expenses are in fact just her estimation of what she believes she will require or be entitled to after the divorce in line with the standard of living enjoyed by the family prior to the breakdown of the marriage, such as the provision for a full-time domestic helper, her entertainments and holidays expenses as well as her medical and life insurance coverage, but the most controversial is her claim for future rental of $30,000 - $50,000 for a bigger 3-bedroom flat of 1,500 sq. ft. in the Mid-Level, which is the same size of their former matrimonial home at Blue Pool Road, so that she can accommodate both the boys during their staying access with her, the helper and her mother whom she would like to come from China to live with after the passing of her father, as well as to house a new piano if she is to give piano lessons at home in future.

36.  The Husband however does not believe that the Wife’s mother would come to Hong Kong as she still has her own career as a piano teaching in Nanjing, and that her relationship with the Wife is very volatile, citing the examples that she did not stay long with them when they were then living in New York in the 1990s, and when the Wife took the boys to Nanjing in the summer of 2008, it was the first time she visited her in 2 years, which he submits does not suggest a close relationship between them.

37.  The Husband further argues that the boys do not require a separate room for each as they now sleep in a bunk bed and share one bedroom in his apartment, while the Wife lives by herself and therefore does not need a bigger flat or a full-time helper, especially if she is going to be spending most of her time away from home attending school at the Chinese University for the next 3 years. He therefore submits that her claims were not about what she actually or reasonably need, but rather about what she could manage to get out of him financially.

38.   Although he accepts that their former matrimonial home in Blue Pool Road was a nice flat, the Husband argues that it had no facilities, and that it housed their family of 5 : the parties, the boys and a helper, which is not now the case with the Wife, and hence there is really no need or reasons for her to move to a bigger flat, nor to claim the kind of rental that she is seeking given the current poor economy and the downward trend in rent in the property market in Hong Kong. He submits that her rental need should remain about the same at $21,500 per month, and that she may even be able to bargain it down if she is to renew the lease for her Conduit Road apartment when it expires in end of February 2009.

39.   While I can understand the Wife’s sentiment of wanting her mother to be by her side under the circumstances, I do share the Husband’s reservation about that prospect, there being no evidence from the mother herself that she wanted to, or that she could obtain the necessary visa to come to live in Hong Kong, and while it may not seem entirely fair to me to accuse the Wife of making it up as she went along, it is true that this had never been mentioned before until her cross-examination, and that it appears that it was something which she had not properly thought through. In any event, given the fact that her own status in Hong Kong has not yet been worked out, I doubt that her mother would be able to come here within the next few years, if it is indeed her intention to do so. I therefore agree with the Husband that the Wife’s need to accommodate her mother in her new flat is not something that should require the court’s consideration at this stage.

40.   Furthermore, the fact that the boys are sharing one bedroom in the Husband’s present household does not seem to support the Wife’s case that they should each have a room to themselves at her place, where they are in effect spending much less time than at their father’s place under their current arrangement, although I would agree with the Wife that they will soon outgrow sharing a bunk bed and require more space for their bedroom. 

41.   On the other hand, I do not see anything wrong or unreasonable for the Wife to have the service of a domestic helper and hence the need to accommodate her in her apartment, when the Husband is having 2 in his household, granted that he has an infant daughter who requires full-time care and that his girlfriend has a busy career of her own, but with the Wife also expected to pursue her university studies and eventually a career in piano teaching, and with the boys also spending part of their time at her place, it would only be fair for her to also have the service of a helper to carry out the household chores for her as well as cooking and washing for the boys when they stay with her.

42.   While this does not necessarily follow that the Wife must have a 3-bedroom flat, for the reasons aforesaid she may need a bigger flat to accommodate both the boys and her helper. By way of comparison, the former matrimonial home in Blue Pool Road was 1,500 sq. ft for a household of 5, while the Husband’s current home is as aforesaid composed of 2 adjourning apartments with a total area of 2,600 sq. ft. for a household of 4 adults and 3 children. It does not seem unreasonable for the Wife to ask for a slightly bigger flat of say 1,100 – 1,200 sq. ft. for her household of 2 adults and 2 children, even though for the latter it would only be for part of the week most of the time.

43.   There is unfortunately not much information before me as to how much it would cost the Wife to rent such a flat of that size, other than her own estimation of $30,000 - $50,000, but that would be for a 1,500 sq. ft. flat. The Husband’s current flat of 1,300 sq. ft. costs $50,000 per month which he rented in 2007, admittedly at a time when the property market was at its peak. It is not in dispute that rental has since come down by some 20% as a result of the current financial and economic crisis, and likely with further downward adjustment in 2009. I am therefore of the view that it should not be difficult for the Wife to rent her apartment at the location of her choice within $25,000 per month.

44.   Another controversial item of the Wife’s needs is her claim of $15,000 for food at home and $6,000 for meals outside including with the boys totalling $21,000 per month, when she has also separately claimed $8,000 for their activities and food, which the Husband criticises as ‘massive food needs’ and another example of her making up her evidence to extract as much from him as she can, in particularly when only 3 weeks earlier in her 12^th Affirmation of 19^th September 2008 when her claim for similar items were only $12,000 and $5,000 respectively.

45.   Her evidence was that everything in the supermarkets such as CitySuper where she habitually shops is so much more expensive these days and that she could produce receipts showing that she spends $2,500 a week for food, and that she loves to indulge the boys who have a big appetite and do eat a lot at their age.

46.   The Wife’s food claim at home, which would amount to $500 per day, does appear high especially when she agrees that she would normally take the boys out for meals when they come to stay with her for which separate provision has been proposed by the Husband. While I do not doubt that it is expensive to shop at supermarkets these days, by comparison the Husband spends the same amount for a much bigger household of 4 adults and 3 children.

47.   Given the Husband’s open proposal of monthly subsidy of $15,000 for the boys when they stay with the Wife which is already well in excess of her claim for the same item, and which would have already included the meals provision for the boys, and the fact that she will likely be spending a considerable amount of time away from home attending her music course and hence having her meals outside, I believe that a total sum of $9,000 per month would be a reasonable and adequate amount to meet her claim for food and household expenses at home and $2,000 - $3,000 for her meals outside.

48.   Another controversial item of the Wife’s expenses is her alleged monthly contribution of $5,000 to her mother which the Husband argues as fabricated or unnecessary as her mother has her own job and means to support herself, that it was not the pattern during the marriage, and that he has no reason or obligation to fund her filial duty to her mother.

49.   While I accept it is quite common amongst local married couples, and for that matter divorced couples as well, to make regular payments to their parents either as of necessity because their parents have no means of their own, or for their ‘tea and pocket money’ as part of their traditional filial duties, especially when one of the parents, and in this case the father, has recently passed away and with it may be the loss of support to the other parent, but there is simply no evidence before the court that her mother indeed requires the Wife’s financial support, and if so the Wife can and should certainly save on her other spending to make the contribution.

50.   The remaining items of the Wife’s expenses that have attracted similar criticisms from the Husband such as her household utilities of $4,000, her transportation expenses of $2,000, her shopping for clothing and shoes at high-end boutiques and department stores such as Lane Crawford at $3,000, and her personal grooming of similar amount, but given the background of this family, her social status as the former wife of a successful lawyer, I do not find them in the main excessive or unreasonable, although I do agree that her entertainment and holidays expenses appear on the high side given the family’s historical spending on trips mainly to the U.S. and South-East Asia, and there is certainly no evidence to support the Wife’s allegation of flying on business class and staying at 5-star hotels, which are in fact quite unlikely considering the Husband’s then much lower income.

51.   As for her dental expenses, I accept that the evidence reveals that the Wife do have the need for some major dental work, and that she does require medical insurance now that she is no longer covered by the Husband’s or his employer’s, while I do not find it necessary to discuss the boys’ expenses as the Husband’s proposal of $15,000 per month for them in fact turns out to be more than what the Wife is claiming. However, before arriving at any final conclusion on what should be the appropriate sum to meet her needs, it would be relevant and necessary to first consider the same aspects of the Husband, and I shall start with his financial means which is as aforesaid relatively simple and straightforward.

The Husband’s Financial Situation  

52.   The Husband has a good income of $462,125 per month as a lawyer in a U.S. law firm with an admittedly good prospect as his income has been on the rise over the past several years, and while nothing is certain in the current financial climate as pointed out by his counsel, there is no question about his high earning capacity. As already indicated earlier, save for a life insurance for US$1 million payable only upon his death to his children and some rental deposits for both his apartment and the Wife’s in the total amount of $138,000. he has no other capital or property that warrant the court’s attention. His financial needs, which is my next consideration, however, are not so straightforward and are in fact much more contentious as far as the Wife is concerned.

The Husband’s Financial Needs

53.   The Husband updated his expenses for himself and the boys in his 17^th Affidavit to $434,842 per month, of which almost $130,000 are for his general and household expenses, $261,000 for his personal expenses, and $43,800 for the boys (PB7 : 3104-5). Of these expenses, 3 substantial items are basically not challenged : loan repayments for his law school study and personal bank loans of $42,802.26, both his Hong Kong and US tax provisions of $107,250, and the instalment payment of his legal fees incurred in these proceedings of $80,000. Most of the rest are as aforesaid challenged by the Wife as excessive, in particularly the household expenses which she argues should be shared equally by his girlfriend.

54.   Very little is known about the girlfriend other than she is said to be earning a basic salary of about $100,000 per month according to the Husband who agreed under cross-examination that she would also earn bonuses, which is usually the case in such profession, but claimed to have no idea of how much they would be.

55.   It is also his evidence that their current arrangements is that he pays for all the expenses of his apartment, their common household expenses, the boys and their helpers, while his girlfriend would pay for some of the utilities of her own flat, all their daughter’s expenses as well as her own personal expenses. 

56.   The Husband’s household expenses consist of $50,000 for rent, $8,000 for utilities, $957 for management, $15,000 for food, $4,000 for other household items, and $8,900 for the 2 helpers, totalling $86,857 per month, and the Wife’s case is therefore half of which, some $43,000, should be paid for by the girlfriend.

57.   Ms Irving for the Husband accepts that the girlfriend might be held to be liable for her own share of the food expenses, half of the daughter’s and half of the helper who looks after the daughter, in which case the sums involved would be small and insignificant, but that it would not be right to hold half of all the household expenses to be met by her who has her own personal expenses and expenses for her daughter that she meets herself, and certainly not the rent of the Husband’s apartment which was not needed until custody of the boys was granted to him.

58.   The Husband has acknowledges that his rental of $50,000 is high, which was contracted in 2007 at perhaps the peak of the property market, and he hopes that it will come down somewhat next year when the current tenancy expires, but either way he insists that this flat is needed with the boys now living with him the majority of the time. Given the number of members in his household, I agree that it is not unreasonable of him to rent this flat in view of its location adjourning to his girlfriend’s property, for which there is no reason why the girlfriend should have to share the rent, and given the current economic situation, it will likely come down next year to provide some relief to the Husband’s budget.

59.   There is of course always the option for the girlfriend to sell her property and use the proceeds to pay for the down payment for a bigger flat with the assistance of a bank mortgage to accommodate the entire family, and for the Husband to meet the monthly mortgage payments instead of paying rent, which would in my view be a better arrangement for the family as a whole and in terms of investment, and while it was never explored at the trial, it is certainly worth considering by both the Husband and his girlfriend, although I would not go so far to suggest that it must be the case, as that would certainly involve the consideration of many other factors which were not before the court, including their relationship in the long run. 

60.   On the other hand, I agree that the girlfriend should share the common household expenses such as the family’s food and other domestic items common to their household, of which Ms Irving submits that since most of the food at home is for the boys, the girlfriend might be held liable only for her own and half of the daughter’s food, and half of one helper, and that the same should also go with the other household expenses.

61.   The Wife however argues that the girlfriend should be responsible for a bigger share than proposed, pointing out the large amount of the Husband’s monthly credit card spending on wine which cannot be for the boys or the helpers, and that some of his expenses for meals out of home were with the girlfriend too with or without the boys, for which she should be responsible for her fair share.

62.   I accept the points raised by the Wife as valid, and given the Husband’s evidence that both he and his girlfriend like to do a lot of entertainments for friends and/or clients at home which have nothing to do with the expenses of the boys, who are also old enough to take care of themselves in the main and that they do spend part of their time at their mother’s home, hence that helper is mainly to take care of the daughter, I agree that the girlfriend should bear a greater share of the Husband’s domestic expenses, in particularly for food, other household items and the helpers, although not necessarily as much as half in view of the fact that the evidence of her total income is not clear, it would not be unreasonable to hold that she should be responsible for at least 1/3 of those expenses, which should go someway to reduce the Husband’s burden.

63.   The Wife does not have any serious dispute about the Husband’s stated current expenses for the boys, or his future obligations to put all 3 of his children through university, expectedly in the U.S. and possibly professional/graduate schools given the background of their family and the high expectation of no doubt both their parents, although there does not seem to be any such provisions in his current list of monthly expenditure.

64.   As for the Husband’s personal expenses, which appear quite substantial even if one were to exclude the legal costs provision, the Wife does not seem to have any serious challenge to the veracity of their figures but rather argues that they reflect both the current lavish lifestyle of the Husband and his girlfriend to which she should be entitled, as well as the true standard of living which the parties were able to enjoy before the breakdown of the marriage, which is what I propose to consider next.  

Standard of Living Before the Breakdown of the Marriage

65.   The Wife’s case is that throughout the marriage the family had lived in spacious and comfortable homes in very good areas such as Palo Alto and Manhattan, admitted by the Husband as some of the most expensive places in U.S., and when they first came to Hong Kong, they also lived in a large and expensive apartment in Parkview at Tai Tam with access to 3 swimming pools, tennis courts, clubs and other facilities, during which they led a lavish lifestyle including shopping at Lane Crawford and other expensive boutiques and department stores, travelling in business class, holidays in the U.S. and other parts of Asia where they would stay in 5-Star hotels while their children attended expensive international schools.

66.   The Husband however disputes that that was not the reality, as when they went to Palo Alto they were mainly on holidays and stayed in his parents’ home, while their apartment in Manhattan was his quarter while he was studying law and they had to sublet part of it to supplement their income, and their last matrimonial home at Blue Pool Road was nice but with no facilities. His argument is that there was never any lavish holidays or expensive spending other than a couple of trips to the Disney Land or to Nanjing to visit her family, as there was simply not the money for what she says she used to have and now requires, and that the evidence before the court, such as the few receipts from Lane Crawford produced by her simply do not reflect what she now says is her spending pattern.

67.   When the court comes to consider the standard of living of the family, section 7(1)(c) clearly refers to that stage or period before the breakdown of the marriage, and in the present context that would mean the period of the parties in Hong Kong up to around the time of the breakdown of their marriage in 2005 upon their living apart for 2 years.

68.   Ms Irving for the Husband submits that the marriage was in fact in a grim state for many years before that, and that any subsequent improvement in the standard of living of the Husband should not play a part in the court’s determination as to what constitute a fair award for the Wife in respect of the living standard during the marriage, save as it affects the children of the family, as they should be in the position where their mother has the resources to enjoy her time with them, hence the Husband’s offer of $7,500 each for the boys per month.

69.   The evidence before me is that the family was then able to enjoy a fairly comfortable lifestyle, not lavish or extravagant but certainly commensurate with the Husband’s profession and his then monthly income of between $200,000 and $300,000, the majority of which no doubt would have been spent on the family after the provisions for his tax and study loans repayments. That must be the standard of living of the family before the breakdown of the marriage.

70.   However the Husband’s income has since almost doubled, and with it brought significant improvement to his standard of living, as evidenced by comparing the amounts of his expenditure of the 2 periods when most of his current general household expenses have also doubled or at least increased substantially. While his present bigger household must have been a major contributing factor, it is also true that he has the financial support or contribution from a high earning partner, it would be unfair under the circumstances for me to totally disregard his higher post-divorce standard of living when considering what should be the appropriate standard for the Wife.

Contributions

71.  The Wife’s case is that she had given 14 years of her devotion to the marriage and the family which should be recognised by the court when considering her claim for compensation. While the Husband does not dispute that she has been a good mother to the boys, but argues that the history is littered with incidents that have caused difficulty and distress to both him and the children, and that she has not always been able to make the best choices for them, as evidenced by the earlier court’s ruling on the custody trial against her, which he says shows that her contributions to the family has not been as positive as she believes.

72.  While obviously I am in no position to make any comment, nor would it be appropriate to do so, on the various findings by the learned judge at the custody trial, most of the criticisms now levelled against the Wife as a mother must be, I believe, confined to the period after these divorce proceedings, when she initially refused to accept the breakdown of the marriage and tried to reconcile with the Husband during which some of her decisions, in particularly those affecting the boys as mentioned above, were no doubt rightly disapproved by the court, but it would equally be right that they should be looked at in that context, as I do not for a moment have any doubt that she has been, and still is, a good mother to her children, having seen and heard not just her for days in court, but also based on what the Husband has said and written about her as a mother during the marriage, and that it was he who initially proposed in his petition that custody of the boys should be given to her, hence he must have been satisfied with her role then.

73.  I do not believe it was the intention of the legislation, when the court considers the parties’ contributions to the family, that their respective role in the marriage has to be perfectly played or performed before their contribution would be recognised, because of the simple fact that there is simply no perfect parent or perfect spouse. What is required for consideration must be whether each of the parties has by and large fulfilled his/her role in the marriage and has thereby properly made his/her respective contributions to the family, which is the case here in my firm belief for both parties, with the Wife both as a good mother to her children as well as a supportive spouse in particularly during the difficult period when the Husband was studying law when she had to work and to enlist her parents’ assistance, and the Husband as a responsible spouse and father to have worked hard to support and provide for his family and no doubt for years to come for his children.

Conduct

74. The Husband raises this issue not to argue that the Wife’s conduct extinguishes her claim, but that it is a matter of which the court must take note, including what he alleges her damaging attitude towards him throughout the marriage and more particularly her various conducts during the early stage of these proceedings including harassments as mentioned above, even resulting in his employer taking out telephone harassment charges against her, and negatively impacted his ability to properly perform his professional duties as well as caused a massive escalation in his legal fees.

75. Ms Irving however in her oral submission accepts, quite rightly if I may say so, that the Husband will not rely on what he alleges to be the Wife’s marital conducts in her present claims for periodical payments as there are simply no other matrimonial assets to be shared between the parties to justify doing so, but reserving his right to rely on them in any future claims by her for lump sums or transfer of property orders if and when such assets come into existence, a right no doubt equally reserved by the Wife if she so wishes.

76. As regard her alleged litigation misconduct in these proceedings, such as those mentioned earlier in this judgment, I am of the view that they can be more properly reflected in costs orders rather than in the scale of the awarded sum as in the case of Tavoulareas v Tavoulareas [1998] 2 FLR 418, CA; P v P [1994] 2 FLR 381; T v T (interception of documents) [1994] 2 FLR 1083, and that the court must not adopt a punitive campaign against the transgressor : per Thorpe LJ in Atkintola v Atkintola [2002] 2 FLR 701, CA.

77. I do however find it necessary to add that, based on my observations of the Wife since my involvement in her ancillary relief application, I have the impression that many of her alleged misconducts complained by the Husband seem to stem from her inability or unwillingness to accept that her marriage had come to an end and the fact that the Husband has a new partner, to which sadly she had reacted improperly and on occasions even badly, in particularly as aforesaid over the well-beings of her sons.

78. No doubt such behaviours would not be and were not approved by the court, and in my view probably cost her the custody of her sons, but given the circumstances of her emotional state, the untimely passing of her father and her lack of family support in Hong Kong which was then a fairly alien place to her, while some of the Husband’s resultant actions such as no less than 5 attempts to commit her for contempt for failing to file her Form E certainly were not helpful, perhaps they should not be judged in the same manner as those which have so grossly wasted the family wealth to an extreme extent that it would be inequitable to disregard them, as in Fournier v Fournier [1998] 2 FLR 990, CA; and Young v Young [1 FLR 1131, CA.

Compensation

79. As aforesaid the Wife seeks compensation of $30 millions, the basis of which is unfortunately not very clear and perhaps even ill-advised, but it seems that $15 millions is the capitalization of all her future needs, while another $15 millions is for the loss of her career. However much attractive one may find in the capitalization of the Wife’s needs as a clean break between the parties given the circumstances of the case, there is simply no capital available for that purpose, which is a fact beyond dispute.

80. As for the compensation for any loss of career, the Husband argues that the Wife could not and would not succeed on it even if there were the resources to meet such a claim, as on one hand she claims to have no earning capacity because she only attended a 2-year course and is not “an accomplished pianist”, while on the other hand she says she threw away a career by marrying him, but it cannot be both.

81. The principle of compensation was first expressly recognised should be taken into account by the court when exercising its statutory powers by the English Court of Appeal in the case of SRJ v DWJ (Financial Provision) [1992] 2 FLR 176, and subsequently propounded by the House of Lords in Miller and McFarlane when Lord Nicholls identified it as one of the 3 strands of principle element of fairness referred to above, of which Baroness Hale of Richmond in the same court further elaborated :

‘A second rationale, which is closely related to needs, is compensation for relationship-generated disadvantage. Indeed, some consider that provision for need is compensation for relationship-generated disadvantage. But the economic disadvantage generated by the relationship go beyond need, however generously interpreted. The best example is a wife, like Mrs. McFarlane, who has given up what would very probably have been a lucrative and successful career. If the other party, who has been the beneficiary of the choices made during the marriage, is a high earner with a substantial surplus over what is required to meet both parties’ needs, then a premium above needs can reflect that relationship-generated disadvantage.’[140]  

82. These are clear statements of an underlying principle falling for consideration in cases where it is clear that the parties have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife very considerably handicapped in terms of her own earning capacity, and that the husband is a high earner with a substantial surplus of resources over what is required to meet the needs of both parties.

83. This strand of relief is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage, and cogent evidence as to the wife’s loss of career is therefore required before the court can find there has been such loss suffered and thereafter consider the appropriate compensation, and that it is not a matter for speculation, as expressed by Lord Nicholls in the same judgment :

‘A fourth feature is that the career foregone by the wife was a professional career as successful and highly-paid as the husband’s. This is not a case where the wife’s future success was a matter for speculation. Speculation of this character is seldom helpful. Here the wife had a proven track record when the parties agreed she should give up her job.’[140].   

84. Here not only is there highly unlikely to be any surpluses over what is required to meet the needs of both parties, it is also not clear as to the nature of what the Wife’s claims to have been lost for which compensation is required, as there is simply no evidence as to exactly what sort of career she was then in, if one can simply use it for “playing the piano in a hotel”.

85. The fact is that there is simply no evidence of any career of the Wife, or of any loss thereof to enable the court to consider the appropriate compensation, such as the level of her piano playing skills, her earnings at the time when she first met the Husband, and what she would have been able to earn had she not given up her job for the marriage. In the absence of such evidence it would only put the Wife’s case as purely speculative and ultimately unsustainable.

86. Both parties however agree that the Wife should undertake the music degree course in university so as to have hopefully a career in music, but certainly not one that will replace the Husband’s financial obligations towards her, upon which I have now come to my conclusion.

Conclusion

87. The evidence before me clearly indicates that the Wife intends to pursue her music career which will no doubt be in her best interest, as it will not only benefit her financially in future, but will hopefully also enable her to get over her failed marriage and to move on with her new life. Meanwhile she is no doubt totally dependent on the Husband financially, as I have found above, and as I have now concluded, to the extent of $60,000 per month based on what I have considered to be her reasonable needs, the standard of living before the breakdown of the marriage as well as that now enjoyed by the Husband, and of course on his financial means, and above all a sum which I believe should achieve fairness between the parties, and of which I have roughly allocated for her monthly expenses as follows:-

(i)   $25,000 for accommodation;

(ii) $4,000 for household utilities;

(iii)   $4,000 for a domestic helper;

(iv)  $9,000 for food and household items;

(v)    $8,000 for meals outside, clothing and grooming;

(vi)  $2,000 for transportation;

(vii)    $3,000 for medical and insurance; and

(viii)  $5,000 for entertainments and holidays.

88. This sum clearly does not include the provisions for the boys when they stay with the Wife and as such has exceeded the Husband’s open offer and apparently his ability according to his latest monthly expenditure, but as I have also found above, he can certainly cut down on some of his expenses as he conceded at the trial, while his girlfriend should have made a bigger contribution towards her share of his household expenses, thereby further freeing up his means to meet the Wife’s needs.

89. In addition, I agree that the Wife do require some dental work for her teeth for which the Husband should pay her a sum of $50,000 within a reasonable period, and that she also need a new piano, the cost for which unfortunately is not entirely clear but given its obvious importance to her earning and earning capacity, I would allow it at $50,000 but not payable by the Husband until she has successfully completed her music study, for which the Husband’s offer to pay for a 3-year course is to be treated as part of his undertaking to the court.

90. Lastly, as regard the Husband’s offer to pay $15,000 per month for the 2 boys to meet their expenses when staying with the Wife, and a further half-yearly sum of $30,000 for their holidays expenses with her, I accept them as reasonable and will make the order accordingly.

91. Accordingly, my orders are as follows :

(a) The Petitioner Husband shall pay the Respondent periodical payment at the rate of $60,000 per month for her maintenance dating back to 1^st December 2008 with credit given to payment already made, and payable thereafter on the 1^st day of each month until she dies or remarries, or until further order;

(b)    The Petitioner shall within 6 month pay the Respondent a lump sum of $50,000 for her dental treatment, and a further sum of $50,000 for her new piano upon her completion of the university course;

(c) The Petitioner’s offer to pay for the Respondent’s 3-year degree course at $30,000 per year for 3 years directly to the university is to be treated as his undertaking to the court;

(d) The Petitioner shall pay the Respondent $7,500 per month as maintenance for each child commencing on 1^st January 2009 and payable thereafter on the 1^st day of each month until the age of 18 years or finish full-time education, such payment to be reviewed if and when each child leaves Hong Kong to study abroad;

(e)  The Petitioner shall pay the Respondent $30,000 per half year on 1^st July and 1^st December of each year for the children’s holidays with the Respondent, commencing 1^st July 2009, such payment to be reviewed if and when each child respectively leaves Hong Kong to study abroad.

(f)   All periodical payments are to be paid into the Respondent’s designated bank account. 

92. As regard the question of costs of the ancillary relief application, save for those already specifically dealt with, I propose to make no order which is an order nisi to be made absolute at the expiration of 21 days.