KNM v. HTF

FCMC 14334/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 14334 OF 2007

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BETWEEN

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J U D G M E N T

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The Applications

1.  This case is essentially concerned with the Petitioner Wife (hereinafter called “the wife”)’s application for ancillary relief against the Respondent Husband (hereinafter called “the husband”)(collectively, I will refer to the wife and the husband as “the parties”).  In the course of her argument, the wife also claimed that the 1^st Intervener (i.e. the father of the husband) (hereinafter called “the paternal grandfather”) and the 2^nd Intervener (the mother of the husband) (hereinafter called “the paternal grandmother”) had once held or was still holding certain properties or monies as trustees for the parties and that was why they were being joined as parties in this suit.

2.  On the other hand, the husband wants to set aside certain transactions of the wife in which she has transferred some monies out.  The husband also applies for a variation of the maintenance that he is currently paying (in the form of interim maintenance) for the wife and the children of the family.

Brief History

3.  The parties married in 1993.

4.  Within wedlock, they have 3 children and they are:

(1)   A daughter, now aged 15 (hereinafter called “the eldest daughter”);

(2)   A second daughter, now aged 13 (hereinafter called “the second daughter”) and

(3)   A son, now aged 7 (hereinafter called “the son”).

5.  On 22 November 2007, the wife issued a petition for divorce based on the husband’s behaviour.  A decree nisi was granted on 4 March 2008.

6.  For custody, this Court granted an order on 22 December 2008 that the custody of the eldest daughter be given to the husband; and the custody of the second daughter and the son be given to the wife.  Both parties have reasonable and defined access to the children.  In other words, the present arrangement is that the eldest daughter is residing with the husband and the paternal grandparents and the 2 younger children are staying with the wife.

7.  On the same day, the Court has also made an order (“the MPS Order”) for the husband to pay interim maintenance on the following terms:

(1)   $15,000 per month as maintenance for the 2 younger children (i.e. $7,500 each); and

(2)   $9,000 per month as maintenance for the wife.

8.  For ancillary relief, the parties went through a FDR which was not successful and so the case was transferred to my court for trial.

Issues

9.  I must say right at the beginning that the wife through her counsel has presented her case in a rather convoluted way.  Throughout the whole trial, I found it quite hard to have a clear identification of the issues from counsel.  In this regard, the wife filed 4 Notices of Application for Ancillary Relief at different times causing much confusion as to the real issues to be tried.  The reliefs sought were changing all the time and that was why I had to request counsel to set out clearly the orders to be sought by the wife in his final submission.  After reading counsel’s supplemental submission, which was a daunting task in itself and doing my very best, I think these are the issues to be determined in this case:

(1)   In the calculation of the family pool, whether the following assets or monies should be included:

(i)   The profits of $350,000 gained after the sale of the property of a unit at Sentact Building, No. 347 King’s Road, North Point, Hong Kong (“the Sentact Property”) by the husband and the paternal grandmother;

(ii)   The profits of $298,000 gained after the sale of the property of a unit at Jade Garden, No.32 Fortress Street, North Point, Hong Kong and a Car Parking Space at Jade mansion (hereinafter called “the Jade Mansion Property”) by the paternal grandmother;

(iii)   Whether a sum of $270,000 should be added back to the pool being the rental payment made by the husband to the paternal grandmother in respect of a property of a unit at Ching Fai Terrace, 4-8 Ching Wah Street, Hong Kong (hereinafter called “the Ching Fai Terrace Property”);

(iv)   Whether the husband should account for various withdrawals of money from his bank accounts;

(v)   The husband’s purchased stock from his employer; and

(vi)   The interest arising from stock options granted to the husband by his employer.

(2)   The beneficial interest in the property of a unit at City Garden, 233 Electric Road, North Point, Hong Kong (hereinafter called “the City Garden Property”).

(3)   The beneficial interest in the property of a unit at Aldrich Garden, No.2 Oi Lai Street, Hong Kong ( hereinafter called “the Aldrich Garden Property” or “the former matrimonial home”) and a Car Parking Space on 2^nd Floor of the Carport Block, Aldrich Garden, No. 2 Oi Lai Street, Hong Kong (hereinafter “the car park”).

(4)   The husband’s application to set aside the following transactions of the wife:

(i)   A sum of $400,000 being transferred from the wife’s bank account to her mother;

(ii)   The wife’s transfer of a property of a unit at Wah To Building, No.42 Wood Road, Hong Kong (“the Wood Road Property”) to her father.

(5)   What kind of ancillary relief order to be made after considering all the circumstances of this case.

The Sentact Property

10.  It is common ground that the Sentact Property was purchased in the joint names of the husband and the paternal grandmother back in 1994 at a consideration of $2,250,000.  It was sold in 1997 at a price of $2,600,000 and hence reaping a profit of $350,000. 

The Case for the Wife

11.  It is the case of the wife that since the husband was then a joint owner and had made financial contribution towards its purchase, he was therefore entitled to the profits made in the sale of the Sentact Property.

12.  However, what troubles me first is the amount of the claim under this property.

13.  In counsel’s Supplemental Submission (which I take as representing the wife’s final claim), she asked for the sum of $350,000 (representing the whole profit) to be added back for distribution.  There was no mention why 100% of the profit had to be added back as the husband was only a joint owner.  This also contradicted counsel’s earlier Closing Submission dated 9 February 2010 (Point 19) in which only half of that sum (i.e. $175,000) was claimed.

The case for the Husband

14.  As far as the evidence of the husband was concerned, he said when the property was purchased in 1994; he was still in the early stages of his career and did not earn much. I do not think the wife would dispute that because in her 8^th Affirmation (para.11 of the Affirmation, A7/2114), she also said:

“11. In 1993 when we got married, [the husband] was an engineer in a local company known as GS Co. Ltd. Earning HK$12,000.00 per month. And for me, I was then a secretary and earned a monthly sum of HK$9,400.00”

15.  Under these circumstances, I think it is not difficult for this Court to accept that in the purchase of the Sentact Property, the husband did not make any initial contribution as to the down payment and for the refurbishment before moving in.

16.  But the more contentious issue is whether the husband has contributed to the mortgage repayment.

17.  The husband did not dispute that during that period of time, he did give some money to the paternal grandmother.  According to the bank records, there were constant transfers of money, ranging from $7,500 to $9,000 per month.  There was even a transfer of $20,000 on one occasion.  All these transfers were from the parties’ joint bank account to the paternal grandmother.

18.  The husband’s explanations for those payments are that they were either pocket money to the paternal grandparents or his share of contribution to the paternal family, which I believe has provided much assistance to the parties, especially in looking after their new born daughter.  He disagreed that those were for the repayment of the mortgage loan.

The Case for the Paternal Grandmother

19.  According to the paternal grandmother, the adding of the husband’s name in the purchase of the Sentact Property was to enable her to get a longer mortgage of 20 years, instead of 10 years because of her age.  She denied that the husband had any beneficial interest in the Sentact Property.

The Court’s View

20.  It is not in dispute that the husband was then a joint legal owner of the Sentact Property and prima facie, he was also a joint beneficial owner.  But in deciding on the beneficial ownership, one also has to look at the common intentions of the parties concerned when the property was acquired: Pettit v Pettit [1970] AC 777.

21.  Both the husband and paternal grandmother claim that the husband had no beneficial interest in the property.  Whether that was true has to be judged by reference to the prevailing evidence at or around the time of acquisition.

22.  According to the wife in her 8^th Affirmation (paras.18 (a) and 19 of A/7,2116-7):

“18. …

(a)In or about November 1994, I was informed by [the husband] that [the paternal grandmother] has just [bought] a unit at Sentact Bldg., King’s Road, North Point, Hong Kong (hereinafter called “the Sentact Building property”) by mortgage.

…

19. From 1994 to 1997, I had on many occasions questioned [the husband] if he was the owner of the Sentact Building Property and [the husband]’s immediate answer was an emphatic “No”. In addition, he shouted at me and asked me to ‘shut up’.”

23.  It is clear from the wife’s evidence that she was told right from the beginning that the husband was not an owner in the Sentact Property.  This is particularly important because in 1994, the parties were just wedded for a year and the eldest daughter was just or about to be conceived.  I have no reason to believe that the parties were not on good terms at the early stages of their married life.  Equally, I have no reason to believe that the husband would deliberately hide and therefore lie about his beneficial interest in the property, if he indeed had any.

24.  Furthermore, the alleged payments by the husband were from the parties’ joint bank account.  In other words, if there were really payments for the Sentact mortgage, they were not only payments by the husband but equally also payments by the wife. However, in more than a decade between 1994 and the institution of the present proceedings, I can see that there has never been any assertion by the wife that she or the husband had any interest in the Sentact Property or in its proceeds of sale.

25.  Therefore, I tend to accept that at the time of acquisition, it was the common intention of the husband and the paternal grandmother that the husband should have no beneficial interest in the Sentact Property.

26.  I understand that it is the wife’s case that there had been different accounts on the money paid by the husband to the paternal grandmother during that period of time.  In this regard, we have to bear in mind that the payments were made 13 to 16 years ago and some discrepancies in the description of those payments are understandable.  Furthermore, it is not in dispute that the paternal grandparents had been providing much assistance to the parties by looking after their children and providing accommodation to them.  There was nothing unusual in the provision of money by a son to his parents under those circumstances. Therefore, I do not accept that the money paid by the husband to the paternal grandmother was or had to be for the repayment of the mortgage loan.

27.  Having concluded that the husband had no beneficial interest in the Sentact property, that should be the end of the wife’s claim in respect of the profits generated from its sale.   However, even if I should rule that the husband did have a beneficial interest in the property back in the 1994-97 period (which is not my ruling in this case), I still have strong reservation on the wife’s claim in this respect. 

28.  As the property was sold in 1997, which was 13 years from now; it is rather difficult for the wife to trace the whereabouts of this sum of money.  Even if the husband really had realised $175,000 as profits, it is more likely than not that the money must have either formed part of the husband’s current assets or being used up in the family’s expenses.  After all, what we are mainly concerned here is the parties’ present financial situation, not how much they owned 13 years ago.

29.  All in all, the wife’s claim concerning the Sentact Property must fail.

The Jade Mansion Property

30.  The next property to be considered is the Jade Mansion Property.

The Wife’s Case

31.  It is the wife’s case that the Jade Mansion Property was purchased in October 1997 at the consideration of $4,380,000.  The property was registered in the names of the husband and his younger sister, HSL (hereinafter called “RW1” or “the husband’s sister”) as tenants-in-common.

32.  The Jade Mansion Property consisted of a flat and a car park.  The flat was sold 2 months later (in December 1997) at $4,390,000 and the car park was sold at $280,000 in April 2000.  The total profits realised were $298,000.  As the husband was a 50% share owner, the wife is of the view that he had earned profit of $149,000 ($298,000 x 50% = $149,000) which sum should be paid over to her.

33.  Again, I am a bit troubled by the wife’s quantification of her claim here.  If she is of the view that the husband was entitled to $149,000 as his share of the profits, I cannot understand her basis of claim when her counsel said (at paragraph 21 of his Closing Submission dated 9 February 2010):

“… In the circumstances, [the wife] believes that she is entitled to at least 50% of what [the husband] was entitled to at the material time:-

HK$18,000 PLUS HK$280,000/2 = 298,000/2 = HK$149,000”

34.  In asking for a sum of $149,000, she was in effect asking for the whole of the husband’s share of the profits, but not just 50%.

The Husband’s Case

35.  The Husband’s case is simply that he was only a co-owner in name and that he had no beneficial interest in the property.

The Court’s View

usband’s

36.  I think the answer to this issue is rather straight forward.  In the wife’s 8^th Affirmation at paragraph 43 (A7/2123), the wife admittedly said:

“43. To the best of my knowledge, the money for the purchase of the Jade Mansion property all came from [the paternal grandfather]; such source of money was confirmed by [the husband] in a then conversation with me prior to the entering into any sale and purchase agreement. I was at all times in particular in concern over the source of the money; I was after all the ‘financial controller’ for [the husband].”

37.  It seems that the wife accepted that the purchase money was from the paternal grandfather and there was no evidence to suggest it was a gift to the husband.  If that was the case, I do not think the wife could persuade this Court that the husband did have a beneficial interest in the Jade Mansion Property.

38.  Furthermore, I do accept the husband’s submission that even if he was held to have received some profits from the sale of the Jade Mansion Property back in 2000, any such sum would have merged into the general pool of assets available for distribution as in 2010. 

39.  In the circumstances, the wife’s claim under the Jade Mansion Property must fail.

$270,000 Rental Payment in respect of the Ching Fai Terrace Property

40.  The next issue concerns with a sum of $270,000 being alleged payment of rents from the husband to the paternal grandmother for the period from 1 April 2002 to November 2003.

The Wife’s Case

41.  It is the wife’s case that in the husband’s Tax Returns (A4/1227-1234), a total sum of $270,000 was paid as rents to the paternal grandmother for the Ching Fai Terrace Property between 1 April 2002 and 30 November 2003.  The basis for this calculation was for $13,500 x 20 months (p.1212 of the Document Bundle), thus suggesting that it was a monthly payment at the rate of $13,500.

42.  In his Supplemental Closing Submission, counsel for the wife asked for an order that the husband and the paternal grandmother to account for this money which should be put into the family pool for distribution.  Although it was not apparent in counsel’s submissions, I think what the wife was advocating was that the so called tenancy was in fact a sham and therefore, this sum of money was held by the paternal grandmother on trust for the husband.  There was also some hint that the paternal grandmother had used this money to repay part of the mortgage of this property.  But as far as I could understand her case from counsel’s submissions, the wife was not saying that the paternal grandmother was holding the Ching Fai Terrace Property or any part of it on trust for the husband.

The Husband’s Case

43.  The husband testified to the effect that no rental payments were actually made.  He said there was then an arrangement in place in which a tenancy agreement was signed between him and the paternal grandmother just purely for the sake of tax minimisation. He said this practice would reduce his tax liabilities and was known to the wife because it was she who had prepared both the husband and the paternal grandmother’s tax returns.

44.  He agreed that there had been some payments made to the paternal grandmother but these were “global payments “ that covered expenses for the children as they were being taken care of by the paternal grandparents, the maid’s salary, food, pocket money for the paternal grandparents and for the use of the former matrimonial home.

45.  The paternal grandmother also gave evidence to a similar effect.

The Court’s View

46.  It is not in dispute that there were tax returns filed by the husband and the paternal grandmother showing that there was such a tenancy existed between them.   There were even rental receipts signed by the paternal grandmother (Exhibit P2).  Therefore, prima facie, the paternal grandmother had received such sums of money as rental payments.  However, after hearing the husband and the paternal grandmother’s explanations in court, I have come to the conclusion that no such rental payments were actually made.

47.  First of all, I note that apart from the tax returns and the rental receipts, there was no evidence proving the actual payments at the rate $13,500 per month, for example by ways of cheques or bank transfers.  This is so even after some extensive investigation into the parties’ bank records.  Furthermore, the motive behind such a sham arrangement was important consideration.  What possible advantage the husband could have gained by putting up such a sham arrangement?  Apart from tax advantages, I could not really think of any. 

48.  The wife at one stage suggested that this arrangement was for assisting the husband to get rental reimbursement from his then employer.  However, the letter from the employer dated 7 August 2009 (p.243 of the Correspondence Bundle) has cleared this doubt.  It was clearly stated in the letter that no such rental reimbursements were made.

49.  In the circumstances, I am inclined to accept that the claim for rental payments as appeared in the husband’s tax returns was purely for tax purposes.  There were no actual payments of $13,500 per month as rental payments.  I accept that some payments were made but not at the rate of $13,500 per month and they were not rental payments. Instead, they were contributions towards the grandparents and the children’s living expenses.  Therefore, the wife’s claim for the adding back of $270,000 must fail.

Withdrawals from the Husband’s Accounts

50.  In counsel’s Supplemental Closing Submission, the wife had listed out the withdrawals from the husband’s various accounts saying that he had failed to account for those transfers or payments and therefore they had to be added back to the family pool for distribution.  Those accounts include:

(1)HSBC Joint A/C No. 4xx-3xxxx9-xx3

(2)HSBC A/C No. 4xx-3xxxx5-xx3

(3)HSBC A/C No. 0xx-6-xxxxx4

(4)DBS Joint A/C No. 0xxxxxxxx1

(5)DBS A/C No. 0xxxxxxxx7 (HK$)

(6)DBS A/C No. 0xxxxxxxx5 (CNY)

(7)DBS A/C No. 5xxxxxxx4 (HK$)

(8)DBS A/C No. 5xxxxxx1 (CYN)

(9)CMB (China Merchant Bank) A/C No. 6xxxxxxxxxxxx6

(10) Charles Schwab A/C No. 4xx3-9xx4

51.  The husband had in his evidence submitted a table (Exhibit R3) in which items 1 to 25 were explanations concerning those withdrawals.  It seems that during cross examination, counsel for the wife had only raised questions on some of the items.  For those unexamined items, I can only take that they are no longer challenged.  In the circumstances, I would only concentrate my analysis on those items that were subject to cross examination.

Item 8 (From HSBC A/C No. 4xx-3xxxx5-xx3)

52.  This concerns with a cheque of $60,000 given by the husband to the paternal grandfather.   The husband said $50,000 of this sum was for partial repayment of a loan arising from the purchase of a property at Tai Wai (hereinafter called “the Granville Garden Property”).  For the balance, the husband said he could no longer remember what it was for.

The Court’s View

53.  I have considered the husband’s explanation.  I understand that it was the husband’s past practice to entrust his money matters to the paternal grandfather who had actually kept a money ledger keeping track of all monetary transactions between the 2 persons.  For the husband’s explanation concerning the loan on Granville Garden Property, I will go into a more detailed discussion in the later part of this judgment, but it suffices for me to say at this stage that I accept the husband’s explanation that the $50,000 was for repayment of a loan from the paternal grandfather.

54.  As to the balance of $10,000, I find there was nothing unusual for the husband to give some money to his parents.  After all, it was not disputed that the paternal grandparents had provided much assistance in the care of the children during all these years.

55.  Being satisfied with the husband’s explanation, the wife’s application for this sum to be added back to the family pool for distribution must fail.

Item 9 (From HSBC Account No. 4xx-3xxxx5-xx3)

56.  This concerns with a cash withdrawal of $57,000 from the husband’s own account on 3 September 2007.

57.  The husband explained that he had withdrawn the cash to pay for expenses between June 2007 and April 2008.  In a letter dated 11 January 2010 between the solicitors (p.252-333 of the Correspondence Bundle), the husband had listed out all his expenses together with various receipts.

The Court’s View

58.  I see that the husband was able to produce the receipts to support his spending during that period.  Although for certain items, I think the husband could have spent his money more wisely, I accept that he had spent the money on the items as set out in the letter.  In the circumstances and in view of the fact that not a really big sum of money is involved here, it is my ruling that there is no need for the husband to account for this $57,000.

Item 12 (From HSBC Account No. 4xx-3xxxx5-xx3)

59.  This concerns with a cheque of $36,000 paid to the paternal grandmother.

60.  According to the husband, he had entered into a tenancy agreement with the paternal grandmother in which the husband rented the flat at City Garden at the monthly rent of $18,000 per month.  This $36,000 was 2 months rental deposit paid to the paternal grandmother.

The Court’s View

61.  I understand that the parties had stayed with the paternal grandparents from time to time and there had never been any need to pay formal rent.  I trust that all along, the parties had been paying some money to the paternal grandparents but more as a form of contribution to their outgoings or may be as some form of appreciation of their efforts in looking after the parties’ children.  There had never been any need to pay “rent”.  Furthermore, I have doubts on whether the City Garden Property was really solely occupied by the husband and the children. Therefore, it is my finding this so called tenancy between the husband and the paternal grandmother was really a sham.  In the circumstances, it is my finding that the paternal grandmother is now holding the $36,000 as trustee for the husband, instead of as a landlord holding a rental deposit.

Item 13 (From HSBC Account No. 4xx-3xxxx5-xx3)

62.  This concerns with a cash withdrawal of $30,000 by the husband from his own account on 29 November 2007.

63.  The husband explained that he had withdrawn this cash and spent it on various items, including the purchase of a camera. 

The Court’s View

64.  I accept the husband’s explanation that he had already spent this sum of money and I find there was nothing wrong with that spending.  There is nothing to be added back to the family pool.

Item 15 (From DBS Bank Joint Account No. 0xxxxxxx1)

65.  This concerns with a fixed deposit of $202,789.82 originally in the Joint Account which was matured and later transferred to the husband’s sole account in the DBS Bank (Account No. 0xxxxxxxx7).

66.  The husband explained that out of this money, a sum of $200,000 was transferred to his other HSBC Account No. 4xx-3xxxx5-xx3 on 16 January 2009.  The money was mainly used for his credit card payment, legal costs, tax and personal expenses for end of the year 2008. He said he only had $87,000 monthly income but expenses at $120,000 and so he was running at a deficit at that time. 

The Court’s View

67.  In considering the husband’s explanation, I note that by early 2009, the litigation had been on going for over a year and legal costs had been incurred.  At cross examination, the husband’s explanation on his spending during this period has not been seriously challenged and therefore, on balance, I accept that he has spent the money in the ways as described by him.  In other words, I accept that there was nothing unusual about those spending and therefore, there was no need for the husband to account for this sum of money.

Items 19 and 20 (From DBS Account No. 0xxxxxxxx7 and 0xxxxxxxxx5)

68.  These concerns with 2 respective sums of HK$100,000 and CYN 132, 000 (Reminbi) withdrawn from the husband‘s sole accounts at the DBS Bank on 25 August 2007 and 28 August 2007.

69.  The husband explained that the money was for the decoration of the City Garden Property and the former matrimonial home; personal spending and gambling loss in Macao.

The Court’s View

70.  I note what the husband said about these spending was without any corroboration.  They were spent within a span of only 3 days.  Furthermore, as a matter of principle, a claim for gambling loss should not be accepted as a good and sufficient explanation for the depletion of family assets.  Therefore, I am of the view that the husband should account for these 2 sums of HK$100,000 and CNY 132,000.

The Husband’s MPF

71.  Counsel for the wife has raised some questions on this topic during cross examination but I do not see there was anything special about it.  The husband said he had $287,313 in his MPF Account but I did not see any follow up questions during cross examination. 

The husband’s holdings under the Employee Stock Purchase Plan (“ESP”) and Stock Options

72.  It is the wife’s case that the husband had over the years received employee benefits in that he was allowed to purchase company stocks at a 15% discount.  According to the wife, the husband could have used 12% of his salaries (amounting to $1,030,683.56 in 2001 to 2008) to purchase company stocks in the worth of $1,212,568.89.

73.  The wife also claimed that the husband had been given certain stock options during his employment with his then employer CMD Corp. (“CMD”).  She said the total value of those stock options amounted to $3,912,480.

74.  She was of the view that the above 2 sums of $1,212,568.89 and $3,912,480 should be added to the family pool for distribution.

75.  According to the husband (A6/2033-4), the stocks that he purchased under ESP were subject to certain restrictions.  He said all the stocks purchased were kept in the Charles Schwab Account.

76.  As to the stock options, the husband did not dispute he was given those options but he had also given a rather detailed explanation on how the system worked.  At A6/2034, the husband explained that when CMD gave the employees the stock options, they were fixed with a value (“the Grant Value”).  So if the market price of the stocks was higher than the Grant Value, the employee could exercise the stock options and profited on the difference between the market price and the Grant Value. 

77.  Unfortunately, according to the husband, the market price had been falling all the time and so all his stock options were without any value.  Furthermore, should an employee leave the company, the stock options would be cancelled or taken back by the company. 

The Court’s View

78.  It was common ground that the husband had purchased company stocks under ESP and kept them in his Charles Schwab Account.  It is most regrettable that during trial, both counsels have not taken the trouble to elicit evidence on the history and the present status of the Charles Schwab Account.  The wife just relied on a simple calculation of all the possible purchases that could have been made by the husband but without directing the court’s attention to the transactions in the account over the years.  I have to dig out the information myself and the latest information seems to be contained in Bundle A/7, 2487-2499.

79.  By looking at those documents, it is obvious that there had been previous buying and selling in the account.  But by looking at those transactions alone, I cannot say there was anything unusual about them.  The wife, just by showing that there had been transactions in the account and without more, failed to satisfy me that the husband had dissipated family assets.   In the circumstances, the wife’s claim for the amount of $1,212,568.89 must fail.

80.  As to the stock options, despite the fact that the wife set their value at $3,912,480, I fail to see any concrete evidence in support of that contention.

81.  I understand that the wife used the following formula in the calculation (see item 27 in the schedule of family assets in counsel for the wife’s opening):

“Including 34,175 such options which are notedly immediately ready for sale assuming the selling price including an earning at USD 8 per share, the total value of the same is at HK$7.8 x 8 x 62,700 = 3,912,480.00

P.2355 & 2356 refer.”

82.  In considering this issue, the first difficulty with the wife’s evidence was the assumption of a “selling price including an earning at USD 8”.  Frankly speaking, I have no idea what it means and the basis for such an assumption.  Furthermore, the true value of those stock options was the difference between the market price and the Grant Value.  As the wife failed to adduce any evidence on the Grant Value, it was impossible for her to arrive at the true value of those stock options.

83.  We all know that the years of 2008 and 2009 have not been  particularly good years as far as the US Stock Market is concerned and without any further evidence on the stock options’ true value, I am inclined to accept that they were valueless when the husband left the company.  As the husband has already left the company, those stock options are no longer in existence.

84.  The wife’s claims under ESP and Stock Options must fail.

The City Garden Property

85.  The City Garden Property is registered under the sole name of the paternal grandmother.  On 4 August 2009, the wife issued a summons (A9/3241) joining the paternal grandmother as the 2^nd Intervener and claimed that part of the City Garden Property was held on trust by the paternal grandmother on behalf of her and the husband, and thus forming part of the family assets for distribution.

86.  As far as I can understand from her evidence, the wife’s case was run on the following basis: The husband had made regular payments to the paternal grandmother in the past as rental payments, dating back to the times when the paternal grandmother was still the owner of the Sentact Property and the Ching Fai Terrace Property. Therefore, the husband was beneficial owner of at least part of the proceeds of sale of those properties.  Since the paternal grandmother had used those proceeds of sale to purchase the City Garden Property and the husband had also made further rental payments after the purchase, the wife is now saying that the husband should have beneficial interest in the City Garden Property as well.

87.  However, it is not too clear what the wife is actually asking for, at least not from the reading of counsel’s closing submissions.  In his Closing Submission at paragraph 46 (p.22), counsel submitted:

“46.   [The wife] hereby asks for a share of [the husband]’s beneficial interest in the City Garden Property.”

Counsel did not say what the share was or how much that was in monetary term.  That was not helpful at all.

88.  In his Supplemental Submission (at p.7), counsel asked for:

“a. An order that the City Garden property be sold forthwith at least 1/3 or 1/2 of the proceeds of sale to [the wife].”

Counsel was still uncertain on how much the wife was claiming.  That was not helpful either.

The Court’s View

89.  In the earlier sections of this Judgment, I have already ruled that there was no tenancy between the husband and the paternal grandmother and the husband had no beneficial interest in the paternal grandmother’s then properties. It was my ruling that the so called “tenancy” was just an arrangement so that the husband could minimise his tax liability.  Despite the actual payment of some money from the husband to the paternal grandmother on a monthly basis, they were just contribution towards the paternal grandparents’ living expenses or as gratitude towards their assistance in looking after the children.  Therefore, it is also my ruling that the husband does not have any beneficial interest in the City Garden Property.

90.  At one stage, the wife tried to convince this court that the husband had to have a beneficial interest by arguing that the paternal grandmother only had a low income and therefore had to rely on the husband’s contribution in order to purchase the properties.

91.  There is no doubt that the husband had paid contribution towards the living expenses of the paternal grandparents but that did not necessarily make him a beneficial owner of their properties.  Moreover, I understand that it is part of the wife’s case that the paternal grandfather had in fact given a $4,000,000 gift to the parties and RW1 (i.e. the husband’s younger sister) to purchase a property at Tai Wai (“the Granville Garden Property”).  That was a clear indication that the paternal grandparents had sufficient resources to buy the City Garden Property, or any properties prior to that.

The Aldrich Garden Property and Car Park

92.  The former matrimonial home was a flat situated at a unit at Aldrich Garden, No.2 Oi Lai Street, Hong Kong.  It was purchased in the year of 2001in the name of the paternal grandfather under the Home Ownership Scheme (“HOS”) on condition that he gave up his former public housing flat at Tai Hang.  The purchase consideration was $1,684,000 with the assistance of a mortgage loan in the sum of $1,600,000 obtained from Sin Hua Bank Limited.

93.  As to its value, there was a joint valuation report obtained in September 2008 and the parties agreed on the current open market value at $2,370,000.  After the deduction of the premium to be paid upon a sale and the mortgage loan, the net value of the property was agreed at $791,745.21.

94.  The paternal grandfather had also purchased a car park in the same development at a price of $300,000 and a mortgage of $210,000 was obtained.

95.  In other words, a down payment of $174,000 was paid for both the Aldrich Garden Property and the car park.  It is not in dispute that this down payment was paid from the parties’ joint account.  It is also not in dispute that the subsequent mortgage repayments were also from the parties’ joint account.

96.  As to occupation, it was not in serious dispute that the Aldrich Garden Property was occupied firstly by just the parties and later they were joined by the children.  After the parties’ separation in 2007, the wife moved out and is now residing at a flat in Wanchai with the second daughter and the son while the husband has moved back to the City Garden Property with the eldest daughter and stayed with the paternal grandparents.  The Aldrich Garden Property is basically vacant at the moment.  As to the car park, it was sold by the paternal grandfather before the commencement of the trial realising a sum of $220,000 which is now held by the paternal grandfather pending the outcome of this trial.

97.  It is the wife’s case that the paternal grandfather is only holding the title to the Aldrich Garden Property as trustee for the parties as all the purchase price and mortgage payments were made by them.  As to the car park, despite the fact that the car park had already been sold by the paternal grandfather prior to trial, the issue here is whether he is holding the proceeds of sale as trustee for the parties.

98.  It is the case of the husband and the paternal grandfather that all the payments were just repayment of a loan of $4,060,000 from the paternal grandfather back in 1997 when he advanced the money to assist the parties and RW1 to purchase the Granville Garden Property.

99.  The wife contends that the money then advanced by the paternal grandfather was a gift instead of as a loan. 

100.  In other words, the ultimate question to be asked in this issue is whether the payment of $4,060,000 by the paternal grandfather in the purchase of the Granville Garden Property in the names of the parties and RW1 was a loan as contended by the husband and the paternal grandfather, or as a gift as contended by the wife.

The Wife’s evidence in respect of the Granville Garden Property

101.  In her 8^th Affirmation, the wife said in the year of 1997, the paternal grandfather was already 60 years of age and was not in good health.  Therefore, he planned to transfer part of his assets to the parties and his daughter HSL (RW1) in order to avoid heavy estate duty and for better management.  In about November 2007, the paternal grandfather spotted a property in Tai Wai, i.e. the Granville Garden Property and suggested the parties and RW1 to buy it.  As he knew that the parties and RW1 were not in a position to afford the purchase price of $6,530,000, he offered to help by giving them a gift of about $4,000,000.   The offer was gladly accepted.  According to the wife, the paternal grandfather eventually paid a sum of $4,060,000, including decoration expenses of $280,000.  As a result, only a mortgage loan of $2,800,000 needed to be taken out by the parties and RW1.

102.  The parties moved into Granville Garden Property but not RW1.  The monthly mortgage repayment of the Granville Garden Property was about $25,000 to $26,000 to which RW1 had only made irregular contribution.   According to the wife, RW1 had altogether paid a sum of about $260,000 towards the mortgage repayment.

103.  In her affirmation, the wife said the $4,060,000 payment by the paternal grandfather had to be a gift because there was no way for them to assume such a big liability.  She calculated their then liability to be in the region of $10,000,000 if there was no gift by the paternal grandfather.  She arrived at this figure by adding up the total amount of the repayment of the principal and interest at $6,000,000 and the $4,060,000 advancement from the paternal grandfather.

104.  She further said that there was later an agreement for the parties to buy off the share of RW1 by the payment of $338,000.  Thereafter, the parties became the joint owner of the Granville Garden Property.  Eventually, the property was sold in 2004 and a sum of $1,500,000 was realised.  The fact that there was no demand for any repayment from this sum of money was a clear indication that no loan was ever made by the paternal grandfather.

105.  The wife’s evidence also included a written schedule of payment recorded in a paper bearing the name of “Friendship Hotel” (“the Friendship Hotel Note”).  She said the paper recorded the parties’ reimbursement of the paternal grandfather’s spending on Aldrich Garden Property, thus indicating that he was merely holding the property on trust for them.

The Paternal Grandfather’s Evidence

106.  According to the paternal grandfather, he is now aged 71 years and being a retiree since 1998. He was residing with the paternal grandmother, her mother (i.e. the great grandmother), the eldest daughter and a domestic helper.  He said in December 1997/ January 1998, he had lent a total sum of about $4,060,000 to the husband, the wife and RW1 to purchase the Granville Garden Property at a consideration of $6,530,000.  He said it was the parties’ idea to buy the flat but they did not have sufficient funds.  After due consideration, he decided to assist them but on condition that if he should need the money at any time in the future, they had to repay him.  There was no agreement signed because he trusted his children and the wife.

107.  The parties moved into the property and stayed there until 2001 when they moved to the Aldrich Garden Property.   The Granville Garden Property was then rented out and the rents were collected by the parties.

108.  At a later stage, there was an agreement that the parties would buy off the share of RW1 at a consideration of $300,000.  The sum was calculated on the assumption that the property was worth $3,200,000 at the time and the outstanding mortgage was $2,100,000, thus giving the property a net equity of $1,100,000.  As RW1’s contribution towards the mortgage repayment was less than the parties, she would therefore get less than 1/3 of the division, which was later agreed at $300,000.  Legal formalities were not completed to effect a formal transfer for the sake of saving costs.

109.  The Granville Garden Property was sold in 2004 and the parties netted a sum of about $1,454,229.01. There was no immediate repayment of the parties’ share of the loan (at about $2,700,000, being 2/3 of the loan of $4,060,000) and so their loan was still outstanding.

110.  As to the former matrimonial home of the parties, i.e. the Aldrich Garden Property, the paternal grandfather said in about 2000, he wanted to but a flat under the HOS. Eventually, the paternal grandfather was successful in getting the Aldrich Garden Property by giving up his public housing unit as one of the conditions. The purchase price for the former matrimonial home was $1,684,600 but as he did not have enough money, he requested the husband to be his guarantor in securing a mortgage and to repay the Granville Garden Property loan regularly so that he could repay the mortgage of the Aldrich Garden Property.  The paternal grandfather further said he had kept a record of the husband’s payment to him which was produced as Exhibit R2.

111.  As to the “Friendship Hotel Note”, the paternal grandfather said it had nothing to do with the reimbursement of outgoings in the Aldrich garden Property.  It related to the repayment of another loan to the husband at $300,000.  He said he could not remember the exact purpose but it should be either for making part payment of the Granville Garden Property mortgage loan or for the husband buying a motor vehicle.

112.  As the parties owed him $2,700,000 (being 2/3 of the $4,060,000 loan), the paternal grandfather said even after the payment of about $1,900,000 by the husband towards the Aldrich Garden Property, the parties still owed him around $800,000.  He said it was a simple family arrangement that he lent money to his children to purchase a property on the agreement and understanding that they would repay him whenever he was in need of the money in the future.  In this case, he had lent most of his savings to the parties and RW1, and when he bought the Aldrich garden Property, he just requested the parties to repay him the money so that he could complete the purchase.

The Husband and RW1’s Evidence

113.  I do not intend to repeat what the husband and RW1 said in regard to the Granville Garden Property as it would lengthen this Judgement unnecessarily.   Suffice to say what they said were broadly in line with the evidence of the paternal grandfather.

The Court’s View

114.  As I have said earlier, the main issue here is whether the payment of $4,060,000 by the paternal grandfather in 1997/98 to assist the parties and RW1 to purchase the Granville Garden Property was a gift as contended by the wife, or as a loan as contended by the paternal grandfather, the husband and RW1.  If it was a loan, then all the payments made by the husband in the purchase of the Aldrich Garden Property under the name of the paternal grandfather could be regarded as a repayment of that previous loan and the wife’s claim for a resulting trust in the Aldrich Garden Property would fail.

115.  After considering all the evidence in this case, I have come to the view that the payment of $4,060,000 was on balance more likely to be a loan, instead of as a gift.  In reaching my conclusion, I take note of the following evidence:

(1)   During the whole course of the trial, there had never been any direct evidence from the wife that at the time of the purchase of the Granville Garden Property, there was an express agreement of a gift.  The wife accepted that she had never heard the paternal grandfather directly said he was gifting the money and that the same was only conveyed to her by the husband, which was of course denied.

(2)   After hearing all the parties’ evidence in court, the first thing that struck me was that the paternal grandfather was a very careful and meticulous person, in particular in relation to money and figures.   As can be seen from Exhibit R2, he had kept a very detailed record of the transactions between him and the husband.  I note that in the year of 1998, the paternal grandfather had already retired and the sum of $4,060,000 formed the majority, if not the entirety of his then available assets.   I do not believe he was that sort of person that would just give away the majority of his fortune, not even to his son.

(3)   In addition, there was also the evidence of Exhibit R2 which had recorded words (in Chinese) “repay part of the Granville Garden mortgage” against the notation “January 2000, loaned out $300,000” (A/4, 1188).  This was a clear indication that by as late as 2000, the paternal grandfather was still lending money, instead of gifting money to the husband.  If the payment in 2000 was a loan, I have difficulty in accepting the payment in 1997/98 was a gift.

(4)   Despite the wife’s claim that the Aldrich Garden Property was regarded as their home and property, in 2007, she had attempted to purchase another flat in the same estate (A/8, 2591).  When the purchase eventually failed, the parties then rented a unit in the nearby Felicity Garden.  If they had already got their own home and property, why bothered to buy another flat in the same estate?  This is another indication that the Aldrich Garden Property was not their property.

(5)   At one stage, the wife tried to argue that the Friendship Hotel Note was a reminder from the paternal grandfather of his spending on their behalf in the Aldrich Garden Property, thus indicating that he was only holding the property as a trustee.  But if one has a closer look of the document, one would realise that the first instalment to be paid was due in April 2000.  The Aldrich Garden Property was only purchased a few months later and so by April 2000, there was in fact nothing to be repaid, as far as the Aldrich Garden Property was concerned.  Later, the wife tried to change her story and said the Friendship Hotel Note was a proposal to buy out RW1’s share in the Granville Garden Property.  However, it is my finding that the proposal was made in 2002, not 2000.

116.  Based on the above analysis and on a balance of probabilities, it is my finding that the evidence of the husband and the paternal grandfather is more preferable.  I find it as a fact that the $4,060,000 paid by the paternal grandfather in 1997/98 was a loan and not as a gift.  Therefore, when the husband paid the money in the purchase of the Aldrich Garden Property, he was merely repaying part of the loan to the paternal grandfather.  In the circumstances, the claim of the wife against the Aldrich Garden Property and the sale proceeds of the car park must fail.

The Husband’s Application to Set Aside

A Sum of $400,000 transferred from the wife’s Account to her mother

The Husband’s Case

117.  It is common ground that a sum of $400,000 was transferred from the wife’s bank account to her mother on 2 May 2007.  It is the husband’s case that this $400,000 was part of the family assets and so he asked for the setting aside of this transaction under s.17 of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“ MPPO”).

The Wife’s Case

118.  It is the wife’s case that she had always been holding some money as trustee for her mother and this fact was well known to the husband.  She said when the parties decided to but another property at the Aldrich Garden, she had actually borrowed $300,000 from her mother to pay the deposit.  However, when the transaction was not proceeded with, the husband used the $300,000 to buy shares instead of returning this to her mother.  This had infuriated her mother and so she asked for the return of all the money, including this $400,000 in the wife’s account.  Therefore, when she returned the money to the mother, she was not dissipating any of the family assets.

The Court’s View 

119.  Under s.17 of the MPPO, the court may set aside a transaction:

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

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

(c) …”

120.  For the applicant to proceed with such an application, the procedural requirement of  r.74(3) and (4) of the Matrimonial Causes Rules, Cap.179A has to be satisfied:

“74.     (3)       A copy of Form 8, 8B or 9, as the case may be, together with a copy of the supporting affidavit, shall be served on the following persons as well as on the respondent to the application, that is to say-

(a)…

(b) in the case of an application for an avoidance of disposition order, the person in whose favour the disposition is alleged to have been made and such other persons, if any, as the registrar may direct.

     (4)       Any person served with notice of an application to which this rule applies may, within 14 days after service, file an affidavit in answer.”

121.  There has never been any affirmation of service filed concerning the service of this s.17 application on the mother of the wife.  However, upon reading the latest submission of the husband’s counsel, coupled with the fact that service has never been an issue in this application, I accept that proper service had been effected on the mother of the wife.

122.  As to the merits of this application, I am persuaded that the wife had been holding this money as trustee for her mother.  I note that when the husband was being cross examined, he agreed that the wife did mention borrowing $300,000 from her mother to pay the deposit.  This important fact has not only corroborated with the wife’s evidence, it also shows that the parties were lack of funds at the time of the purchase of the 2^nd Aldrich Garden flat.  In other words, if the wife did have this $400,000 in her bank account as a beneficial owner, she would not have any need to borrow the deposit from her mother.  The fact that she had to borrow this sum from her mother, it was a clear indication that the $400,000 then in her account did not belong to her beneficially.

The Wood Road Property

The Husband’s Case

123.  It is the husband’s case that the Wood Road Property was originally held under the sole name of the wife’s father.  On 9 April 2002, it was transferred into the joint names of the wife and her father and this, according to the husband, was a gift of half share of the property to the wife.  However, on 16 June 2007, that was less than a month before the wife left the family, she transferred back her share to her father for $750,000.  The husband said it was a clear case of a transaction designed to defeat the husband’s claim for ancillary relief and should therefore be set aside.

The Wife’s Case

124.  It is the wife’s case that when the property was transferred into her and her father’s joint names, it was merely an effort to obtain an address proof for the purpose of school application for the children.  When the property was transferred back in 2007, there was no actual money transaction because she was just retuning the legal title to her father as a trustee.  She did not know why there was such a consideration of $750,000 stated in the Deed of Assignment as all the procedures were handled by her father.

The Court’s View

125.  Again, upon reading counsel’s latest submission, I am satisfied that proper service had been effected on the father of the wife.

126.  After hearing the wife’s evidence and despite the fact that the wife’s father did not testify at trial, I accept on a balance of probabilities that the original transfer in 2002 was not a gift.  I note that all the 3 children were and still are students studying on the Hong Kong side. This is consistent with the wife’s claim that they always wanted to have their children educated on the Hong Kong side as there are more famous and prestigious schools.  This was the case even when the parties were themselves residing at the Granville Garden Property in Tai Wai.  There is also no evidence to suggest or prove that the wife did obtain any financial benefits from this property in the past years.  Therefore, I accept that the transfer in 2002 was merely for the purpose of providing an address proof so that the wife could apply for school placements for the children on the Hong Kong side.  I do not accept the wife was having a beneficial interest in the Wood Road Property.

The Law on Ancillary Relief

127.  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.       “

128.  Apart from the granting of financial relief, the court has also power to grant a property transfer order or a sale of property order under ss.6 and 6A of MPPO:

“6.       Orders for transfer and settlement of property and for variation of settlement 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 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…

6A.   Orders for sale of property

(1)   Where the court makes an order under section 4, 5 or 6 then, on making that order or at any time after the making of that order, the court may make a further 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.

…”

Section 7 Considerations

129.  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.”

Income Capacity, Property and Other Financial Resources

The Wife

130.  In her latest Form E (A8/2574), the wife stated her occupation as a Customer Services Representative earning a monthly income of $12,768.  However, as the information was dated 6 May 2009, her counsel in his final submission updated the wife’s present monthly income at $13,440.

131.  As to other assets, I accept that the wife does not have any substantial deposits in her bank accounts or any other properties which are of a substantial value.  The only asset that she may have is a MPF balance at $114,834.07.

The Husband

132.  The husband is now working as the Vice-president of a company called EM AS with a monthly income of $106,250.

133.  In his Form E, he has listed in the Summaries of Assets and Liabilities (A7/2380) a negative value of $44,491.73.  That was of course challenged by the wife at trial.  The main thrust of the wife’s arguments was that there were a number of properties or assets being held by the paternal grandparents on trust for the husband; or that the husband has actually hidden some of his other assets himself.  But as I have indicated in the some of the preceding paragraphs, I rejected most of her arguments and it is now my finding that the husband is not holding any valuable properties or assets except the followings:

(1)   The paternal grandmother is holding a sum of $36,000 as trustee for the husband (para. 61 above refers);

(2)   HK$100,000 and CNY 132,000 (being HK$151,800 if an exchange rate of 1:1.15 is adopted) being money allegedly spent on decoration and gambling in Macao that has to be accounted for by the husband (para. 70 above refers); and

(3)   $287,313 in the husband’s MPF account.

The total amount of the husband’s assets being $575,113.

Needs, Obligations and Responsibilities

The Wife

134.  In her 6^th Affirmation (A/5, 1570), the wife stated that she had the following monthly outgoings:

General Family Expenses	$18,700
Personal Expenses	$7,600
For 2nd Daughter	$5,040
For Son	$8,054
Total:	$39,394

135.  However, in his Final Submission, counsel said the wife’s total monthly expenses are around $36,000 and I will therefore take that as her current monthly needs.

136.  I have no intention to enter into a detailed discussion on each and every item of the wife’s expenses as I note that they were not seriously challenged at trial.  Even if they were challenged (which is not the case here), I would have no hesitation to accept that they were reasonable outgoings in view of the fact that the total family income is about $120,000 to $130,000 per month.

137.  As the wife is only having a monthly income of about $13,000, I accept that her income alone is not sufficient to cover her current expenses.  But since the court has granted a MPS order of $24,000 in her favour, that would enable the wife to make her ends meet. 

138.  As to the wife’s capital position, she stated in her latest Form E (A/8, 2591) that she was having a debt of $468,000.  I note that this was seriously challenged but I accept that her total debts to various credit card companies and to her mother were in the sum of $468,000.

The Husband

139.  As to the husband, he stated in his latest Form E (A7/2383) that his monthly outgoings amounted to $122,200 and they were made up of:

Items	Amount
General Expenses (inclusive of rent of $18,000 payable to the paternal grandmother)	$18,000
Personal Expenses (inclusive of $27,000 legal costs and $24,000 MPS)	$86,500
Children Expenses	$4,500
Total:	$122,200

140.  I understand that the husband is claiming that he pays $18,000 per month to his mother as rent.  In paragraph 61 above, I have already ruled that this so called “tenancy” is really a sham.  Therefore, I do not accept that the husband is paying a rent.  However, I understand that both parental grandparents are now retired, and they have been very helpful in the past in looking after the parties’ children and even provided financial assistance in the acquisition of landed properties, I see nothing wrong for the husband, as a dutiful son to repay their kindness by way of monthly contribution towards their living expenses.

141.   As to the payment of legal costs, I note that the wife is not claiming a similar item in her monthly expenses.  It is my view that this item should be put aside for the time being and I will re-visit this item at the end of the Judgement when I have to deal with the question of costs.  In the circumstances, if one should take away this sum of $27,000, the total monthly expenses of the husband are about $95,000.

142.  As to the husband’s capital position, he stated in his Form E that he owed the following debts:

Item	Amount
Balance of a car loan	$100,000
Granville Garden Property loan	$618,305
Loan from BOC	$166,667
Legal Fees	$88,350
Total:	$973,322

143.  I understand that the BOC loan was for payment of tax and I suppose that should have been repaid by now.  Furthermore, it is also my understanding that the husband has taken some more recent loans to pay for his legal costs and so this sum of $88,350 should have been paid up as well.  In the circumstances, the amount of loans that are still outstanding under the above table should be $718,305 only.

144.  In his further evidence, it is the husband’s case that in the few months prior to the trial, he has incurred 2 other loans of $150,000 and $165,544 respectively from HSBC and BOC.  He said those loans were for the payment of tax (HSBC loan) and for personal use (BOC loans).  Therefore, his most updated liabilities are $1,033,849.  But to be fair to the wife, a few months have been lapsed and the husband must have repaid some of the above loans by monthly instalments.  Therefore, the actual amount of outstanding loans as at today may be lower than $1,033,849.  However, as counsel have not made further submissions in this regard in their written submissions, I would still adopt this figure in this Judgment but bearing in mind that the actual outstanding liabilities may be a little bit lower.

Conclusion on the parties’ financial positions

145.  Based on the above analysis of the parties’ financial positions, and even taking into account of the parties’ positive assets in their MPF accounts and the money that the husband has to account for as discussed under paragraph 133 above, it is my findings that both parties do not have any positive capital for the purpose of distribution in the ancillary relief applications.

Standard of Living Previously Enjoyed

146.  During the duration of the marriage, the parties have been staying in private accommodations.  The last matrimonial home was in the Aldrich Garden Property which was a flat of about 700 sq ft under the HOS.  The husband drove a second hand Mercedes Benz S Class and they had family trips from time to time.  Overall speaking, I believe they have lived to a standard of an ordinary middle class family.

Age and Duration of Marriage

147.  The wife is aged 42 and the husband aged 43.

148.  They married in 1993 and separated in 2007.  It was a 14 year marriage.

Physical or Mental Disabilities

149.  There is no evidence to suggest that either party or the children are suffering from any kind of physical or mental disabilities.

Contributions

150.  Both parties were working parents and both of them had contributed to the family financially.  As a way forward, the elder daughter will stay with the husband and the two younger children will be taken care of by the wife.  I am of the view that both parties have made more or less equal contribution to the family.

Conduct

151.  Despite the fact that both parties have made numerous allegations against each other, after hearing their evidence in court, I am of the view that there was no conduct of an obvious and gross nature that has to be taken into account in deciding on the ancillary relief issue.

Ancillary Relief

152.  Based on the evidence and the above analysis, it is my finding that both parties do not have any positive capital for the purpose of distribution.  Both of them are in debts to their parents or financial institutions. The wife has also failed in her applications against both the paternal grandparents (i.e. the 1^st and 2^nd Intervener).  Equally, the husband has also failed in his s.17applications.

153.   What remains to be considered is the wife’s application for maintenance in the form of periodical payments.  In this regard, I understand that the husband is presently paying a total sum of $24,000 as MPS ($9,000 for the wife and $7,500 for each of the 2^nd and 3^rd child).  It is my view that in the circumstances of this case, a monthly periodical payment in the sum of $30,000 is more reasonable. 

154.  The MPS order was made about 2 years ago and the costs of living have certainly increased during this period.  The costs of maintaining the children will also increase further as they grow and it is time for the court to re-assess the wife and the 2 children’s needs.  I understand that the husband is having a monthly income of $105,000, a maintenance order of $30,000 would not be excessive even after taken into account of his tax and other liabilities. 

Orders

155.  Based on the above reasons, I hereby make the following orders:

(1)   The husband to pay the following periodical payments to the wife:

(a) $10,000 per month in the form of maintenance pending suit for the wife until the granting of Decree Absolute and thereafter as final maintenance, payable on the 1^st day of every month starting from 1 October 2010 and continue to be payable during the joint lives of the parties or until the re-marriage of the wife, whichever is the shorter;

(b) $10,000 per month as maintenance for the second daughter payable on the 1^st day of every month starting from 1 October 2010 until she reaches the age of 18 years or until she finishes full time education, whichever is the latter;

(c) $10,000 per month for the maintenance of the son payable on the 1^st day of every month starting from 1 October 2010 until he reaches the age of 18 years or until he finishes full time education, whichever is the latter; and

(d) The above payments should be made and deposited into a bank account to be nominated by the wife.

(2)   The wife’s claim for a lump sum payment or property transfer order be dismissed.

(3)   The husband’s claim for an avoidance of disposition order be dismissed.

Costs

156.  As can be seen from the above orders, most of the parties’ various applications for ancillary relief failed and I do not see any clear winner in the proceedings between them.  It is my view there shall be no order as to costs, including all costs reserved as between the husband and the wife.

157.  As between the wife and the paternal grandfather, the wife’s claim against the paternal grandfather failed and costs, including all costs reserved be to the paternal grandfather with certificate for counsel, to be taxed on a party and party basis if not agreed.

158.  As between the wife and the paternal grandmother, costs, including all costs reserved be to the paternal grandmother.  I understand that the paternal grandmother was acting in person all along.  I hereby assessed her costs summarily at the sum of $2,000.

159.    This will be in the form of an order nisi which is to be made absolute upon the expiry of 14 days from the handing down of this Judgment.

S.18 Declaration

160.  Finally, I hereby grant a s.18 Declaration in respect of the 3 children of the family.