ML v. YJ

HCMC 13/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 13 OF 2006

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J U D G M E N T

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1.  In my judgment handed down on 23 May 2008, I reserve a question for further submissions: given the finding of this court as regards the total wealth of the family, whether the figure alone warrants departure from equality on the ground of stellar contribution.

2.  The case was restored for hearing on 10 October 2008.  I heard submissions from Mr Yu SC on behalf of the Wife.  The Husband remained absent.

3.  As I said previously, the Husband did not put forward a case of stellar contribution.  In other words, there is no evidence of any exceptional and individual quality on the part of the Husband that contributed to the exceptional wealth in the family.  Therefore, the discussion on stellar contribution must be confined to a very narrow issue: whether the total wealth alone lead to an inference of stellar contribution.

4.  In Charman v Charman [2007] 2 FCR 217 at para.80, Sir Mark Potter P said,

“the court will no doubt have regard to the amount of the wealth; and in some cases [the amount of wealth] will be so extraordinary as to make it easy for the party who generated it to claim an exceptional and individual quality which deserves special treatment.  Often, however, he or she will need independently to establish such a quality … Sometimes, by contrast, it will immediately be obvious that substantial wealth generated during the marriage is a windfall … which is not the product of a special contribution.”

5.  That was said by way of answer to questions raised in the earlier part of the same paragraph at p.253b,

“In such cases [viz. where there is substantial property in the family] can the amount of the wealth alone make the contribution special? Or must the focus always be upon the manner of its generation?”

6.  In my judgment, properly understood, the answer of the President was that one must primarily examine the manner of the generation of wealth instead of looking at the amount of wealth.  Whilst an extraordinary amount would make it easier to advance a claim of special contribution, one must still ask whether the wealth was generated from exceptional quality of the breadwinner.

7.  In Charman, the English Court of Appeal was invited to give guideline on a threshold of wealth below which a court would be unlikely to conclude that it was the product of a special contribution.  The court declined to do so.  At para.88, the President said,

“Like this court in Lambert, we find ourselves unable to identify any figure as a guideline threshold for a special contribution of this character.  It would, we consider, be dangerous for us to do so.  However laden with qualification, the guideline might discourage a court from discerning special contribution in the generation of wealth below the threshold in circumstances, however rare, in which it should properly do so.  The greater concern, however, is the obvious risk that it might encourage a court to discern special contribution in the generation of wealth above the threshold in circumstances in which it should not properly do so.  While the law recognizes the concept of a special contribution in the generation of wealth, there is no doubt that, following the decision of this court in Lambert, approved and developed in Miller, it keeps the concept in very narrow bounds.  We would not wish a party’s claim to have made a special contribution to succeed by reference to something interpreted as effectively a presumption deriving from our identification of a threshold figure.”

8.  This highlights that figure alone cannot be determinative on the question of special or stellar contribution.

9.  In Miller v Miller [2006] 2 WLR 1283, at para.146, Baroness Hale emphasized that the focus should be on contribution to the welfare of the family, not contribution to accumulated wealth per se.

“It had already been made clear in White v White [2001] 1 AC 596 that domestic and financial contributions should be treated equally.  Section 25(2)(f) of the 1973 Act[1] does not refer to the contributions which each has made to the parties’ accumulated wealth, but to the contributions they have made (and will continue to make) to the welfare of the family.  Each should be seen as doing their best in their own sphere.  Only if there is such a disparity in their respective contributions to the welfare of the family that it would be inequitable to disregard it should this be taken into account in determining their shares.”

10.  This must be read together with Her Ladyship’s approval of the following observations by Coleridge J in G V G (Financial Provision: Equal Division) [2002] 2 FLR 1143 at 1155 para.34,

“what is ‘contribution’ but a species of conduct? … Both concepts are compendious descriptions of the way in which one party conducted him/herself towards the other and/or the family during the marriage. … the facts having been established, they each call for a value judgment of the worth of each side’s behaviour and translation of that worth into actual money.  But by what measure and using what criteria?  …  the valuing of positive ‘contribution’ varies from time to time.  Should a wealth creator receive more because, e.g. his talents are very unusual or merely conventional but well-employed? Should a housewife receive less because part of her daily work over many years was mitigated by the employment of staff? Is there such a concept as an exceptional/special domestic contribution or can only the wealth creator earn the bonus?…It is much the same as comparing apples with pears and the debate is about as sterile or useful.” (My emphasis)     

11.  If I may say so respectfully, these observations bring out the heart of the problem and the injustice if one simply focuses on the quantum of wealth generated by the breadwinner to see whether a case of stellar or special contribution has been made out.  A major lesson to be learnt from the ground breaking judgment of Lord Nicholls in White v White [2001] 1 AC 596 is that there is no room for discrimination between the breadwinner and the homemaker in the redistribution of family assets upon divorce.  In that light one can readily see why Baroness Hale formulated the guiding principle on stellar/special contribution in Miller as follows,

“Each should be seen as doing their best in their own sphere.  Only if there is such a disparity in their respective contributions to the welfare of the family that it would be inequitable to disregard it should this be taken into account in determining their shares.”

12.  In my judgment, it flies in the face of such guiding principle and the fundamental reasoning of White to say one can establish stellar/special contribution just because the quantum of the total wealth is above a certain level.  That would be a bias in favour of the breadwinner and inconsistent with the principle of equality.

13.  I am aware that in Lambert v Lambert [2003] Fam 103, Thrope LJ had said at para.52,

“There may be cases where the product alone justifies a conclusion of a special contribution but absent some exceptional and individual quality in the generator of the fortune a case for special contribution must be hard to establish.”

14.  But that dicta must be read together with what was said by His Lordship at para.45 as regards the danger of gender discrimination in the concept of special contribution and at para.46 as regards the futility of speculating on the boundaries of the exceptional cases.  At para.46, His Lordship expressed the following tentative view,

“In the course of argument I suggested that [the exceptionality] might more readily be found in the generating force behind the fortune rather than in the mere product itself.”

15.  I do not think Thrope LJ had come to a concluded view on whether the quantum of total wealth alone can make out a case of special contribution.  In view of subsequent authorities referred above, what His Lordship had said in para.52 in Lambert does not present any difficulty to the conclusion I reached in Paragraph 12.

16.  Given that the Husband has not advanced a case on stellar contribution, I hold that no basis for departure from equal division can be established by the mere fact that the total wealth of the family is substantial.

17.  Without any stellar/special contribution, I agree with Mr Yu that on the facts of the present case equal division is appropriate by the application of the sharing principle.  It is not a short marriage and the Wife had contributed both financially and domestically.  She had given up her business for the sake of looking after the children.  She will continue to take care of them.  I shall award the Wife a lump sum payment accordingly.  After deducting assets already allocated to the Wife, the lump sum payment should be,

$840,290,664.6 / 2

–   $32,100,000 [item 1.1 of Annex A to my earlier judgment]

–   $9,754,221.19 [item 1.2 of Annex A excluding item (f)]

=   $378,291,111

18.  For reasons already canvassed in my earlier judgment, there is a need to have injunctive relief in place to preserve assets for execution.

19.  Mr Yu asked for costs of the ancillary relief proceedings to be paid by the Husband on indemnity basis.  Suppressing information, material non-disclosure, litigation misconducts are matters that the court will take into account on the issue of costs.  In the context of matrimonial proceedings, as I have explained in L v C HCMC 5 of 2006, 15 May 2006, material non-disclosure can often have significant impact on costs because the other party inevitably has to incur much costs to seek redress.  The Court of Appeal in L v C [2007] 3 HKLRD 819 at paras.67-70 also took a serious view on such misconduct and endorsed the following passage from Rayden & Jackson on Divorce and Family Matters 18^th Edn., para.17.28,

“Shortcomings in disclosure will be visited by orders for costs against the offending party, often on the indemnity basis.”

20.  In the present case, I have found that the Husband had embarked on the concealment of his assets on a massive scale.  Assets of substantial worth were put under the names of his nominees to facilitate his scheme of misleading the court.  The tactics he deployed to frustrate proceedings in Hong Kong and his subsequent absent from the trial are also relevant conduct for the purpose of costs.  As I said in paragraph 68 of my judgment of 23 May 2008, it is my finding that his deliberate absence from the trial was to frustrate the exposure of his non-disclosure.

21.  It is time for the court to take a firm stance to discourage such litigation misconduct.  Whilst I recognize indemnity costs should not be ordered unless there are exceptional circumstances, and if it is to be awarded on the ground of unreasonable conduct, the conduct has to unreasonable to a high degree (see Liam v MGN Ltd (No 2) [2002] 1 WLR 2810 at para.12), I am of the view that the Husband’s conduct in the present case warrants such an award.

22.  I therefore make an order in terms of the draft submitted by the solicitor for the Wife on 13 October 2008.

23.  Subject to comments from the parties that may be advanced to this court in writing within 14 days, I shall release this judgment for circulation.

[1] Similar wordings appear in Section 7(1)(f) of our Matrimonial Proceedings and Property Ordinance Cap.192