CR v. MRQ

FCMC 2706 / 2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER FCMC 2706 OF 2008

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J U D G M E N T

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Introduction

1. This is an application by a Respondent Wife for ancillary relief where the parties were married for approximately 2 ½ years. There are no children of the family.

2. The Wife is from the Philippines where she enjoys some status as a celebrity. She is a Beauty Queen having won the Miss Philippines pageant in 19XX and subsequently coming runner up in the Miss Universe competition in the same year. On the back of this she has carved out a career which includes modelling, hosting television programmes and endorsing products such as shampoo and other beauty items. She has had one small movie part. The husband is a successful Italian businessman based in Hong Kong. He is a self made man and is by all accounts wealthy. He has a number of business interests including trading in watches and promotional items such as bags, hats etc, real estate investment and he also has an interest in several restaurants. The couple met in Manila and conducted a long distance relationship for approximately one year before marrying in December 2003. During the marriage they enjoyed a very high standard of living. They separated in June 2006 with each blaming the other for the breakdown of the relationship.

3. The wife seeks a clean break and a share of the matrimonial assets. The husband’s approach, initially at least, has been to offer the wife nothing, arguing that she is not entitled either legally or morally to a share of the asset base.

The issues

Financial resources

1) What is the computation of available assets?

2) To what extent is the concept of a marital acquest engaged in this case?

3) How should the matrimonial home/s be viewed?

4) To what extent are the assets in this case to be regarded as matrimonial or non-matrimonial assets?

5) Given my findings in 1) – 4) above what share of the assets is the wife entitled to bearing in mind the principles of need (generously interpreted), compensation, sharing and the s.7 factors?

In particular:-

a) What are the wife’s reasonable needs (generously interpreted) in the context of this case?

b) To what extent, if at all, should the wife be compensated? 

The law

4. Both parties referred me to Hong Kong’s leading case on ancillary relief namely DD v LKW (CACV no 91 of 2007). In that case the Hon Mr. Justice Cheung JA set out in clear terms the applicable principles to be generally applied in ancillary relief cases. These can be found at para’s 69 and 70 of the judgment. For ease of reference I will repeat some of the sections relevant to the circumstances of this particular case as follows:

 (2)    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)

 (3)    The inquiry should be conducted in two stages:

 1)    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 the parties have and are likely to have in the foreseeable future (Charman [67]).

 2) 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]).

(4)   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)(c));

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

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

 (5)    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]).

 (6)    The relevant factors for the principle of sharing are,

1)    the contributions 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)).  (But see below)

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

 (7)  As to any conflict between these 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]).

(8)   The principle of fairness is to apply to all properties of the parties both ‘matrimonial’ (i.e. the product of both parties which also include the matrimonial home, even if this was brought into the marriage by one of parties) and ‘non-matrimonial’ (i.e. by inheritance and gift) (Miller [22]).

(9)   The equal sharing principle applies to both long and short marriages but in case of short marriage, the non-matrimonial property may be a good reason for departing from equality (Miller [24]; Charman [66]).

(10) The concept of ‘special contribution’ i.e. exceptional income generated by only one party, may be regarded as a factor pointing away from equality of division when, but only when, it would be inequitable to proceed otherwise (Miller [68]).

(11) Where a spouse has given up a lucrative career for the benefit of the family, this may justify an award for compensation (Miller [90-93]).

5. It is accepted that in the circumstances of this case, given the shortness of the marriage, that there should not be an equal sharing of assets. The question then becomes how much is the wife entitled to, (if, on the husband’s case she is infact entitled to anything at all), and on what basis should the award be made?

Short marriages

6. In support of the wife’s case Ms Rattigan referred me to the leading House of Lords decision in Miller v Miller, McFarlane v McFarlane [2006] UKHL, 24. I agree that the facts in Miller are very similar to the facts in this case. In both cases the marriage was short and the couple were in their mid to late 30’s, with the husbands being a little older than the wives. In each there were no children. In addition the wealth of the marriage was created solely, by the husbands’ efforts. In Miller, Baroness Hale said

The needs generated by the relationship are comparatively small. The wife will be able to re-establish herself in life within a relatively short time. But she was for some time the fiancée and then the wife of a very rich man … Mrs. Miller never sought to claim a half (of the assets). The Judge eschewed the yardstick of equality because the assets had not been generated by their joint efforts but by the husband using his pre-marriage assets and expertise to generate substantial extra profits during the marriage.

On the award to the wife of approximately 1/6 of the assets she added:

that is undoubtedly more than she would need to get herself back to where she would have been had the marriage not taken place. But that was never the express objective of the law, even in the 1970’s and 1980’s when the Court of Appeal supported such an approach in short childless marriages … The Court has to take some account of the standard of living enjoyed during the marriage: see S25(2)(c). The provision should enable a gentle transition from that standard to the standard that she could expect as a self-sufficient woman. But she is entitled to some share in the assets. The couple had two homes and there is no reason at all why she should not have a share in their combined value, together with other assets obviously acquired for the benefit of the family. She is also entitled to some share in the considerable increase of the husband’s wealth during the marriage.

7. I agree that the same approach may be taken in this case.

8. Therefore the wife says that similarly she is entitled to a share of the value of the matrimonial home/s and to a share of the marital acquest generally.

9. In response Mr. Erving, for the husband has referred me to the judgment at first instance of McCartney v McCartney where Barnett J, in taking what might be described as more of a needs based approach in the circumstances of that particular case, said as follows:

303. Mr Mostyn encapsulates the husband’s case at paragraph 40 of his closing submissions:

“In a short marriage where the assets were all in place prior to that marriage and where the assets have not increased by reference to “partnership” activity the wife should get a needs-based award. The principle of sharing is simply not engaged. This, of course, is the guidance of those passages of White and Miller that deal with inherited or pre-marital resources. Premarital wealth is a very important factor and can act so as to displace the sharing principle altogether. Put another way, there can be a departure from sharing to need in a case where virtually all the assets are pre-marital or derive therefrom.”

304. He thus contrasts such a case with a case of a short marriage where there has been a very substantial increase in the asset base e.g. Mr Miller’s New Star shares, in which the sharing principle may be engaged.

305. In my judgment, the compensation principle set out in Miller is simply not engaged in the instant case given my findings of fact. I say no more about it.

And later

311. In my judgment, in this case the needs of the wife (generously interpreted) are not simply one of the factors in the case but are a factor of magnetic importance. In a case where the vast bulk of the husband’s enormous fortune was made not only before their marriage but also indeed before the wife and husband even met; where the “marital acquest” (if such there has been) is of a very small amount compared to the total assets; where the compensation principle is not in any way engaged; where the marriage is short and where the standard of living lasted only so long as the marriage; where the wife is now and will be very comfortably housed; and where B’s needs are fully assured, surely fairness requires that the wife’s needs (generously interpreted) are the dominant factor in the S.25 exercise. Any other radically different way of looking at this case would, in my judgment, be manifestly unfair.

Open offers

10. The wife made an open offer as follows:

Pursuant to the Order dated 1st June 2009 we hereby set out our client’s open offer of settlement.

It is our client’s case:-

That throughout the marriage she supported your client fully as his wife. Throughout the marriage your client fully enjoyed the kudos of having a model and beauty queen as his wife from which he derived a clear benefit. Our client accompanied your client on his many business trips and supported him in his many business endeavours.

That during the marriage there were at all times two matrimonial homes, which were run simultaneously by the couple. There was a home in Treviso, Italy, and a home in the New Territories, Hong Kong. Both properties were newly renovated and furnished by the parties and our client contributed to those renovations and to furnishing the homes. She was responsible for the day-to-day running of these homes.

That the Parties traveled extensively and commuted between the matrimonial homes in Hong Kong and Italy. They enjoyed business class flights on Cathay Pacific to regional destinations and enjoyed First class flight on Cathay or Thai Airways for long haul flights to Europe.

That the Parties had the assistance of 2 domestic helpers in Hong Kong and they had the use of various luxury cars and motorbikes and enjoyed gym and yoga memberships.

That our client was treated to regular salon and spa visits and received jewellery, shoes, bags and accessories as gifts from your client together with a monthly allowance. The Parties dined in high-end restaurants and shopped at high end branded stores worldwide.

That she was for some time the fiancée and then wife of a very wealthy man.

Following the separation our client’s living conditions have greatly changed and deteriorated compared to the standard of living she enjoyed during the marriage and in comparison to that standard of living still enjoyed by your client. Furthermore, our client does not enjoy even now the standard of living that she would have been able to afford at this time had she not married your client and given up her career for the marriage as she did.

It is hoped that our client will in time be able to re-establish herself to some degree in her career following the 2 ½ years of marriage. She has been endeavoring to re-establish herself since the Parties’ separation but has still not been able to do so fully and may never be able to do so fully.

On the evidence available from your client’s financial disclosure to date, which is not complete or indeed up to date, your client’s net worth is in the region of at least HK$61.5 million. This includes his interest in P Holdings (at company level only and not including the full value of the profits earned in respect of the subsidiary and associated companies for which accounts have not been disclosed) of HK$50 million, together with HK$10.9 million in respect of A Limited and the balance in your client’s bank accounts which has mysteriously fallen from HK$8.03 million as stated in his Form E to HK$1.5million. This estimation of your client’s net worth does not include the property in Italy, the value of the subsidiary and associated companies of P Holdings or other valuable items. This estimation is, therefore, extremely conservative.

Our client seeks a clean break settlement.

Whilst your client undoubtedly bought a substantial amount of money into the marriage and whilst this was a short marriage, our client contributed to the marriage as a wife and companion and thereby contributed, at the very least, to the wealth generated during the course of the marriage. Our client is legitimately entitled to some share of the matrimonial assets especially in respect of the matrimonial homes.

Furthermore, our client has a legitimate claim to include an element for compensation in her financial claim. Our client gave up her career, which was “on the up and up”, in order to devote her life to your client. Our client forewent her career and turned her mind instead to the marriage to your client, which she had every expectation and hope would last a lifetime.

During the course of the marriage and since the separation our client has suffered an opportunity loss of earnings. Our client’s earnings would have increased each year had her career not been stopped in its tracks by her marriage to your client. Our client has, therefore, suffered an opportunity loss in respect of the income she would have earned during the course of the marriage. Furthermore, our client has suffered a set back in her earning capacity caused directly by the marriage due to the fact that when returning to her chosen career after a significant absence she was no longer in high demand. The break in her career has meant that she was unable to maintain the same level of celebrity status she enjoyed and, therefore, has been unable to sustain that critical element of her career, which leads to longevity in such an industry.

Our client’s financial loss, for which she is entitled to be compensated has, therefore, been for a period of not just the actual loss of income during the 2½ years of the marriage and the past 3 years since separation when our client has struggled to re-establish her career but also going forward from this point.

Our client also has a legitimate claim in respect of her financial needs. Your client enjoys the same standard of living that the parties had during the marriage. Our client is entitled to have a higher standard of living than she currently endures. She had a legitimate expectation of a life of comfort ahead of her when she gave up her successful career to marry your client. The standard of living our client enjoyed during the marriage must be taken into consideration. This standard of living together with our client’s needs would be reflected by an award which will allow her to re-house herself in the Philippines in a property of the same or similar standard to that which she enjoyed during the marriage, together with the use of a car and the necessary funds to run that home and car with domestic help and enjoy a modest level of international travel and holidays from time to time.

Therefore, in respect of the all the elements of our client’s matrimonial claim we are instructed to make a proposal as follows:-

Sharing of matrimonial assets. On the basis of this being a short marriage, the Respondent is prepared to exclude any pre-martial assets other than Belleview Villa, which was the matrimonial home. For the purposes of this computation the Petitioner is prepared to limit the matrimonial assets to the two matrimonial homes in Hong Kong. Whilst our client is prepared to exclude the property in Italy for the purpose of this computation, the fact cannot be ignored that the property was also a matrimonial home purchased, renovated and furnished during the marriage. Furthermore, whilst our client is prepared, for the purpose of this computation, not to include any increase in the value of the Petitioner’s shareholdings in the companies during the marriage, this also cannot simply be ignored.

Our client is entitled, at the very least, to a 50% share in the profits made on each of these properties. From your client’s Affidavit and the latest information provided to us by your letter dated 3rd June 2009 the profits amount to HK$14,166,316, our client is entitled to 50% of this or HK$7.08 million.

Needs: The Petitioner’s needs for a home, a car and capital can to a large extent be subsumed into sharing in this case. Her capital needs will also need to be met.

Contribution: As stated above our client contributed to the marriage as a wife and homemaker. She contributed to the wealth generated during the marriage.

Compensation: Prior to the marriage, the Respondent was riding high on her Miss Universe win and was at the height of her career as a TV presenter and film actress and she was building her career on her growing popularity. The respondent suffered a direct financial loss by the marriage for the period of the marriage. Whilst she has endeavored to re-establish herself after the breakdown of the marriage she has been unable to obtain the same earning capacity she enjoyed prior to the marriage and her ability to advance her career further following her absence from public life is severely restricted. Therefore, there is also an entitlement to an element of compensation going forward.

Taking a broad approach in respect of all the elements of the Respondent’s claim, and considering the Respondent’s own assets of approximately HK$1.49 million and taking into account once again that this has been a short marriage, the Petitioner proposes that she should receive a lump sum of HK$10 million.

11. The husband replied in his open offer as follows:

1. The Parties were married on XX December 2003. They commenced cohabitation when the Respondent moved to live in Hong Kong on XX February 2004. They separated when the Respondent decided, of her own accord to leave the Petitioner and return to live in the Philippines on or about XX May 2006. Although the true husband/wife relationship really ended in April 2005. The marriage had therefore lasted a maximum of 2 years and 5 months, but more realistically for less than 18 months.

2. During this short marriage the Respondent made no contribution, financial or otherwise to the marriage. She was wholly supported by the Petitioner. She could hardly be described as a housewife as the household was managed by 2 domestic helpers. The parties traveled extensively during the marriage.

3. The Respondent made no contribution of any kind to the Petitioner’s business or accumulation of wealth.

4. There was never a ‘matrimonial home’ in the true sense of the word. The first property, wrongly stated by the Respondent to be House X Bellevue Villas was purchased by A Limited long before the parties ever met. Later properties were bought, refurbished and then sold for a profit. It is accepted that between refurbishment and sale the parties occupied the properties as tenants. During their time together the parties only lived in property owned by A for a maximum period of 8 months. During the marriage there was no property owned in Italy.

5. During the marriage the Respondent was wholly supported by the Petitioner. Whatever funds she brought with her to Hong Kong from the Philippines after the marriage, on her own admission, she took back with her when she left the Petitioner.

6. During the marriage the Petitioner showered expensive gifts on the Respondent to the value of over HK$2 million.

7. Prior to the marriage the Respondent was a television presenter and part time model. She never completely severed her ties with the Philippines during the marriage. She has returned to her chosen career and is wholly re-established in the Philippines.

8. The marriage ended at the instigation of the Respondent, it was her choice and her choice alone.

9. Applying the principals set out in DD v LKW of contribution, sharing, need and compensation the only relevant one for consideration is need. The Respondent has not made out a case of need. She is no worse off now than she was before the marriage, in the circumstances of this case she is not entitled, post separation, to enjoy the extravagant life style enjoyed during this very short marriage.

10. In determining any payment due to the Respondent account must be taken of the significant difference between the cost of living in the Philippines and Hong Kong. The value of one dollar in the Philippines to over thirteen times the value in Hong Kong.

11. The Petitioner does not believe the Respondent is entitled to any financial settlement. In her Form A she claims the full gambit of orders but the court need only be concerned with two of them, namely periodical payments and lump sum. As to the former, the Respondent has been wholly self-supporting since May, 2005, she has no legitimate claim for such an order. As to the latter, she again has no legitimate claim. However, the Petitioner is prepared to pay to the Respondent, within 14 days of the granting of the decree absolute the sum of HK$2,000,000.00

The Wife’s case

12. As I have said the wife acknowledges that the marriage is short but makes a claim which “recognizes that marriage is a partnership of equals whatever its duration and whatever the respective roles of husband and wife”. She seeks a share of the value of the matrimonial home/s enjoyed by the parties during the marriage. She has also put her case on the basis of need by reference to the high standard of living enjoyed by the parties during the marriage. In addition she says that she should be compensated for the loss of opportunity that she might have enjoyed had she not married and continued with her career in the Philippines. Although reference is made to the marital acquest the wife acknowledges that her approach has been more broad brushed than specific. She does however claim a share of any wealth generated by the husband during the marriage, although the computation of that is somewhat difficult to ascertain. She claims a 50% share in the increase in value of the matrimonial home/s.

The husband’s case

13. The husband argues that the wife is entitled to very little, if anything at all. He bases this on the shortness of the marriage and the fact that he was responsible for bringing all of the wealth into the marriage. (The wife had US$50,000 which she brought with her from the Philippines and which was transferred back to the Philippines once the relationship ended). He claims that his companies and other assets were all pre marital assets and that on that basis the wife is not entitled to a share. In addition he maintains that the wife has not made out a case on need. In so far as the matrimonial homes are concerned he argues that these were first and foremost investment properties and that consequently they cannot be accurately described as “matrimonial homes”. He says that they lie outside the scope of the legal definition of that term. He denies that the wife made any contribution to his business or that she should be compensated for any loss. He maintains that she has been unable to prove a loss in any event. Although he offered the wife HK$2 million in his open offer, in his closing written submission Mr Erving said, “the husband should not be required to pay the wife anything”.

The Evidence

14. I must now turn to consider the issues, the law and the parties evidence as set out in the parties affirmations, their Form E’s and as given orally by them during the hearing. I have also considered the evidence of Mr T, a former Agent of the Wife, who agreed to give evidence on her behalf. For the avoidance of doubt, in so far as the matters set out in this judgment differ from the evidence of the husband or wife, that is because I have preferred the evidence of the other party or because I do not find the evidence given credible, or because I consider that the documents produced confirmed my findings of fact.

The issues

Financial Resources

What is the computation of available assets?

15. It has been very difficult to accurately ascertain the husband’s current worth, or indeed his worth at both the time of the marriage and at the time of the separation. The husband puts a figure of HK$49.4 million on his current assets but the wife claims that it is likely to be much more than that, possibly nearer HK$81 million. The wife produced a schedule of assets at the final hearing in June as follows:

The parties’ assets:

Asset Schedule

Item	PetitionerHK$	RespondentHK$
Net value of interest in the matrimonial home
Total net value of all other landed properties (excluding the matrimonial home)	Within company values Although not booked at true value	553,834.66Residence
Total value of interest in all bank accounts	1,500,000	730,798.59
Total value of shareholding / beneficial interest in all private companies	61,500,000	176,369.57
Total value of other business interests	Unknown	389,188.33Property investments
Total value of interest in all holdings (e.g stocks)		32,288.22
Total value of interest in all insurance policies		15,895.32
Total value of interest in all debts owed to you	18,500,000
Total value of valuable personal items	Unknown	1,240,235.30
Total value of other assets
Sub-total	81,500,000	3,138,609.99
Total value of pensions, if any		123,632.48
Total	81,500,000	3,262,242.47
Less : TOTAL value of liabilities	39,087.42	528,793.11
NET VALUE	In excess ofHK$81,000,000	2,733,449.36

16. Some of the difficulty is that the husband has taken a rather de minimalist approach to disclosure. In his Form E he puts his current value of his share holding in A Ltd (100% beneficial interest) at HK$6 million and in P Holdings Ltd (50% beneficial interest) at HK$7 million. This is later corrected to HK$9 million. He says that the valuation of the companies should be based on the latest audited accounts. There is no mention of any other companies. He says that he has HK$8 million in savings and that he is owed HK$18.5 million. He says that he has an income of HK$400,000 per month and outgoings of HK$150,000. These are not broken down in anyway.

17. Mr Erving insisted at the beginning of the trial that the accounts produced for P were infact consolidated accounts. During cross-examination the husband confirmed that this was not the case. In an answer to a question raised in a Request for Further and Better particulars he said that there were a myriad of interconnecting companies that had not been originally disclosed. He was asked to produce copies of the last two years audited or unaudited financial statements. None were provided apart from the accounts originally described as the consolidated accounts. Therefore even if one were to take the husband’s approach to valuing the companies, it is almost impossible to verify because of the lack of complete disclosure.

18. What we do now know, following the husband’s cross-examination is that these companies hold a number of restaurants, and other business interests. A is a vehicle for holding properties in Hong Kong. Likewise a second company called E Ltd. A Ltd buys properties, renovates and refurbishes them to a very high standard and then sells them fully furnished at a significant profit. E Ltd presently holds 4 ½ properties – 2 in Soho, 2 in Clear Water Bay and one in Kowloon Bay. Little is known about these properties. The husband also appears to have an interest in a number of restaurants through this corporate structure. There are also companies that trade promotional items and others that trade watches and costume jewellery. Another trades garments. None of this was clear from his initial disclosure.

19. The wife claims that the husband is a man of great wealth and says that this is amply demonstrated by his ability to invest Euro 3 million through one of the companies in an investment fund, which, by his own admission was a speculative investment. Counsel points to the fact that under cross- examination the husband was unable to identify the reason for large withdrawals from his personal bank account, including US$260,000 in January 2009. His credit card expenditure is also indicative of significant wealth. He said during his cross-examination that he presently holds HK$7 million in his personal account (as opposed to HK$1.5 million referred to in the schedule above).

20. I accept that the husband is a man of wealth and that his companies are doing well. For the purposes of the trial I accept that the husband is worth in excess of HK$50 million and that the precise extent of his wealth is unknown. Although Mr Erving denied on the part of the husband that he was running a millionaires defence, it seems to me that that was precisely the husband’s approach.

21. In contrast the wife owns a small property in the Philippines in which she lives, which is worth approximately HK$550,000. She has limited savings and a company called H Inc. She puts her total asset base at approximately HK$2.7 million.

To what extent, if at all, is the concept of the marital acquest engaged in this case?

22. Case law indicates that this is one approach that may be taken when considering what award to make in short marriages. However in order to do this accurately it is necessary to know the asset base of the husband as at the date of the marriage and at the date of separation/divorce. It is not possible to accurately determine the marital acquest in this case, based on the disclosure provided. I have also noted, as stated above in the Wife’s open offer, that for the purposes of computation the Wife does not wish to include any specific increase in the value of the Petitioner’s shareholdings during the marriage.

23. In general terms Ms Rattigan said in her closing as follows:

13. Just by looking at the assets of P from accounts disclosed, it can be seen that they have increased during the first year and a half of the marriage by some HK$27 million (from HK$560,308 in 2004 to HK$27,667,502 at the end of 2005. The last year of marriage saw a further increase of some HK$10.2 Million (from HK$27,667,502 in 2005 to HK$39,603,433 at the end of 2006); Over the course of the marriage the net asset value has risen by HK$39 million. 50% of this (based on the Petitioner’s 50% shareholding) is HK$19.5 million. The Respondent is entitled to a share in this and any other asset increase during the marriage.

24. The Wife asks that this be taken into account in general terms. She does not wish it to be simply ignored. I accept that the Husband’s companies appear to have done well during the course of the marriage and that this is something that I should quite rightly take into account.

How should the concept of the “matrimonial home” be viewed?

25. The wife also seeks a 50 % share of the increase in value of the matrimonial home/s, in which she says the parties lived during the marriage.

26. The husband has argued that the properties cannot be viewed as “matrimonial homes” in the true sense of that term, because although the parties lived in various properties from time to time, they were essentially investment properties and the intention had always been to sell them once the renovation/refurbishment had been completed.

27. Although that may be the case, it does not seem to me that that should preclude a property from being regarded as a matrimonial home. A matrimonial home is often an investment as well as a “home”. Indeed it can often be the central most important investment that any couple makes. The fact that in this instance the husband had a business, in which he invested in and then sold on properties, does not in my view preclude any such property from being regarded as a matrimonial home if, as in this case, they actually lived in that property as man and wife.

28. The parties married in December 2003. The wife came to Hong Kong in February 2004. Initially the parties lived in a property known as Bellevue Villa. This had been purchased in 2002, prior to the parties meeting. It was sold on the XX March 2005. Therefore the parties lived in Bellevue as man and wife, for approximately 1 year. It is suggested that the parties travelled a lot during that year. Although that may be the case I accept that this was their base in Hong Kong. It was their “matrimonial home” for that period of time. They then lived in rented accommodation whilst another property namely Rainbow Villa was renovated. This property was purchased in June 2005 and the parties lived there until they separated in June 2006.

29. Bellevue was purchased for HK$13.5 million and sold for HK$30.5 million. Its net profit is put at HK$9.38 million. This money was held by A and used in part to purchase Rainbow Villa. Rainbow Villa was purchased for HK$23 million and sold after the parties separated in August 2007 for HK$40 million with a net profit of HK$4.78 million. (It is noted that the husband received HK$13.675 million into his HSBC account on the XX August 2007 from the sale of Rainbow Villa’s by way of a shareholder loan repayment and to that extent he has realized some of his initial investment). Notwithstanding that I accept that the net profit generated from both properties stands at a total of HK$14,166,316.

30. In the husband’s closing he argues as follows:

The claim for a 50% share in the profits generated by the sale of the “matrimonial homes” cannot be sustained because neither property was a matrimonial home in the true sense of the word. Bellevue Villa was an investment property bought almost 2 years before the marriage. It was owned by a property investment company, which admittedly was owned 100% by the husband, but, which nevertheless, was an investment property in which the husband chose, for convenience, to live for a short time. The same applies to the Rainbow Villas property. Further it is significant that the profit generated by each sale has been “plowed back” into the next property so that it has never been realized in case. A still holds investment property in which the husband does not reside. The profit generated by the sale of the 2 subject properties is not profit in the husband’s hand but rather in A’s hand from which must be deducted company expenses. Further, in view of the fact that the 1st property was owned before the marriage and the 2nd property was sold after the marriage ended it is impossible to attribute the whole of that profit to the matrimonial acquest.

31. As I have already indicated I do not accept the argument advanced that these properties are not matrimonial homes. Although the profit generated is held by A, this is a company, which is the husband’s alter ego, and thus it is a financial resource, which quite rightly forms part of the matrimonial pot. However I accept, given the timing of the transactions, that it is impossible to attribute the whole of the profit to the marital acquest. Given that Bellevue was owned by the husband (through A) for three years and the parties lived in the property for only one year it seems to me to be reasonable to attribute 1/3 of the profit to the marital acquest. Similarly the husband, through A, purchased Rainbow Villa’s whilst the parties were married. A owned it for approximately 2 years and the parties lived in it whilst they were together for 8 months. On that basis i.e. that the parties were together for 8 months of a 24-month period it again seems reasonable to attribute 1/3 of the profit to the marital acquest. I accept that this is a rough and ready approach, but given the circumstances here it seems to me to be a reasonable one. Thus approximately HK$4.67 million can be said to form part of the marital acquest arising out of the sale and purchase of the parties’ matrimonial homes in Hong Kong. (1/3 x HK$14,166,316 = HK$4,674,884). The wife is entitled to 50% of this or approximately HK$2,337,442 - say HK$2,350,000.

32. There was some argument about a property in Italy which the wife understood was owned by the husband and which she also considered to be a matrimonial home. I accept that this is not a property, which is owned by the husband, and therefore it is not an asset capable of forming part of the matrimonial pot. On the husband‘s case this was a property, which he rented as a holiday home. It was used exclusively by him and the wife. He renovated it. It is therefore indicative of the high standard of living enjoyed by the parties during the marriage.

To what extent are the assets in this case to be regarded as matrimonial or non-matrimonial assets?

33. The husband argues that all of the assets held by him are pre marital assets and therefore that they should be regarded as non-matrimonial assets and accordingly be excluded from the matrimonial pot for redistribution purposes.

34. Guidance on this point has been helpfully provided by Nicholls J, also in Miller v Miller, McFarlane v McFarlane [2006] UKHL, 24, quoting from White.

21. 23. The matter stands differently regarding property ("non-matrimonial property") the parties bring with them into the marriage or acquire by inheritance or gift during the marriage. Then the duration of the marriage will be highly relevant. The position regarding non-matrimonial property was summarised in the White case [2001] 1 AC 596, 610: "Plainly, when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered. However, in the ordinary course, this factor can be expected to carry little weight, if any, in a case where the claimant's financial needs cannot be met without recourse to this property."

24 In the case of a short marriage fairness may well require that the claimant should not be entitled to a share of the other's non-matrimonial property. The source of the asset may be a good reason for departing from equality. This reflects the instinctive feeling that parties will generally have less call upon each other on the breakdown of a short marriage.

35.In this case the Wife says that she accepts that given the fact that the family assets were largely brought into the marriage by the husband and more or less solely created by his endeavours, that she is not entitled to a 50% share. She accepts that this is a good reason to depart from the yardstick of equality. She does not accept, given the other factors, that she is entitled to nothing at all. I agree.

36.Helpful guidance on this point has also been provided by Rayden, at paragraph 16.74, which states:

Pre-marriage assets, inherited wealth or gifts received, during the marriage represent assets that derive from sources external to the marriage; however they are not to be quarantined and set apart from the other assets in the case. It has been suggested that pre marriage assets could include, not only cash and property, but also a developed career, existing high earnings and an established earning capacity. There are no hard and fast rules: it is for the judge to decide how important assets that were owned by a spouse before the marriage, or acquired later by inheritance or gift are in the particular case.

5) Given my findings in 1) – 4) above what share of the assets is the wife entitled to bearing in mind the principles of need (generously interpreted), compensation, sharing and the s.7 factors?

Need

(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;

a) What are the wife’s reasonable needs (generously interpreted) in the context of this case?

37.  The wife has advanced an argument for a share of the husband’s assets partly on the basis of need. The wife says that she needs a bigger apartment, a better quality car and some capital so that she is able to enjoy a higher standard of living.

38.  In her affidavit she said that she would like to move to a bigger apartment namely OS. This is a two bed roomed apartment in a nicer part of town than her current apartment. She estimates the cost of a new apartment at between HK$2.3 – HK$2.9 million. She presently lives in a one bed roomed 500 square foot apartment. She says that she would like to be able to continue to afford to run her Nissan SUV. Whilst married she drove a Mini Cooper, BMW 5 series and an Audi 6. The cost of upgrading the car has not been quantified. She would also like to be “able to afford the odd international holiday each year that I once enjoyed”. I accept that this is reasonable.

39. The Wife also states that it will cost her approximately HK$43,000 per month to live more comfortably. This is based on her living at OS. The difficulty with the Wife’s case on income was that it really did not stand up to detailed scrutiny.

40.She said in her Form E that she had a total income of HK$33,690 per month and outgoings of HK$25,613. In her affidavit of the 12 March 2009 she said as follows:

The current average monthly income I earn for guestings in television shows/pictorials or corporate hosting is only an average of HK$7,961.78 per month. As I no longer have regular television work or the exposure from such work, I no longer have the additional income that I have for sponsorship, which covered some of the cost of clothing, shoes and cosmetics. Due to reduced earnings from H Inc, I no longer receive allowances from the company. I no longer have the sponsorship for the cost of my dental cover either. My gym, spa, salon and facial sponsorships still exist our agreement will expire soon since I no longer have regular exposure. I will have to spend for these myself in the near future.

I am still receiving income from the Braganza Property at HK$2,388.54/month.

41.  She adds that her present outgoings are just under HK$14,000 per month.

42. The case was adjourned twice so that the Wife might have an opportunity to review her own disclosure and in particular to explain the deposits and withdrawals from her own bank accounts.

Her tax returns put her earnings as follows:

2002 – 2.7 million pesos

2003 – 2.313 million pesos

2006 – 2.1 million pesos (for 6 months)

2007 – 2.1 million pesos

2008 – 2.8 million pesos.

43. But, a closer analysis of her bank accounts showed that in 2008 she received just under 5 million pesos from the GMA network (television network) and from guesting or hosting work. In addition she received just under 800,000 pesos from real estate investments. She said that she had not declared a further 1 million pesos for an L advertisement. It was put to her that her income for last year was nearer 6 million pesos (or just under HK$1 million). I accept on the evidence that this must be the case.

44. The wife said that she needed c HK$43,000 per month to live in a lifestyle to which she would like to become accustomed. On her own evidence she has infact been earning well in excess of that last year. All in all I did not find the wife at all credible in so far as her past earnings are concerned. Bearing in mind that she says that she is presently only spending HK$14,000 per month it is not clear where the excess has gone, save for the fact that she has made some bad investments and that she has some limited savings.

45. The Wife also argued that although she has tried to re establish her career and has been reasonably successful in that respect, unfortunately her career has now taken a downward turn. Mr T, her former agent said in his affidavit as follows:

22. I believe that, in order to re-launch the Respondent’s career, there is need for her to adopt a complete change in approach to a more liberated and vocal image than before. The Respondent’s marriage was wholesome and virginal, but after a marriage breakdown, this is not the case.

23. I also believe that it is very difficult to attain the stature that the Respondent had achieved prior to her marriage, considering the competitive nature of the local entertainment industry at present as well as changes in programming as a result of the global financial crisis. Due to the change in programming the networks no longer look for local talent as regularly and look to foreign rated shows instead, therefore, the jobs available to the Respondent are fewer and further between.

24. To my mind, if it is in fact possible, it would take at least another two or three years coupled with aggressive marketing, before Respondent could gain lost ground in her career as a result of her marriage.

46. Counsel put it as follows in her closing:

21. She no longer has a regular income from GMA, the television station which gave her the exposure necessary to sustain her other source of income from guesting, hosting and commercials. Her two shows have now finished, her contract ended in December. Her latest Bank statements show this to be the case, the last payment she received from GMA was in February (her evidence was that payments from GMA are marked with the code CM PAYR in her bank statements)

22. Although she still has a commercial for L, this has been reduced due to the loss of part of the L account. The last payment from L of P1.4M can be seen going into her bank account on 24th August. This is a one off annual payment for all billboards and media and may not be renewed next year.

47. I accept that she has lost some of her regular work. I also accept that she may find it difficult to sustain a career in the public eye going forward. She says that she has been looking at other opportunities and at the possibility of retraining. I accept that she may need some financial support in order to do so.

48. Mr Erving says that she should be able to afford to pay for a new flat herself. He says, “the wife’s needs are wholly satisfied from her own resources despite her failure to disclose the full extent of those resources”.

The evidence shows that she has sufficient assets to enable her to purchase her chosen apartment and her current income is sufficient to support her claimed expenses of HK$42,868.79. While she claims a fall in income in 2009, this is not supported by her bank statements and further she has just begun to make a new film from which she can reasonably expect to secure more film roles. There is no evidence to suggest otherwise.

49. Whilst I accept that the wife has been less than frank in relation to her income for the previous year, I also accept that she in unlikely to sustain that level of income going forward. I do not accept that the evidence shows that she has sufficient money at hand to purchase the apartment of her choice.

50. Consequently I agree that in the circumstances it is reasonable for her to live more comfortably than she appears to be doing at present and that any award that the court might make should take that into account.

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

51. This forms a major part of the wife’s case. I accept that the Wife’s reasonable needs (generously interpreted) have to be seen in the context of the standard of living enjoyed by the parties during the marriage, albeit for a short time.

52. There is no doubt that the parties enjoyed a very high standard of living whilst married. The wife received a monthly allowance of HK$30,000 and she also had use of a credit card on which she spent approximately HK$50,000 per month. Although she spent partially on the household, this was generally speaking her allowance to do with as she wished. From the Husband’s credit cards it seems that the husband also spent lavishly on her. They lived in high end properties and enjoyed a very comfortable lifestyle complete with overseas trips, business and first class flights, luxury hotels etc etc.

53. The wife is not asking for this same standard of living to be replicated. She simply asks that it be taken into account. She wishes that her own standard of living be increased to enable her to live more comfortably. I accept that this is reasonable.

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

54. The husband is presently aged 40 and the wife 34 years old.

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

55. Thankfully this is not in issue.

Compensation

b) To what extent, if at all, should the wife be compensated?

in short marriage the financial disadvantage a party suffered, if any, on entering into the marriage.

56. This is very much in issue. The wife argues that she should be compensated for loss of opportunity i.e. that had she not married the husband and continued with her career in the Philippines she may have become a successful movie star. Certainly she argues that her career would have continued unabated.

57. The difficulty with this is that it is highly speculative. Yes, the wife may have become a successful movie star – but equally she may not have been.

58. The husband argues that the concept of compensation is not engaged because in order to be compensated it is necessary to show that you have lost something. In this case, he says that since she has re-established herself in her career that there is nothing to be compensated for.

59. Although that is true to an extent, it is also true that the wife gave up her career in the Philippines and followed her husband to Hong Kong where she was virtually unknown. She was unable to work because of the restrictions on dependent visa holders at that time. The husband admitted that she had just broken into films and that she gave it all up to be with him. It seems clear from the evidence of Mr T that it is now difficult for her to break back in at the same level as before – although clearly she has had some success in picking up where she left off.

60. In the words of her Counsel she says in her closing that

There is no question that she gave up her career, she left her home, family and friends to be married to the Petitioner, there is no question that she made valuable contributions to the marriage and to the build up of the assets. The Respondent cannot now generate the income which would allow her to have the lifestyle that she would have expected had she never been married and carried on just in her television career. She certainly cannot have a lifestyle anywhere close to that which she might have if her movie career had taken off. Her standard of living at present falls far short of the high standards that the enjoyed during the marriage, comparing the matrimonial homes to her small apartment in Manila provides a very stark contrast. Fairness and the law demand that this is redressed in the award make to her in these proceedings.

60. I accept this. Therefore to a limited extent the concept of compensation is engaged.

Sharing

(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;

61. This was hotly disputed. The husband maintained that the wife has not made any contribution to him in his business and that her contribution overall as a wife was very limited. The wife maintains that she assisted, that she was a valuable asset for him in his business and generally, that she ran his house, helped to refurbish them etc. I accept that the wife did make a contribution, but that this is necessarily somewhat curtailed given the length of the marriage.

(e) the duration of the marriage;

62.This is clearly a short marriage in the classic sense of being short in duration and childless.

Conduct of the parties, which it would be inequitable to disregard

63.Both parties sought to introduce an element of misconduct when describing the reasons for the breakdown of the marriage. Thankfully it is not of the type that needs concern the court. I intend to say no more about it.

What share of the assets should the wife receive?

64. It is accepted by the wife that given the shortness of the marriage and the fact that the husband was almost wholly responsible for the family asset base, that this is a suitable case to depart from the yardstick of equality. The wife seeks a share of the marital acquest in general terms, based on the increase in the value of the assets during the course of the marriage. She seeks a share in the increase in value of the matrimonial home/s. She seeks a share in the increase in value of the husband’s business interests. She also asks that she be compensated for her loss of opportunity. She asks that her needs (generously interpreted) be taken into account. Having considered all of these factors and my findings as set out above, I intend to make an order that the husband pay the wife a lump sum of HK$5 million on a clean break basis, such sum to be paid within the next 28 days. This takes into account the HK$2.35 million that the wife is entitled to receive from the increase in value of the matrimonial homes whilst the parties were married. It also provides the wife with a share of the marital acquest in so far as the husband’s businesses are concerned. A precise computation of the marital acquest in this respect is not possible given the nature of the disclosure provided. If the husband complains about this he really only has himself to blame. I have also taken into account the fact that her needs (generously interpreted) should be catered for. I accept that she should be in a position to purchase a two bed roomed apartment (c HK$2.3 – 2.9 million) and a new car if she should so wish. I am also satisfied that HK$5 million will provide her with some capital in addition as a cushion. It does, however, also acknowledge that she has an earning capacity and one that is ongoing, albeit possibly at a more reduced rate than before.

Costs

65. Taking into account the Husband’s approach to disclosure, which is not to be encouraged and the fact that the Wife’s own disclosure on income was found to be wanting, together with the fact that the Wife really had no option but to litigate this matter, I will make an order nisi, to be made absolute in 14 days, that the Husband pay 2/3 of the Wife’s costs on a party and party basis to be taxed if not agreed. There shall be certificate for counsel.