WLMLA v. WWKP

FCMC 9972/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 9972 OF 2008

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BETWEEN

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J U D G M E N T

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1.  Although there may be some procedural irregularities on the part of the Respondent Husband (“the husband”), I will treat him to have made the following 3 applications at this trial, namely:

(1)   The husband’s application under s.17 of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“MPPO”) for an avoidance of disposition order (hereinafter called “the s.17 application”);

(2)   The husband’s application for ancillary relief against the Petitioner Wife (“the wife”); and

(3)   The husband’s application under s.17A of the Matrimonial Causes Ordinance, Cap. 179 (“MCO”) (hereinafter called “the s.17A application”).

Brief History

2.  The parties married in 1973.

3.  Within wedlock, they had 2 children and they were:

(1)   A daughter, now aged 33 (hereinafter called “the daughter” or simply “M”); and

(2)   A son, now aged 24 (hereinafter called “the son” or simply “D”).

4.  Both children are now adult and living independently.

5.  In May 2004, the parties separated. 

6.  On 5 July 2004, the wife issued a petition for divorce based on the husband’s behaviour (FCMC 7084 of 2004).  The parties later reached an agreement for the wife to withdraw her then petition but thereafter the parties had never resumed cohabitation.  The parties also signed a deed of separation (hereinafter called “the Deed of Settlement” or simply “the said Deed”) on 7 September 2004 in which they agreed, among other things, that the parties should continue to live separately; the joint property at a unit of Bay View, No. 17 Middle Lane, Midvale Village, Discovery Bay City, Lantau Island, New Territories, Hong Kong (“the Discovery Bay Property”) would be sold and the net sale proceeds be divided between the parties in equal shares; the parties would support and maintain herself or himself; and both parties would not make any claim for ancillary relief against each other in future divorce proceedings.

7.  Pursuant to the Deed of Settlement, the wife received the sum of $594,277 being her share on the net sale proceeds of the Discovery Bay Property on 4 October 2004.  With this money, the wife and the daughter, M purchased another property at a floor of Race Tower, No.81 Wong Nai Chung Road, Hong Kong (“the Race Tower Property”) as tenants in common in equal shares in December 2004.  The purchase price was $3,500,000 with the wife paying $350,000 as down payment while the monthly mortgage repayments would be shouldered by the daughter.

8.  The Race Tower Property was sold in December 2008 at $6,300,000.  It is the wife’s case that the daughter has paid about 2/3 of the purchase price by way of her contribution to the mortgage repayments, therefore, she was also entitled to 2/3 of the net profits, namely the sum of $2,200,000.  As a result, she paid the daughter the said sum by 2 transfers, namely the sum of $500,000 on 2 March 2009 and the sum of $1,700,000 on 13 July 2009.

9.  On the contrary, it is the husband’s case that the wife should have been entitled to at least half of the net profits and therefore, he views the payment of $2,200,000 to the daughter as a deliberate attempt by the wife to reduce her capital in order to defeat the husband’s claim for ancillary relief.  Therefore, he filed his summons dated 3 November 2009 asking for the setting aside of the payment of $2,300,000 (this was a round up figure and that is why the parties sometimes referred to $2,200,000 and sometimes referred to $2,300,000) from the wife to the daughter.

10.  As to the Deed of Settlement, it is the husband’s case that at the time of signing, he was well aware that the document would not be a bar to his future claim for ancillary relief against the wife. Furthermore, he said he was under tremendous pressure at the time, and therefore this court should not give any effect to the terms of the Deed of Settlement.

11.  As to ancillary relief, the husband is saying that his business has failed and at the age of 62, he is in a very precarious financial position.  On the other hand, the wife is enjoying very good retirement benefits and with financial support from the daughter.  Therefore, the husband asks for a fair distribution of the wife’s assets.

The Husband’s s.17 Application

12.  It is common ground that the Race Tower Property was purchased in December 2004 by the wife and the daughter as tenants in common at $3,500,000.  At the time of purchase, the wife paid the down payment of $350,000 from her share of the proceeds of sale of the Discovery Bay Property.  A mortgage was taken out for the balance and it was the daughter who has repaid the subsequent monthly mortgage repayments.

13.  When the Race Tower Property was sold in May 2008, and after the deduction of the outstanding mortgage loan and other expenses, a net sum of about $3,400,000 was realised. 

14.  According to the wife, as the daughter had settled the mortgage repayments in the total sum of about $700,000, it was agreed between them that the daughter would be entitled to 2/3 of the net proceeds while the wife would have 1/3. 

15.  Upon the actual sale, the whole of the net proceeds of $3,400,000 was deposited into the bank account of the wife. She explained that no money was paid to the daughter at the time because it was the daughter’s then wish to quit her job in order to pursue her studies in Theology overseas.  The wife was requested to hold the daughter’s share on trust and out of which to pay for the mortgage of the daughter’s another property (“the Po Tak Property”). 

16.  Later in March 2009, the wife paid a lump sum of $500,000 to reduce the mortgage loan of the Po Tak Property.  As a result of the present litigation, the daughter has also requested the wife to pay back the balance and so the further sum of $1,700,000 was paid to the daughter on 13 July 2009.  In other words, by July 2009, the wife has returned a total sum of $2,200,000 as the daughter’s rightful share in the proceeds of sale of the Race Tower Property.

17.  It is now the case of the husband that as the wife has paid for the whole of the down payment, she should be the sole beneficial owner of the Race Tower Property.  In the alternative, she should at least own half of the beneficial interest in the property as she was a tenant in common in equal shares with the daughter. Therefore, the payment of $2,200,000 to the daughter should be set aside and be brought back into the family pool of assets for a fair distribution between the parties.

The Law

18.  The husband is now relying on s.17(1)(b) of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) in his setting aside application:

“(1) Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as "financial provision") are brought by a person (hereafter in this section referred to as "the applicant") against any other person (hereafter in this section referred to as "the other party"), the court may, on an application by the applicant-

(a) if it is satisfied that the other party is, with the intention of defeating the claim for financial provision, ---;

(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) ---

and an application for the purposes of paragraph (b) shall be made in the proceedings for the financial provision in question.

(2) Paragraphs (b) and (c) of subsection (1) apply respectively to any disposition made by the other party (whether before or after the commencement of the proceedings for financial provision), not being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such intention as aforesaid on the part of the other party.

(3) Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application or to a disposition or other dealing with property which is about to take place and the court is satisfied-

(a) in a case falling within subsection (1)(a) or (b), that the disposition or other dealing would (apart from this section) have the consequence, or

(b) in a case falling within subsection (1)(c), that the disposition has had the consequence,

of defeating the applicant's claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property.”

The Issue

19.  The main issue here is whether the wife, by paying over the total sum of $2,200,000 to the daughter, had the intention of defeating the husband’s claim for ancillary relief.  As the disposition was made within 3 years before the date of the husband’s application, the burden is on the wife to prove that she had no such intention.

Discussion

20.  The starting point for discussion is that the wife and the daughter were tenants in common of the Race Tower Property and therefore, prima facie, each of them would at least be entitled to half of the net proceeds of sale.

21.  At trial, the wife testified further to the effect that during the mortgage period, it was the daughter who was responsible in discharging the monthly mortgage repayments of the Race Tower Property.  There is evidence to show that the daughter had made payments of $25,000 per month by way of autopay into the account of the wife up to September 2008 (A1/175-188).

22.  During cross examination, the wife further explained that despite the sale of the Race Tower Property in May 2008, the autopay did not stop until September 2008 because the daughter had forgotten to discontinue the autopay arrangement.

23.  I note that the daughter did not give evidence.  Instead, she has written a letter to the court on 5 December 2009 (B/98).  I do not intend to recite the contents of the letter in detail, but suffice to say that it supports what the wife has said in her affidavits and in court.  In particular, the daughter confirmed that the wife had paid the down payment of $350,000 while she has paid about $700,000 for the mortgage repayments.  They had also agreed to share the net proceeds of sale at the ratio of 2/3 to her and 1/3 to the wife.

24.  It is regrettable that the daughter has failed to come to court to testify or to be cross examined.  However, her reluctance to come to court is understandable because after all she was in the middle of a dispute between her own parents.  I think the last thing that she wanted was to face the cross examination of her father who was trying to discredit her mother. 

25.  Having said that, the undeniable facts of this case are that the Race Tower Property was registered under both names of the wife and the daughter; the daughter did pay a monthly sum of $25,000 into the wife’s bank account which was slightly more than the monthly mortgage repayment; the total mortgage repayments amounted to about $700,000 which should be roughly 2/3 of the total monies paid by the parties for the Race Tower Property.   Furthermore, despite the non-attendance of the daughter at the trial, it is never the case of the husband that the letter from the daughter was a false document.  After considering all the evidence in the round,  I am satisfied that the daughter did pay around $700,000 towards the mortgage repayments of the Race Tower Property which amounted to about 2/3 of the monies paid on this property.  I am further satisfied that the payment of $2,200,000 to the daughter was just a payment of the daughter’s rightful share in the property and it was not an attempt to defeat the husband’ claim of ancillary relief against the husband.

26.  The husband’s s.17 application is dismissed.

The Husband’s Application for Ancillary Relief

27.  The next topic is the husband’s application for ancillary relief.

The Deed of Settlement

28.  One of the major issues concerning the husband’s application for ancillary relief is the Deed of Settlement.

29.  It is common ground that the Deed of Settlement was signed between the parties on 7 September 2004.  The issue now is the effect of that Deed on the husband’s application for ancillary relief against the wife.

The Terms of the Deed of Settlement

30.  I think in order to have a meaningful discussion of the Deed of Settlement, it is important to set out the major terms of the document.

31.  One would still remember that before the signing of the Deed of Settlement, the wife had issued a petition of divorce based on the husband’s behaviour.  At paragraph (5) of the preamble, the purpose of the Deed was stated as follow:

“(5) The [wife] has agreed to withdraw the Petition with no order as to costs against each other on condition that the parties shall continue to live apart and shall enter into this deed to release each other from any duty of cohabiting with the other and to record the covenant to be performed and observed by them.”

32.  It is clear from the above wordings that the parties were contemplating a separation and the covenants to be observed during that period of time.

33.  Apart from the terms governing the separation and the sale of the Discovery Bay property, the relevant terms as contained in the main body of the Deed are as follows:

“3. The parties hereby covenant with each other that throughout the subsistence of this deed, and in consideration thereof, the parties will at all times support and maintain herself or himself and will at all times keep the other party indemnified against all debts heretofore or hereunder contracted and incurred by her or him and against all actions proceedings claims demands costs damages losses and expenses in respect and on account of any matter aforesaid.

4. The parties agree not to claim for ancillary relief against each other in subsequent matrimonial proceedings, if any.

5….

6. The parties hereby declare and acknowledge that they have each been fully and independently advised as to their legal entitlement and related procedures and that each is satisfied that this deed has fairly and adequately made adjustment of property and provision for maintenance for each of the parties.”

34.  Counsel for the wife relies heavily on the case of Edgar v. Edgar [1980] 1 WLR 1410 with the proposition that formal agreements that were properly and fairly arrived at with competent legal advice should be given effect unless good and substantial grounds are shown for concluding that injustice would be done by holding the parties to the terms of the agreement.

35.  I have no problem with the principles as enunciated in Edgar and also in the more recent case of Radmacher v. Granatino (English Supreme Court Judgment given on 20 October 2010) in which one can see the modern trend of the recognition of post-nuptial and even ante-nuptial agreements.  But before we come to consider whether the husband should be held to the terms of the Deed of Settlement, it is my view that one should always start the analysis by looking at the terms of the agreement to see what has been agreed and their legal effect.

Clause 4 of the Deed

36.  The agreement as contained in Clause 4 of the Deed is that the parties agreed not to claim for ancillary relief in future matrimonial proceedings.  If this Clause is held to be binding on the husband, that will be the end of his application.  However, after considering this Clause very carefully, I have to come to the conclusion that the said provision is void.

37.  In reaching this conclusion, reference has to be made to s.14(1)(a) of  MPPO which states:

“(1) If a maintenance agreement includes a provision purporting to restrict any right to apply to a court for an order containing financial arrangements then-

(a)  That provision shall be void…”

As Clause 4 has the effect of restricting a party’s right to claim for ancillary relief and therefore, the inevitable conclusion is that it is a void provision.

The other Terms

38.  With Clause 4 out of the way, the remaining issue now is the effect of the remaining terms of the Deed on the husband’s application for ancillary relief.

39.  As I read from the remaining terms, I think the only other important term is Clause 3, which states that “throughout the subsistence of this deed, …the parties will at all times support and maintain himself or herself…”. 

40.  I think by a fair reading of this term, together with the other terms of the Deed, it was the parties’ then agreement that none of them will be required to pay any maintenance towards the other in case of a future divorce. 

41.  But a maintenance order, by definition of s.2 (1) of the MPPO would be restricted to a periodical payment, secured periodical payment or a lump sum order only.  The husband’s present application is for ancillary relief, which would include relief other than just maintenance.   In other words, even if full effect is to be given to the terms of the Deed of Settlement, it cannot be regarded as a full and final settlement of the husband’s claim for ancillary relief.

42.  Having said the above, the fact that the parties have once reached an agreement to support and maintain herself/himself is nevertheless a fact to be taken into account when I come to consider the husband’s application for ancillary relief.

43.  Of course, I am also aware of the husband’s evidence concerning the circumstances of the signing of the Deed of Settlement, for example, he said he was being thrown out of the then matrimonial home by the wife; that he was under great pressure, both emotional and financial, at the time; that he was given a false hope of reconciliation, etc.

44.  But the undeniable facts remain that the Deed was signed in contemplation of a separation of the parties; both of them were having competent legal advice at the time of signing (the husband was well advised and fully aware that he would not be barred from claiming for ancillary relief in the future); the other main terms of the agreement (the sale of the Discovery Bay Property) have been fully complied with by both parties.  Bearing all these circumstances in mind, I do not think it is just to exclude this Deed of Settlement from the court’s consideration in deciding on a proper ancillary relief order.

The Law on Ancillary Relief

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

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

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

(a) an order that either party to the marriage shall make to the other such periodical payments and for such term as may be specified in the order;
(b) an order that either party to the marriage shall secure to the other to the satisfaction of the court, such periodical payments and for such term as may be so specified;
(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified.

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

(a) may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before making an application for an order under this section;
(b) may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments to be secured to the satisfaction of the court. “

46.  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

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

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

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

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

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

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

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

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

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

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

Recent Case Law

48.  In the recent Court of Final Appeal case of LKW v. DD (FACV No 16/2008, Date of Judgment: 12 November 2010), Ribeiro PJ, after considering the recent line of English authorities of White v. White [2001] 1 AC 596; Miller v. Miller and McFarlane v. McFarlane [2006] 2 AC 618, has given a detailed discussion on how a Hong Kong court should approach the issue of ancillary relief.  The following is a brief summary of His Lordship rulings in the case:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Important Facts of this Case

The Wife’s Financial Resources and Needs

49.  The wife is now aged 60 and has retired in June 2010 upon which she has received over $2 million as severance/provident fund payment.  She is currently studying at the Bethel Bible Seminary for Theology.  She does not have any monthly income but still has about $2,900,000 in her bank accounts (Hang Seng Bank and HSBC).

50.  As to landed property, the wife is a joint owner of a property situated at a unit on 6^th Floor, Fook Hing Court, No.63 Wun Sha Street, Hong Kong (“the Fook Hing Property”) with her daughter.   The property is about 500 sq ft in size and was purchased by the wife and the daughter in February 2010 as joint tenant at a price of $3,150,000.  Their ownership was later severed and now they are holding the property as tenants-in-common in equal shares.  According to the wife, the present value of the property remains more or less the same as the date of purchase and so the wife’s share in the property now amounts to about $1,600,000.  Therefore, I am satisfied that the wife is now holding total assets in the region of about $4,500,000 ($2,900,000 + $1,600,000 = $4,500,000).

51.  Both children are now grown up and being independent.  The only assistance that was given to the wife is the permission of the daughter in allowing her to live at the Fook Hing Property despite the fact she was only a joint owner.

52.  As to her needs, she has listed her monthly outgoings in Exhibit P14, which amounts to about $17,000 per month, including about $3,800 per month for her studies.  In court, the wife supplemented in saying that upon that figure, there should be added another $2,000 for entertainment/presents and $1,000 for holidays.  Therefore, the present total monthly expenses of the wife are about $20,000.   I do not intend to go into the details of all the figures as they were not seriously challenged by the husband at the hearing.  But I note that the wife is now paying $3,000 per month as donation which I believe is not absolutely necessary.  Furthermore, the studies on theology will end in 2011 and so it will not be a long term expense.  Therefore, I think it would be fair to assess the wife’s reasonable monthly expenses at $15,000.

The Husband’s Financial Resources and Needs

53.  The husband is now aged 62.  In his Form E, he described himself as a “retired screw and metal parts merchant”.  According to him, he used to run a partnership business in Hong Kong but the business began to decline even before the separation of the parties in 2004.  His business has now completely failed and he has no source of income.

54.  The husband is now residing in a flat owned by his sister’s company in Wanchai.  At one stage, he said he was paying $5,000 per month as rent but during cross examination, he said the payment was not exactly rent but a kind of gesture of gratitude to his sister in allowing him to use the premises.  Later, he even said he had not made regular payments but could not remember how many times or months that he had in fact paid the money.  I accept counsel’s submission that it is more likely than not that the husband was in fact being given free accommodation by his sister.

55.  According to the evidence, the husband’s daughter and relatives, including his sisters have all been very supportive to him in terms of financial assistance.  By his evidence and the bank documents, it is clear that the husband has received the following financial support in the past:

(1)   $100,000 as loan from his uncle P.H. L, which the husband claims to be repayable after the trial;

(2)   $9,000 per month from his sister Z;

(3)   Regular amounts in Australian dollars from another sister;

(4)   Gifts of money from the daughter including:

(i)   $49,000 on 6 May 2008;

(ii)   $50,000 on 22 February 2007;

(iii)   $50,000 on 12 February 2008;

(iv)   $17,800 on 15 July 2007; and

(v)   $50,000 on 16 February 2007.

(5)   He also described the following entries in his bank statements as “loan recovered A”:

(i)   $20,000 on 10 July 2008; and

(ii)   $20,000 on 14 July 2008.

56.  As to his needs, the husband has stated in his Form E the following monthly expenses:

General Expenses
Rent	$5,000
Utilities	$950
Management fees	$500
Food	$5,400
Household expenses	$1,400
Jockey Club monthly subscription fee	$1,300
Personal
Meals out of home	$2,000
Transport	$1,200
Clothing/shoes	$400
Personal grooming	$250
Cigarettes/wines/presents	$4,400
Holiday	$300
Medical/dental	$1,090
Credit card interests and repayments	$11,453
Total:	$35,643

57.  From the evidence, it is quite clear that some of the figures are no longer correct.  For example, I have ruled that the husband is in fact being provided with rent free accommodation.  Some of the items are also questionable because they are either unnecessary or excessive.  The monthly amount of $7,400 he spent on food, together another $4,400 on cigarettes/wines/presents are certainly excessive. As to the monthly subscription of $1,300 he is paying to the Jockey Club, this is also unnecessary.  Overall speaking, and in view of the past standard of living of the family, I think it would be fair to allow the husband a monthly sum of $15,000 as his reasonable monthly expenses, which is similar to what I have allowed the wife.

58.  As to the husband’s current liabilities, he said he has a total debt of about $$425,000 which is consisted of the following items:

(1)	2 Hang Seng Bank loans	$75,000
(2)	Hang Seng Credit Card	$210,000
(3)	Diners Club Credit Card	$30,000
(4)	Visa Card	$110,000
	Total:	$425,000

59.  Although the existence of these debts are not seriously challenged at the trial, one has to bear in mind that all these debts have been incurred by the husband after the parties’ separation in 2004.

60.  I would remind myself that when the parties separated in 2004, the husband’s then financial position was much healthier than it is today.   In Exhibit P3, counsel has helpfully listed out the husband’s assets as in September 2004 which came up to close to $2 million. 

61.  I would also remind myself that upon the sale of the Discovery Bay Property in 2004, the parties were supposed to share the sale proceeds equally.  But as a matter of fact, the husband had received about $200,000 more because he only shared the net balance of purchase price but not the deposit with the wife.    At the end of the transaction, the husband had received about $800,000 while the wife had only received about $600,000 (the deposit of about $200,000 being kept by the husband). 

62.  After the receipt of her share of the profit, the wife had made good use of the money in buying the Race Tower Property with the daughter, which investment proved to be a wise move and good profit was generated.  After the realisation of the profit in the Race Tower Property, the money was re-invested in the present Fook Hing Property which provides a stable home for the wife.

63.  On the other hand, the picture of the husband was totally different.  After separation, the husband had engaged himself in high risk investment, for instance in securities trading.  He has also lost money in gambling which included horse betting (Exhibit P4) and in Macau casinos.  All these, together with his living expenses for the past 6 years, have not only depleted all his capital but made it necessary for him to rely on the generous financial support of his sisters and daughter.  This is an important fact that I have to take into account in the s.7 exercise.

Other Circumstances to be Considered

64.  Another important circumstance to be considered is the length of the marriage.  The parties married in 1973 and separated in 2004.  It was a very long marriage of 31 years.

65.  There has been some dispute on the parties’ respective contribution to the marriage.  I understand that during the existence of the marriage, the husband was a businessman and the wife having a stable employment.  I trust both of them must have made contribution to the family, including the raising of 2 children and the accumulation of family assets (e.g. the Discovery Bay Property).  I would regard both of them having made more or less equal contribution to the family during the marriage.

66.  As to the husband’s health, he stated in his Form E that he had “phobia & mental depression, hypertension, uncontrolled stools and joint ache”.  I trust that at the age of 62, the husband may be suffering from physical decline or even psychological discomfort.  But I do not see any concrete evidence to say that he is suffering from very serious illnesses.

Ancillary Relief

67.  After considering all the evidence in this case, I am satisfied that the wife has assets in the amount of $4,500,000 while the husband has nil.   Therefore, the total assets in this family are $4,500,000.

68.  Although the husband has present liabilities of about $425,000, it is my view that the negative value should not be put into the equation because all those debts were incurred after the parties’ separation 6 years ago and equally important, they were due to the inappropriate spending of the husband (e.g. speculating in securities, gambling and lavish spending).

69.  I see that both of them are residing either in self owned property (the wife) or free accommodation provided by relative (the husband).  The husband is receiving monthly assistance of $9,000 from his sister while the wife is living on her own savings.  Both of them have monthly needs of about $15,000 each.  It seems that the husband will have a monthly deficit of $6,000 but he also receives irregular financial assistance from other relatives including the sister in Australia and may be even the daughter.  There is no evidence to suggest that that assistance will not be forthcoming in the future.  Therefore, I am satisfied that if the husband is prepared to exercise further economy in his spending, he should not worry too much about his future needs.

70.  As to the division of the family assets, I understand that by applying the sharing principle and in view of the very long marriage in this case, the usual order to be made should be equal division.  However, I am of the view that there exists good reasons for this court not to adopt such a division and those reasons include:

(1)   It is common ground that the parties separated in 2004 which was 6 years ago.  At the time of separation, the husband was in possession of assets close to $2 million.  In her affidavit (A2/508, paragraph 29), the wife said she had about $1,200,000 at the time.  Even if we should count in her share of the sale proceeds of the Discovery Bay Property in the sum of about $600,000, the wife’s total assets at the time of separation was still less than the husband.  Therefore, when the marriage came to an end in 2004, the financial position of the husband was more or less the same as the wife, if not better.  Therefore, if an ancillary relief application were to be made at that time, it was quite likely that no maintenance order would be made.

(2)   Although the sale proceeds of the Discovery Bay Property were supposed to be shared equally under the Deed of Settlement, the fact was the husband had retained $200,000 more than the wife.

(3)   At the effective end of their marriage (i.e. in 2004), the parties had already agreed in the Deed of Settlement that each of them would maintain himself/herself signifying their agreement not to claim for maintenance against each other.

(4)   To a great extent, the wife’s present assets are the fruits of her wise choice of investment (by investing in landed property instead of other speculative investments) and had nothing to do with the endeavours of the husband.  On the other hand, the husband’s present financial predicament, if any, was to a certain extent due to his own lavish spending and habit of gambling.

(5)   Even as at today, the husband is still receiving quite generous financial assistance from his relatives, which to a great extent has catered for his basic living and there is no reason to believe that such assistance will not be forthcoming in the future.  On the other hand, the wife is only relying on her own savings.

71.  After considering all the circumstances of this case, and in particular the above special factors, it is my view that a departure from equal division of the family assets is called for.  I would think an order in favour of the husband representing 20% of the wife’s assets, which is a sum of $900,000, would be fair in all the circumstances.  With this amount, the husband would at least be able to clear all his debts and still retain about $500,000 to start a new living.  As to the wife, she will be able to retain about $2,000,000 for her future retirement.

The Husband’s s.17A Application under MCO

72.  The last issue is the husband’s application under s.17A of the MCO.

73.  In this application, the husband has filed a Form B, being a Notice of an application under Rule 56B (of the Matrimonial Causes Rules, Cap.179A) making an application under s.17A of the MCO, which reads:

“17A. Financial protection for respondent in certain cases

(1) This section shall apply where-

(a) the respondent to a petition for divorce in which the petitioner alleges any such fact as is mentioned in section 11A(2)(c) [i.e. 1 year separation with consent] or (d) [i.e. 2 years separation] has applied to the court under this section for it to consider the financial position of the respondent after the divorce; and

(b) a decree nisi of divorce has been granted on the petition and the court holds that the only fact on which the petitioner is entitled to rely in support of his petition is that mentioned in section 11A(2)(c) or (d).

(2) The court hearing an application by the respondent under subsection (1) shall consider-

(a) all the circumstances, including the age, health, conduct, earning capacity, financial resources and financial obligations of each of the parties; and

(b) the financial position of the respondent as, having regard to the divorce, it is likely to be after the death of the petitioner should the petitioner die first.

(3) Notwithstanding anything in this Ordinance but subject to subsection (4), the court shall not make absolute the decree of divorce if an application has been made under subsection (1), unless it is satisfied that-

(a)the petitioner should not be required to make any financial provision for the respondent; or

(b)the financial provision made by the petitioner for the respondent is reasonable and fair or the best that can be made in the circumstances.

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74.  As one can see from the above provision, in a case where the petitioner obtains a decree nisi based on 2 years separation, the said decree should not be made absolute unless the court is satisfied that:

(1)   the petitioner should not be required to make any financial provision for the respondent; or

(2)   the financial provisions to be made is reasonable and fair or the best that can be made in the circumstances.

75.  By coming to the view that the wife should pay a lump sum of $900,000 to the husband, I am of the view that reasonable and fair financial provisions have been made and therefore, there is no reason to delay the granting of the decree absolute.

Orders

76.  Based on the above reasons, I would make the following orders:

(1)   The husband’s s.17 application under the MPPO is dismissed.

(2)   The wife shall pay a lump sum of $900,000 to the husband within 14 days from the granting of the decree absolute.

(3)   The court is satisfied that the financial provision made by the wife for the husband is reasonable and fair or the best that can be made in the circumstances.

Costs

77.  The husband failed in his 2 applications under s.17 of the MPPO and s.17A of MCO, but succeeded to a limited extent in his ancillary relief application.  I am of the view that a proper order is for no order as to costs, including all costs reserved.  This will be in the form of an order nisi, to be made absolute upon the expiry of 14 days from the handing down of this Judgment.