TPY v. TCWK

FCMC 15156 of 2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 15156 OF 2002

 _________________

_________________

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J U D G M E N T

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1. This is an application by the Respondent (“W”) for ancillary relief against the Petitioner (“H”) for herself and the two children of the family.

ORDERS SOUGHT

2. W has changed her position on several occasions, both before and at the beginning of the trial.  On the last day of the trial, and in the Closing Submissions of W’s counsel, Ms Lai, the last proposals of W are now as follows : -

(a)      the matrimonial home (“matrimonial home”) be transferred to her subject to present encumbrances.

(b)     a sum of $10,000 per month as maintenance for herself.

(c)     a sum of $10,000 per month as maintenance for the elder son.

(d)     a sum of $5,000 per month for the maintenance of the younger son.

(e)      H shall retain the commuted part of his retirement pension for himself.

3. The orders sought by H are as follows : -

(a)      The matrimonial home be sold and that the net sale proceeds be divided as to 60% for H and 40% for W.

(b)     H will pay $10,000 per month for the maintenance of the two children until they complete full time education.

(c)     H is to retain the commuted part of his pension for himself.

BRIEF BACKGROUND

4. The parties were married on 7^th December 1984 and on about 1^st June 2000, the parties’ marital relationship broke down, and they started to lead separate lives and they have been living in separate households, although they have continued to remain under the same roof in the matrimonial home, which they bought in joint names in 1996 (“Matrimonial Home”).

5. In 2002, H issued a divorce petition (FCMC 6000 of 2002) against W based on the parties’ separation since 1^st June 2000. W filed an Answer, denying the separation and defending the divorce. Subsequently, on 18^th December 2002, H obtained leave to withdraw his petition, and  to issue a fresh petition, which was then issued under the present proceedings on 30^th December 2002.  The fresh petition was again based on the fact that the parties had separated since about 1^st June 2000, but this time W did not defend the petition.

6. The parties have two sons, the elder son being born on 21^st June 1985, now aged 20 (“elder son”), and the younger son being born on 23^rd March 1990, now aged 15 (“younger son”).

7. The elder son has been attending University in Australia since end of 2003, and the younger son is attending secondary school in Hong Kong.

8. The two sons have very much taken the side of their mother, in that there is little communication between them and their father.  The younger son will continue to live with W, once the parties start occupying separate accommodation, and when the elder son returns during holidays, he will be staying with his mother and younger brother.

9. A Decree Nisi of divorce was granted to H based on his petition on 27^th August 2003.  On the same day, custody of the two sons was granted to W with reasonable access to H.

10. On 15^th October 2004, there was an interim maintenance order made by which H has to pay interim maintenance of $10,000 per month for the two sons commencing from 1^st November 2004 until further order.

THE LAW

11. The matters I will need to consider are set out in s. 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO”) which are as follows : -

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

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

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

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

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

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

(f)      the contributions made by each of 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.

(2)     Without prejudice to subsection (3), it shall be the duty of the court in deciding whether to exercise its powers under section 5, 6 and 6A in relation to a child of the family and, if so, in what manner, to have regard to the circumstances of the case including the following matters, that is to say –

(a)      the financial needs of the child;

(b)     the income, earning capacity (if any), property and other financial resources of the child;

(c)     any physical or mental disability of the child;

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

(e)      the manner in which he was being and in which the parties to the marriage expected him to be educated;

and so to exercise those powers as to place the child, so far as it is practicable and, having regard to the considerations mentioned in relation to the parties to the marriage in paragraphs (a) and (b) of subsection (1), just to do so, in the financial position in which the child would have been if the marriage had not broken down and each of those parties had properly discharged his or her financial obligations and responsibilities towards him”.

S.7 MATTERS

12. I now turn to consider the s. 7 matters.

13. For the avoidance of doubt, in so far as the matters set out in this judgment differ from the evidence of H or W, this is because I have preferred the evidence of the other party because I consider that the documents produced confirmed my finding of fact and further I have been able to observe the demeanour of the parties.

Duration of the marriage and age of the parties

14. The parties were married on 7^th December 1984 and they separated on 1^st June 2000.  Thus, their marital relationship was about 15 1/2 years.  H is now 49 and W is now 43.

The Conduct of the parties

15. W alleges the breakdown of the marriage was directly caused by H’s affairs with other women.  W’s counsel, Ms Lai, submits that W had devoted all her youth and the past 16 years on the family and children, that she may not be able to start everything all over again with her age and, by reason of her family and the children, she might already have irretrievably lost her chance in her career pursuit.  In W’s oral evidence, she said she discovered that H had an affair in 2001.  This was after their separation date.  She has also said, under cross examination, that in 1997 they were already starting to have problems in their marriage.  However, in the previous proceedings, W filed an Answer on 30^th July 2002, denying the marriage had broken down.  The alleged adultery was not proved against H, and the Decree Nisi was based on the parties’ separation.  Notwithstanding what W says, this is clearly not a case where there has been any “obvious and gross” marital conduct on the part of either party.  (see Rayden 17^th Edition, paragraph 21.61)

Income / earning capacity which H has or is likely to have in the foreseeable future

16. H is a civil servant currently earning a basic salary of HK$53,765 per month.  He receives a housing allowance under the Home Financing Scheme $20,940 per month and other allowances of about $1,500 per month.  His present total monthly income is about HK$76,205 per month, but when his housing allowance ceases his income will be reduced to about HK$55,265 per month.

17. H’s prescribed normal retirement age is 55 and therefore he will be retiring on 30^th November 2010, in about 5 years time.  According to a letter dated 26^th May 2005 from the Treasury, assuming H would continue his service at his present rank and that he would commute 50% of his pension benefits into a pension gratuity, the pension payable to him will be, calculated at the present price level would be : -

                   (i)      commuted pension gratuity $3,346,000.

                   (ii)      reduced (50%) pension of $239,000 per annum.

18. H joined the government in 1975 and by the time he retires in November 2010, he will have worked for the government for approximately 35 years.

19. H’s housing allowance under the Home Finance Scheme will cease on 30^th September 2005 or earlier upon the matrimonial home being sold.  Thereafter, he will not be entitled to claim any housing allowance.

Financial needs, obligations and responsibilities which H has or is likely to have in the foreseeable future

20. H says that in the event that the Matrimonial Home is sold or transferred to W, he will no longer be entitled to apply for any benefits under the Home Financing Scheme nor can he apply for government quarters.  He will have to rent a privately owned flat to reside in.  He says that a small flat of 450 sq ft to 500 sq ft in Happy Valley will cost HK$8,000 to HK$10,000 per month, including management fees.  At the moment, H has to pay a total of about HK$32,903 per month towards his mortgage and housing loan repayments.  Once the Matrimonial Home is sold or transferred to W, he will no longer to pay for these expenses, nor for rates or government rent.  H says that the utilities will be reduced to about HK$1,500 per month if he lives alone.  He will no longer require the services of a domestic helper.  H says he will still need to spend HK$3,000 per month on food, although the monthly sum of HK$300 previously claimed for household expenses will not be necessary.  Thus, under the heading of “General Expenses” in his Form E, including rent of HK$10,000 and utilities, he will require a monthly sum of about HK$21,000.  This amount also includes an item of HK$7,000 for his car expenses.  W challenges this item and says he should sell his car, as he has claimed a monthly sum of HK$2,000 for his transport expenses to and from work.  H says he has had a car since 1975, and since then, he would change cars on average every 5 years.  Although W says H deliberately bought an expensive car at the end of 2002, I accept H’s explanation that his previous car was costing him more on the monthly instalment payment than his present car.  There is not sufficient evidence that H’s purchase of the present car was anything other what was his previous practice of changing cars on average of about every 5 years.  H has provided a breakdown of why his car costs him HK$7,000 per month.  The amount includes insurance and vehicle registration fees of an average of about HK$925, the hire purchase payment of HK$3,717 per month, car park rental of HK$1,900 per month, and petrol of about HK$500 to HK$800 per month.  H says that he cannot sell the car, even though he uses public transport daily but as he now works on Lantau Island, and when he is on night shifts, there are no public transport, and he has to drive home.

21. Under the heading of “Personal Expenses”, as above stated, H has claimed a monthly sum of HK$2,000 for his transport expenses, as he says apart from when he is on night shifts, he needs to take the MTR and other travelling expenses to and from work.  H says every two weeks, he has 2 days off, and he will need to spend an extra HK$2,000 per month on his entertainment expenses during his days off.  H has also claimed a total of HK$1,500 per month for “clothing / shoes” and “personal grooming, including haircut and cosmetics”.  H says he needs to spend on average of HK$100 per month on medical / dental.

22. There was much discussion as to the amount of tax H has to pay.  Previously, W objected to H claiming Child Allowances, which resulted in H having to pay higher taxes.  During the trial, W agreed that in future, she would agree to H claiming the Child Allowances.  There was still an issue as to whether H would be allowed to claim the Single Parent Allowance.  W’s counsel, Ms Lai, in the beginning submitted that H’s salaries tax should be HK$59,836 for 2005/2006, which would be an average of about HK$5,000 per month.  H’s counsel, Mr. Chan submits that this should be HK$79,836, which would be about HK$6,653 per month.  In her Closing Submissions, Ms Lai now submits that H’s tax liability for 2005/2006 should be about HK$84,964, which is about HK$7,080 per month as H says for the first 6 months of the tax year, he is still receiving the housing allowances.  In H’s Form E, he has claimed an amount of HK$10,000 per month as his tax provision, this is obviously too high.  In any event, it seems that H has not in fact set aside any tax provision as he has borrowed loans to pay his taxes.

23. H had claimed a monthly contribution of HK$2,000 to his parents in his Form E, but H’s father having died recently, both H’s parents are now dead.  H claims that there is 10 year old child born out of the relationship between his father and another woman, and H says he needs to pay HK$2,000 per month for this young 10 year old half brother.  H’s father had left 2 properties.  I agree with Ms Lai that the needs of H’s half brother should not rank before the needs of W and the two sons.

24. Under the heading  “Personal Expenses”, H alleged that there are loan repayments.  In his Form E filed in October 2004, he listed the amount of repayment to be HK$10,183 per month.  At that time, he listed his loans to be :

Personal Loan from HSBC	HK$110,650
Of HK$175,000 taken out	(for which H repays
In April 2003 for 36 months	HK$5,823.70
	per month until
	April 2006)
Revolving Credit Facility, limit of
HK$70,000, from HSBC	HK$57,434
Credit Union loan	HK$101,636
	(for which
	H currently repays
	HK$3,162.10
	per month)
Credit card loans	about HK$7,000

25. By the time of the trial, H says that his monthly loan repayments have increased to about HK$18,000 per month as he recently had to take out two further loans, one of HK$80,000 from the Wing Lung Bank, and another of HK$103,500 from Inchroy Credit Corporation Ltd, to help him pay his tax bill.  H says he has to repay HK$3,613 per month towards the Wing Lung Bank loan, and HK$4,406 per month towards the Inchroy loan, totalling HK$8,019 per month.

26. W has challenged these loans, saying that there was no need to apply for any of these loans, and I will consider these loans separately later.

27. H in his Form E filed in October 2004 claimed his expenses were HK$82,286.53 per month whereas his income was HK$77,833.  This was before the Order for Interim Maintenance.  H now says his monthly expenses under “General Expenses” are going to be HK$21,000 per month when he moves out, upon Matrimonial Home being sold or transferred to W, and his expenses under “Personal Expenses” are going to be HK$15,600 per month, including tax provision and the HK$2,000 per month for his half brother, but excluding any of the loan repayments.  On this basis, he has agreed with his counsel that his total monthly expenses will be about HK$36,000 per month, excluding the loan repayments.

28. Having considered his expenses, I am of the view that as H will be moving out to a rented flat, he can try and rent a flat with a carpark, and thus he will not need to separately rent a carpark.  The amount of $1,500 per month for “clothings / shoes” and “personal grooming, including haircut and cosmetics” is on the high side, and could be reduced to about $500 per month.  I am also of the view that there is no need for him to pay $2,000 per month for his half brother.  His car and travelling expenses in total can be reduced by another HK$1,000 per month.  All in all, I am of the view that $30,000 should be a reasonable monthly sum to cover his financial needs including his accommodation expenses and tax provision, but leaving aside the loan repayments.

Property and other financial resources which H has or is likely to have in the foreseeable future

29. Apart from his interest in the Matrimonial Home, H’s assets consist of the following :

(i)	cash at bank	HK$47,191.82
	(as at 7/10/2004)
(ii)	Pension (as stated above)	HK$3,346,000
	(commuted 50% on
	30/11/2010)
(iii)	Lexus car	HK$20,000
	(current value of HK$160,000
	less HK$140,000 outstanding hire
	purchase loan, which
	will be paid off at end of 2007)
(iv)	Credit Union Savings	HK$20,512
	(as at 1/3/2005)

30. Apart from the outstanding mortgage loan, and the housing loan on the Matrimonial Home, H’s liabilities are as follows : -

(i)	HSBC Personal Loan	HK$110,650
	as at 7/10/2004
	(As mentioned above, the loan
	was for a sum of
	HK$175,000 made in
	April 2003,
	repayable by 36 monthly
	instalments of about
	HK$5,823.70 each.
	There was an earlier loan,
	of HK$100,000, made by
	HSBC to H in about
	May 2001, repayable by 36
	monthly instalments of
	HK$3,267.80 per month,
	but this has already been
	paid off).
(ii)	Revolving Credit Facility	HK$57,435
	as at 7/10/2004 (from HSBC).
(iii)	Credit cards	HK$7,033
	as at 7/10/2004
	(HSBC Platinum Visa and
	Gold Master).
(iv)	Credit Union Loan	HK$83,874.40
	as at 1/6/2005.
	(As mentioned above,
	H repays $3,162.10 per month
	And this loan will be repaid in
	December 2007)
(v)	Loan from Wing On Bank	HK$80,000
	as at 3/1/2005
(vi)	Loan (Promissory Note)	HK$105,744
	from Inchroy
	as at 3/1/2005
(vii)	Estimated Legal Costs :	HK$148,900
	up to 14th October 2004 :
	HK $ 76,000
	from 15th October 2004 to
	17th June 2005 :  HK$72,900

31. There are altogether 5 loans as follows :

(i)	The HSBC Personal Loan of HK$175,000
	The above loan of HK$175,000 was, according to H, taken out on 17th April 2003, to pay his tax for 2001/2002, but when Counsel for W, Ms Lai, pointed out to him that for 2001/2002 his salaries tax was only HK$113,988, H then said part of this amount was to repay his elder brother for tax payments for the previous two years.  H, however, had taken out an earlier personal loan from HSBC for HK$100,000, repayable by 36 monthly instalments of HK$3,267.80, but upon this being paid off in April 2003, he took out the present loan.  The amount of HK$175,000 was credited into H’s HSBC PowerVantage Savings account on 17th April 2003.  On 30th April 2003, there was a transfer withdrawal of HK$85,423 to H’s HSBC mastercard account to pay the outstanding amount.  I note that this amount was incurred largely due to a cash withdrawal of HK$84,000 on 11th April 2003.  Further in the month of June 2003, there were two large cash withdrawals totalling HK$67,000, and in the month of July 2003, there were three large cash withdrawals totalling HK$85,000.  Under cross examination, H said he would usually withdraw cash from his HSBC account to pay the monthly mortgage to Fortis Bank of HK$22,000, to pay the maid’s monthly salary of HK$3,600, and to pay the monthly rental of the carpark of HK$2,000, but all this adds up to only HK$27,600 per month.  H then said he would keep the rest of the cash for his pocket money.  H further said under cross examination he cannot recall why he withdrew the cash sum of HK$84,000.  Anyway, there was no evidence that this loan was used to pay his tax.  By now the outstanding amount of this loan should be only about HK$52,413.
(ii)	Credit Union Loan of HK$120,000
	The above loan was taken out on 18th December 2003, and the amount was credited into H’s HSBC PowerVantage Savings account on 19th December 2003.  The amount is repayable by 48 monthly instalments of about HK$3,160.  On 29th January 2004, a sum of HK$89,499.10 was transferred from this account to his HSBC Mastercard account.  H’s salaries tax for 2002/2003 was HK$92,551, HK$65,699 payable on or before 2nd January 2004, and HK$26,852 payable on or before 1st April 2004.
	The transfer of HK$89,499.10 to his Mastercard account could be for the payment of the first tranche of his salaries tax for 2002/2003.  The rest of the loan seems to be used up by him.  However, I note that as at 29th November 2003, the total amount in his HSBC PowerVantage Savings was about HK$39,000.  There was no reason or explanation why he needed to borrow as much as HK$120,000 even if he had to pay the first tranche of his tax.  The amount outstanding of this loan as at 1st July 2005 was HK$81,553, and this should be paid off in about December 2007.
(iii)	Revolving Credit Facility of HK$70,000
	The above facility was taken out by H from HSBC on 4th June 2004.  On 29th June 2004, an amount of HK$37,973.71 was transferred to his Mastercard account to pay off the then outstanding amount in this credit card account.  It would appear that a sum of HK$26,852 was paid out of the credit card account to the Inland Revenue Department on 30th March 2004 for the second tranche of his 2002/2003 salaries tax payment, and this was part of the HK$37,973.71.  On 31st May 2004, H had about HK$21,500 in his HSBC Account, and again there was no reason as to why he needed a facility as much as HK$70,000.  As at 7th October 2004, there was an amount of HK$57,435 outstanding of this loan.
(iv)	Loan of HK$80,000 from Wing Lung Bank and
(v)	Loan of HK$103,500 with interest of HK$2,244 from Inchroy Credit Corporation Ltd
	Both the above loans were taken out on 3rd January 2005, after the Order for Interim Maintenance, and the one from Wing Lung Bank repayable by 24 monthly instalments of HK$3,621 each, and the one from Inchroy repayable by 24 monthly instalments of HK$4,406 each.  H says this was again for payment of tax for 2003/2004.  There was no evidence produced, and no recent statements produced by him.

32. H’s income was in the region of at least HK$78,000 in 2000.  His income is now about HK$76,205.  After payment of the monthly mortgage and housing loan instalments, utilities, maid’s salary, rates and government rent, and car expenses, he should still have about HK$27,000 to HK$30,000 left each month from June 2000 to now.  H’s own expenses should be well covered by his income, and there is no need for any of these loans.  In addition, on 12^th June 2002 there was a cheque deposit of HK$78,626.93, which H said was from his previous insurance policies, which he terminated at that time.  As submitted by Ms Lai, there were various cash withdrawals from his bank accounts, including a total of HK$172,000 in the month of July 2002, the whereabouts of which is unknown, and for which he has not been able to account for.  There was a cash deposit of HK$65,000 on 30^th December 2002, and a cash deposit of HK$30,000 on 25^th March 2003, of which H could not explain the source.  I agree with Ms Lai’s submission that there was no need for H to apply for the above 5 loans, and I am further of the view that he has not made a full and frank disclosure of his financial means.

The Income / earning capacity which W has or is likely to have in the foreseeable future

33. W in her Form E described herself as a proactive housewife.  She was educated to Form 5 level and studied crafting at the Kwun Tong Technical Institute and art work design at the First Institution of Art and Design between about 1986 and 1988.

34. One of the major disputes in this case is W’s income and earning capacity.  In W’s affirmation of means filed in October 2003, her monthly expenses were HK$42,956.49 and in her Form E filed in October 2004, she said her monthly expenses increased to HK$49,689.63.  If so, Mr. Chan submits that W had spent a total of HK$2,698,585.90 from June 2000 to June 2005, and as her income as previously disclosed in her affirmations, being HK$391,000 from 2001 to July 2002, together with a loan of HK$150,000 from her friend Ms Chan in September 2003, and November 2003 respectively, and a loan of HK$200,000 from her friend Ms Ma in November 2003, there would still be a deficit of about HK$1.9 million.  This figure is not quite correct, since from 1^st November 2004 onwards, W has been receiving interim maintenance of HK$10,000 per month, but in any event, there would still be a deficit of about HK$1.1 million.  Whatever the shortfall is, I do agree that W was not able to provide a reasonable explanation of how she was able to finance her living expenses, to meet such shortfall during the 5 years.  I note that she did not apply for any interim maintenance until October 2004.  Mr. Chan further produced two schedules setting out the deposits in W’s HSBC PowerVantage Account and her Standard Chartered Bank account from August 2002 to August / September 2004.  There have been numerous credits into W’s bank accounts and W’s initial explanation was that she had been active in buying and selling shares in addition to buying and selling two properties during the marriage.  Later she said under cross examination that some of the amounts could be amounts paid to her by Mr Lam for work she had done part time for Mr Lam and some amounts were from her elder sister.

35. It appears that W bought her first property in March 1989 together with one Madam Kwok as tenants in common.  The purchase price was $345,000.

36. At about the time of the purchase of the first property in 1989, she and Madam Kwok also started a design company and they were partners for approximately two years.  Later, on about 3^rd December 1991, they split up, and thereafter the first property was sold in April 1992 for $600,000.  W’s share of profits was approximately HK$127,500.

37. In March 1993, W bought her second property for $1.6 million and this second property was sold in 1994 for $1.9 million and her profits were approximately $300,000.

38. The parties bought the matrimonial home in 1996 for $3,650,000.  The Agreement of sale and purchase was signed on 14^th March 1996 and the Assignment signed on 17^th April 1996.  W initially claimed that she had paid the following : -

(a)	HK$100,375 being the stamp duty.
(b)	HK$365,000 being the 10% down payment which she paid after borrowing a sum of $300,000 from her elder sister.  The sum of HK$365,000 was later repaid to W by H after H obtained the housing loan from the government.
(c)	HK$50,000 being legal fees.
(d)	$420,000 to $430,000 being paid to contractors for renovation.

39. As her elder sister had lent to W $300,000, and only $100,000 was allegedly repaid by W, apart for $200,000 from elder sister, the rest W says all came from her which means if she did, she would have contributed about $380,000, namely (a) + (c) + (d) less $200,000.  This was in 1996 which meant most of her profits from the two properties she sold would be used up.

40. W further claimed that from 17^th April 1996 to October 2000 she had contributed $10,000 per month to H to help repay H’s housing loan from the government.  H denies this, and if what W says is true, then this amount must have come from some source of income.

41. Between 1996 and 2000, W said her main source of income was from speculating in shares although she also did some part time work.

42. W said in her affirmation of means of 21^st October 2003 she joined a company called G Limited in about 2001.  It appears in fact that she started G Limited with friends much earlier.  According to the company search produced by H, G Limited was incorporated on 26^th February 1991.  There were 4 shareholders, namely a Mr. Lam (“Mr. Lam), 30%, a Mr. Chan (“Mr. Chan”), 30%, a Mr. Tse (“Mr. Tse”), 20%, and W, 20%.  The Business Registration Certificate produced by H indicated that a business known as G commenced business on 1^st January 1994, with the same 4 persons, including W.  According to the Certificate, the business ceased on 31^st March 1997.

43. During her oral evidence, W says that G Limited was first formed in 1989 but in its early stage, she was not involved, and she was not a shareholder.  Later, W met Mr. Lam and he invited her to invest $200,000 to start a new company also called G Limited.  Although W often said she could not remember the dates, it appears from the above mentioned company search that certainly by 26^th February 1991, W was registered as a shareholder of a company called G Limited, holding 100,000 out of 500,000 shares, namely 20% interest.  W said as she worked very hard during the first and second year for G Limited, and the company did make some money but instead of payment of bonuses, the shareholders decided to start another company called BV Limited.  From the Chinese name of this company, it appears to be in the business of spray painting.  W said her share of the bonuses was also invested in BV Limited, as a result of which W was given a 5% interest in BV Limited.  W said she cannot recall the amount of her capital, may be HK$40,000 or HK$80,000.  According to the company search produced by H, BV Limited was incorporated on 16^th January 1996, with 6 shareholders, including Mr. Lam, Mr. Chan, Mr. Tse, and W, and two others.  W said she was only a “sleeping” shareholder of BV Limited and was never involved in any work of the company.  However, from the company search of BV Limited, it can be seen that W was a director as well.  As a director, she must have been involved to certain extent in the company.  As at 16^th January 2003, W was a director and held 50 out of 1000 shares, which seems to be still the current position.

44. W says that in 1997, due to the economic downturn, the other shareholders of BV Limited left to start another company called BVCC Limited which was a subsidiary of a company called CW which business was to let out billboard signs.  According to the Wife, Mr. Lam was subsequently transferred to work in Guangzhou.

45. W then says, in 2001, apparently Mr. Lam wanted to start a spray painting business as he was planning to leave CW and it was at about this time that W claimed that she found out H had affairs with other women.  Mr. Lam then requested her to work for G Limited and offered to pay her a monthly salary of HK$23,000.  She accepted the offer and worked for G Limited until she resigned on 31^st July 2002.  She said her work involved helping Mr. Lam to “collect back” all shares in the company, to credit money for him and to arrange for a transfer of $500,000 to China for the purpose of “examination of capital” for Mr. Lam who was in the process of setting up a G in Shanghai through a nominee.  W has produced a copy of the Business Permit of the Shanghai company which indicated that it was incorporated on 3^rd January 2003.  According to W, as Mr. Lam was still working for CW then, his other business dealings had to be handled through others, including W.  A sum of $500,000 was credited into W’s account on 1^st June 2002 and she said this was from Mr Lam.  Thereafter from 19^th June 2002 until 3^rd October 2002, apart from a withdrawal of $140,000 to Mr Lam on 19^th June 2002 as shown in a credit advice produced by W, the other withdrawals were all of cash of $20,000 each from 8^th July 2002 to 3^rd October 2002, and W said this was because she was only allowed to withdraw cash of not more than $20,000.  All these cash sums were, allegedly, also paid to Mr Lam, or as directed by him.  There was, however, no evidence to support what W said.  I note also the W received H’s first divorce petition on 24^th June 2002, and she says she resigned from G Limited on 31^st July 2002.

46. From the company search of G Limited, on 3^rd September 2002, it can be seen that Mr. Lam and Mr. Chan transferred all their shares to W, and on 12^th September 2002, W transferred 1000 of her shares to one Madam Ma (“Madam Ma”).  On 28^th October 2002, the othershareholder Mr. Tse transferred all his shares to W, and on 7^th December 2002, W transferred all her remaining shares to a company called S8CP (HK) Limited, and Madam Ma transferred 1 share to a company called RCED (HK) Limited.  As a result of all these transfers, on 7^th December 2002, the shareholders of G Limited were S8CP (HK) Limited, holding 499,000 shares, RCED (HK) Limited holding 1 share, and Madam Ma holding 999 shares, out of a total of 500,000 shares.  It would appear that when W referred to “collecting back” the shares, she was probably referring to the above transfers of the shares, firstly to her, then from her to the new shareholders.  W’s explanation did not really shed much light as to why all these transfers were necessary.  According to the company search, the major new shareholder is S8CP (HK) Limited, which was a company incorporated on 5^th June 2002.  Mr. Lam was appointed a director on 29^th August 2002, and he appears to be the majority shareholder of S8CP (HK) Limited after an allotment of shares to him on the same day.

47. H had produced a name card of W on which W was described as “Manageress” of companies including G Limited, G Print Limited, BV Limited and GLP Limited.  W denies that she had any interest in G Print Limited and G Production Limited, which were both incorporated in 1993.  W’s explanation was that the largest shareholders, being Mr. Lam and Mr. Chan, printed name cards for all of the others in the same format.  I cannot accept her explanation.  W was a 20% shareholder in those days, and she must have played an important role in G Limited, and its group of companies.

48. W has disclosed that she was a director and a 50% shareholder of a company called LPSIP Limited, a spray painting company, which was incorporated on 28^th May 2001.  The other director and shareholder was a Mr. Yeung who W says is the son of her elder sister.  According to the Annual Report of the company, as at 31^st December 2003, there were retained profits of HK$21,077 in 2002 and HK$54,339.53 in 2003.  In 2002, the restated amount due to W was HK$203, 507.50 and in 2003 the amount due from W was HK$29,035.65.  The profit after taxation in the year ended 31^st December 2003 were HK$33,562.03.  No profits and Loss accounts were produced by W.  W claimed that both she and Mr. Yeung transferred all their shares in this company on 5^th June 2004 to a BVI company called DC Limited.  W claimed that she received no consideration for the transfer of her shares, although on the bought and sold notes, the consideration was stated to be HK$5,000.  However, it would appear that the amount due by the company to her of HK$203,507.50 was repaid to her and she ended up owing the company HK$29,035.65.  If this is correct, then W would have received about HK$232,543.15 from the company during the year 2003.  W claimed that DC Limited was controlled by another company in Hong Kong, and W transferred the shares as requested by Mr. Yeung.  According to W, Mr Yeung later also resigned as a director of DC Limited, and that neither she nor Mr. Yeung now has any connection with either LPSIP Limited or DC Limited.

49. W has also disclosed that she was a 50% shareholder of another company called HCG Limited which is an advertising agent.  The company was incorporated on 12^th July 2000 and ceased business on 31^st March 2002.  W claimed that she was only a nominee shareholder holding the shares for a friend a Madam Leung.  W says that she has received no benefits from this company.

50. In 2002 and 2003, W attended a diploma programme on Chinese Medicine which was a two year programme at the Chinese University of Hong Kong.  She finished the diploma programme in July 2003.  She has obtained a certificate in Chinese Medication from Guangzhou University, and a certificate from the Ministry of Labour and Social Security in 2004.  She is now attending the first year of a Bachelor Degree course of Chinese Medication at Hong Kong Baptist University.  Apart from attending the course, W says she has a part time job working for a Chinese herbalist, with whom she has been working since 2002, and her income is now only about HK$2,000 per month.

51. During the time when she was taking all these courses and after she left G Limited on 31^st July 2002, W disclosed only during cross examination that she had continued to help Mr. Lam, the former shareholder of G to work part time, and he had paid to her travelling expenses of several thousand dollars from time to time. The work involved having to go to Macau and to follow up on payment of invoices for Mr. Lam and for each invoice collected she received about 2% of the payment.  She worked for Mr. Lam in this manner until she says when Mr. Lam left Hong Kong in 2004.

52. From the above, it is clear that W has led a much more active life than H.  She was quite active in speculating in shares and there were two property transactions and further she was involved in the above various companies / businesses.  She has also been improving herself by attending various courses and learning to become a Chinese herbalist.  H says that W would leave home every day at about 8:30 am and would return home late around 8 pm.  Although W denies this, no doubt with all her above activities, W must have been a very busy woman.  I note further that in H’s first divorce petition, as in the petition in the present proceedings, he described W’s occupation as a “merchant”.  This was in fact admitted by W in her Answer filed on 30th July 2002.  I find that W is a capable and enterprising woman.  H said W bought an expensive television at about end of October 2002 which cost $46,000.  W says that she got it at a special discount.  Whatever the price, it would appear that W was doing well then.  The last regular income declared by her was the monthly salary of $23,000 from G Limited in 2001 / 2002, although according to her tax return, her income from G Limited was more in the region of HK$28,000.  The present degree course she is taking is for 3 years and in another 2 years time, she will obtain a Bachelor degree in Chinese medicine, and thereafter she says she will go on to attend a Master course.

53. Looking at the above circumstances, I cannot accept that W’s earning capacity would only be $2,000 per month.  From the two schedules produced by Mr Chan, counsel for H, in relation to the deposits in W’s HSBC account and Standard Chartered Bank account, the total deposits from about August 2002 to August 2004 were about HK$859,000, which was an average of about HK$34,360 per month during this 25 month period.  W says some of these credits were from sale of securities, some were payments from her elder sister, and some were payments from Mr. Lam for her part time work as described above and / or payments which she had to transfer out for Mr. Lam.  W’s counsel, Ms Lai, submits that the relevant withdrawals had not been taken into account in the two schedules, as according to W, when she was cross examined that some of the credits from Mr Lam were subsequently paid out to other persons or companies, as directed by Mr. Lam.  However, it was W’s case that she was a housewife with an income of HK$2,000 per month.  I am of the view that she should therefore provide explanations and proper evidence in the first place in relation to these numerous credits in her bank accounts, and also how these amounts were used.  It is her duty to make full and frank disclosure, and she should not wait until being cross examined.  During cross examination, W produced some more of her securities account statements.  The major activities, from the statements produced by her, appeared to be in June 2002, after she had received the HK$500,000 allegedly from Mr. Lam.  W also produced two deposit slips of HK$30,000 to show that there were credits from her elder sister during the period from August 2002 to August 2004.  Assuming some of the credits in W’s bank accounts were indeed from sale of securities which amounts were of odd dollars and cents, as can be seen in the securities account statements produced by W by way of example, and adding up only the deposits of round figures, this still gives an amount of about HK$740,000 and an average credit of about HK$29,600 per month, allegedly from either her elder sister or Mr. Lam.  W has not mentioned these payments in her affirmations.  I do not find W’s explanations at all satisfactory and in my view, these credits were income of W.  In the circumstances, from about August 2002 to August 2004, I find W must have an income of about HK$29,000 per month.  W’s present course at Baptist College consists of only 3 to 4 classes a week and each class is 3 hours.  She says she has to have practical training once a week and she sometimes goes to Shenzhen or Guangzhou for such practical training.  She therefore does have time to take on other jobs.  I therefore find that W still has an earning capacity of about HK$29,000 per month.

Financial Needs, obligations and responsibilities which W has or is likely to have in the foreseeable future

54. According to her Form E filed in October 2004, W says the monthly expenses of her and the two sons are in the region of $49,689.63.  This amount did not include W’s accommodation expenses.  W present wish is to retain the Matrimonial Home for her and the sons to reside in, and seeks a transfer of the Matrimonial Home to her.  W says she intends to take out a mortgage for HK$1.2 million, to pay off the existing mortgage.  W has made enquiries from GE, and understands that her monthly repayments will be in the region of HK$7,430.81.  However, there will be utilities, management fees, rates and government rent payable.  Based on H’s estimates in his Form E, this would amount to at least another HK$3,760 per month, assuming utilities of about HK$2,000 per month.  W’s accommodation expenses would then be around HK$11,000 per month.

55. If the Matrimonial Home were to be sold, W would need have to seek alternative accommodation.  She says she will then need to rent a flat for her and the two sons and her rent will be in the region of HK$10,000 per month, and utilities will be another HK$2,000 to $3,000 per month.  In this case, her accommodation expenses would even be higher.  Further, she will need to pay rental deposit and moving expenses.

56. W says the elder son will require a monthly sum of about HK$13,000 for his tuition and expenses.  In addition, W says she will need $49,000 per month for rent, and expenses for herself and the younger son.

57. In W’s 1^st affirmation of means filed in October 2003, she said the total expenses for her and the two sons were about HK$42,956, excluding accommodation and utilities, and by the time she filed her Form E in October 2004, the amount had increased to about HK$49,000, and W said this was because the elder son has gone to Australia to study at end of 2003.

58. I find that the monthly expenses of HK$49,000 for herself and the younger son to be on the high side.  W seeks an order of $5,000 per month for the younger son.  Her accommodation expenses will be $11,000 to $13,000 per month, depending whether she pays mortgage or rent, and there is a sum of about $1,955.63 for insurance premia.  In my view, when H resides separately, a reasonable sum for the expenses for herself and accommodation should not exceed HK$29,000 per month, and thus the total expenses for W and the younger son should not exceed $34,000 per month.

Property and other financial resources which W has or is likely to have in the foreseeable future

59. Apart from her interest in the Matrimonial Home, W’s assets consist of :

(i)	cash at bank	HK$ 7,203.83
	as at April / May 2005
	(reduced from HK$35,808.94
	as at 8th October 2004)
(ii)	50% interest in HCG Limited
	of nominal value of HK$1
(iii)	5% interest in BV Limited
	of nominal value of HK$50
(iv)	2 Insurance policies	HK $ 72,725.23
	as at February, and April 2005
	respectively)

60. W’s Liabilities are as follows :

(i)	Personal loans :
	(a) a sum of HK$200,000 allegedly owed to her elder sister
	(b) a sum of HK $150,000 allegedly owed to a Madam Chan
	(c) a sum of HK$200,000 allegedly owed to Madam Ma
(ii)	credit card (HSBC mastercard)	HK $ 34,725.55
	as at 14/4/2005
(iii)	estimated legal costs	HK$110,665
	(per Estimates of Costs
	dated 15/6/2005)

61. W claimed that she had not yet repaid the HK$200,000 to her her elder sister, notwithstanding the loan was in 1996, over 9 years ago.  This was part of the $300,000 loan from her elder sister at the time of the purchase of the Matrimonial Home.  W said her elder sister would not ask for repayment, and in fact, the monies she used to buy her first and second property also were loans from her elder sister.  W says her elder sister was very good to her, and had also lent H money to pay tax previously.  Although her elder sister has not pressed her for repayment, W says she intends to repay her when she has money.  There is no sufficient evidence that the amount of HK$200,000 is still outstanding.  I am of the view that since W’s elder sister has not pressed for repayment and in fact has even paid W more sums over the years, according to W’s own evidence, I therefore cannot accept that this is still a liability which I should take into account.

62. W has also said that she had borrowed a sum of HK$150,000 from a friend Madam Chan on 6^th November 2003 for the elder son to study abroad, and a sum of HK$200,000 from Madam Ma on 3^rd November 2003 for the same purpose although not all were spent on the elder son.  W has provided copies of two cheques as evidence of HK$250,000, one of HK$200,000 from Madam Ma, and one of HK$50,000 from Madam Chan.  Another sum of HK$100,000 was allegedly credited by Madam Chan on 30^th September 2003 into W’s HSBC account.  W says she borrowed the sum of HK$200,000 to show to the Australian Government that she had funds to support the elder son to study there.  Ms Ma was one of the directors of G for a period of time, and that they were close friends.  I would accept these loans since when the elder son left for Australia, it was understandable that W’s expenses would have increased greatly, and even though I have found that she had a monthly income of about HK$29,000, this would not be sufficient to cover the elder son’s expenses.

Matrimonial Home

63. As stated above, the parties bought the Matrimonial Home in 1996 for HK$3,650,000.  The Agreement of Sale and Purchase was signed on 14^th March 1996, and the Assignment was signed on 17^th April 1996.

64. W claims that she paid the stamp duty of HK$100,375.  Further, in order to pay for the 10% down payment, which was required to be paid before H’s application for a loan from the Government had been approved, she used HK$65,000 of her savings, and borrowed the balance of HK$300,000 from her elder sister.  Subsequently, H obtained the loan and repaid a sum of HK$365,000 to W.  W said she only repaid HK$100,000 to her elder sister, as she needed money to pay for other expenses in relation to the purchase, including HK$50,000 for legal fees, and about $420,000 to $430,000 (in her affirmation of means, this figure was HK $302,156.40) to various contractors for renovation.  According to W, and as mentioned above, the sum of $200,000 is allegedly still outstanding.

65. As mentioned earlier, W has claimed that after the purchase of the Matrimonial Home, from 17^th April 1996 to October 2000, she had contributed HK$10,000 per month to H to help repay H’s housing loan, totalling $550,000.  These monies were paid to H in cash, and she said the source was from buying and selling the two properties and also from share dealings.

66. H denies that W paid him HK$10,000 in cash every month.  There was no other evidence to substantiate what W said, or what H said.  However, in those days, the parties’ marital relationship had not yet broken down.  I have also found that W had income from various sources.  I therefore believe that W would have made monetary contributions towards the family expenses.

67. The value of the Matrimonial Home is agreed to be HK$3.85 million.  After deducting the mortgage loan and other loan, the estimated net value as at 2^nd June 2005 was HK$2,497,262.38.  By now, the net value should be about $2.56 million as there were two further months’ payments.

Standard of living enjoyed by the family before the breakdown of the marriage

68. The parties enjoyed a reasonably comfortable standard of living.  The Matrimonial Home is 1,200 sq ft in area.  They were able to have a new car every 5 years or so, and they employed a maid.

Physical or mental disability of the parties

69. The parties appear to be in reasonable good health, and there is no evidence of any physical or mental disability on the part of either party, although W claims she suffered from insomnia.

Contributions made by each party to the welfare of the family, including any contribution made by looking after the home or caring for the family

70. The payment of the mortgage and the repayment of the housing loan were all made by H, together with the utilities, management fees, government rent and rates.  Before the parties purchased the Matrimonial Home, W says that H used to pay $2,500 per month to W for household expenses but H denies this.  Anyway such payments, according to W, ceased when the Matrimonial Home was purchased as according to W, H said he did not have enough funds and W agreed to help and she said she then contributed HK$10,000 per month to H for the monthly mortgage and housing loan repayment.  H also paid for all utilities and other household expenses including the maid’s salary and children’s education fees.

71. Although H denies that W had contributed HK$10,000 per month towards the monthly mortgage and loan repayments, I am satisfied that W has made contributions, both monetary and as a wife and mother to the two sons.  I would regard her contribution towards the welfare of the family during their 16 year of marital relationship to be equal to that of H.

72. Further, from June 2000 onwards, W has been supporting herself and the two sons, since apart from the mortgage and housing loan repayments and utilities and food and necessities, H had not contributed any sums for W or for the sons’ expenses until November 2004 when the order for Interim Maintenance was made and even after that, only HK$10,000 per month.  As the parties have continued to reside under the same roof, her contribution so far as the children is concerned has continued.  She also bought an expensive television at end of October 2002.  From marriage until now it is almost 20 1/2 years.

Value to either party of any benefit which by reason of the divorce that party will lose the chance of acquiring

73. There is no evidence submitted by either of any such loss.

The Two Sons

74. s. 7(2) sets out the matters which I have to consider regarding the two sons.  Their financial needs have been set out in W’s Form E.  W says that the sons’ monthly expenses were HK$22,250 each month.  W in her evidence says that the elder son requires HK$13,000 per month for his tuition and living expenses, but she now only seeks HK$10,000 per month for his maintenance.  For the younger son, W seeks a monthly sum of HK$5,000.  They do not have any independent income, or any earning capacity, property and other financial resources.  There is no evidence of any physical or mental disability.  The standard of living enjoyed by the family has been set out above.

75. One of the matters which I need to consider is the manner in which the children were being and in which the parties to the marriage expected them to be educated, and to place the children, so far as it is practicable, having regard to all the other matters, in the financial position in which the children would have been if the marriage had not broken down and the parties had properly discharged his or her financial obligations and responsibilities towards them.

76. H says he expects the sons to be educated to secondary level.  I accept what W says, that during the marriage, the children had been living without much worry.  They could originally enjoy subsidy to study in the United Kingdom under H’s civil servant’s benefits, and I am in no doubt that had the marriage not broken down, the parties would have expected them to attend university either in Hong Kong or abroad.

Conclusion

77. As set out above, I am of the view that in this case, neither H nor W has made full and frank disclosure of his / her financial situation.  By the time of the trial, neither had much cash in the bank accounts, and a lot of liabilities.  I am of the view that they should each be responsible for their own liabilities and leaving aside their liabilities, the major assets of the parties are as follows :

(i)	H’s pension	HK$3,346,000
		(on 30.11.2010)
(ii)	H’s car	HK$20,000
(iii)	H’ savings in Credit Union	HK$20,512
(iv)	W’s insurance policies	HK$72,725.23
(v)	Matrimonial Home	HK$2,497,262,38
		(on 2.6.2005), about
		HK$2.56 million now

78. H’s counsel, Mr Chan has submitted that the Matrimonial Home should be sold and the net sale proceeds should be divided 60% to H and 40% to W, as H had made great monetary contribution to the property and to the family than W.  Further, in relation to H’s pension, as H had started working for the government in 1975, about 9 years before the marriage and by the time he retires, he will have worked for the government for about 25 years, and the marriage was only about 16 years, and therefore W should be entitled to only 22% of H’s pension.

79. Ms Lai has referred me to the case of F v. F HCMC No. 4 of 2001, where Mr. Justice Hartmann has said

“Today there is greater awareness of the value of non-financial contributions to the welfare of the family.  But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f), relating to the parties’ contribution”.  While White v. White may not have laid down a presumption of equality, clearly equality of division is now a starting point in cases.  Mr. Justice Hartmann has further said in F v. F that he found the philosophy underlying certain of the proposition in White v. White persuasive in line not only with modern concepts of fairness but in accordance with what he believed our legislature intended.

80. Having considered all the circumstances of this case and the s. 7 matters, in particular W’s contribution to the welfare of the family, and her need for a secure roof for the accommodation of her and the two sons and on the basis that H will be entitled to retain for his sole benefit the commuted lump sum part of his pension, I am of the view that it is just and fair for H to transfer all his interest in the Matrimonial Home to W subject to present encumbrances.  W should then end up with about $2.25 million in assets, namely $2.56 million + $72,725, less $350,000 of liabilities to Madam Chan and Madam Ma.  W could pay her credit card liabilities by instalments.

81. As I have found that W has an earning capacity of at least HK$29,000 per month, I am of the view that she should be able to maintain herself. In the circumstances, I will only order H to pay W a nominal sum of HK$1 per annum.

82. Regarding the two sons, I am of the view that W’s proposals are reasonable.  In the circumstances, H should pay HK$10,000 per month for maintenance of the elder son, and HK$5,000 per month for the maintenance of the younger son.  I have found that H’s reasonable expenses should not be more than HK$30,000 per month including his tax provision.  H obviously has not been making any tax provision, as he says he has borrowed to pay tax.  Without the tax provision, his reasonable expenses should be around $23,000 per month if he continues to keep his car.  Even with all his loan repayments and credit card repayments of about HK$18,000 per month, he should still be able to pay $15,000 for the two sons, without taking into account the sums he has withdrawn and whereabouts unknown.

83. I am aware that by reason of the above order, H will be deprived of almost all disclosed major capital assets, except his car and savings in Credit Union and his alleged liabilities.  However, by May 2006, the HSBC personal loan will be paid off, by December 2006, both his loans from Wing Lung and Inchroy will be paid off, and by December 2007, the Credit Union Loan and his car hire purchase instalments will also be paid off and his financial situation will improve.  Further, when H retires in 5 years’ time, he will have a capital of HK$3,346,000.

84. Regarding costs, I have found that neither H nor W has made full and frank financial disclosures, and as their estimates of costs are not too far apart, they should each be responsible for their own costs.  I will make an order nisi that there be no order as to costs, including all costs reserved.  This order will become final in 21 days.

ORDER

85. The effect of my order is as follows :

(i)      Upon Decree Absolute, the Petitioner shall transfer to the Respondent, subject to present encumbrances, all his interest in the Matrimonial Home, upon which he shall move out of the matrimonial home.

(ii)      The parties shall each be responsible for his / her legal costs and disbursements of the transfer.  The stamp duty shall be paid by the Respondent.

(iii)     The Petitioner shall continue to pay for the monthly mortgage instalment, and the monthly repayment of the housing loan and the utilities, and the management fees until the date of the completion of the transfer.

(iv)     As from 1^st September 2005, the Petitioner shall pay to the Respondent HK$10,000 for the maintenance of the elder son, until he completes full time education, and HK$5,000 per month for the maintenance of the younger son, until he reaches the age of 18 or completes full time education, whichever shall be the later.  The interim maintenance order shall cease with effect from 1^st September 2005.

(v)     Upon Decree Absolute, the Petitioner shall pay to the Respondent HK$1.00 per annum for her maintenance, during the joint lives of the parties, or until the remarriage of the Respondent, whichever shall be the shorter term.

(vi)     There be no order as to costs of and incidental to the Respondent’s application for ancillary relief, including any costs reserved. This is an order nisi, and will be made final in 21 days.

(vii)    There be liberty to apply regarding the implementation of this order.

(viii)   Leave to the Petitioner to apply for the Decree Nisi pronounced on 27^th August 2003 to be made absolute, notwithstanding the expiration of 12 months therefrom.

(ix)     I also make a declaration under s. 18 of MPPO that the arrangements for the younger son are the best that can be devised in the circumstances.