T W H v. C S K AND ANOTHER

FCMP 233 / 2010

IN THE DISTRICT COURT OF THE HONG KONG

SPECIAL ADMINISTRATIVE REGION

FAMILY COURT

MISCELLANEOUS PROCEEDINGS

NUMBER 233 OF 2010

(transferred from DCMP 499 of 2010 and HCMP 1374 of 2010)

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BETWEEN

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J U D G M E N T

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1.  The present proceedings concern a claim by the Plaintiff as the wife of C N C, deceased (“the Deceased”) for financial provision from the Deceased’s estate (“the Estate”) under the Inheritance (Provision for Family and Dependents) Ordinance, Cap. 481 (“the IO”). Originally, this action was commenced in the District Court which was by consent transferred to the Court of First Instance and then transferred back to the Family Court pursuant to the Order of Mr. Justice Lam in HCMP 1374 of 2010[1]. The new Practice Direction 15.12 is thereafter issued and has just come into effect on 2^nd July 2011. For the purpose of this Practice Direction, “Family Proceedings” include proceedings issued under the IO.

2.  It is noteworthy that according to paragraph 14 of this Practice Direction, where the mode of beginning of Family Proceedings is by way of Originating Summons, notwithstanding Order 7, rule 2(2) of the RHC / RDC, the applicant is to be called “Applicant” and the respondent “Respondent”, instead of “Plaintiff” and “Defendant”. Nevertheless, I shall hereinafter call the parties as the Plaintiff and the Defendants since they were so named in the heading of this case and the present proceedings were commenced before the effective date of this Practice Direction. In the future, this Practice Direction shall be complied with by the litigants and practitioners.

3.  It is a well established practice in the Family Court that all judgments concerning the Family Proceedings should conceal the identity of the parties and any children involved. This practice of sanitization applies to all relevant hearings whether in open court or in chambers. Hence, I will apply such practice of sanitization in this case although I note that the judgments relating to the claims under the IO in Hong Kong in the past were not sanitized.

BACKGROUND

4.  The Deceased passed away on 31^st July 2009. The Plaintiff is an old lady of 94 years old. The action is brought in the name of her next friend, Zhou (“Zhou”) by an Originating Summons filed on 12^th February 2010. The claim is made against the 1^st Defendant (“D1”), the daughter of the Deceased, for “a lump sum equivalent to half of all the dispositions made by the Deceased to D1 as donee within 6 years prior to the date of death of the Deceased”. There is no further or alternative claim against D1. The disposition referred to the transfer of the Deceased’s shares to D1 (“the Shares”) by the Deed of Gift dated 21^st March 2007 (“the Deed of Gift”). The 2nd Defendant (“D2”) is the Intended Personal Representative of the Estate and the claim is for “a lump sum equivalent to half of the net estate of the Deceased upon his death”.

5.  D2 is absent in the proceedings. By the order of Hon. Lam J made in HCMP 1374 of 2010[2], the action can proceed against D2 in his absence but the outcome will be binding on the Estate.

6.  The Deceased was born in the PRC on 11^th November either in 1915 or 1925. He had received education up to University level and had worked as an official in the Nationalist Party (or Kuomintang).

7.  The Plaintiff was born on 13^th August 1916. She is now 94 years old approaching 95. It is said that her maiden family belonged to the “landlord” class in the PRC.

8.  She married the Deceased in Lin Shan County of the Guangdong Province on 5^th September 1940. There is a PRC notary certificate issued on 12^th September 1994 on the marriage. The marriage was a Chinese customary marriage.

9.  Out of the union between the Plaintiff and the Deceased, the following children were born:-

(i) C T F, son, born in 1942 (“C T F”);

(ii) Z Y Q, daughter, born in 1947;

(iii) Zhou, son, born in 1949;

(iv) Z W F, daughter, born in 1951.

10.  The Deceased came to Hong Kong in 1951 to flee from the Communist Party as he was a member of the Nationalist Party (or Kuomintang).

11.  The Deceased came to purchase a property at Electric Road, North Point at a price of $23,193.00 on 2^nd June 1965 (“the Electric Road Property”) which was 14 years after he had come to Hong Kong.

12.  The Deceased married another woman called Woo (“Madam Woo”) in Hong Kong on 29^th May 1967. The marriage was a registered marriage. There is no evidence to suggest that the marriage between the Deceased and Madam Woo had been dissolved or annulled.

13.  Out of the union between the Deceased and Madam Woo, the following children were born:-

(i) Kin, D1’s elder brother born in 1968 (“Kin”);

(ii) Chi, D1’s elder sister born in 1970 (“Chi”);

(iii) D1, daughter, born in 1971.

14.  Kin has suffered from clinical schizophrenia since 1987 when he was 18 and he required constant medical attention and care.

15.  As to D1, she graduated in Hong Kong Polytechnic University and has been working as a regional sales manager earning about $54,500 per month on average. She has a lived in boyfriend.

16.  By an assignment dated 22^nd May 1993, the Deceased assigned the Electric Road Property to Madam Woo, Chi and Kin out of love and affection.  It is D1’s case and not challenged by the Plaintiff that Madam Woo and Chi came to live with her until 1999 and she has lost contact with them since 2006. At present, there is nothing to suggest that Madam Woo and Chi have passed away.

17.  C T F came to Hong Kong by way of one way permit sometime from 1980 to 1983. After his arrival at Hong Kong, C T F had lived with the Deceased’s cousin Mr. Liu (“Liu”) for a while and then came to reside in a unit at King’s Road (“the King’s Road Property”) which was purchased in the name of C T F on 31^st October 1983 with money provided by the Deceased.

18.  C T F had signed a memo bearing the year of 1988 giving power to the Deceased to deal with the King’s Road Property (“the Memo”) and the title deeds of the King’s Road Property had been kept by the Deceased.

19.  The Plaintiff came to Hong Kong under one way permit in about 1984 and has lived at King’s Road Property all the time.

20.  Zhou started to visit Hong Kong in 1984 and eventually he came to Hong Kong under one way permit in 2002. He said he came to live at the Electric Road Property and initially worked as a cleaning worker and after about August 2006 he came to be engaged by the Deceased to look after the Deceased and Kin at a monthly fee of $5,000. Zhou has continued living at the Electric Road Property up to now after the Deceased and Kin left in July 2007.

21.  The Deceased made his last will on 2^nd March 1986 (“the Will”). Under the Will, the Deceased bequeathed the entire residuary estate to Madam Woo, Kin, Chi and D1. One Mr. Woo being the uncle of the Deceased was appointed the sole executor of the Estate. No one has applied for the probate of the Will.

22.  In August 2006, the Deceased suffered a stroke and was hospitalized. Then on 10^th March 2007, the Deceased was again admitted to hospital for treatment of inter alia pneumonia. The Plaintiff lodged a divorce petition under FCMC 3058/2007 (“the divorce proceedings”) on 15th March 2007. The basis of the petition was 2 years separation.

23.  By a Deed of Gift dated 21^st March 2007, the Deceased gifted over the Shares to D1. It has been said by D1 under re-examination that the Deed of Gift was prepared by solicitor as engaged by D1 according to the instruction of the Deceased given previously and executed by the Deceased at hospital on 21^st March 2007. The Shares were the subject property of the Plaintiff’s claim here. The parties have agreed that the value of the Shares as at the date of the Deed of Gift was $16,551,701.77 and as the date of death of the Deceased to be $11,018,059.84. The parties had also agreed the price of the Shares as at 18^th March 2011 is $11,712,214.07.

24.  Coincidentally, the Deceased made a report to the police on the theft of his shares by Zhou and blackmail by Zhou.

25.  The Deceased moved out of the Electric Road Property with Kin on 30^th July 2007 to live with D1 at a rented flat at Tseung Kwan O.

26.  Later in August 2008, the Deceased and Kin moved to live at another flat at Tseung Kwan O purchased by D1 in the name of D1’s boyfriend (“Tseung Kwan O Property”).

27.  The divorce proceedings were proceeded with by the Plaintiff. Messrs. Tso & Associates (“T&A”) acted for her in the divorce proceedings and had filed a Form E for her stating that her monthly expense was $5,000. The Deceased was not legally represented. He had filed a Form E himself and written various letters to the Family court at that time.

28.  No decree nisi in the divorce proceedings has been granted. There had been no application to set aside the disposition of the Shares by the Deceased or any injunction to restrain D1 from dealing with the Shares.

29.  There was an undated letter bearing the finger print and signature of the Plaintiff stating she agreed to the cancellation of the divorce proceedings. It was revealed during trial that Zhou was indeed appointed as the next friend of the Plaintiff in the divorce proceedings on 7^th August 2009. There was a certificate by one Ng Kwok Wah of Messrs. Wan & Leung (“W&L”) filed in support of the application which enclosed inter alia a certificate by Dr. Ho Pang Nin (“Dr. Ho”).

30.  The Deceased passed away on 31^st July 2009.

31.  The Plaintiff is mentally incapacitated. In the application for Zhou to act as next friend, Wan Choi Ha of W&L filed a certificate producing various medical reports. The certificate prepared by Dr. Ho, an approved doctor under the Mental Health Ordinance Cap. 136 (“MHO”), dated 13^th July 2009 was relied on. There is no application to appoint a Committee under Part II of the MHO.

ISSUES

32.  As D1 has not taken issue of the alleged marriage of the Plaintiff with the Deceased, the issues are defined on the basis that she was a wife of the Deceased as defined under section 2 of the IO, which states as follows:-

“"husband" (丈夫) or "wife" (妻子), in relation to a deceased person, means-

(a) a husband or wife by a valid marriage; and

(b) a person who in good faith entered into a void marriage with the deceased unless either-

(i) the marriage of the deceased and that person was dissolved or annulled during the lifetime of the deceased and the dissolution or annulment is recognized as valid by the law of Hong Kong; or

(ii) that person has during the lifetime of the deceased entered into a later marriage;”

33.  The Plaintiff’s application is made under section 3(1)(a)(b)(i) of the IO which is as follows:-

“3. Application for financial provision from deceased's estate

(1) Where after the commencement of this Ordinance a person dies-

(a) domiciled in Hong Kong; or

(b) having been ordinarily resident in Hong Kong at any time in the 3 years immediately preceding his death, and is survived by any of the following persons-

(i) the wife or husband of the deceased;

(ii) ………..

that person may apply to the court for an order under section 4 on the ground that the disposition of the deceased's estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is not such as to make reasonable financial provision for the applicant.”

34.  The size and nature of the net estate of the Deceased are in dispute, in particular, whether the King’s Road Property is part of the Estate. “Net estate” is defined insection 2 of the IO as follows:-

“"net estate" (淨遺產), in relation to a deceased person, means-

(a) all property of which the deceased had power to dispose by his will (otherwise than by virtue of a special power of appointment) less the amount of his funeral, testamentary and administration expenses, debts and liabilities, including estate duty (if any);

(b) any property in respect of which the deceased held a general power of appointment (not being a power exercisable by will) which has not been exercised;

(c) any sum of money or other property which is treated for the purposes of this Ordinance as part of the net estate of the deceased by virtue of section 10;

(d) any property which is treated for the purposes of this Ordinance as part of the net estate of the deceased by virtue of an order made under section 11;

(e) any sum of money or other property which is, by reason of a disposition or contract made by the deceased, ordered under section 12 or 13 to be provided for the purpose of the making of financial provision under this Ordinance;”

35.  Whether the transfer of the Shares to D1 by the Deed of Gift was a disposition by the Deceased with an intention to defeat the application for financial provisions under the IO by the Plaintiff caught by section 12 of the IO which is as follows:-

“12. Dispositions intended to defeat applications for financial provision

(1) Where an application is made to the court for an order under section 4, the applicant may, in the proceedings on that application, apply to the court for an order under subsection (2).

(2) Where on an application under subsection (1) the court is satisfied-

(a) that, less than 6 years before the date of the death of the deceased, the deceased with the intention of defeating an application for financial provision under this Ordinance made a disposition; and

(b) that full valuable consideration for that disposition was not given by the person to whom or for the benefit of whom the disposition was made (in this section referred to as "the donee") or by any other person; and

(c) that the exercise of the powers conferred by this section would facilitate the making of financial provision for the applicant under this Ordinance,

then, subject to the provisions of this section and of sections 14 and 15, the court may order the donee (whether or not at the date of the order he holds any interest in the property disposed of to him or for his benefit by the deceased) to provide, for the purpose of the making of that financial provision, such sum of money or other property as may be specified in the order.

(3) Where an order is made under subsection (2) as respects any disposition made by the deceased which consisted of the payment of money to or for the benefit of the donee, the amount of any sum of money or the value of any property ordered to be provided under that subsection shall not exceed the amount of the payment made by the deceased after deducting therefrom any estate duty payable in respect of that payment.

(4) Where an order is made under subsection (2) as respects any disposition made by the deceased which consisted of the transfer of property (other than a sum of money) to or for the benefit of the donee, the amount of any sum of money or the value of any property ordered to be provided under that subsection shall not exceed the value at the date of the death of the deceased of the property disposed of by him to or for the benefit of the donee (or if that property has been disposed of by the person to whom it was transferred by the deceased, the value at the date of that disposal thereof) after deducting therefrom any estate duty paid in respect of the transfer of that property by the deceased.

(5) Where an application (in this subsection referred to as "the original application") is made for an order under subsection (2) in relation to any disposition, then, if on an application under this subsection by the donee or by any applicant for an order under section 4 the court is satisfied-

(a) that, less than 6 years before the date of the death of the deceased, the deceased with the intention of defeating an application for financial provision under this Ordinance made a disposition other than the disposition which is the subject of the original application; and

(b) that full valuable consideration for that other disposition was not given by the person to whom or for the benefit of whom that other disposition was made or by any other person,

the court may exercise in relation to the person to whom or for the benefit of whom that other disposition was made the powers which the court would have had under subsection (2) if the original application had been made in respect of that other disposition and the court had been satisfied as to the matters set out in paragraphs (a), (b) and (c) of that subsection; and where any application is made under this subsection, any reference in this section (except in subsection (2)(b)) to the donee shall include a reference to the person to whom or for the benefit of whom that other disposition was made.

(6) In determining whether and in what manner to exercise its powers under this section, the court shall have regard to the circumstances in which any disposition was made and any valuable consideration which was given therefor, the relationship, if any, of the donee to the deceased, the conduct and financial resources of the donee and all the other circumstances of the case.

36.  If the answer is yes, what should be the proper valuation of the Shares for the purpose of theIO?

37.  The next issue is whether reasonable financial provision should be ordered out of the Estate for the Plaintiff under sections 3(1) and (2) of the IO. It is noteworthy that since the Plaintiff is the spouse of the Deceased, the meaning of "reasonable financial provision” is different from other applicants in the sense that her claim shall not be restricted to the extent of her maintenance. Section 3(2) states:

"reasonable financial provision”

(a)  in the case of any application made-

(i)  by virtue of subsection (1)(i) by the husband or wife of the deceased (except where the marriage with the deceased was the subject of a decree of judicial separation and at the date of death the decree was in force and the separation was continuing); or

(ii)  by virtue of subsection (1)(iii) by a tsip or male partner of the deceased by a union of concubinage, means such financial provision as it would be reasonable in all the circumstances of the case for such a person to receive, whether or not that provision is required for his or her maintenance;

(b) in the case of any other application made by virtue of subsection (1), means such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance.(emphasis added)

38.  If the answer to the above is positive, then

(i) whether the Court should exercise the power to make the order;

(ii) if the Court should exercise its power, how to apply the matters as listed in section 5(1) of the IO which are as follows:-

"(a) the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

(c) the financial resources and financial needs which any other applicant for an order under section 4 has or is likely to have in theforeseeable future;

(d) the financial resources and financial needs which any beneficiary ofthe estate of the deceased has or is likely to have in the foreseeablefuture;

(e) any obligations and responsibilities which the deceased had towards any applicant for an order under section 4 or towards any beneficiary of the estate of the deceased;

(f) the size and nature of the net estate of the deceased;

(g) any physical or mental disability of any applicant for an order under section 4 or any beneficiary of the estate of the deceased;

(g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the courtmay consider relevant.”

(a) the age of the applicant and the duration of the marriage or union of concubinage;

(b) the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family,

and, in the case of an application by the wife or husband of the deceased, the court shall also, unless at the date of death a decree of judicial separation was in force and the separation was continuing, have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce.

40.  Re Rowlands (Deceased)[3] is anUK Court of Appeal case, in which Cumming-Bruce LJ said:

“As a matter of construction, the first point to note on the provisions of s.3(1) [of the Inheritance (Provision for Family and Dependants) Act 1975] is this. The court has to answer three questions. The first is the question whether reasonable financial provision for the applicant should be ordered out of the estate. In relation to that exercise, the court is enjoined to have regard to all the matters thereafter specified in the section. If the court answers the first question in the affirmative it then has to decide whether to exercise its powers at all, and at that stage has again to have regard to all the matters thereafter set out by the draftsman in the sub-section. If the court decides to exercise its powers, it then has to determine in what manner to exercise them, and again for that purpose to have regard to all the matters set out in the rest of the section. That is important because it is perfectly plain from the language that those factors set out in sub.(1) fall for mandatory consideration by the court when answering each of the three questions which the legislation requires the court to answer.”

41.  Insofar as the relevant provisions under the Inheritance (Provision for Family and Dependants) Act 1975 are concerned, s.1, s.3 and s.9 thereof are basically the same as their respective counterparts s.3, s.5 and s.12 of the IO mutatis mutandis even after the amendments introduced by the Civil Partnership Act 2004.

What is the size and nature of the “net estate”?

42.  It is not disputed by the Plaintiff that the Electric Road Property is not part of the net estate as the same having been assigned to Madam Woo, Chi and Kin back in 1993. It cannot be caught bysection 12 of the IO. Fortunately, the Plaintiff never alleges that Madam Woo, Chi and Kin hold the Electric Road Property on trust for the Deceased. So, it is not an issue for me to determine.

43.  There are only the 2 bank accounts of the Deceased with negligible balance and the monies therein would be part of the net estate.

44.  As to whether the Shares should be part of the “net estate”, the same will be addressed in the latter part of this judgment.

45.  The only remaining consideration is the King’s Road Property. There is no dispute that it is registered in the name of C T F but the purchase price was provided by the Deceased. It is not C T F’s case that the King’s Road Property was a gift by the Deceased to him so that the presumption of advancement applied. The question is whether the arrangement gave rise to a trust with the Deceased being the beneficial owner or was a pure loan arrangement and if so whether the repayment was made.

46.  There was the Memo by which C T F acknowledged that the Deceased had power to deal with the King’s Road Property including sale of the same in his absence. Also, it is common fact that the Deceased had kept the title deeds all the time. In this regard, C T F explained that he did not mind to have the title deeds to be kept by the Deceased since they were father and son. Mr. Li, Counsel for D1, submitted that there is just no reason why C T F should not keep the title deeds and never demanded for their return until according to him when the Deceased moved to live at Tseung Kwan O in June 2007. Mr. Li submitted that the factors canvassed above are all classic considerations for the case of resulting trust.

47.  As to whether the arrangement was a pure loan, C T F said in cross-examination that the Deceased came to ask him for money sometime later and he went on to say that he had overpaid the Deceased. Mr. Li, Counsel for D1, submitted that if there was indeed a loan agreement, there was no reason for C T F to overpay. He further submitted that no clear evidence as to the exact amount of alleged repayment or documentary proof of repayment has been given.

48.  First of all, I accept that the purchase money of the King’s Road Property is not a gift from the Deceased to C T F as C T F admitted that he had repaid and overpaid the Deceased. Secondly, I consider that the Memo itself is simply a written authorization signed by C T F but not a document which can prove C T F is holding the King’s Road Property on trust for the Deceased. In my view, if the Deceased managed to get him signed the Memo, there is no reason why the Deceased could not simply ask him to sign on a note to acknowledge the trust in writing. Although it is not abundantly clear from C T F’s evidence that there was any agreement of loan from the Deceased to him for the purchase money, I can easily infer the same from his evidence regarding repayment to the Deceased when he was so asked by the Deceased. The fact that the Deceased had kept the title deeds all the time cannot, in my judgment, assist Mr. Li’s submission regarding trust. It can at the highest suggest a case that the loan from the Deceased to C T F was secured by deposit of title deeds in the Deceased’s custody and that an equitable charge may be accordingly created. I accept C T F’s evidence regarding repayment to the Deceased because it is further supported by the evidence of Liu. I consider that if both C T F and Liu are prepared to give false evidence in this regard, they can simply say it is a gift from the Deceased to C T F and the presumption of advancement applies due to the father and son relationship.

49.  Mr. Wang, Counsel for the Plaintiff, rightly pointed out that there is no documentary proof of the existence of such trust and that the Form E filed by the Deceased in the divorce proceedings had never mentioned about it. Even according to D1’s evidence, she did not say that she had heard from the Deceased about such trust.

50.  The explanation of C T F for not demanding for the return of the title deeds until the Deceased moved to live at Tseung Kwan O in June 2007 is not, in my view, unreasonable since even D1 said in her affirmation filed 17^th June 2010 that the Deceased was an extremely autocratic father who received traditional education in Confucianism. After all, it seems to me that D1 is asking the Plaintiff or C T F to disprove the existence of such trust. It must be wrong. I therefore reject Mr. Li’s submission that C T F is holding the King’s Road Property on trust for the Deceased.

51.  I am satisfied that the payment for the purchase price of the King’s Road Property by the Deceased was a pure loan arrangement. Mr. Li then asked me to determine whether the repayment was wholly made by C T F. Theoretically, I need to do so in order to find out the “net estate” of the Deceased. However, Mr. Li did not make any submission as to the amount of the outstanding balance of such loan and simply submitted that C T F did not produce documentary proof of the entire repayment. I consider that C T F is only a witness of the Plaintiff and was never requested by D1 to produce such documentary proof before the trial. In my judgment, this submission by Mr. Li is unfair to C T F. In any event, I accept the evidence of C T F and Liu that C T F had repaid the entire loan to the Deceased.

52.  I conclude that the King’s Road Property should not be part of the “net estate”.

Whether the Deed of Gift in favour of D1 shall be set asideunder section 12 of the IO?

53.  While the Deed of Gift was made within 6 years of the death of the Deceased, the fundamental question is whether the disposition was made by the Deceased with the intention of defeating an application for financial provision under the IO. This Court must be satisfied that the Deceased had the intent to defeat an application under the IO by the disposition. There are 2 related sections in deciding the matter. One is section 12(6) of the IO which provides as follows:

In determining whether and in what manner to exercise its powers under this section, the court shall have regard to the circumstances in which any disposition was made and any valuable consideration which was given therefor, the relationship, if any, of the donee to the deceased, the conduct and financial resources of the donee and all the other circumstances of the case.

54.  The other is section 14(1) of the IO. By this section, the test to find such an intention is on a balance of probabilities and the intention need not be the sole intention of the Deceased. Section 14(1) of the IO is as follows:-

“14. Provisions supplementary to sections 12 and 13

(1) Where the exercise of any of the powers conferred by section 12 or 13 is conditional on the court being satisfied that a disposition or contract was made by a deceased person with the intention of defeating an application for financial provision under this Ordinance, that condition shall be fulfilled if the court is of the opinion that, on a balance of probabilities, the intention of the deceased (though not necessarily his sole intention) in making the disposition or contract was to prevent an order for financial provision being made under this Ordinance or to reduce the amount of the provision which might otherwise be granted by an order thereunder.

55.  Before I determine whether the Deceased had the intention to defeat an application under the IO by the disposition, I consider that I have to deal with the factual dispute as to whether the divorce petition had been duly served on the Deceased.

56.  It is alleged by Zhou that he was present in the hospital when the papers in the divorce proceedings were served on the Deceased. He said at the trial that the process server asked the Deceased to sign some receipt.

57.  Mr. Li, Counsel for D1, queried as to why the process server was not called and that in his purported affirmation of service, there is just no suggestion that he had asked the Deceased to sign anything. Mr. Li submitted that if indeed there was any receipt, one would expect the process server to have produced it and that his evidence should not be accepted because his evidence is only hearsay. Mr. Li cast doubt on whether there was indeed service of the divorce papers at the hospital on 15^th March 2007.

58.  In my view, the affirmation of service has sufficiently proved good service of the divorce papers on the Deceased at the hospital on 15^th March 2007 until and unless D1 can disprove it to the satisfaction of the court. I note that the process server stated clearly in his affirmation of service as to not only the date and the time of the service i.e. 15^th March 2007 at 4:50pm but also the exact location i.e. bed no.18, 7^th Floor, Ruttonjee Hospital. He further stated therein that the Deceased confirmed to him as to his identity, which was further identified by the Deceased’s name appearing on his wrist belt. The affirmation of service was made by the process server on 16^th March 2007 and filed with the court on 18^th March 2007. Bearing in mind that the process server is just a legal executive of T&A, the then solicitors for the Plaintiff in the divorce proceedings, I cannot think of and Mr. Li has not suggested any reason for T&A to ask its staff to make a false affirmation of service. More important is that no one can forecast that the Deceased would give the Shares to D1 on 21^stMarch 2007.

59.  If D1 really wants to take issue on this matter, she may simply apply for subpoena to compel the process server to attend the trial for examination rather than criticizing the Plaintiff not doing so and making such a serious accusation against T&A or his staff. Furthermore, as it is not one of the agreed issues as set out in the agreed list of issues signed by the parties’ legal representatives filed 13^th October 2010, the Plaintiff may not be in a position to know D1’s intent to pursue this particular issue at the trial. I therefore reject Mr. Li’s submission in this regard and find that the divorce papers were duly served on the Deceased at the hospital on 15^th March 2007.

60.  It is necessary for this Court to make the factual finding as to whether the divorce papers had been duly served on the Deceased because the Deed of Gift was executed by the Deceased on 21^st March 2007 i.e. mere 6 days after the personal service of the divorce papers.

61.  I agree with the submission of Mr. Wang,Counsel for the Plaintiff, that the timing of making the Deed of Gift was very suspicious. It is D1’s evidence under re-examination that the Deed of Gift was prepared by solicitor engaged by D1 according to the instruction of the Deceased given previously and executed by the Deceased at the hospital on 21^st March 2007. D1 had not further explained the urgency of executing the Deed of Gift by the Deceased at the hospital on 21^st March 2007 upon receipt of the divorce papers.

62.  D1 admitted that the Shares were meant to be given to her for her use and with the obligation to use them for looking after Madam Woo, Chi and Kin if they can be found. Mr. Li, Counsel for D1, argued that such arrangement was consistent with the Will and that if the Deceased really wanted to defeat the claims of the Plaintiff, C T F or Zhou, if any, over his assets, there was no need for him to effect the disposition of the Shares by the Deed of Gift as he had already made the Will disinheriting them.

63.  On the other hand, Mr. Wang submitted that if there had already been a valid will of the Deceased made in about 1986 bequeathing all his belongings to his family with Madam Woo, there was no pressing need of relinquishing the Shares at that moment.

64.  I prefer Mr. Wang’s submission to that of Mr. Li in this regards as Mr. Li no doubt made his submission based on the fact that the divorce papers were not personally served on the Deceased at the hospital on 15^th March 2007. Unfortunately, I find the contrary. Besides, the Will which only takes effect upon death of the Deceased cannot prevent the Plaintiff’s claim for financial provision in the divorce proceedings. According to the Will, the Deceased intended not to bequest any of his assets to the Plaintiff. As a result, the irresistible inference shall be drawn by this Court is that the Deceased gifted D1 with the Shares at that time with a view to defeating the entitlement of the Plaintiff under the divorce proceedings. It is noteworthy that there is a very similar though not exactly the same provision for anti-avoidance of transaction under section 17 of the Matrimonial Proceedings and Property Ordinance Cap.192.

65.  I conclude that on a balance of probabilities, the Deceased had the intention to defeat the Plaintiff’s application under the IO though I agree that it may not be his sole intention. In other words, I accept that he also intended to give the Shares to D1 with the obligation to use them for looking after Madam Woo, Chi and Kin.

66.  In my judgment, the disposition of the Shares by the Deed of Gift is caught by section 12 of the IO and shall be set aside. Then the next question is what should be the amount of money or value of the Shares to be ordered for the purpose of making financial provision under section 12(1) of the IO.

67.  In Ye Hong Ying vChap Lup Ying[4], Mr. Justice P. Cheung (as he then was) said in §10 of his judgment:

In my view, in applications under the Ordinances, it is essential to establish, as a starting point, the value of the net estate at the time of the death of the deceased. The value of the estate after death may fluctuate from time to time due to change of circumstances, for example, fluctuation in the price of shares or real estate of the deceased. Hence, it is necessary to establish a benchmark of the value of the deceased's net estate first. However, having established this benchmark, the Court must take into account the current value of the net estate in making the financial provisions. Even in the absence of authorities, this must be clear enough. For example, if a property of the deceased has been destroyed since his death, the Court must consider this and cannot possibly make financial provisions without taking this matter into account. In any event, this is clear from both Ordinances. Under s.7(1)(d) of DFMO, the Court shall have regard to any other matters or things which, in the circumstances of the case, the Court may consider relevant or material in relation to that dependant or to persons interested in the estate of the deceased or otherwise. In s.5(1)(g) of IPFDO, the Court shall have regard to any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the Court may consider relevant. Section 5(7) further provides that:

"In considering the matters to which the Court is required to have regard under this section, the Court shall take into account the facts as known to the Court at the day of the hearing."

In my view, in an application under the Ordinances, the current value of the net estate may well be treated as a relevant consideration although it has to be recognised that the question ultimately depends on the circumstances of the case. (emphasis added)

68.  Hence, I shall look at the value of the Shares at the time of death of the Deceased as the benchmark and then to look at the current value at the time of hearing as the value might fluctuate after death. At last, I would decide the matter by looking at the whole circumstances of the case.

69.  Section 12(4) of the IO is also relevant in this context, which provides as follows:-

“(4) Where an order is made under subsection (2) as respects any dispositionmade by the deceased which consisted of the transfer of property (other than asum of money) to or for the benefit of the donee, the amount of any sum ofmoney or the value of any property ordered to be provided under thatsubsection shall not exceed the value at the date of the death of the deceasedof the property disposed of by him to or for the benefit of the donee(or ifthat property has been disposed of by the person to whom it was transferred bythe deceased, the value at the date of that disposal thereof) after deductingtherefrom any estate duty paid in respect of the transfer of that property bythe deceased.” (emphasis added)

70.  As agreed by the parties, the value of the Shares as at:-

i. the date of purported transfer is HK$16,551,701.77;

ii. the date of death of the Deceased is HK$11,018,059.84; and

iii. the date of trial is HK$11,712,214.07.

71.  Mr. Wang,Counsel for the Plaintiffdraws my attention to paragraph 74 of D1’s Affirmation filed 17^th June 2010, in which she affirmed that:

“in order to support, maintain and take good care of my Father (the Deceased) and my Elder Brother (Kin), and to pay for the expenses vis-à-vis the Rented Tseung Kwan O Flat and the Purchased Tseung Kwan O Flat, I had no choice but to sell, and I did sell, the shares that were given to me by my Father as a gift”

72.  It is not challenged by the Plaintiff that the Tseung KwanO Property was purchased in about 2008 at the consideration of $1,350,000 with a bank loan of $945,000. Therefore, the down payment is about $400,000. Mr. Wang,Counsel for the Plaintiff, submitted that D1 had realized some of the Shares for acquiring the Tseung KwanO Property which should have substantially appreciated because of the booming property market. Therefore, he urged this Court to adopt the value of the Shares as at the time of the purported transfer as the value of the net estate of the Deceased for the purpose of the present proceedings.

73.  As said above, I shall also look at the whole circumstances of the case, in particular the fact that D1 had sold some of the Shares for purchase of the Tseung KwanO Property and the alleged substantial appreciation in its value in the recent years.

74.  In my view, there is no evidence as to the actual amount of those shares sold by D1 and Mr. Wang for the Plaintiff did not put any question to D1 relating to the down payment for purchase of the Tseung KwanO Property. Therefore, I am not in a position to guess whether the amount of those shares sold by D1 is exactly the said down payment of $400,000. In any event, I shall not ignore the fact that the Deceased had moved into the Tseung KwanO Property until his death and that Kin is still living therein free of rent. I accept that the sale proceeds of those shares were used by D1 for normal expenses for accommodation of the Deceased and Kin. Even if there is appreciation in the value of the Tseung KwanO Property, amount of which the Plaintiff has not shown to this Court, it is a pure fortune. I am not persuaded by Mr. Wang’s submission to adopt the value of the Shares as at the time of the purported transfer as the value of the net estate of the Deceased for the purpose of the present proceedings.

75.  More important is that by reason of section 12(4) of the IO, themaximum value of the Shares which can be ordered to be provided is $11,018,059.84, namely the value as at the date of death of the Deceased. I therefore conclude that for the purpose of the present proceedings,the value of the net estate of the Deceased is $11,018,059.84.

Whether reasonable financial provision should be ordered out of the Deceased’s netestate for the Plaintiff

76.  In my judgment, it is crystal clear that the disposition of the Estate by the Will is not such as to make any, not to say reasonable, financial provision for the Plaintiff.

77.  Mr. Li for D1 argued that no order for reasonable financial provision should be made out of the Estate as the marriage between the Deceased and the Plaintiff was a “fossil marriage”. He quoted the following from William, Sunnucks and Mortimer, Executor, Administrator and Probate19^th ed.[5]:

“Fossil Marriages

If cohabitation ended some time before the death of the deceased, and the parties to the marriage had arranged their lives on the footing that the marriage had ended, the court is most unlikely to disturb that footing. In effect, it is likely to treat the applicant as a former spouse.” (emphasis added)

78.  Mr. Li for D1 submitted that applications from former spouses for family provisions will fail generally. In support of this legal proposition, Mr. Li cited Tse Mui v Liu Suet Fun[6]. In this case, the plaintiff was concubine of the deceased testator who had maintained herself since 1965. She received no maintenance and support for 14 years until the testator’s demise in 1977 apart from some very modest sums of $5 to $10 a month for food. The testator’s last will left no provision for the plaintiff or her daughter. Liu J (as he then was) held that there was hardly any relationship to be described as ‘close or harmonious’ between the plaintiff and the testator. The learned judge opined that they had drifted apart and held that the nil provision in the last will for the plaintiff could not be said to be unreasonable in the circumstances. The plaintiff’s claim was dismissed.

79.  I note that the decision of Tse Mui’s case was based on the Deceased’s Family Maintenance Ordinance Cap. 129 (“the DFMO”) which has been repealed and replaced by the IO,which came into operation on 3rd November 1995. I am of the view that the law applicable therein is not entirely applicable in the present case.

80.  In Ye Hong Ying’s case[7] , the deceased therein had two wives similar to the Deceased in the present case. He married theplaintiff in Shanghai in 1938. Out of that marriage, 6 children were born with one died as an infant. He married the defendant also in Shanghai in 1945 and out of that marriage, 4 children were given birth. The deceased came to Hong Kong in 1957 and was joined by the defendant in 1962. The plaintiff remained in Shanghai and joined her daughter in England in 1987. Hence, the plaintiff had not been living with the deceased since 1957. The deceased died in Macau in 1993 and therefore by then, the plaintiff had been living apart with the deceased for about 36 years. By a will, the deceased bequeathed the defendant his entire estate. The plaintiff was 78 at the time of trial. Despite the contention of the defendant that the plaintiff should not have a share of the estate because the deceased’s business was built up with the support of the defendant and their children, the Court ordered a lump sum equivalent to about one-third of the current net estate of the deceased. Mr. Justice P. Cheung (as he then was)said in §6 of his judgment:

“In this case, there are two applications by the Plaintiff. The first is an application for maintenance under the DFMO. The second is an application under the IPFDO to vary the order that may be made under the DFMO. This approach was adopted in accordance with the judgment of Patrick Chan J. (as he then was) in Kung Lok Ping v. Ngai Fook Sang and Ngai Fook Ying, Deborah (HCMP No.158/1995) where the Plaintiff made an application under the DFMO, but before the hearing, the DFMO was repealed by the IPFDO. The learned Judge analysed the differences between the two Ordinances which include, among other things, that under the DFMO, the aim is to ensure the widow can have a reasonable living while under the IPFDO, the aim is to ensure the widow can have a reasonable share in the estate.” (emphasis added)

81.  I also consider that the situation of former spouseis expressly dealt with under section 3(1)(ii) of the IO, which provides that before a former spouse of the deceased may make a claim under the IO, the court has to satisfy that he or she has not remarried and was being maintained, either wholly or substantially, by the deceased immediately before his death. In my view, the legislation clearly does not forbid a former spouse of the deceased to make a claim under the IO. Of course, the court can simply dismiss his or her claim on the ground that he or she was not maintained, either wholly or substantially, by the deceased immediately before his death. I consider Mr. Li’s submission that applications of former spouses for family provisions will fail as a general rule is over-simplified and cannot be accepted in the present case.

82.  Mr. Li cited me another recent English case Hope v Knight[8] . In that case, the applicant wife had been separated with the testator for 20 years since 1991. At that time there was a separation agreement which represented a clean break (so far as capital was concerned) between the couple. The parties did not proceed to divorce until the testator died in late 2009. In dismissing the applicant’s claim, Judge Purle, QC said that delay on the part of the applicant was a powerful factor because the testator must have justifiably thought himself free of further capital claims. The learned judge also said that:

“Looking at all those factors, I do consider that Michael (the testator) was entitled to take the view and reasonably took the view that his obligations towards Julie (the applicant wife) had more than been satisfied by the capital provision that he had made in the past and that he could proceed upon the basis that he was free of all claims, whether for capital or maintenance and, in particular, that it was reasonable for him to provide for Christina(his present cohabite) to the exclusion of Julie (the applicant wife) (including leaving her the home in which they lived).”

83.  In reaching the decision to dismiss the applicant’s claims in Hope’s case, the learned judge had considered all the relevant factors, such as the clean break separation agreement, the applicant’s delay to proceed to divorce as well as her earning capacity coupled with her other resources. The separation for 25 years is only one of the relevant factors, but not conclusive, which the learned judge took into account. Hence, I do not think that it is a case to support Mr. Li’s submission in this regard.

84.  I am of the view that it is extremely difficult for thisCourt to stop at this stage and make no order for financial provision out of the Estate simplybecause the marriage between the Plaintiff and the Deceased is a fossil marriage. Furthermore, as there is no statutory definition of fossil marriage according to the IO, I find myself not necessary to determine whether the marriage between the Plaintiff and the Deceased is a fossil one albeit it must be a relevant matter which the court has to consider when making suitable order under section 4 of the IO. It will be discussed in the latter part of this judgment.

85.  Bearing in mind that no financial provision is made for the Plaintiff under the Will, I have no hesitation to exercise the power to order for reasonable financial provision out of the Estate. I am then bounded to consider all the matters as listed in section 5of the IO. In usual parlance, the matters laid down in section 5(1) are said to be for the maintenance standard and those of section 5(2) the divorce standard. Indeed, it must be noted that the Court is bound to consider all the relevant circumstances and factors albeit the matters laid down in section 5(1) and (2)[9]are mandatory considerations.

Matters under section 5(1)(a)of the IO

86.  The Plaintiff has neither financial resources presently nor any great financial resources in the future. She is receiving disability allowance in the sum of $2,560 per month and it is expected that she would continue to receive such allowance in the future. She has previously filed a Form E on about 29^th May 2007 in the divorce proceedings stating that her monthly expenses were $5,000.

87.  According to Zhou’s affirmation filed 17^th February 2010, he was asking for a total figure of about $26,000 to $28,000 per month as financial needs of the Plaintiff. The figure was then revised in Zhou’s 3^rd affirmationfiled 5^th March 2011 to be $30,000 per month.

88.  Mr. Li for D1 submitted that the financial needs of the Plaintiff in the foreseeable future is the amount required to be spent in keeping her in a decent elderly home and some provision for her medical expenses. He said that on top of the proposed monthly contribution by D1 for $5,000, the Plaintiff still would have her allowance from the Government and could use the said $5,000 to employ a domestic servant to look after her. In term of accommodation, she can live at the Electric Road Property or indeed continue to live at the King’s Road Property.

89.  In the ancillary proceedings of a divorce case, the parties’ needs should be generously interpreted.[10] For the claim under the IO, I consider this generous interpretation approach shall also be adopted, especially when the resources allow. Since I find that for the purpose of the present proceedings,the value of the net estate of the Deceased is $11,018,059.84, the Plaintiff’s needs shall not be assessed according to some perceived lowest common denominator. D1’s suggestion of keeping the Plaintiff in a decent elderly home plus some provision for her medical expenses and D1’s monthly contribution of $5,000 for hiring a domestic servant to look after her, in my view, is too harsh to be accepted.

90.  I also agree with Mr. Wang’s submission that the monthly expenses of HK$5,000 as stated in the Form E filed by the Plaintiff in the divorceproceedings were only an estimate made before she had suffered from stroke in 2008. Therefore, this figure has no or very little bearing in assessing the present and future financial needs of the Plaintiff due to the significant change of her medical condition.

91.  For the accommodation, I find it justifiable for the Plaintiff to rent a decent flat in North Point, which shall be near to both of the Electric Road Property and the King’s Road Property, so that it will be convenient for Zhou and C T F to look after and visit her frequently. I also consider necessary to hire a domestic servant to look after her at home since this is indeed the usual arrangement for most of the families in Hong Kong to do so. After having carefully considered the circumstances, I find that the financial need of the Plaintiff is $21,000 per month, breakdown of which is set out as follows:

(i) Rental and all necessary outgoings	$13,000
(ii) Food, medical and other expenses	$13,000
(iii) Wages of domestic servant including food, insurance, air-ticket etc.	$5,000
Total	$21,000

Matters under section 5(1)(b), (c) and (d)of the IO

92.  I have to take into account the financial resources and needs of Madam Woo, Chi and Kin, who are the beneficiaries of the Estate, and the Deceased’s obligations to them. Kin who is now 43 years old suffers from mental illness and diabetes. It is not in dispute that he has been cared for by the Deceased before he passed away and then by D1. Mr. Li for D1 submitted that D1 has set out her calculation of the need of Kin as being up to $4,000,000 by using the monthly expenses of $18,500 and multiplier of 18 [i.e. $18,500 X 12 X 18].

93.  Mr. Wang for the Plaintiff submitted that monthly expenses of HK$5,000 are more than reasonable in the case of Kin and that the appropriate multiplier to be adopted in his case should be around 15. Hence, he suggested that the aggregated maintenance is HK$900,000 [i.e. $5,000 x 12 x 15]. Both Counsel had not addressed me on use of Duxbury calculation which is an appraisal of lump sum level a person will require in order to spend rest of his/her life at a certain amount of expenses every year. So I do not have to consider it.

94.  Although no information had been provided as to the financial resources of Kin, I do not think he has significant resources in view of his mental illness except that he is one of the registered owners of the Electric Road Property. However, I consider that he cannot reside there for the rest of his life because Zhou is now occupying the same unless either a legal action is taken to evict him or he moves out voluntarily.

95.  I note that D1 was not cross-examined by Mr. Wang relating to the alleged Kin’s monthly expenses for $18,500. As a generous interpretation approach shall be adopted in this case, I accept D1’s suggested figure of $18,500 as Kin’s monthly expenses. Regarding the appropriate multiplier, I adopt 16. Hence, the need of Kin is $3,552,000 (i.e. $18,500 X 12 X 16).

96.  Concerning the financial resources of Madam Woo and Chi, the Court has very little information apart from the fact that they are also the registered co-owners of the Electric Road Property. Chi is now 41 years old. According to D1’s evidence, she has lost contact with them since 2006. Thus, I cannot see any obligation on the part of the Deceased to make financial provision to Chi as she has not been maintained by the Deceased for many years.[11]

97.  Regarding the Deceased’s obligation to make financial provision to Madam Woo, I consider that she also falls within the definition of “wife” under section 2 of the IO, being a person who in good faith entered into a void marriage with the Deceased which is not dissolved or annulled during the lifetime of the Deceased and such dissolution or annulment is recognized as valid by the law of Hong Kong. In my judgment, she is also entitled as a spouse to make a claim under theIO out of the net estate of the Deceased and the Deceased do have obligation to make financial provision to Madam Woo. However, there is no evidence before me concerning her needs for the obvious reason that she cannot be located for about 5 years. Hence, unlike the situation of Kin, I consider that although the Deceased had obligation to make financial provision to Madam Woo, it is difficult to assess her need. In any event, if Madam Woo requires the Deceased or D1 to maintain her, she would not disappear for 5 years and even refuses to see D1.

98.  As D1 is also one of the beneficiaries under the Will, I have to consider her financial resources and needs. She is the donee under the Deed of Gift of the Shares and has very high earning capacity as well as the beneficial ownership of the Tseung Kwan O Property. I can firmly conclude that the Deceased has no legal obligation to make financial provision to her. Lastly in respect of the 4 children born out of the marriage between the Plaintiff and the Deceased, I do find that they are neither potential applicants under section 4 of the IO nor beneficiaries under the Will. Thus, I do not have to consider their needs.

Matter under section 5(1)(e) of IO

99.  As already determined above, the value of the net estate of the Deceased is $11,018,059.84.

Matters under section 5(1)(f)of the IO

100.  The Plaintiff is mentally incapacitated and requires help of wheel-chair. Kin is also under disability suffering from schizophrenia and diabetes. Regarding Madam Woo and Chi, Mr. Li for D1 submitted that they have mental problem. D1 said in her affirmation that Madam Woo began to show signs of mental illness by shouting at people, including the Deceased and that Chi had difficulties in communicating with others. Even though these are not challenged by the Plaintiff, I cannot accept these are adequate evidence to prove they are suffering from mental disability which obviously requires medical evidence from a medical practitioner.

Matters under section 5(1)(g)of the IO

101.  Under this sub-section, the Court has to consider all relevant circumstances including the conduct of the Plaintiff and any other person.

102.  Mr. Li for D1 submitted that the relevant conduct of the parties is that the present application is indeed instigated by Zhou and possibly C T F for their benefit. He further contended that whole exercise was manipulated by Zhou who confirmed under cross-examination that he found the lawyer, namely T&A for the Plaintiff for the divorce proceedings and he gave instructions to the lawyer.Accordingly, if the Court grants a substantial lump sum for the Plaintiff, that will result in a vast windfall for her children under intestate succession. That would tantamount to allowing the children’s application (especially that of Zhou) for financial provision through the backdoor.

103.  Mr. Wang for the Plaintiff replied that in White v White[12], Lord Nicholls of Birkenhead said:

“I agree that a parent’s wish to be in a position to leave money to his or her children would not normally fall within paragraph (b) as a financial need, either of the husband or of the wife. But this does not mean that this natural parental wish is wholly irrelevant to the section 25 exercise in a case where resources exceed the parties’ financial needs. In principle, a wife’s wish to have money so that she can pass some on to her children at her discretion is every bit as weighty as a similar wish by a husband.”

104.  I consider that the above legal statement is also applicable in this case since the net estate of the Deceased is about $11 million which exceeds all the relevant parties’ financial needs. I see nothing improper if the Court grants a lump sum for the Plaintiff, it will result in passing some money on to her children under intestate succession.

Matters under section 5(2)(a)of the IO

105.  The Plaintiff is now 94 years old approaching 95. The duration of the marriage is almost 71 years. However, Mr. Li for D1 argued that the marriage is indeed a “fossil marriage” and the Plaintiff should be treated as a former spouse. It is not disputed that the Deceased and the Plaintiff parted their ways since 1951 after the Deceased fled to Hong Kong from the Communist Party as he was a member of the Nationalist Party. Another family was set up 16 years later when the Deceased married Madam Woo in 1967.

106.  According to the evidence of Zhou, C T F and Liu, the Deceased sent daily necessities and letters back to the Plaintiff when she was in the PRC. Although Mr. Li for D1 challenged as to why those letters could not be produced, I accept their evidence in this aspect. As said by C T F in his affirmation filed 27^th August 2010, I agree that it is almost impossible for a 68 years old woman like the Plaintiff to apply for one-way permit to Hong Kong in about 1984 without the help of the Deceased. Liu also said in his affirmation filed 27^th August 2010 that when the Plaintiff came to Hong Kong in 1984, he picked up her at the train station as the Deceased had to work. It must be the Deceased who asked Liu to do so for him.

107.  Later, the Deceased had signed several Chinese declarations to apply Zhou for one-way permit to Hong Kong in about 1985, 1992 and 2002, copies of which are exhibited in Zhou’s affirmation filed 12^th February 2010. In the 3 Chinese declarations made in 1985, the Deceased described the Plaintiff as his wife. He also stated therein that they were living together and he wished that Zhou would be allowed to come to Hong Kong for the purpose of looking after him and the Plaintiff. Further in the Chinese declaration made on 8^th May 1992, the Deceased said that he would give very substantial shares of various listed companies to Zhou if he could come to Hong Kong for family union. Indeed, Zhou successfully got the one-way permit to Hong Kong in about 2002. I accept all these are reliable and credible evidence, which are not challenged by D1. In the circumstances, I find that the Deceased had kept in touch of the Plaintiff and the children after his flee to Hong Kong.

108.  If the Deceased really treated the Plaintiff as his former wife, as argued by Mr. Li for D1, one would immediately ask why he bothered or was eager to apply the Plaintiff and Zhou for one-way permit to Hong Kong for family union. It seems to me that the answer is obvious as the Deceased still treated them as his family members at that time.

109.  Further in accordance with the evidence of Zhou, C T F and Liu, which I accept, the Deceased did visit the Plaintiff and maintain contact with her by bringing her “cheap and leftover food” and giving her cash after she came to Hong Kong in 1984. The undisputed facts that the Deceased assisted C T F in the purchase of the King’s Road Property in 1982 and the Chinese declaration was jointly made by the Deceased and the Plaintiff on 18^th July 2002 for the purpose of applying Zhou to Hong Kong are clear and additional incidents to support that the Deceased still treated them as his family members for that period of time. I find that although the Deceased physically lived apart from the Plaintiff since 1951, he had maintained regular contact with the Plaintiff even after her arrival in Hong Kong in 1984. Nevertheless, I agree that the relationship between the Deceased and the Plaintiff became deteriorated especially after the commencement of the divorce proceedings in 2007. As a result, I do not agree with Mr. Li’s submission that the Plaintiff had been in de-facto separation with the Deceased since 1984.

110.  Mr. Li for D1 further submitted that undue delay in prosecuting the divorce claim had caused injustice to the Deceased or D1. He relied on Rossi vRossi[13](UK Family Division), in which the husband ceased cohabitation with the wife in 1978. The wife divorced the husband in 1992, at which time he did not defend and signified not to claim ancillary relief. However, he began to pursue the ancillary relief claim against his wife in or about 2005 and his claim was dismissed. Judge Nicholas Mostyn QC said in §32 of his judgment:

“While of course no rigid rule can be expressed for the infinite variety of facts that arise in ancillary relief cases, I would have thought, generally speaking, that it would be very difficult for a party to be allowed successfully to prosecute an ancillary relief claim initiated more than 6 years after the date of petition for divorce, unless there was a very good reason for the delay.” (emphasis added)

111.  In the present case, the Plaintiff commenced the divorce proceedings in 2007 and the Deceased passed away in 2009. I fail to see any undue delay on the part of the Plaintiff in prosecuting the ancillary relief claim. Even if there was such delay, no evidence was given by D1 to prove the injustice caused to her. Mr. Li’s submission in this regard is rejected.

Matters under section 5(2)(b)of the IO

112.  Concerning the contribution of the Plaintiff, the sub-section expressly states the inclusion of any contribution made by looking after the home or caring for the family. I accept that after the Deceased left the family for Hong Kong in 1951, the Plaintiff had undertaken a hard life to look after the whole family single handedly and shouldered up the responsibility of raising 4 young children, in particular their eldest son was only 9 years old and the youngest was newly born at that time. According to Liu’s evidence, which I accept, the Plaintiff came from a wealthy family which financially supported the Deceased to complete the university education in the PRC after their marriage. It is common sense that someone who can complete the university education in about 1940 to 1950 is extremely extraordinary. In my judgment, the significant contribution of the Plaintiff to the welfare of the family is a material factor, on which I am bound to put a very great weight.

113.  There is another factual issue as to whether the Plaintiff had given any money to the Deceased when he came to Hong Kong.

114.  Both Zhou and C T F accepted that they could not have any personal knowledge of it. They could not tell the exact amount. Liu’s evidence is that he was not sure about the amount or whether the same came from the Plaintiff’s maiden family. Zhou had based on the allegation of the Deceased taking money from the PRC to allege that the Deceased was then able to purchase property in Hong Kong. His allegation is based on the alleged hearsay of one Mr. Lee who is not called to give evidence at the trial. Hence, I consider Zhou’s evidence in this respect unreliable. Besides, the Electric Road Property was only brought in 1965, namely 14 years after the Deceased had come to Hong Kong. If the Deceased took substantial money from the PRC, he should be able to purchase a property in Hong Kong soon after arrival. In fact, the evidence of Liu was that the Deceased had a very hard living when he arrived at Hong Kong. In my view, Liu’s evidence disproves the allegation that the Deceased had brought substantial money to Hong Kong. As to his wealth in the form of the Shares, there is the clear evidence of Liu that he acquired the same after he came to Hong Kong by his luck and acumen. Mr. Wang for the Plaintiff indeed accepted that Liu is a reliable witness.

115.  Thus, I conclude that the Deceased had not brought substantial money to Hong Kong in 1951.

116.  Mr. Li for D1 submitted that the Deceased’s wealth as accumulated had nothing to do with the Plaintiff or her family since he had not brought substantial money to Hong Kong. He further submitted that the Plaintiff had made no contribution to the assets of the Deceased and that the Shares shall be regarded as ‘non-matrimonial’ assets.[14]

117.  Maybe it is right to say that the Plaintiff has no direct financial contribution to the Deceased’s wealth. Nevertheless, as found by me in the above, the Plaintiff had shouldered up the responsibility of raising 4 young children and her maiden wealthy family financially supported the Deceased to complete the university education in the PRC after their marriage. If I agree that the Deceased’s wealth had nothing to do with the Plaintiff, it will in effect achieve a discriminatoryresult, which is obviously unfair. The principle against discrimination will be further discussed below.

Divorce Standard

118.  According to the last part of section 5(2) of the IO, the court shall alsohave regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce. It is the implication of the so called “divorce standard”. The Plaintiff’s approach in this application is as if she is entitled to one half of the assets of the Deceased as under a divorce.

119.  Mr. Wang for the Plaintiff submitted that the legal approach as laid down in Cunliffe v Fielden and Anr[15] (UK Court of Appeal case) shall be adopted and applied in this case. Wall LJ said at §19, §20 and §21 in Cunliffe’s case:-

“There can, I think, be little doubt that in relation to claims for financial provision and property adjustment in proceedings between divorced former spouses, the correct approach for the court to adopt, following the decision of the House of Lords in White vWhite [2001] 1 All ER 1, [2001] 1 AC 596, is to apply the statutoryprovisions to the facts of the individual case with the objective of achieving a result which is fair, andnon-discriminatory. Having undertaken that exercise, a way of assessing the fairness and non-discriminatorynature of the proposed result is to check it against the yardstick of equality of division. There is, however, nopresumption of equal division of assets, but as a general guide, in the words of Lord Nicholls of Birkenhead,'equality should be departed from only if, and to the extent that, there is good reason for doing so' (see[2001] 1 All ER 1 at 9, [2001] 1 AC 596 at 605). He added: 'The need to consider and articulate reasons fordeparting from equality would help the parties and the court to focus on the need to ensure the absence ofdiscrimination.'

With appropriate adjustments based on the different statutory provisions, I see no reason, in principle, whythe White v White approach to marital financial claims should not be applied to proceedings under the 1975Act brought by a widow, not least because, in any case brought under s 1(1)(a) of the 1975 Act, s 3(2)imposes a statutory cross-check of its own to the provision which Mrs. Cunnliffe [the plaintiff] might reasonably haveexpected to receive if on the day on which the deceased died the marriage, instead of being terminated bydeath, had been terminated by a decree of divorce. This subsection assumes a particular importance in the instant case due to the brevity of the marriage.

Caution, however, seems to me necessary when considering the White v White cross-check in the context of a case under the 1975 Act. Divorce involves two living former spouse, to each of whom the provisions of section 25(2) of the Matrimonial Causes Act 1973 apply. In cases under the 1975 Act a deceased spouse who leaves a widow is entitled to bequeath his estate to whomsoever he pleases: his only statutory obligation is to make reasonable financial provision for his widow. In such a case, depending on the value of the estate, the concept of equality may bear little relation to such provision.”(emphasis added)

120.  In LKW v DD[16], one of the 4 principles established by the Court of Final appeal is the principle against discrimination in dealing with the claim under s.7 of the Matrimonial Proceedings and Property Ordinance. Mr. Justice Ribeiro PJ said at §28 that:-

‘…what is fair treatment upon dissolution of a marriage involves concepts which “change from one generation to the next” and the values underlying C v C do not reflect elementary notions of fairness as between husband and wife in present day Hong Kong. To confine a non-working wife’s award to the sum needed to meet her “reasonable requirements” and to permit the husband to keep the remaining assets is patently unfair and discriminatory, a proposition which lies at the heart of White v White and Miller/McFarlane …. ’ (emphasis added)

121.  I consider that divorce standard must be one of very important consideration, to which the court should have due regard. On one hand, due to different provisions in the two Ordinances, the guidelines laid down in LKW’s case which approves White vWhitein dealing with s.7 of the Matrimonial Proceedings and Property Ordinance cannot be mechanically transplanted to the spouse’s claims under the IO. On the other hand, the principle against discrimination, in my judgment, is equally applicable to such claim. With the objective of achieving a fair andnon-discriminatoryresult, the court shall treat the divorce standard as a statutory cross-check so as to decide what reasonable financial provision shall be ordered to the spouse under the IO. I have to remind myself that there is nopresumption of equal division of assets, but as a general guide, equality should be departed from only if there is good reason for doing so. In my view, the value of the net estate is also very important.

122.  In re Fullard, deceased[17], the value of the deceased’s estate was approximately £7,000. The court held that it was reasonable for the deceased to make no financial provision for the plaintiff in his will since the deceased and the plaintiff had settled their financial affairs on divorce and the plaintiff if she had been dissatisfied with that settlement, could have applied to the court in the divorce proceedings for ancillary relief. The decision was upheld by the Court of Appeal. Ormrod LJ said in page 46 of the judgment:

“Where the estate - like this one - is small, in my view the onus on an applicant of satisfying the conditions of section 2 is very heavy indeed and these applications ought not to be launched unless there is (or there appears to be) a real chance of success, because the result of these proceedings simply diminishes the estate and is great hardship on the beneficiaries if they are ultimately successful in litigation.”

123.  However, I consider that the net estate in the present case for about $11 million is sufficiently large to satisfy the needs of the Plaintiff and Kin who are the two I consider have real needs. Madam Woo has not demonstrated such a need due to her disappearance for at least 5 years. Therefore, I take the view that the award to the Plaintiff under the IO shall not be confined to her need only and that she shall be entitled to share part of the net estate of the Deceased.

124.  I also accept that the court shall respect the testamentary freedom of the testator albeit the ambit and effect of the IO obviously interferes a person’s right to make testamentary gifts under a will to whomever he pleases according to his wishes. The exercise under the IO must be proportional to achieve the legitimate aim of attaining a fine balance between the testator’s private property right and his spouse’s entitlement for reasonable financial provision under the said legislation.

Conclusion

125.  As submitted by Mr. Li, which I agree, that the IO is an enabling statute giving the Court the power to make orders for reasonable provision out of the estate of the deceased for members of his family and dependents. The Court has a broad discretion which must be exercised judiciously to ensure that the order to be made is fairand non-discriminatoryfor all parties concerned, in particular the spouse.

126.  In making the award I have had regard to all the matters discussed above. After all, it is a value judgment. I am of the view that the Plaintiff has demonstrated not only a real need but also her entitlement to share the net estate of the Deceased due to her significant contribution. On the other hand, Madam Woo who is one of the beneficiaries under the Will has not demonstrated such a need. Nonetheless, she is still entitled to share the net estate of the Deceased as she also falls within the definition of “wife” under the IO. In my judgment, her contribution to her family with the Deceased is substantial, too since such marriage lasted for over 40 years. Regarding Kin, his interest must be looked after due to his mental problem and I have already assessed his need in the sum of $3,552,000. For Chi and D1, they are 2 beneficiaries under the Will but have not demonstrated a real need. This is an appropriate case for a lump sum award in favor of the Plaintiff rather than an order for periodical payment.

127.  Weighing all of these matters, I am of the view that the net estate shall be used to satisfy Kin’s need first. The surplus or the balance of the net estate after deducting his need is about $7.5 million. I have come to the conclusion that the Plaintiff should receive a lump sum of $2,500,000 which represents one-third of the said balance and shall be paid by D1. In my view, Madam Woo shall be also entitled to this one-third and same as the Deceased if he were still alive. Thus, the Deceased’s one-third share can be distributed according to his wishes under the Will by D1 or D2. I now order that D1 do pay into the court a sum of $2,500,000 for the benefit of the Plaintiff within 14 days, which shall not be released pending the Plaintiff’s application to appoint a Committee under Part II of the MHO or until further order of the court.

128.  There will be an order nisi that the Plaintiff shall have her costs of these proceedings including all costs reserved to be paid by D1, to be taxed if not agreed and the Plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations. Such cost order nisi shall become absolute unless any of the parties applies to vary it within 14 days.

129.  Last but not least, I would like to express my greatest gratitude to counsel for both parties for conducting the trial effectively and making very helpful submissions with all necessary and relevant legal authorities for my consideration.