JDW v. TLW (nee TJL)

FCMC 4203/2019

[2021] HKFC 62

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

No. 4203 OF 2019

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J U D G M E N T

(Ancillary relief)

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Introduction

1.  This is an application by a Petitioner husband for an ancillary relief order (i.e. an order with respect to finances) to include a dismissal of claims and ongoing provision for the two children of the family, until they each reach the age of 18 years or cease full time education. 

Background

2.  The parties married on the XX June 2000 in Hong Kong and separated in or about August 2014. This then was a marriage of approximately 14 year’s duration. There are two children of the family, a son E, who was born on the XX September 2000 and is now 20 years of age. E is studying for a higher diploma in Information Technology and he hopes to go onto university next year and to complete his degree within the following two years. The younger child, J, a girl, is now nearly 15 years of age having been born on the XX June 2006. She is studying in a local school and she is currently in Form 3. The hope is that she will also go onto some form of tertiary education. The husband, who is British, is 52 years of age. He runs his own small transport company and he currently earns in the region of HK$20,000 – HK$25,000 per month. The wife, who is Filipino, allegedly works in the hospitality industry and she resides with the children on Lantau island. The wife has not participated in these proceedings. However, on the 25 February 2021 the wife was personally served with the court order dated the 27 November 2020, by the court bailiff. This order stated inter alia that the issue of ancillary relief be set down for trial on the 22 March 2021. A penal notice was endorsed on that order. Notwithstanding this the wife did not attend the court hearing on Monday. I am though confident that she was made aware of that hearing and that she has chosen not to participate in the process. She must therefore bear the consequences of her nonattendance.

3.  On the 10 April 2019 the husband issued divorce proceedings in Hong Kong based on two year’s separation. On the 28 June 2019 an order was made for deemed service of the petition. The decree nisi was pronounced on the 21 November 2019 and an order was also made for joint custody of the daughter with care and control to the wife and reasonable access to the husband. Since then the husband has pursued his application for ancillary relief, which has been made more difficult by the wife than it should have been. The decree absolute has yet to be pronounced.   

The husband’s proposal

4.  The husband proposes splitting the cash assets that he currently holds so that the wife receives a lump sum of approximately HK$600,000 on a clean break basis. He also proposes that each party retains any other assets held in their sole names. This would mean that the wife will retain two properties in the Philippines, a condo and a standalone house. These are difficult to value, but the husband estimates that the condo is worth in the region of HK$1 million and that the house is worth in the region of HK$450,000 - HK$930,000. Thus in total there are assets in the wife’s name of between HK$1.45 to just under HK$2 million. For his part the husband also holds an MPF fund of just over HK$700,000 and his interest in his small business, which in reality has no resale value save for the value of the vehicle. He also has cash savings of approximately HK$1.2 million. Thus the husband’s proposal will mean that the wife will receive significantly more than 50% of the family assets. I will come to this again later. The husband does not wish to pay any maintenance to the wife, not even nominal maintenance, and his offer is made on that premise.

5.  The husband did not produce a schedule of assets but in total the husband currently holds approximately HK$1.9 million worth of assets including his MPF fund plus the value of his vehicle, so say approximately HK$2 million in total and the wife holds between HK$1.45 – HK$2 million. There is therefore at most a difference of say HK$600,000, maybe less between them.

6.  In addition, the husband undertakes to continue to pay for the lease on the property where the wife and children currently reside, in the sum of HK$8,000 per month rising to HK$8,500 per month, until the end of the tenancy in August 2022. Thereafter he proposes paying periodical payments for the two children of the family in the sum of HK$3,500 per month per child, until each child reaches the age of 18 years or ceases full time education. He further undertakes to contribute towards 1/3 of E’s university fees for the next two years, up to a maximum of HK$27,000 per annum. He also undertakes to contribute towards J’s undergraduate fees for university up to HK$40,000 per annum for a four-year period. It is of note that it is the husband’s case that he has contributed towards the cost of E’s current studies.

7.  In addition to the rent, the husband currently pays for the household bills in the sum of HK$2,500 – HK$3,000 per month plus he provides the wife with a further HK$5,000 per month in cash, in two tranches of HK$2,500 each. This totals HK$15,500 – HK$16,000 per month. I accept that this means that he has to dip into his cash savings each month to cover these and his own expenses, which are fairly minimal. The husband believes that the wife is currently working full time and that she probably earns a similar amount to him. The husband says that he is currently earning in the region of HK$20,000 – HK$25,000 per month. E also works in a part time capacity from time to time.   

The law on Ancillary Relief

8.  The relevant law is reasonably straightforward. The Court of Final Appeal’s decision in LKW v DD (FACV no 16 of 2008) 13 HKCFA 537 sets out the approach that the lower courts must take when determining issues relating to final ancillary relief.

9.  In that case, Mr Justice Ribeiro PJ identifies a five step approach to be adopted in all ancillary relief trials, which if I may I will summarize as follows:-

1)  The identification of the assets. It is of note that Mr Justice Ribeiro states that a broad brush approach is generally considered sufficient for these purposes and that the assets should be valued as close to the date of the trial as possible. 

2)  An assessment of the parties’ financial needs

3)  Whether or not the sharing principle should be adopted?

4)  Whether or not there is a good reason to depart from an equal division of the assets?

5)  Deciding the outcome

10.  The section 7 factors (s. 7 Matrimonial Property and Proceedings Ordinance, Cap 192) are largely dealt with within this general framework. They are: -

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

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

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

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

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

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

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

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

Discussion

11. The assets have been identified as set out above. In so far as the party’s needs are concerned, both sides “need” a reasonable monthly income or access to other financial resources (i.e. cash savings) in order to provide a fairly basic standard of living for both themselves, and perhaps more importantly the children. I accept that things are tight financially for all concerned and that both parties will need to maximize their earning capacity as best they can. In so far as the assets are concerned, it seems to me that this is prima facie a sharing case.

The s. 7 factors

(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;

12. The wife’s position is unknown as she has not filed a Form E or participated in these proceedings. However, I accept that she does have an earning capacity, although both her earning capacity and that of the husband is somewhat limited. This is unlikely to change very markedly in the foreseeable future. As indicated above both parties have some assets held in their sole names.

(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;

13. The parties have both an obligation and a responsibility to provide for the children. They both also need somewhere to live and sufficient money to live on.

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

14. According to the husband the parties enjoyed a moderate living standard.

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

15. The husband is 52 years old. I do not know the wife’s age. They were married for approximately 14 years.

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

16. This is not in issue.

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

17. It is not clear what contribution each party made to the welfare of the family, but I accept that the children have been living with the wife and that she has most probably contributed in part by looking after the home and caring for the children, as well as by working outside of the home from time to time. The husband for his part has contributed historically by being the main breadwinner of the family.

(g) 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.

18. This was not really argued, save that the husband made it clear that he would wish to retain his MPF fund and in return the wife should retain the properties in the Philippines. This is accepted.

Decision

19. The husband has made a generous proposal for a division of the assets. However, it seems to me that given that this is a sharing case, that prima facie there should be more or less a 50:50 split of the assets. Thus, within 30 days of the pronouncement of the decree absolute, the husband shall transfer a lump sum of HK$300,000 to the wife in full and final settlement of her capital claims. In addition, there shall be an order for nominal maintenance in favour of the wife. This means that the husband shall hold assets in the sum of approximately HK$1.7 million and the wife shall hold assets of a similar amount, (if her assets in the Philippines are valued at approximately HK$1.45 million. If they are valued more highly then her asset position is likely to be a little stronger than the husbands). In any event I accept that it is appropriate for her to have access to some liquid capital in order that she may also dip into her cash reserves in the event that she does not have sufficient income in the short to medium term to support both herself and the children. The husband is likely to also need to continue to do the same. Otherwise each party shall retain the assets held in their sole names. I shall also accept the husband’s proposed undertakings as set out above. He shall also pay a slightly increased amount for the children’s maintenance than offered.

Order

20. The order then shall read as follows:

Upon hearing the Petitioner who appeared in person and the Respondent being absent.

AND UPON the Petitioner undertaking to pay for rent on the Respondent’s current residence until August 2022 in the sum of HK$8,000 per month rising to HK$8,500 per month.

AND UPON the existing financial arrangement between the parties continuing as set out in paragraph 7 above until such time as the husband pays the lump sum as set out in order 1 below.

AND UPON the Petitioner undertaking to contribute towards 1/3 of the elder child’s (E’s) university fees for the following two years (September 2021 – June 2023), up to a maximum of HK$27,000 per annum and to contribute towards the younger child’s (J’s) undergraduate fees for university up to HK$40,000 per annum for a four-year period.

AND UPON each party retaining the assets held in their sole names other than as set out in this order.

AND UPON it being deemed that each party has made an application for ancillary relief.

IT IS ORDERED THAT: -

1. Within 30 days of the pronouncement of the decree absolute the Petitioner shall pay the Respondent a lump sum of HK$300,000 in full and final settlement of her claims for capital ancillary relief.

2. Nominal periodical payments to the Respondent to be paid by the Petitioner at the rate of HK$1 per annum for her maintenance during the joint lives of the parties or until the Respondent’s remarriage, whichever is the shorter; first payment to be made upon decree absolute.

3. The Petitioner do pay periodical payments for the two children of the family in the sum of HK$2,000 per month per child, the first payment to be made on the 1^st day of the month following the payment of the lump sum in order 1 above and thereafter to be paid until August 2022 whereupon the amount shall be increased to HK$3,500 per month per child until each child’s 18^th birthday or cessation of full time education, whichever is the later, or until further order.

4. The Petitioner’s claims against the Respondent for all forms of ancillary relief shall stand dismissed upon the making of this order.

5. A s.18 declaration to issue.

6. There be no order as to costs including all costs reserved.