CPK v. CY

FCMC 7599 / 2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 7599 OF 2007

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J U D G M E N T
(Ancillary Relief)

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BACKGROUND

1.  This is the Petitioner’s application for ancillary relief including a child’s maintenance against the Respondent.

2.  The parties were married on 24^th November 2004 and there is a child of the family (“Child”), born in June 2005 (now 5 years and 11 months old). The custody, care and control were granted to the Petitioner (“Wife”) with defined access to the Respondent (“Husband”). The Child is attending K.3 at a Kindergarten in Tai Po and will soon move to primary education with ICQM after this summer. 

3.  The Wife is aged 32 under the employment of the Hospital Authority as a medical officer of Paediatrics Department of a hospital earning about $79,800 per month (including allowance and benefit).

4.  The Husband aged 37 is also under the employment of the Hospital Authority occupying the post as an associate consultant (since 2006) at a Family Medicine Centre earning about $123,300 per month (including allowance and benefit). 

5.  The parties separated in November 2006. The divorce proceedings were commenced by the Wife in June 2007 on the basis of “unreasonable behaviour”. The marriage between the parties lasted for about 3 years when the Decree Nisi was granted on 7^th December 2007.

6.  The Husband was first ordered to pay $6,000 per month from 10^th September 2007 for the Child’s maintenance after the Wife had lodged a Summons for interim maintenance on 6^th September 2007 and after the hearing for maintenance pending suit, the Husband was ordered to pay $17,000 per month from 1^st December 2007 up till now.

THE LAW

7.  The governing principles in relation to the distribution of the family assets in the dissolution of marriage are set out section 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO”), Cap. 192, which states as follows:

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

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

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

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

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

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

(f)  the contributions made by each of 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.

6.    The Court of Final Appeal in LKW v DD[1] set out 4 principles as to how section 7 shall be approached, which are stated briefly as follows:

a.   The first is that the implicit objective of a section 7 exercise is to arrive at a distribution of assets which is fair as between the parties[2];

b.    The second is that the concept of fairness requires the refutation of any gender or role discrimination[3];

c.   The third principle is that, with a view to eliminating insidious discrimination and promoting fairness, judges should check their tentative views on distribution against a “yardstick of equal division” which should be departed from only for good, articulated reasons[4];

d.    The fourth principle is that the court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tend to deplete the parties’ (and the courts’) resources and to increase antagonism and discourage settlement[5]. 

7.    The Court of Final Appeal further laid down 5 steps for a section 7 exercise briefly as follows:

a.   The first step in the exercise is to ascertain the financial resources of each of the parties calculated as at the date of the hearing[6];

b.    The next step is for the court to assess the parties’ financial needs[7];

c.   If surplus assets would remain after the parties’ needs have been catered for, the next step in the exercise should generally be for the court to apply the sharing principle to the parties’ total assets, leaving the “needs” question previously considered to be dealt with under that principle[8];

d.    The fourth step therefore involves considering whether good reasons exist for departing from the principle of equal division[9];

e.   When deciding the outcome, the court is not bound to depart from equality in the division of the parties’ assets even if one or more of the factors considered are engaged on the facts.  The weight to be given to such considerations is a matter of discretion for the court[10].

8.  Concerning the children’s maintenance, the jurisdiction of the court to make orders for the financial support of the children is found in section 5 of the MPPO. In making orders under section 5, the court shall regard to the matters in section 7(2) of the MPPO, which are set out below:

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

(a)  the financial needs of the child;

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

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

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

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

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

9.  According to section 7(2) of the MPPO, the court has the duty to consider the matters mentioned in section 7(1) (a) and (b) when exercising those powers relating to the child.

INDENTIFICATION OF ASSESTS

10.  In relation to the distribution of the family assets, the first step is to identify the assets of the parties and the family as at the date of hearing. At this stage, the court need not attempt to distinguish between matrimonial and non-matrimonial property, that being an exercise best undertaken (if necessary) when considering distribution of the assets.[11]

11.  The Matrimonial Home jointly owned by the parties was sold in 2010 with net proceeds being paid into court in the sum of $2,606,918.25.

12.  The Scenic Car Park is jointly owned by the parties with agreed valuation of $615,000 and outstanding loan for the sum of $116,300 giving rise to a net value of $498,700. It is not in dispute that the Husband’s father had made the down payment of $20,000 which shall be repaid to his father by the Husband.

13.  According to the Husband’s Form E dated 29^th March 2011, he holds the following assets and liabilities in his sole name which are not disputed by the Wife:

14.  The Husband acquired a car park at Metro Town, Tseung Kwan O, New Territories, Hong Kong on 20^th October 2008 (“Metro Town car park”). It is not challenged by Mr. Leung, Counsel for the Wife, that such property is acquired by the Husband well after the separation without the help or contribution by the Wife. Source of assets is a material factor to provide a good reason for excluding it from the equality principle on the basis that it is not an item of matrimonial property.[12] The issue whether there are good reasons to depart from the equality principle will be discussed later.

15.  According to the Wife’s 3^rd Form E dated 1^st April 2011, she holds the following assets and liabilities in her sole name which are not disputed by the Husband:

16.  The following issues relating to the assets held by the parties are in dispute:

i.  Whether the Husband’s beneficial interests in joint name banks and securities accounts held with his mother shall be treated as half only.

ii.  Whether the Husband’s beneficial interests in the Scenic Flat jointly owned with his parents shall be treated as his parents’ assets.

iii.  Whether the Husband holds any interest in PM Academy Ltd and PM Group Ltd.

iv.  Whether the Le Point Flat acquired by the Husband under his sole name shall be regarded as the family assets.

v.  Whether the Parc Versaills Flat acquired by the Wife and her father in joint name shall be regarded as the family assets.

vi.  Whether the Wife owes a loan to her mother for $200,000 for the purchase of the Matrimonial Home.

vii.   Whether the outstanding legal costs owed by the Wife to her lawyers are about $1.05 million.

viii.  Whether the Wife holds any valuable jewellery.

ix.  Whether the Wife’s Gratuity and 5% Housing Allowance should be counted as the family asset.

Whether the Husband’sbeneficial interests in joint name banksand securities accounts held with his mother be treated as half only.

17.  There are 2 bank accounts and 5 securities accounts in the joint name of the Husband and his mother. The Wife argued that the Husband has 100% beneficial interest thereof whilst the Husband said that he has only 50% interest.

18.  Regarding the Husband’s interest in one of the 5 securities accounts (CIS Ltd. formerly known as HIFG Ltd.), the Husband stated in his 3^rd Form E dated 29^th March 2011 that the 2,000 shares of stock no.13 well exist before the marriage and that 1,000 shares were sold for the marriage and the payment for the Matrimonial Home. Hence, the remaining 1,000 shares belong to his mother and the Husband has no interest.  Since Mr. Leung, Counsel for the Wife, did not particularly challenge this statement at the trial, I accept that the Husband has no more interest in this account.

19.  As to the remaining 2 bank accounts and 4 securities accounts, I consider that strictly speaking, the court needs to chase the sources of contribution to all these 6 accounts since their openings in order to see how much the Husband and his mother respectively contribute to these accounts in the past. However, since the Husband’s mother only worked until 1997 and has no income thereafter, I consider that she can only make very minimal financial contributions to these accounts after 1997. On the other hand, the Husband has become a registered medical officer with significant income since 1998. In the circumstances, I accept on balance of probabilities that the Husband has 100% interest thereof. Therefore, the total value the Husband’s interest in these 2 bank accounts and 4 securities accounts is $293,244 ($23,092 + $270,152).

Whether the Husband’s beneficial interests in the Scenic Flat jointly owned with his parents shall be treated as his parents’ assets

20.  The Scenic Flat was jointly purchased by the Husband and his parents in 1998, 6 years before the marriage and sold in September 2007 with net proceeds of about $2.5 million. The Husband said that the down payment and initial payments were mainly from his parents and that the mortgage instalments were paid out from the joint name bank account of the Husband and his mother. The Husband submitted that the Scenic Flat which was independently acquired shall wholly belong to his parents.[13]

21.  I do not entirely agree to the Husband’s submission. I accept that the down payment and initial payments were mainly from his parents since these facts are not challenged by the Wife.  However, in relation to the mortgage instalments paid out from the joint name bank account of the Husband and his mother, I am of the view that the Husband was all along solely responsible for such instalments since his mother has retired in 1997 and has no income thereafter.

22.  The Husband fails to disclose how much the down payment and initial payments were made by his parents. I consider that he has the duty to do so.[14] As he fails to make full disclosure in this regard, I am entitled to draw adverse inference against him. Mr. Leung, Counsel for the Wife, suggests me to treat the Husband holding 1/3 interest. In my judgment, it is a fair suggestion as the Husband and his parents jointly owned the Scenic Flat. Hence, 1/3 interest of the net sale proceeds of the Scenic Flat in the sum of $829,744 (ie $2,489,231 / 3), rounding up to $830,000 will be counted to be his assets.

23.  The Husband submits that the Scenic Flat is a property acquired well before the marriage and that due to the parties’ short marriage, 1/5 of his interest therein shall be shared by the Wife. The issue of short marriage raised by the Husband will be dealt with in the latter part of this judgment.

Whether the Husband holds any interest in PM Academy Ltd and PM Group Ltd.

24.  The Wife said that the Husband’s father is holding 50% shares in these 2 companies on trust for the Husband who denied the same during the trial. I have no doubt to reject his denial since it obviously contradicts the following evidence given earlier by him when he was legally represented:

(1)   In parts 2.4 and 2.6 of his 1^st Form E dated 28^th September 2007, he stated that he has 50% of the shareholding in PM Group Ltd. and attached its financial records thereto. In part 2.13, he further stated he has the liability of $995,431.6 for PM Group Ltd.

(2)   In paragraph 7 of the social investigation report dated 10^th December 2007, he told the social work officer that he ran a medical centre, namely PM Group Ltd which gave him no benefit.

(3)   According to the transcripts of the hearing for maintenance pending suit on 10^th October 2007, in which the Husband was legally represented, his lawyer referred the presiding judge to part 2.6 in the Husband’s Form E and submitted that the clinic invested by the Husband was running at a huge loss.

(4)   Paragraph 40 of the judgment of Deputy Judge CK Chan (as he then was) dated 13^th November 2007 made reference to the clinic business ran by the Husband.

25.  I can understand why he has to deny it especially after having read the following in his written closing submission:

“Y&P (the Wife’s solicitors) breached confidentiality and sent the private clinic data to Husband’s Hospital human resources. Wife accused husband of running private clinic. Wife’s revenge type of hostility created unnecessary legal cost and protracted litigation. Husband hopes that this is Y&P’s business proposal instead of Wife’s shameful character.”

26.  Mr. Leung, Counsel for the Wife, rightly conceded that the capital value of these 2 companies is not significant as the financial statements for the year ended 31^st March 2009 confirm PM Group Ltd. has accumulated loss of about $191,000 and the letter dated 17^th March 2010 issued by the Inland Revenue Department shows no assessable profits from the business carried on by PM Academy Ltd.. However, Mr. Leung submitted that the income generated by the clinic in Liberte Place (“Liberte clinic”) operated by PM Group Ltd is relevant to the issue of the Child’s maintenance. This issue will be dealt with in the latter part of this judgment.

Whether the Le Point Flat acquired by the Husband under his sole name shall be regarded as the family assets.

27.  The Husband signed the sale and purchase agreement to buy the Le Point Flat and paid 5% deposit by credit card for $152,050 on 15^th October 2006 just about 1 month before the date of separationon 19^th November 2006. It is not challenged by Mr. Leung, Counsel for the Wife, that all the further deposits were paid by the Husband’s mother and that the Husband had to borrow money from his parents by mortgaging their Whampoa Garden property in order to get a loan of $2,310,000 from Bank of East Asia. The Husband also borrowed a short duration personal loan of $600,000 from Dah Sing Bank in order to complete the transaction of the Le Point Flat in May 2008.

28.  In the opening submission of the Wife, Mr. Leung originally submitted that only the 5% deposit in the sum of $152,050 paid by the Husband shall be regarded as the family assets. Nonetheless, in his closing submission, Mr. Leung suddenly changed his stance that the Le Point Flat shall be regarded as the family assets.

29.  In my judgment, the 5% deposit paid by the Husband is definitely part of the family assets since it was paid before the separation. As to the remaining 95% of the purchase price, the evidence produced by the Husband clearly shows that it was paid by the Husband and his mother without help or contribution of the Wife.[15] At this stage, I would consider the Le Point Flat is a family asset but there will be a good reason in favour of the Husband to depart from the equality principle. I will discuss this issue later.

Whether the Parc Versaills Flat acquired by the Wife and her father in joint name shall be regarded as the family assets.

30.  The Wife jointly purchased with her father a property in Parc Versaills in July 2008, about 20 months after the parties’ separation in November 2006. The agreed current market value is $6.52 million and after the deduction of the outstanding mortgage loan of about $3.88 million, the net value is about $2.64 million.

31.  In the 2^nd Form E of the Wife dated 29^th July 2010, she stated that the down payment of $1.56 million was paid for the purchase of the Parc Versaills Flat and that the mortgage was $3.64 million. In her 3^rd Form E dated 1^st April 2011, she stated the down payment $1.04 million and the mortgage $4.16 million. No explanation was given by the Wife or her lawyers as to such discrepancies.

32.  As to the time of making such down payment, although it was not mentioned by the Wife, I consider that it shall be around May 2008, namely about 2 months before the date of purchase in July 2008. Regarding the amount of the down payment, I choose the figure of $1.04 million as stated in the Wife’s 3^rd Form E instead of $1.56 million in her 2^nd Form E. The reason is that the mortgage sum stated under the Particulars of Purchase in her 2^nd Form E is $3.64 million which is lower than the amount outstanding on mortgage as stated in both of her 2^nd and 3^rd Form Es. Assuming the Wife has not defaulted in payment of mortgage installments, the original mortgage sum must be higher than the outstanding sum. Therefore, the figure of $1.56 million in her 2^nd Form E is, in my view, incorrectly stated for unknown reason.

33.  Mr. Leung, Counsel for the Wife, submitted that as the Parc Versaills Flat was acquired well after the parties’ separation, it shall not be regarded as the family assets. In my view, his submission is too simple. First of all, the Wife does not disclose as to how much she and her father contribute to this down payment and the subsequent mortgage instalments. I consider that she has the duty to do so.[16]

34.  In view of the strong income of the Wife, I am satisfied that she and her father are able to pay the mortgage installments without help or contribution from the Husband. If the entire down payment was paid by her father, I may well exercise my discretion to exclude the Parc Versaills Flat from the family assets. On the other hand, if the entire down payment was paid by the Wife herself, I have some hesitation to exercise my discretion to exclude the same from the family assets for the obvious reason that she shall not be able to save this $1.04 million down payment during the period after separation until the date of such down payment. The third scenario is that if only part of the down payment was paid by the Wife, it all depends on how much it is and whether she is able to save this part of the down payment during such period.  In other words, the crux of the issue is whether she has to use her savings during the marriage so as to pay this part of the down payment. As what I have said earlier, the Wife fails to make full disclosure in this regards and I may have to attribute robustly certain portion of this down payment to her based on the evidence available. To be fair to the Husband, even though he has not raised this issue at the trial, I am of the view that I have the duty imposed by section 7 to consider it.[17]

35.  In the 1^st Form E of the Wife dated 21^st September 2007, she disclosed the balance in her bank accounts for about $377,000 in part 2.3 and the balance in her stocks accounts for about $135,000 in part 2.7. Hence, she has the available cash for about $512,000 at that time since the stocks can be realized very easily.

36.  In the 2^nd Form E of the Wife dated 29^th July 2010, she disclosed the balance in her bank accounts for about $1,136,000 in part 2.3 and the balance in her stocks accounts for about $123,000 in part 2.7. Thus, she has the available cash for about $1,259,000 at that time. That is to say, she is able to save about $747,000 during the period from September 2007 to July 2010 (around 2 years and 10 months). Indeed, she also explained at the trial that it may probably be due to increase in value of the stocks.

37.  The next question is when the down payment of $1.04 million was made in May 2008, how much did the Wife contribute to the same? No evidence in this regard is given by the Wife. Therefore, I have to attribute robustly certain portion of this down payment to her based on the evidence available. According to the 1^st Form E of the Wife dated 21^st September 2007, she has the available cash for about $512,000 at that time. Thus, I consider that she shall not be able to pay the entire down payment in May 2008 and that part of it must be paid by her father. In my judgment, the reasonable sum which I robustly attribute is $300,000. That is to say, I find that the Wife contributed $300,000 to this down payment.

38.  As I have said earlier, the crux of the issue is whether she has to make use of her savings during the marriage so as to pay this sum of $300,000. Again no submission is made by the parties in this regard. No information is available as to the Wife’s financial situation, in particular her available cash at the time of separation in November 2006. In the light of her saving pattern (including the increase in value of her stocks) in the past and her contract gratuity equivalent to 15% of her total monthly basic salary for every 2-year contract period, I am satisfied that from November 2006 (i.e. date of separation) up to May 2008 (i.e. date of down payment), she is able to save this sum of $300,000 without using her savings made during marriage. As a result, I am of the view that since the Wife acquires the Parc Versaills Flat without the help and contribution of the Husband, I may exercise my discretion to exclude it from the family assets when I am considering any good reasons for departure from the equality principle in the latter part of this judgment.

Whether the Wife owes a loan to her mother for $200,000 for the purchase of the Matrimonial Home

39.  The Wife alleged that she owes a loan to her mother for $200,000 for the purchase of the Matrimonial Home and produced the bank statement of her mother to support the same. The Husband does not challenge such allegation. I therefore accept that $200,000 shall be deducted as her liability from the assets of the Wife.

Whether the outstanding legal costs owed by the Wife to her lawyers are about $1.05 million

40.  The Wife said that the outstanding legal costs due to her lawyers are about $1.05 million. However, no legal bills except one issued by the Wife’s solicitors on 28 September 2007 was produced. She testified at the trial that such figure was only told by her solicitor and that she has not yet paid this sum.

41.  I have no comment on this figure because it is a matter of contract between the solicitor and his client. Nevertheless, I consider that at least, she shall produce a legal bill issued by her solicitor to prove such sum. Although the Wife has no doubt incurred the liability to pay the legal costs to her solicitor, the actual amount is not yet quantified as she is always entitled to dispute this amount by way of taxation in the court. If she has no dispute on these legal costs of $1.05 million, there is no reason why she chooses not to settle the same before the trial bearing in mind that she has sufficient cash in her bank accounts according to her latest Form E. Since the amount of the legal costs due to her solicitor cannot be ascertained at this moment, I refuse to accept it as part of her liability to be deducted from her assets.

Whether the Wife holds any valuable jewellery

42.  In the Wife’s Form Es, she claims no valuable jewellery. In her Reply to the Husband’s Further and Better Particulars dated 5^th November 2009, she answers that around 8 pieces of small items of gifts were received at the wedding banquet, which were kept in her mother’s safe deposit box together with  her sister’s wedding gifts. The Husband said that she shall have received at least 19 pieces of gold rings, neck laces and diamond ring as wedding gifts from the Husband’s father and relatives in addition to another list of jewellery from the Wife’s family.

43.  The Wife testified at the trial that the wedding jewelleries have been given to her mother as gifts and she will not ask her mother for return.

44.  The Husband submits that it is against the traditional culture for the daughter to give her wedding jewelleries to the mother as gifts and that instead of taking as gift, the Wife’s mother just helps keeping the jewelleries in the safe.

45.  I think that the Husband’s submission is only sensible if the marriage between them has not been broken down. After divorce, the wedding jewelleries may no longer be memorable to the parties. I cannot say that it is unreasonable for the Wife to give all these jewelleries to her mother as gifts especially, when the parties’ relationship is deteriorating after separation. Besides, the value of these jewelleries is not really significant in the sense that it will greatly affect the outcome of this case. I do not think that the Wife being a medical professional has to give false testimony in the court. In this regard, I accept the Wife’s evidence that she has no valuable jewellery.

Whether the Wife’sGratuity and 5% Housing Allowance should be counted as family assets

46.  The Husband said that in June 2011, the Wife will receive the Gratuity for $209,502 (i.e. $58,195 (her basic salary) x 15% x 12 months x 2 years). He further said that according to the written confirmation from HA Human Resource manager, the Wife shall be entitled to 5% housing allowance from July 2007 to June 2011 for $139,668 (i.e. $58,195 x 5% x 12 months x 4 years).

47.  However, I consider that since the parties have separated in November 2006, she acquires such sums without the help or contribution of the Husband. I may exercise my discretion to exclude them from the family assets when I am considering any good reasons for departure from the equality principle in the latter part of this judgment.

Assessing the parties’ financial needs

48.  The next step is for the court to assess the parties’ financial needs.

49.  The Husband said that the Wife has future rapid salary increment as her salary has increased from $49,000 to $79,796 (about 63%) within 4 years and that she has good promotion chance to Associate Consultant.

50.  I consider that both parties shall have very bright future in respect of their medical careers in different fields but I am not in a position to comment on their increase in salary and promotion chance in the future.

51.  The Husband further said that he is a chronic hepatitis B carrier and suffers from anaemia of unknown origin which will cast potential big health risks to him. In my view, it has no or little significance since he himself is a very senior medical professional with very strong income and substantial assets.

52.  In short, it cannot be disputed that the parties’ earning capacities and present salaries are already adequate for their respective financial needs in their foreseeable future.

Deciding to apply the sharing principle

53.  Since the total resources and incomes of the parties are sufficient to go beyond and to meet both their financial needs, I decide to apply the sharing principle unless there is good reason, capable of articulation, for departing from an equal division, which will be discussed below.

Considering any good reasons for departing from equal division

Source of assets as a material factor

54.  For the Matrimonial Home and Scenic Car Park which were purchased by the parties with intent for family use, it is well settled in law that source shall not be considered as a material factor.[18] Therefore, the fact that the Husband has greater financial contributions to these properties is not a good reason for departure of equality principle.

55.  For the Le Point Flat, as discussed in paragraphs 27, 28 and 29 above, the Husband acquires the same with very little though not entirely without help or contribution of the Wife. I consider that it is a good reason to depart from the equal division. In my judgment, 5% of its agreed value, namely $210,000 ($4.2 million X 5%) shall be added to the Husband’s assets.

56.  For the Parc Versaills Flat, the Wife’s Gratuity and 5% Housing Allowance, since I am satisfied that the Wife acquires them without help and contribution of the Husband, I exercise my discretion to exclude them from the Wife’s assets. For the Metro Town car park, I also exercise my discretion to exclude them from the Husband’s assets on the same reason.

57.  For the MPF of the parties, the Wife has $240,712 whilst the Husband has $739,993 according to their respective last Form Es. The Husband submits that it would be most unfair if the Husband’s 7 years of pre-marital MPF and 4.5 years post separation MPF (i.e. 11.5 years outside marriage) are to be divided equally for this short marriage. I accept the Husband’s submission in this regards since the parties have not made any contriutions as to the increase in value of the other parties’ MPF after their separation based on the similar rationale given relating to the Wife’s Gratuity and 5% Housing Allowance. I accept the Husband’s suggestion to use the figures of the parties’ own MPF as stated in their respective first Form Es (which are the figures nearest to the date of the separation). For the Wife, she has $125,786.49 in her MPF account and the Husband has $320,668.44 at the time of making the said Form Es. These figures will be added as their respective assets.

58.  According to the Wife’s first Form E, she has about $377,000 in her bank accounts. However, in her latest Form E, her savings increase to about $929,000. I also consider that the Husband has made no contribution to the increase of about $552,000 (i.e. $929,000 - $377,000). Thus, to be fair to the Wife, such sum shall not be shared by the Husband and be deducted from the Wife’s assets.

Conduct as a material factor

59.  In my view, there is no “obvious and gross” conduct of the parties, which I have to consider.[19]

Financial needs as a material factor

60.  As mentioned above, it is not a good reason to depart from the equal division since the parties’ incomes are already adequate for their respective financial needs.

Duration of the marriage as a material factor

61.  As the parties’ marriage lasted for less than 3 years, I agree that it is a short marriage. However, the custody of the Child who is only 5 years and 11 months old now is granted to the Wife. In my judgment, since the parties both being medical professionals must have great expectation for the Child to receive very good and high education in the future, the Wife has to take care of him for the coming almost 20 years until the Child completes the tertiary education or even higher.

62.  Thus, in respect of the Husband’s interest in the net sale proceeds of the Scenic Flat for the sum of $830,000, I am of the view that this marriage with a young child though short is not a good reason to depart from the equal division.

Contributions to the welfare of the family as a material factor

63.  I accept that the contributions of the Wife are as follows:

i.  The multiple and pivotal roles she played in the marriage by being a working mother and looking after the young son as well as paying some household expenses, such as management fees, rate etc.

ii.  She has delayed her studies to further advance her career in order to help the Husband in his studies to pass the examination and get promotion and not to put the baby’s health at risk.

iii.  She has assisted the Husband in building up business of PM Academy Ltd. and PM Group Ltd., for instance, interviewing the clinic nurses and finding substituted or locum doctors for the clinics.

64.  Regarding the Husband’s contributions, I also recognise that he made a lot of financial contributions to the family. For instance, the Husband borrowed a loan of $600,000 by way of mortgage of the Scenic Flat and that the said sum of $600,000 was used as down payment to purchase the Matrimonial Home. As to the repayment of this $600,000, I consider he was wholly responsible for the same.

65.  It is not disputed by the Wife that the Husband continued to pay the mortgage instalments and most of the management fees, government rent and rate of the Matrimonial Home until its sale in September 2010. He also continues to make similar financial contributions to the Scenic Car Park up to now. He seems to suggest his greater financial contributions to the family assets to be a good reason for departure of equal division.

66.  In my judgment, the parties’ contributions to the welfare of the family are more or less the same since there is no place for discrimination between a husband and wife and their respective roles and there should be no bias in favour of the money-earner and against the home-maker and the child-carer.[20] In other words, I do not find the Husband’s greater financial contribution is a good reason for departure of equal division.

Compensation as a material factor

67.  No issue is raised by the parties under this head.

Deciding the outcome

68.  Before deciding the outcome, I summarise the family assets as follows:

69.  After dividing this sum equally, each party shall have about $2.93 million. I remind myself that I am not bound to depart from equality in the division of the parties’ assets even if one or more of the factors considered above are engaged on the facts.[36] Nonetheless, stepping back and looking at the overall impact of the factors discussed above, I am satisfied that each party has about $2.93 million is a fair result. Therefore, the Wife is entitled to $2,015,416.22 (i.e. $5,859,018.95/2 - $914,093.26).

Order

70.  In the circumstances, I make the order in relation to the distribution of assets as follows:

a.  The Wife do transfer all her interest or share in the Scenic Car Park to the Husband within 3 months from the date hereof;

b.  The necessary expenses for effecting the above transfer including but not limited to legal costs and stamp duty, if any, shall be borne by the parties in equal share;

c.  Upon documentary proof of the above transfer, the sum of $2,015,416.22 be released to the Wife from the payment into court for $2,606,918.25 and the balance thereof in sum of $591,502.03 be released to the Husband from the court forthwith;

d.  Half of the interest accrued on the said payment into court be released to the Husband and the remaining interest be released to the Wife;

e.  Upon compliance with paragraphs (a), (b) and (c) above, all claims which each party may have against the other for ancillary relief be dismissed; and

f.  The parties have liberty to apply to the court in relation to the terms and implementation of paragraphs (a), (b) and (c) above.

Maintenance of the Child

71.  The next issue is the maintenance of the Child. The Husband is currently paying $17,000 per month as maintenance pending suit for the Child. The current monthly expenses on the Child are $16,850 as set out in the Wife’s latest Form E. The Wife said that such expenses are expected to rise very soon after the Child’s entering into primary education in the coming September. For instance, the Child is prepared to join the musical instrument classes and Taekwondo. She estimated his expenses will increase to $22,340 per month.

72.  The Wife also said that the general expenditure of the Parc Versaills Flat where 3 people, namely the Child, her mother and herself, (the domestic helper is agreed by the parties to be excluded) are living together is $34,247 as set out in her latest Form E and the Child’s share shall be $11,416 (i.e. $34,247 / 3). Hence the total costs for the Child is $33,756 (i.e. $22,340 + $11,416).

73.  The Husband contends that the Wife exaggerates some expenses such as school fee and that she also includes $800 management fee of her mother’s Kwun Tong house as part of the utilities. He also argued that the Wife’s father should be counted for the purpose of dividing the general expenditure of the Parc Versaills Flat so that it shall be divided by 4 instead of 3.

74.  For the school fee, the Wife has already adjusted in her new estimate of the Child’s expenses of $22,340. She also explained that her father is not living together with them in the Parc Versaills Flat but just sometimes stays overnight there during some weekends. I accept the Wife’s evidence in this regard and agree with the Wife’s proposed division of the general expenditure of the Parc Versaills Flat by 3 rather than 4. I also agree that the monthly expenses of the Child will increase after promoting to the primary education since the parties must expect the Child to receive very good education in the future.

75.  As to the $800 management fee, I accept it shall not be included as part of the Wife’s utilities expense. For the remaining expenses, since they are not challenged by the Husband, they are accepted by me. Thus, the monthly expenses of the Child are $32,956 (i.e. $33,756 -$800).

76.  Mr. Leung, Counsel for the Wife, submitted in his written closing submission that 1/3 of the monthly expenses of the Child are to be shared by the Wife and 2/3 by the Husband due to the income disparity between them.

77.  At the oral closing submission, Mr. Leung invited the court to consider the Husband’s income from the Liberte clinic. According to the Liberte clinic balance sheet produced by the Husband in his first Form E dated 28^th September 2007, the average monthly net profit is about $60,000 for the period from January 2006 to April 2007. Mr. Leung agreed that the profit after April 2007 shall not be considered because some of the figures concerning expenses after April 2007 are incomplete.

78.  The Husband stated in his first Form E that PM Group Ltd. which operates the Liberte clinic and the Olympia clinic suffered from loss of over 1.3 million as at December 2006. The Olympia clinic was close down in 2006 due to continuous loss for 2 years. But according to the financial statements for the year ended 31^st March 2009, PM Group Ltd. has accumulated loss of only about $191,000, which means that this company has made about $1.1 million profit during the period from January 2007 to March 2009 (i.e. about 27 months) and recovered almost all the previous loss. That is to say, the average income of this company is about $40,000 per month (i.e. $1.1 million / 27) during the period of 27 months. In the circumstances, I consider that this company is beginning to gain profit now. Although the Husband denied at the trial that he has any interest in this company, I have already determined that he holds 50% beneficial interest thereof[37]. Since the Husband fails to produce any updated financial statements of PM Group Ltd. in his latest Form E, I have to draw adverse inference against him. Hence, I conclude that the Husband has an additional income of $20,000 from the Liberte clinic or PM Group Ltd., namely half of the average income during the said period of 27 months.

79.  The Wife’s income is about $80,000 and the Husband’s is about $143,000 ($123,000 + $20,000). In my view, the monthly expenses of the Child for $32,956 are to be shared by the following ratio:

(i)    80/223 by the Wife:     $11,823 (round up to $12,000)

(ii)   143/223 by the Husband:  $21,133(round up to $21,000)

80.  I therefore order the Husband to pay the Wife $21,000 per month as maintenance of the Child, first payment to be made on the 1^st June 2011 and thereafter on the first day of each succeeding month until the Child reaches the age of 18 or finishes full time education whichever is the later, and grant a section 18 declaration.

Smart Kids, Child Tax Allowance and vacation of registration against Le Point Flat

81.  There is an outstanding summons taken out by the Wife dated 30 June 2009 concerning the costs for Smart Kids education products for the benefit of the Child. The parties eventually agreed at the hearing on 20 April 2011 that the Husband do pay the Wife $20,000 as his share thereof within 14 days with costs of the said application reserved.

82.  The parties further agreed to give undertaking at the hearing on 20 April 2011 that the Wife shall claim the Child tax allowance in 2011 and odd years thereafter whereas the Husband shall claim such allowance in 2012 and even years thereafter.

83.  The Wife has registered a Notice of ancillary relief against the Le Point Flat in the Land Registry. I now make a separate order for vacation of such registration at the own costs of the Wife. In my view, it is totally unnecessary for the Wife to do so especially when the sale proceeds of the Matrimonial Home has been paid into court which is sufficiently secured the interest of the Wife in these ancillary relief proceedings.

COSTS

84.  In CACV 196/2009, Hon Kwan JA said in paragraph 123 of the judgment:

“In matrimonial cases, as in other cases, costs should normally follow the event. The court also retains a discretion to deprive successful litigants of costs under the principles in In re Elgindata Ltd. (No. 2) [1992] 1 WLR 1207 (L v C, CACV 169/2006, 19 March 2008, paragraph 23, per Yuen JA). The general rule that costs follow the event does not cease to apply simply because the successful party raised allegations on which he failed, but where that has caused a significant increase in the length or costs of the proceedings, he may be deprived of the whole or a part of his costs. As the Judge had remarked, the wife had taken an over-inflated view of the merits of her case and the assets she should be awarded. The approach she took in relation to the valuation of O Ltd. and the accounts caused a significant increase in the length and costs of the proceedings. It is not fair she should be awarded all of her costs at trial. I would exercise the discretion to reduce the award of the costs of the trial to the wife by half.”

85.  First, I find that the Husband unreasonably denies and has not fully and frankly disclosed his interest in PM Group Ltd. and PM Academy Ltd. whereas the Wife did make full and frank disclosure as to her assets save the down payment of the Parc Versaills Flat. Besides, I am of the view that the Husband unreasonably refuses to accept the Wife’s open offer concerning the Child’s maintenance. On the other hand, both parties have also caused significant increase in the length or costs of the proceedings as they raised a lot of factual disputes which I consider unnecessary or even I find against them.

86.  Looking at the circumstances as a whole, I would exercise the discretion to make an order nisi that the Husband do pay half of the Wife’s costs for the ancillary relief proceedings including all costs reserved and the Wife’s summons dated 30^th June 2009, to be taxed if not agreed. Such costs order nisi will become absolute unless any of the parties apply to vary the same within 14 days.