LKYI v. GJS, as the Personal Representative of KO , the Deceased

FCMP 46 / 2020

[2024] HKFC 145

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FAMILY COURT MISCELLANEOUS PROCEEDINGS

NO. 46 OF 2020

________________________

________________________

________________________

JUDGMENT

(Financial provision claimed by
de facto wife under
section 3(1)(ix) Cap. 481)

________________________

A.  The Application

1.  This is an application for reasonable financial provision to be paid out of the net estate of O, deceased (“the Estate”). The Applicant claimed as a dependent of O under section 3(1)(ix)  of the Inheritance (Provisions for Family and Dependents)  Ordinance (Cap. 481)  (“IPFDO”).

B.  Brief Background

2.  O was a businessman. He founded and operated two companies, L Travel which runs a plane ticketing and hotel booking service, and L Insurance, a licenced insurance broker company. O was the sole shareholder of L Insurance and the majority shareholder (99%)  of L Travel. L Insurance and L Travel are referred collectively below as “the Companies”.

3.  The Applicant was a reservation officer employed by an airline company, earning a monthly salary of $13,000.

4.  The Applicant and O met in 2003 through their respective works in the travel industry. They began a romantic relationship in mid-2008.

5.  In around September 2009, the Applicant was pregnant and started to cohabit with O in a property in Stubbs Road (“Stubbs Road Property”). Stubbs Road Property was held in the name of WHL, a company solely owned by O. They have been living together for about 10 years but they had not married. The Applicant produced photos taken at her request in 2009 in studio wearing wedding gowns.

6.  Their daughter (“Daughter”)  is now 14 years old.

7.  The Applicant’s case is that she has been a full time housewife since she has cohabited with O. She held the title of Office Manager in L Insurance and received a monthly salary of $18,000 although she did not have day to day duties and responsibilities. In addition, O gave her $35,000 cash every month for her own personal use and $25,000 for other household expenses. O would also occasionally gave her money to take care of ad-hoc expenses.[1]

8.  In October 2018, O unexpectedly passed away intestate at the age of 71 years.  The Daughter is the sole known beneficiary of the Estate.

9.  The Applicant filed this claim on 13 May 2020 against the Estate.

10.  By an Order dated 27 September 2022 (“Interim Maintenance Order”), a monthly interim maintenance of $90,000 was granted to the Applicant to be paid out of the Estate and will be taken into account after the final distribution.

C.  The Respondent

11.  Although O has passed away in 2018, no step has been taken to apply for letters of administration of the Estate. It appears that the reason for the long period of delay is to allow the Applicant to get her own maintenance first so that she will not be in conflict with the Estate when she seeks to apply to be an administratrix. The Applicant said it is likely that she will make such application once her conflict of interest arising out of the present claim is resolved[2]. The effect that this delay may have caused to the administration of the Estate is unknown but this is not a matter within the jurisdiction of this court.

12.  As there is yet to have a personal representative of the Estate, on 22 April 2022, upon the application by the Applicant and with consent of GJS, Deputy Judge W.Y. Ho (as she then was)  appointed GJS[3] to represent the Estate solely for the purpose of these proceedings.

13.  GJS is O’s nephew and the eldest male descendant of O’s extended family.  He is not a beneficiary of the Estate. He has never had any business dealings with O.  He made himself available for the appointment because he felt that, as the eldest male descendant, he had a moral duty to take care of the Daughter (his youngest cousin)  and the Estate and to see that the Applicant is fairly taken care of. He said he is not hostile to the Applicant or any party. He is conscious of his duty to the Estate and shall act in the best interest of the Estate and its beneficiary.[4]

D.  Applicable statutory provisions and legal principles

14.  Section 3 of IPFDO provides that:-

“(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 -

…

(ix)  any person (not being a person included in the foregoing paragraphs of this subsection)  who immediately before the death of the deceased was being maintained, either wholly or substantially, by the deceased,

that person may apply to the Court for an order under section 4 [of the Ordinance] 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.”

(emphasis added)

15.  Section 3(3)  defines the meaning of “being maintained, either wholly or substantially, by the deceased” as follows:

“For the purposes subsection (1)  … (ix), a person shall be treated as being maintained by the deceased, either wholly or substantially, as the case may be, if the deceased, otherwise than for full valuable consideration, was making a substantial contribution in money or money’s worth towards the reasonable needs of that person.”

(emphasis added)

16.  When considering whether an applicant’s care and support are full valuable consideration for maintenance, the English Court of Appeal held in Bishop v Plumley[5] that care and support given by an applicant to the deceased in the years prior to his death was not to be considered in isolation from the mutuality of their relationship. The benefits which flowed between them living together as man and wife had to be viewed in a common sense way without valuing too finely the normal exchanges of support or benefit within such domestic relationship.

17.  A distinction on the standard of “reasonable financial provisions” applies to a surviving spouse and to other categories of applicants was drawn in section 3(2).

17.1.  The provisions that may be made to a surviving spouse applicant is more generous and is not limited to payment for the surviving spouse’s financial needs. It includes “such reasonable 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”[6]. The court shall 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 … had been terminated by a decree of divorce.”[7] The court will make a “notional divorce” enquiry by cross checking the outcome with the entitlement of a spouse in a divorce situation without setting a floor or ceiling for the provision.

17.2.  The provision that may be made to other categories of applicants is “such reasonable financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance”[8], and thus confines to payment for maintenance. The court assesses the applicant’s financial needs and makes reasonable provision to cover such needs.

18.  By amendments to the English Inheritance (Provision for Family and Dependants)  Act 1975, the entitlement to provisions on the surviving spouse standard was expanded to civil partners and cohabitees. This amendment was not adopted in Hong Kong.

19.  Although the Applicant is a de facto wife of O and was so treated by O’s relatives and friends, she does not fall within the category of “surviving spouse”.  Her application was rightly made on the ground as a dependent under section 3(1)(ix).  Hence, the reasonable financial provision that may be awarded to her is for her maintenance only.

20.  The form of orders that the court is empowered to make out of the deceased’s net estate are set out in section 4(1)  which include periodical payment, lump sum payment, order for transfer or settlement or acquisition of property for the benefit of the applicant.

21.  It is well settled that an applicant has the burden to prove a two-stage test:

21.1.  First, whether in all the circumstances, viewed objectively, the will or the intestacy regime does not make reasonable financial provision for the applicant.

21.2.  Second, whether and what reasonable financial provision ought to be made for the applicant.

(See: In re Coventry, deceased[9] at 487; LZX v WYL (Provision: family and dependents)[10] §140; Ilott v Mitson (No 2)[11]§23)

22.  The first stage test is a question of fact or evaluative judgment that the court shall determine objectively, but not based on the subjective view of the applicant: In re Coventry, deceased; LZX v WYL (Provision: family and dependents); Tam Mei Kam v HSBC International Trustee Ltd[12]; Ilott v Mitson (No 2).

23.  Although the reasonableness of the deceased’s decision can be a factor for consideration under section 5(1)(g), the question remains whether reasonable financial provision had not been made to the applicant, but not whether the deceased has acted unreasonably in the disposition of his estate by will or by resorting to the intestacy regime: Ilott v Mitson (No 2) §17.

24.  The second stage test is a question of discretion, which must be exercised after having regard to the factors listed in section 5 (“Section 5 Factors”). These factors govern whether the court should exercise its power to make reasonable financial provision for an applicant, and in what manner such power should be exercised: In re Coventry, deceased at 486 - 487, Tam Mei Kam v HSBC International Trustee Ltd, §32, §38.

25.  Section 5 contains general matters that apply to all applicants and specific matters that apply only to some categories of applicants.

26.  Section 5(1)  are general matters that the court shall have regard to when considering applications of all eligible applicants under IPFDO:

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

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

(c)  the financial resources and financial needs which any beneficiary of the estate of the deceased has or likely to have in the foreseeable future;

(d)  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;

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

(f)  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 court may consider relevant.”

27.  Section 5(8)  provides that for the purpose of section 5, the court shall take into account:

27.1.  a person’s earning capacity when considering his financial resources; and

27.2.  a person’s financial obligations and responsibilities when considering his financial needs.

28.  In addition to the general matters, sections 5(5)  and 5(6)  set out specific matters that the court shall have regard to when considering an application by a person falls within section 3(1)(ix).  These matters are:

28.1.  Section 5(5)  - “the extent to which and the basis upon which the deceased assumed responsibility for the maintenance of the applicant, and to the length of time for which the deceased discharged that responsibility”; and

28.2.  Section 5(6)  - “the closeness of the relationship between the applicant and the deceased immediately before the death of the deceased”.

29.  Section 5(7)  provides that in evaluating the matters set out in section 5, the court shall take into account “the facts as known to the court as at the date of the hearing”.

30.  The following principles and guidance on what is or what is not “maintenance” have been elucidated and applied in many English and Hong Kong authorities, notably In re Coventry, deceased, In re Dennis, deceased[13], Re Duranceau[14], LZX v WYL (Provision: family and dependents), Tam Mei Kam v HSBC International Trustee Ltd:

30.1.  The precise meaning of “maintenance” must depend on all the facts and circumstances of the particular case.

30.2.  “Maintenance” includes payment which enable the applicant to pay for the costs of his living directly or indirectly in the future at the standard of living appropriate to him.

30.3.  It is not limited to a subsistence level, nor extend to a payment to support an extravagant life or a standard desirable for the general well-being. 

30.4.  It is to provide income for maintenance of the applicant. It is not to confer capital nor does it mean to provide legacies for the applicant.

30.5.  The limitation to provision for maintenance represents a deliberate legislative choice and demonstrates the significance attached by the law to testamentary freedom. The legislation is not designed to introduce a general power to re-write the testator’s will or the deceased’s choice to be governed by the law of intestacy.

30.6.  While the statutory power is not to confer capital or legacies, the maintenance that can be awarded is not limited to periodical payment.

30.7.  In some cases, it is more appropriate and more convenient for other beneficiaries and for executors if income is provided by way of a lump sum from which both income and capital can be drawn over the years: Ilott v Mitson (No 2) §15, per Lord Hughes.

30.8.  Payment to meet an applicant’s housing needs can be part of the maintenance. 

30.9.  This is not a moral claim. The applicant is in a necessitous circumstances per se is not a sufficient ground for an award: Cameron v Treasury Solicitor[15]; Ilott v Mitson (No 2) §§20-22.

30.10.  There shall be a single assessment of what reasonable provision should be made in all the circumstances of the case. The judge is not required to fix some hypothetical standard of reasonable provision and then either add to it, or discount from it, by percentage points or otherwise, for variable factors: Ilott v Mitson (No 2) §34.

31.  It is worth repeating the following oft-cited passages.

31.1.  In re Coventry, deceased[16], per Goff LJ :

“ What is proper maintenance must in all cases depend upon all the facts and circumstances of the particular case being considered at the time, but I think it is clear on the one hand that one must not put too limited a meaning on it; it does not mean just enough to enable a person to get by; on the other hand, it does not mean anything which may be regarded as reasonably desirable for his general benefit or welfare.”

31.2.  In re Dennis, deceased[17] per Brown-Wilkinson J:

“The applicant has to show that the will fails to make provision for his maintenance: see Re Coventry (deceased) … . In that case both Oliver J at first instance and Goff LJ in the Court of Appeal disapproved of the decision in Re Christie (deceased) …, in which the judge had treated maintenance as being equivalent to providing for the well-being or benefit of the applicant. The word ‘maintenance’ is not as wide as that. The court has, up until now, declined to define the exact meaning of the word ‘maintenance’ and I am certainly not going to depart from that approach. But in my judgment the word ‘maintenance’ connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him. The provision that is to be made is to meet recurring expenses, being expenses of living of an income nature. This does not mean that the provision need be by way of income payments. The provision can be by way of a lump sum, for example, to buy a house in which the applicant can be housed, thereby relieving him pro tanto of income expenditure. Nor am I suggesting that there may not be cases in which payment of existing debts may not be appropriate as a maintenance payment; for example, to pay the debts of an applicant in order to enable him to continue to carry on a profit-making business or profession may well be for his maintenance.”

32.  In re Christie, deceased, “maintenance” was held to refer to “no more and no less than the applicant’s way of life and well-being, his health, financial security and allied matters such as the well-being, health and financial security of his immediate family for whom he is responsible.”[18] This wide definition of maintenance was disapproved in In re Coventry, deceased as one “come dangerously near to equating it simply with ‘wellbeing’ or ‘benefit’”[19].

33.  It was held in Re Duranceau, a Canadian authority, that maintenance was what was “sufficient to enable the dependant to live neither luxuriously nor miserably, but decently and comfortably according to his or her station in life.”[20]

34.  The Applicant cited §12 of Bahouse v. Negus[21] and submitted that:

“maintenance is not to be construed by some objective standard, but in context and regard should be had in awards ‘to the fact that some people have a much more expensive or extravagant way of life than others … it is a standard which has to be flexible to suit the circumstances of the case. It is what is appropriate to that case, and that means looking at what style of life the claimant was accustomed to live with the deceased during his lifetime’”.[22]

35.  I find the following decision of Mr Justice Munby in §§22 to 25 of Bahouse v. Negus elucidated the point with more clarity:

“22. The meaning of maintenance in this particular statutory context has for many years been recognised as being that described by Goff LJ in Re Coventry [1980] Ch 461 in the passage at page 485 to which my Lord has already referred, supplemented by the passage in the judgment of Browne-Wilkinson J (as he then was)  in Re Dennis [1981] 2 All ER 140 at page 145 to which again my Lord has referred. Goff LJ made clear that:

‘What is proper maintenance must in all cases depend upon all the facts and circumstances of the particular case …’

In an earlier passage in his judgment, Goff LJ had clear that what was reasonable maintenance had to be assessed having regard to what, quoting the Canadian case of ln Re Duranceau [1952] 3 DLR 714 at page 720, he referred to as the applicant's "station in life".

23.  Browne-Wilkinson J in Re Dennis. as appears from the passage to which my Lord has already made reference, made clear that what is reasonable maintenance has to be assessed having regard to ''whatever standard of living is appropriate to him".

24. It seems perfectly plain to me in the light of those two judgments that, in assessing in any particular case what is or is not reasonable maintenance, the court must have regard to the nature and quality of the lifestyle previously enjoyed by the applicant and the deceased.

25. It cuts both ways. The applicant who lived with the deceased in a hovel will not be able to look to maintenance at the same level as the applicant who lived together with the deceased in a palace. If, in fact, as in the present case the lifestyle was indeed lavish and extravagant then, in my judgment, consistently with the authorities, it was perfectly permissible for the judge, in determining what the proper answer was to each of these two questions, to say that the reasonableness or otherwise of the provision made for the claimant by the deceased, and the provision which it would be reasonable for the judge to make for the claimant, had to be assessed having regard to the lifestyle she had previously enjoyed with the deceased. If the lifestyle was indeed lavish and extravagant then it is entirely acceptable, and a proper application of established principle, for a judge to reflect that in his evaluation of the proper answer to the first question and in the exercise of his discretion in providing an answer to the second question. So there was, in my judgment, not even arguable error of law on the part of the judge in the present case.”

36.  The Respondent referred this court to the following cases:

36.1.  In Malone v Harrison[23], the court took into account the applicant’s standard of living, acknowledged that the deceased was generous to the applicant, and made a comfortable award which would be enough to maintain herself reasonably in the present or a similar flat and to keep her in a reasonable but not extravagant style.

36.2.  In Webster v Webster[24], the court applied Bahouse and construed “maintenance” to mean maintenance in the context of the applicant’s lifestyle during the cohabitation with the deceased. The court took into account the equivalent to “Section 5 Factors”, approved an award largely consistent with the applicant’s standard of living “with the exception of holidays, entertainment and the like”[25], which the applicant would have the remainder of her savings to fund.

36.3.  The applicant in Cattle v Evans[26] is the de facto wife of the deceased. Her income was meagre. She was living of rental income from a property she owned with the deceased. She has had the benefit of living in a larger property rent free since the death of the deceased and has chosen to spend a large sum of money on the caravan which was held to be “unnecessary and inappropriate extravagance and something she could easily have managed without”. The court held that reasonable provision for her accommodation needs did not require a transfer to her a property comparable in size and value to the one she had lived with the deceased, but awarded her a life interest in a smaller property.

37.  In my view, the nature and quality of life that an applicant had accustomed to live with the deceased prior to his demise is part of the facts and circumstances that the court shall have regard to when considering a claim under IPFDO.  It is acknowledged that some people enjoyed more comfortable life than the other. Care should be given when the court has regard to the previous lifestyle of the applicant. This is not to be construed subjectively. The decision of Mr Price QC in In re Christie, deceased that maintenance refers to the applicant’s way of life and well-being is still regarded as an anomaly and has not been followed.  The court had disallowed “unmerited extravagance” although it may be the applicant’s way of life when living with the deceased. In Tam Mei Kam v HSBC International Trustee Ltd, the Court of Appeal reminded that the court’s statutory power to make reasonable financial provision “is an evaluative judgment based on objective considerations, not the subjective view of the applicant”. [27] This applies to the consideration of the nature and quality of life previously enjoyed by the applicant, which is to be viewed objectively when assessing maintenance. 

38.  I proceed to consider this application with the above principles in mind.

E.  The Parties’ Open Offers

E1.  The Applicant

39.  The Applicant claimed a maintenance of $120,000 per month (excluding provision for accommodation)  for the remainder of her life capitalized at $64,146,566 according to the SJE’s Duxbury calculations.   She further seeks an additional sum equivalent to 10% of the current value of Stubbs Road Property (i.e. $6.62 million)  to reflect the costs of accommodation. To provide security for her continued residence in Stubbs Road Property which she considered as her de facto matrimonial home, she proposes a transfer of 50% of Stubbs Road Property, with the remaining balance of $37,666,566 ($64,146,566 – (66,200,000 x 40%))  to be paid by cash or equivalent value of the listed shares.

40.  The Applicant made the open offer that the Estate shall pay and/or transfer to her the following assets in full and final settlement of her dependency claim of about $70.8 million[28] in the following manner:

40.1.  transfer 50% of the legal and beneficial title in Stubbs Road Property to her valued at $33.1 million (10% being her direct entitlement and 40% being in lieu of her lump sum payment); and

40.2.  pay a lump sum to the Applicant in the sum of $37,666,566 in cash or by transfer of the equivalent value of listed shares within 28 days from the date of the Order.

E2.  The Respondent

41.  The Respondent considered the expenses claimed by the Applicant are extravagant. Moreover, the Applicant has double claimed the general household and other expenses which have been paying by the Companies.

42.  The Respondent submitted that no order is needed to be made for the Applicant’s maintenance, alternatively a capitalised lump sum reflecting a monthly maintenance of $25,000 or lower should be sufficient.

43.  The Respondent did not oppose an order for lump sum payment of capitalised maintenance, but he criticised the use of Duxbury calculation. He suggested alternative methods of either (a)  bespoke calculation based on Duxbury or (b)  Chan/Ogden Tables, or (c)  Multiplier-Multiplicand method.[29]

44.  The Respondent accepted that the Applicant’s accommodation needs shall be provided for. The Respondent initially proposed to give the Applicant a life interest in Stubbs Road Property.  At closing, the Respondent addressed the complaint on rigidity imposed by a life interest and revised his open offer[30] to a transfer of Stubbs Road Property to the Applicant on trust for herself and the Daughter as joint tenants to meet the Applicant’s housing needs. 

F.  Witnesses

45.  The court heard the evidence of 3 factual witnesses and 1 expert witness, namely:

45.1.  The Applicant testified and was cross-examined by the Respondent.

45.2.  Mr Yuen, aged 69, is a close friend of O. He worked in the garment export industry and retired in 2016.  Mr Yuen said that shortly before O’s unexpected death, O had asked him to make proposal on O’s asset management and capital restructuring, and to help managing the Companies as O, in his 70s, would like to spend more time with his daughter. Mr Yuen agreed to commence work in November 2018. Sadly and unexpectedly, O passed away on 24 October 2018. At the request of the Applicant, Mr Yuen assisted her in the management of the Companies. Mr Yuen gave evidence for the Applicant on the operation and financial condition of the Companies and was cross-examined.

45.3.  The Respondent testified at the trial and he was not cross-examined.

45.4.  Mr Jerome McDonagh (“SJE”)  of MDD Forensic Accountants was appointed by an Order dated 16 January 2023 as the single joint expert to adduce a report of Duxbury calculations (“Duxbury Report”)  for the court’s reference.  The SJE attended the trial and provided under oath additional Duxbury calculation results based on some other expenditure sums. The parties have not cross examined the SJE.

46.  The well established test for assessing witnesses’ credibility has been summarised in Hui Cheung Fai v Daiwa Development Limited[31] at §§76-82. Contemporaneous documents and documents which came into existence before the problem in question arose are generally of great importance in assessing credibility.  The reliability of a witness will also be assessed by the inherent probabilities and consistencies of his evidence. 

47.  I approach the witnesses’ testimony on matters involving the deceased with more caution for the obvious reason that the deceased cannot give evidence. I look for documentary evidence and circumstantial evidence to test the reliability of witnesses’ testimony. Evidence supported by contemporaneous documents carries more weight.  Mere oral assertions will be approached with circumspection.

G.  Locus Standi – section 3(1)(ix)

48.  O died domiciled in Hong Kong, and was survived by the Applicant.  It is common ground that the Applicant, who is presently 45 years old, was the de facto wife of O for about 9 years, and has been financially maintained by O during the period of their cohabitation.

49.  The parties are in consensus, and I agree, that the deceased was making a substantial financial contribution towards the Applicant’s reasonable needs immediately before his death otherwise than for full valuable consideration. The Applicant has the locus standi under section 3(1)(ix)  to apply for an order under section 4 for her reasonable financial provision.

H.  The first stage test - whether viewed objectively, reasonable financial provision for the Applicant had not been made

50.  O made no will. He passed away intestate leaving no surviving wife but an issue, the Daughter. Under section 4(5)  of the Intestate’s Estates Ordinance, O’s residuary estate shall be held on the statutory trusts for the Daughter. The Daughter is the sole known beneficiary of the Estate. It is common ground that no financial provision has been made to the Applicant out of the Estate.

I.  The second stage test - whether, if so, what order shall be made for the financial provision in favour of the Applicant

I1.  Overview

51.  This is the parties’ real battle ground.

52.  The court’s exercise of discretion at this stage must be guided by the Section 5 Factors.

53.  I first set out those parts of the Section 5 Factors that are inapplicable, irrelevant or not in dispute:

53.1.  Section 5(1)(b)  – There is no other claim filed against the Estate under IPFDO. In about 2019, KWY, O’s second elder sister had expressed an intention to claim against the Estate under IPFDO. In 2021 and 2022, the Applicant and the Respondent had through their respective solicitors asked KWY if she would join in these proceedings. Despite notice of these proceedings and the parties’ enquiry, KWY has not filed any claim against the Estate.

53.2.  Section 5(1)(f)  – Neither the Applicant nor the Daughter suffers from any physical or mental disability.

53.3.  Sections 5(1)(d), 5(5)  and 5(6)  - It is common ground that O has assumed responsibility for the maintenance of the Applicant for about 10 years. The relationship between them immediately before the death of O was close. They lived together as de facto husband and wife. Most of O’s friends, relatives, staff and acquaintance called the Applicant “Mrs [K][32]”.

54.  Next, I consider the remaining Section 5 Factors in the following sequence:

54.1.  Section 5(1)(e)  - the size and nature of the net Estate;

54.2.  Section 5(1)(a)  - the financial resources and financial needs which the Applicant has or is likely to have in the foreseeable future;

54.3.  Section 5(1)(c)  - the financial resources and financial needs which the beneficiary of the Estate (namely the Daughter)  has or is likely to have in the foreseeable future;

54.4.  Section 5(1)(g)  – 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.

I2.  Size and nature of the net Estate – section 5(1)(e)

55.  The total size of the Estate is substantial. According to the updated agreed table of assets and liabilities of the Estate signed by the parties (“Joint Table”)[33], the Estate has a net value of about $166.3 million, comprises:

55.1.  $22.7 million cash at bank;

55.2.  5 listed shares at an agreed value of $29.8 million; and

55.3.  interests in 4 landed properties of over $114 million as follows:

55.3.1.  Stubbs Road Property at an agreed value of $66.2 million is being held by WHL with no mortgage. This is occupied by the Applicant and the Daughter as their residence.

55.3.2.  Henan Property at an agreed value of $35.3 million is being held by WHL with no mortgage. This property is generating a monthly rental income of $38,100.

55.3.3.  Haiphong Property at an agreed value of $7.5 million is registered in O’s name without mortgage. The monthly rental income generated by Haiphong Property is $30,000.

55.3.4.  Portfield Property is being held by O and O’s business partner SSK (also deceased)  as tenants in common. O’s 50% interest in this property was agreed at $5.135 million. It has been left vacant.

55.4.  The disclosed liabilities of two outstanding tax payments are $181,296.

56.  The above figure does not include:

56.1.  the value of the Companies which are revenue generating;

56.2.  the value of the inventory in O’s safe deposit box which includes some gold coins, jewellery and petty cash; and

56.3.  other possible liability of the Estate.

57.  Mr Yuen gave the following evidence about the Companies.

58.  The Companies experienced serious administrative and logistical difficulties brought by O’s death:

58.1.  O was the only signatory to the Companies’ bank accounts. These bank accounts could not be operated after O’s death, thus affected the Companies’ business as a going concern.

58.2.  The operation of L Insurance was subject to the holding of an insurance broker licence. O was the person in L Insurance holding this licence.

58.3.  The business of L Insurance depends largely on O’s skills, connections and standing in the industry. After his demise, L Insurance has difficulties to negotiate for insurance renewal of its clients.

59.  To avoid causing a standstill or abrupt closure of the Companies that may affect their clients and employees, the Applicant and Mr Yuen continued the Companies’ operation in the following manner:

59.1.  The Applicant withdrew all her money in one of her current account (“HSBC Account”)  and lent this bank account for initial use by the Companies. The HSBC Account was used for receipt of and payment by L Insurance.

59.2.  The Applicant obtained a loan of $3 million from O’s close friends and in turn lent $2.1 million to L Insurance and $700,000 to L Travel for operations.

59.3.  By the end of October 2018, Mr Yuen asked the tenant of Haiphong Property to deposit the rent ($30,000 per month)  into HSBC Account, which was then used for settling the expenses of L Insurance.

59.4.  The rental income of Henan Property ($38,100 per month)  was used to settle the salaries of L Insurance’s employees.

59.5.  L Insurance’s business was continued in a limited capacity. It reached an agreement with A Insurance whereby A Insurance would handle L Insurance’s clients and gave L Insurance a commission. Between April 2019 and March 2023, L Insurance received about $7 million commission from A Insurance.

59.6.  The Applicant set up a new company bearing the name of “L” (“Newco”)  and opened a bank account of Newco for L Travel’s operation. According to Mr Yuen, Newco’s operation was on trust for L Travel.

60.  As at September 2020, L Travel has a bank balance of $5,330,131 and L Insurance $10,351,070.  As shown in the respective management accounts as at 31 March 2023, L Insurance has net assets of over $8 million and L Travel $2.6 million.

61.  There are the following possible issues or claims relating to the Estate:

61.1.  Haiphong Property is registered in O’s own name. KWY has raised that this property does not belong to O but to his late father.[34] Nonetheless no claim was filed by KWY or any person against O’s interest in Haiphong Property.  The land search of Haiphong Property shows that in 1987, the registered owner of this property was changed from O’s late father to his administrator (O’s eldest brother). In 2011, by an assignment with a consideration, it was transferred to O.

61.2.  Portfield Property is jointly owned by O and SSK, who is also deceased.  No evidence is adduced on how the value of this property will be materialised.

61.3.  Although the Estate has a substantial size, its liquid cash is limited. The $22.7 million cash held at O’s bank account has been reduced by the interim maintenance paid to the Applicant. The Estate may sell the listed shares (value at $29.8 million)  relatively easier if cash is needed. It may however be difficult and/or undesirable to the Estate to sell the landed properties to satisfy the Applicant’s claims.

I3.  Financial resources and financial needs of the Applicant – section 5(1)(a)

I3a.  The expenses claimed by the Applicant

62.  The Applicant claimed the following monthly expenses round up to $120,000, with breakdown as follows:

General Needs (shared between Applicant and Daughter)
Item	Amount
Utilities	$6,192.56
Management fees	$4,900.00
Household food	$21,879.98
Household expenses	$2,226.85
Car expenses	$19,751.74
Domestic Helper	$5,898.80
Subtotal:	$60,849.93
Applicant’s 50% Share:	$30,424.96
Personal Needs
Item	Amount
Meals out of home	$14,522.03
Transport	$1,500.00
Clothing/Shoes	$21,503.00
Personal grooming (including haircut, cosmetics and body treatment)	$22,287.50
Entertainment/presents	$4,128.05
Holiday	$15,000.00
Medical/dental	$8,642.13
Subtotal:	$87,582.71
Total (Applicant’s share):	$118,007.67

63.  The Applicant contended that the claimed expenses are commensurate with the standard of living enjoyed by her and O as well as the financial maintenance provided by O during their relationship.

64.  She described the standard of living enjoyed by her during O’s lifetime is luxurious and one of comfort. To reflect her “station in life”, she referred to O’s association with a group of 11 persons in the upper echelon of Hong Kong society with whom she said O had frequent gatherings, and they readily lent money to the Applicant shortly after O’s death.

65.  These 11 persons and O formed a “Fraternity Club Ltd”, a company limited by guarantee for organising social gatherings. With respect, it appears to me that O’s wealth and background are not quite the same as these friends or some of them.  I remind myself not to too readily associate the Applicant’s lifestyle and “station in life” with these friends when assessing her needs.

66.  The Applicant has also referred to her status as a de facto wife and suggested that her entitlement should be comparable to the entitlement that a de jure wife may have.

67.  Hong Kong has not adopted the English amendment which placed civil partners and cohabitees into the category of “surviving spouse”.  There remains a clear statutory distinction on the standard of reasonable provision applies to a surviving spouse and other categories of applicants. It is wrong to associate the de facto wife status of the Applicant (as a dependant under IPFDO)  with the entitlement of a de jure surviving wife in the assessment of reasonable maintenance.  The Applicant might have lived with O as husband and wife, and are treated by O’s relatives and friends as O’s wife. These are indicative of the closeness of their relationship.  It remains the fact that they chose not to register their marriage formally. An attempt to draw a comparison with a de jure wife’s entitlement is liable to create confusion.

I3b.  Disputed expenses - 3 cars’ expenses

68.  The Applicant claimed $19,751.74 as expenses for maintaining 3 cars: a Porsche Macan, a Nissan Figaro and a BMW. At the trial, the Applicant withdrew her claims for maintenance of the Porsche Macan.

69.  The Porsche Macan was used by O. It is already beyond repair and will be scrapped. It is no longer necessary to spend maintenance expenses for this car including monthly repairing charges, autotoll expenses and gasoline expenses.

70.  The Nissan Figaro is a hobby car kept by O since 1991. It is owned by the Companies. The Applicant wanted to keep this car as it holds sentimental value for her. She intended to use it just to keep it in good running condition and will pass it to the Daughter.  Among the expenses claimed for the Nissan Figaro is $4,500[35] being the monthly rental for a car parking space near the Companies’ office building, which were being paid by L Insurance.

71.  I find that no expenses shall be allowed for maintaining the Nissan Figaro for the following reasons:

71.1.  This is O’s car and thus is part of the assets of the Estate.  Its maintenance shall be at the expenses of the Estate’s account.

71.2.  If a car parking space near the office is needed for attending the business of L Insurance, the rental shall continue to be covered by L Insurance. 

71.3.  There is no reasonable need for the Applicant to rent a car parking space near the office. There are two car parking spaces in Stubbs Road Property available for use.

72.  The BMW is the car used by the Applicant.  It was purchased by L Insurance 4 years ago. I allow a reasonable sum for maintaining this car but not the hire purchase payments for the following reasons:

72.1.  The hire purchase instalment payments of $11,331 per month have been fully paid by L Insurance in March/April 2023.  

72.2.  The Applicant is having the use of the BMW. There is no suggestion that this arrangement will cease. Funds for purchase of a new car is not a reasonable maintenance.  

72.3.  As the car is and will be solely used by the Applicant, it is reasonable that the Applicant bears the maintenance expenses although the car is owned by L Insurance.

73.  By reason of the above, $4,000 (instead of $19,751.74)  is a reasonable sum for the Applicant’s car expenses.  

74.  For completeness, her claims for an additional monthly sum of $1,500 for transportation expenses is allowed.  

I3c.  Disputed expenses – Household Food and Meal out of Home

75.  The Applicant claimed $10,939 (50% of $21,879.98)  for household food.

76.  This amount is much higher than the household food expenses ($6,500 being 50% of $13,000)  stated in her 1^st Form E filed in May 2020. In her 2^nd Form E filed in July 2022, she increased the expenses to $22,299.33. 

77.  To justify the claim, she testified at trial that they used to have wagyu beef, king salmon or coral grouper when dine with the Daughter at home.  They used to have sugarless yogurt purchased from City Super for breakfast. The Daughter developed the habit of consuming dry scallop which is costly.

78.  The Applicant claimed $14,522.03 for meals out of home. She said that she would have fine dining or buffet at hotel with the Daughter during the weekend.

79.  I find the amounts claimed for household food is excessive. I am not satisfied that the Applicant had spent a similar amount for household food during O’s lifetime. The expenses set out in the 1^st Form E (which was closer to the time before O’s demise)  is more reflective of the expenses incurred during O’s lifetime. This is also a reasonable amount for household food expenses. Moreover, this claim is for the Applicant’s maintenance only. The Daughter’s expenses and her habit of consuming dry scallops is irrelevant. 

80.  The Applicant produced receipt of $4,522.03 for meal out of home. No documentary support was adduced to support the remaining $10,000 claim. She explained that her friends paid the bill first and she reimbursed her share by cash, therefore she did not have receipts.  This explanation does not sit well with the Applicant’s evidence that she usually dines out with the Daughter and did not have much entertainment after the death of O.

81.  Generously assessed, I allow $6,500 (instead of $10,939)  for the Applicant’s share for household food and $9,000 (instead of $14,522.03)  for her expenses for meal out of home.

I3d.  Disputed expenses - Clothing and Personal Grooming

82.  The Applicant claimed a monthly sum of $21,503[36] for clothing and shoes, and a monthly sum of $22,287.5 for personal grooming, including haircut, cosmetics and body treatment.

83.  The Applicant produced receipts of $3,006 in December 2021 and May 2022 (claiming a monthly average of about $1,503)  for clothing/shoes. She did not produce any supporting document for the balance of $20,000. She explained at trial that she used to purchase brand name products and bags from a buyer who does not operate under the name of any company. The buyer only accepted cash for payment and did not issue receipt.

84.  In support her claims for personal grooming, she produced a receipt for a body treatment package of $37,800 valid for 18 months. She said this package is mainly for her weekly massage.  She said she has purchased other packages for facial treatment of around $1,000 to $1,200 per visit, and she used to visit hair salon every month for haircut and hair treatment. No documentary evidence was produced. 

85.  The Applicant stated in her 1^st Affidavit and her 1^st Form E, both filed on 13 May 2020, that her monthly expenses for personal grooming (including haircut and cosmetics)  before[37] and after[38] O’s death was $5,000.  In her 2^nd Form E filed in July 2022, she increased the personal grooming expenses to $22,287.5. 

86.  Having considered the evidence and generously assessed, I allow $15,000 (instead of $21,503)  for clothing/shoes and $5,000 (instead of $22,287.50)  for personal grooming.

I3e.  Disputed expenses - Holiday

87.  The Applicant claimed a monthly sum of $15,000 (yearly $180,000)  for holiday expenses. She said they used to fly on business class and stay at top hotels. During the lifetime of O, they had vacation and travel around 5 to 8 times a year to places like Korea, Japan, Thailand, Taiwan, China and France (see Part 5.3 of her 1^st and 2^nd Form Es).

88.  At cross examination, the Applicant admitted that while O was alive, they had gone to trips in South East Asia or China, and had only travelled once to Paris to attend a celebration hosted by one of the friends in the fraternity club.  She also admitted that as the Daughter was young, they could not travel frequently nor travel long haul. They had only travelled to South East Asia. She said that she travelled to Tokyo with the Daughter for 7 days in 2023 and spent $40,000 each person. She plans to travel to Australia with the Daughter in the future.

89.  I find the Applicant’s evidence at cross examination more credible and reject her assertion that she had 5 to 8 travels every year during O’s lifetime. Holiday expenses is a discretionary spending. Generously assessed, I allow a monthly sum of $10,000 (instead of $15,000). 

I3f.  Other expenses

90.  I do not find the claims for entertainment/presents expenses of $4,128.05 and medical/dental expenses of $8,642.13 unreasonable in the context of this case.

91.  The Applicant said O would give her gifts or red packet money of about $30,000 on special occasions such as birthday.  These gifts and red packet money are, in my view, discretionary spending but not “maintenance”.

92.  For completeness, the Applicant has referred to a sum of $25,000 for contribution to parents in her 1^st Affidavit. She has rightly not claimed this item.

I3g.  Disputed expenses - Expenses paid or reimbursed by the Companies

93.  After examination of the documents exhibited to the affidavits filed for the Applicant, the Respondent found out that many of the expenses claimed (including but without limitation to utilities expenses, management fee, domestic helper expenses and medical insurance premium)  were paid by L Insurance without reimbursement by the Applicant.

94.  The Respondent submitted that maintenance for these expenses paid by the Companies shall not be allowed.  The Applicant, who was regarded by Mr Yuen and the Companies’ employees as the “proprietress” (老闆娘), maintained a substantial degree of influence over the Companies and their funds. She had the ability and control to effect two increases of her own salary to $38,000 after the death of O. The business of the Companies is profitable. L Insurance is earning about $1.7 million each year even in the adjusted operation model, thus is financially capable to pay the household expenses for the Applicant and the Daughter. 

95.  The Respondent criticised the Applicant for double claiming these expenses without stating in her affidavits that these expenses were paid by the Companies.  

96.  To salvage, the Applicant confirmed under oath at re-examination to the effect that if the court allows her application by making an order of the lump sum payment for her maintenance, these items of expenses would no longer be paid by the Companies.

97.  The Respondent submitted that it is artificial and unrealistic to rely on the Applicant’s statement at re-examination because:

97.1.  The Applicant claimed these expenses without telling the court that L Insurance was the payer.

97.2.  The Applicant is the proprietress of L Insurance. She is likely to be the administratrix of the Estate. The co-administrator is likely to be a person who will work with her. There is no one to ensure that the Applicant will not continue to claim the same expenses from the Companies after the lump sum order.

97.3.  Many of these items benefit the Daughter as well. There is no reason to change O’s practice for the purpose of giving the Applicant a lump sum award.

98.  It must be wrong for the Applicant to claim expenses which were actually paid by another. The Applicant said this was the practice before O’s death. This is not a reason for her to gain by “double claiming”.

99.  I shall also take heed of the evidence that the operations of the Companies have been winding down since O’s death. I was told that L Travel has ceased operation because it is expensive to maintain the licence. It is likely that L Insurance may not survive in the long run to service payment of these household expenses.

100.  The Daughter is a minor. Pursuant to section 25 of the Probate and Administration Ordinance, 2 or more administrators shall be appointed as the personal representatives of the Estate.  If the Applicant seeks to be one of the administratrix, she has the duty not to place herself in conflict with the interest of the Estate. The co-administrator has an independent duty to act in the best interest of the Estate but not the Applicant. The co-administrator, who will have notice of this judgment, may be liable for breach of his duty as a personal representative of Estate if he allows double recovery by the Applicant.

101.  In the circumstances, I am prepared to accept the Applicant’s sworn confirmation at the re-examination, and award these expenses as part of her maintenance on the basis of an undertaking from the Applicant to the court and the Estate to ensure no double recovery.

I3h.  The Applicant’s Financial Resources

102.  The Applicant disclosed in her Form E a net asset of $556,208.28:

Item	Amount
Money in bank	$164,212.60
Shares	$40,640.00
Insurance policies	$107,550.97
Debts owed by the Companies	$2,800,000.00
Valuable personal items[39]	$1,815,000
MPF	$333,644.71
Total asset:	$5,261,048.28
Less: Debts owed to friends, parents and bank	($4,704,840.00)
Net asset:	$556,208.28 =========

103.  She is receiving a monthly salary of $38,000 from the Companies, annual dividend of about $3,200 from her HSBC stock and a monthly interim maintenance of $90,000 since the Interim Maintenance Order. She is residing in Stubbs Road Property with the Daughter. The Applicant used to receive a monthly salary of $18,000 during O’s life time, and she has increased it to $38,000. 

104.  As stated in section I3g above, the Applicant shall not continue to receive maintenance in the form of salary or otherwise from any of the Companies if an order of lump sum maintenance is made.  In the context of her background, it is fair to assume that over the years, the income she can really earn will be limited.

I3i.  Reasonable amount of maintenance before accommodation needs

105.  Having considered all the relevant factors, I find that $75,000 is a reasonable provision for the Applicant’s monthly maintenance.

106.  To test this figure, I cross check with the maintenance received by the Applicant during O’s life time.

107.  The Applicant said[40] O gave her $18,000 as salary from L Insurance, $35,000 cash for her personal use, and $25,000 to handle other household expenses per month.  The household expenses of $25,000 was for the benefit of at least 3 people (not counting domestic helpers). Therefore, the monthly maintenance paid to the Applicant during O’s lifetime was about $61,333[41].

108.  An award of $75,000 as maintenance matches the sum paid during O’s lifetime ($61,333)  with a balance of about $13,600 for the other items of expenses that O had separately settled during his lifetime.

I3j.  Accommodation needs

109.  Maintenance includes the provision for accommodation needs. The cases showed that the housing needs was often provided for by a life interest to reside in a property. Lord Hughes has said in a recent English Supreme Court decision Ilott v Mitson (No.2) that:

“15. … As Brown-Wilkinson J envisaged (obiter)  in In re Dennis (above)  there is no reason why the provision of housing should not be maintenance in some cases; families have for generations provided for the maintenance of relatives, and indeed for others such as former employees, by housing them. But it is necessary to remember that the statutory power is to provide for maintenance, not to confer capital on the claimant. Munby J (as he then was)  rightly made the point clear in In re Myers [2004] EWHC 1944 (Fam); [2005] WTLR 851 at paras 89-90 and 99-101. He ordered, from a very large estate, provision which included housing, but he did so by way not of an outright capital sum but of a life interest in a trust fund together with the power of advancement designed to cater for the possibility of care expenses in advanced old age. If housing is provided by way of maintenance, it is likely more often to be provided by such a life interest rather than by a capital sum.””

(emphasis added)

110.  A life interest provides for the accommodation needs without conferring capital, but this is not the only option. The court is empowered to award a sum or transfer interests in a property to meet this needs.

111.  The Respondent initially proposed to give the Applicant a life interest to reside in Stubbs Road Property. 

112.  The Applicant objected to this proposal.  She raised that a life interest creates undue rigidity which binds not only the Applicant, but also the Daughter. With the imposition of life interest, equity in the property is locked out for the reminder of the Applicant’s life. The Daughter may not be able to sell it should circumstances change. This rigidity may also create conflict or complication in the mother and daughter relationship. To provide security for her continued residence in the de facto Matrimonial Home, she claimed 50% interest of Stubbs Road Property, with 10% being value for the accommodation needs ($6.62 million), and the remaining 40% being in lieu of the equivalent value of the lump sum payment.

113.  The Respondent acknowledged the issue of rigidity and revised his proposal to a transfer of 50% of Stubbs Road Property to the Applicant and the Daughter as joint tenants, but not tenants in common.

114.  In my view, the Applicant’s proposal is a better option for the following reasons:

114.1.  It is beneficial to the Daughter and the Applicant that they continue living together in Stubbs Road Property.

114.2.  The Applicant would have security for her accommodation.

114.3.  The proposed value of $6.62 million to reflect the costs of accommodation is reasonable and not disputed.

114.4.  By transferring 40% interests in Stubbs Road Property in lieu of part of the lump sum payment, the Estate will not be compelled to sell landed properties to settle the lump sum maintenance award due to insufficient cash flow.

114.5.  Holding the property as joint tenants may give an unbefitting windfall to the Applicant in case she lives longer than the Daughter.

114.6.  In the normal course of event, whether a property is held by the co-owners as joint tenants or tenants in common, the co-owners would have practical difficulties to sell or otherwise dispose of the property without consent of the other side. It is unlikely that the Daughter will have lesser protection if the property is held by them as joint tenants.

115.  The Applicant, relying on the following evidence of Mr Yuen[42] and the case M v X[43], further contended that O promised and/or had the intention to give the Applicant an interest in Stubbs Road Property:

115.1.  O used to rely on the assistance of his brother VK and his business partner SSK for daily management of the Companies. Unfortunately, SSK and VK passed away in March and July 2018 respectively.

115.2.  In about July 2018, O fainted during a trip in Shenzhen. He started to consider retirement plan and capital restructuring for the benefit of the Applicant and the Daughter.

115.3.  In August 2018, O asked Mr Yuen to make a proposal for his asset management and capital restructuring. Mr Yuen said O indicated his wish to “concentrate the assets of [L Insurance] and [L Travel] on [WHL]”, and his plan to transfer some shares of WHL to the Daughter and the Applicant while he would remain its major shareholder. O had also indicated his intention to distribute the shares to the Daughter and the Applicant according to the transfer ratio in case he passes away.

115.4.  As Mr Yuen had to attend a wedding ceremony overseas in September 2018, he promised to give O a written proposal after his return.

115.5.  Mr Yuen put forward a written proposal and discussed with O on 3 October 2018. The proposal involves a transfer of assets which may attract tax liability. Mr Yuen asked O to consult tax professionals on the proposal.

115.6.  A few days later, O asked Mr Yuen to assist him in handling the daily management of his companies on a full time basis. Mr Yuen accepted the offer as they were good friends. Mr Yuen was very grateful to O and would assist him if O needed. Mr Yuen asked to commence work not earlier than 1 November 2018 so that he could make arrangements for his own affairs first.

115.7.  Mr Yuen had not commenced the work as planned since O had the accident on 21 October and passed away on 24 October 2018.

115.8.  At the request of the Applicant after O’s death, Mr Yuen was assisting the Applicant in the management of the Companies.

116.  The above evidence of Mr Yuen suggested that O had intended to plan for assets restructuring with a view to passing the same to the Daughter and the Applicant after his death.  This remains to be an initial plan in general terms without details such as how and in what proportion O “intended” to pass them to the Applicant and the Daughter. Mr Yuen’s proposal only covers the restructuring, but not the transfer. There is also no evidence on the views that O had on the proposal.

117.  I am not satisfied that O had made a promise to give his properties to the Applicant. The fact of this case is distinguishable from M v X where an express promise by the deceased to the applicant was found.

I4.  Financial resources and financial needs of the Daughter – section 5(1)(c)

118.  After having regard to the financial resources and financial needs of the Applicant, I move on to consider the situation of the Daughter.

119.  The Daughter is the sole known beneficiary of the Estate.  She was maintained by O prior to his death. The application for a grant of letters of administration of the Estate has not been made. Since O’s demise, the Daughter has been taken care of by the Applicant. She is residing in Stubbs Road Property together with the Applicant. 

120.  The Daughter is studying in a local school.  The Applicant said she intended to transfer the Daughter to an international secondary school which would increase the school expenses by around $25,000 per month.

121.  According to the Applicant, the Daughter has the following monthly expenses:

Item	Amount
School fees	$100.00
Extra Tuition Fees	$18,000.00
School books and stationery	$5,272.93
Medical/Dental	$1,438.75
Extra curricular activities	$5,475.00
Entertainment/presents	$1,813.83
Holiday	$10,000.00
Clothing/shoes	$1,390.62
Insurance premia	$533.08
Lunches and pocket money	$3,000.00
Uniform	$250.00
Others – additional expenses for ice skating local and overseas competition, twice in a year.	$5,000.00
Subtotal:	$52,274.21
50% share of approximate general expenses[44]:	$21,000
Subtotal :	$73,274.21
Estimated expenses if transfer to an international school:	$25,000.00
Total:	$98,274.21

122.  Assuming the Daughter’s monthly needs is round up to $100,000 on the basis that she continues to reside in Stubbs Road Property, and it takes about 12 years to complete her secondary school, undergraduate and master’s degree, the Daughter would need a maintenance of about $14.4 million for the next 12 years.

123.  In view of the size of the Estate and the assessed amount of the Applicant’s maintenance, there should be sufficient funds in the Estate to provide for the Daughter’s financial needs.

I5.  Other matters – section 5(1)(g)

124.  The Respondent drew the court’s attention to the 30 years age gap between the Applicant and O and the 10 years duration of their relationship. The Respondent submitted that these matters have a crucial implication for the purpose of capitalisation because no one can predict whether the Applicant will start another relationship in the future, nor whether there will be a change of relationship between the Applicant and the Daughter when the Daughter attains majority.

125.  Firstly, on the inability to predict the future, since the court is tasked to assess the Applicant’s reasonable maintenance for the future, an application under IPFDO inevitably involves estimation and assumptions. 

126.  Secondly, I do not consider the age gap and the duration of relationship between the Applicant and O require an adjustment of the maintenance award. The evidence showed that the Applicant and O had a stable relationship for about 10 years (which is not a short period). They had a daughter. The Applicant was in good terms with O and the Daughter. The Applicant has made efforts to take care of the Daughter and to handle O’s business for the transition despite the difficulties caused by his death.

J.  Duxbury calculation or other methods of calculation

J1.  Overview

127.  The parties agreed to achieve a result of clean break, but they differed on the method to calculate a capitalised sum of maintenance.

128.  The Applicant advocated the use of Duxbury calculation. The Respondent opposed and pointed out the unfairness that Duxbury calculation may create. The Respondent proposed to use (a)  bespoke calculation based on Duxbury or (b)  Chan/Ogden Tables; or (c)  Multiplier-Multiplicand Method.

J2.  Duxbury calculation

129.  A Duxbury calculation is an iterative calculation used to estimate the monetary amount a person requires to support themselves for the reminder of their life or a fixed time period computed with a number of assumptions and variables. 

130.  Although the courts have from time to time pointed out the weakness and limitation of Duxbury calculation, it has been commonly accepted by family courts in Hong Kong and England for calculating capitalised lump sums.

J2a.  The SJE’s Duxbury Calculation

131.  It is apt to explain the Duxbury calculation method by setting out the methodology adopted in the Duxbury Report:

“2.1 A Duxbury Calculation is a calculation used to estimate the monetary amount a person would require to support themselves for the remainder of their life, commonly referred to as the lump sum. This is done using an iterative mathematical function to estimate the changes in the estimated amounts required for the remainder of the person’s life, and is computed on the basis that:

(a)  The person would invest the lump sum in an investment portfolio to achieve capital growth and income from the investments, which would be used to offset their expenditure requirements;

(b)  The investment portfolio can be readily liquidated into cash to support the person’s expenditure needs;

(c)  The expenditure requirements are inflation adjusted; and

(d)  The sum would be completely exhausted at the end of the person’s life.

2.2 The following parameters must be estimated in order to compute a Duxbury Calculation:

(a)  The remaining life of the relevant person;

(b)  Their expenditure requirements for the remainder of their life;

(c)  The inflation rate; and

(d)  The investment portfolio, and the capital gain and investment income of the portfolio.”

132.  The SJE estimated the 4 parameters as follows:

132.1.  Remaining life of the Applicant - the SJE relied on the Projected Hong Kong Life Tables for Female issued by the Census and Statistics Department of Hong Kong. Based on these tables, the remaining life of the Applicant (a 41 year old female)  is 47.22 (about 47)  years counting from the date of O’s death (“Date of Death”), and 43.39 (about 43)  years counting from the date of notional trial (“Notional Trial Date”).[45]

132.2.  Expenditure requirements - the SJE used various options of expenditure requirements provided to him by the parties.[46]

132.3.  Inflation rate - the SJE assumed that it will be similar to the historical rate for the last 10 years from each of the respective calculation dates. Based on the average Composite Consumer Price Index of Hong Kong, he calculated the following inflation rates:

132.3.1.  Date of Death – 3.03% inflation rate calculated based on the period from November 2008 to October 2018;

132.3.2.  Notional Trial Date – 2.47% inflation rate calculated based on the period from January 2013 to December 2022.[47]

132.4.  Investment portfolio - the SJE noted that the Applicant does not appear to have a preferred investment strategy and there is no established investment portfolio for Duxbury calculations in Hong Kong. He has considered an investment portfolio based on the portfolio established by Mr Justice Bharwaney in the personal injury case Chan Pak Ting v Chan Chi Kuen (No. 2)[48] (often referred to as the ‘Bharwaney portfolio’)  for needs over 10 years.  The investment portfolio allocation[49] used by the SJE are 10% Fixed Deposit, 20% Tracker Fund. 35% 5-Year Government Bonds and 35% 10-Year Government Bonds. The SJE, relying on the historical returns of these investment products, estimated the long term returns of these investment products during the life of the Applicant.  The SJE calculated a capital gain rate of 0.99% and an investment income rate of 1.73% for calculation if counting from the Date of Death; a capital gain rate of 0.57% and an investment income rate of 1.74% for the calculation if counting from the Notional Trial Date.[50]

J2b.  The Respondent’s criticism

133.  The Respondent raised the unfairness that may be induced by the distorting effect of a Duxbury calculation. 

134.  He cited F v F (Duxbury Calculation)[51], a 1996 English case, where Holman J pointed out the “Duxbury Paradox”:

“I cannot stress too strongly that I regard a Duxbury calculation as a starting-point or guide and in no way as determinative of an appropriate capital award in lieu of maintenance. In particular it is well known that the Duxbury approach can have a very distorting effect both in the case of a relatively young wife after a relatively short marriage and in the case of a relatively old wife after a long marriage. In the former case it produces too high a figure in proportion to the length of the marriage. In the latter case it may well produce a rather low figure which fails adequately to reflect a long marriage. It happens that in this case the age of the wife (and hence her assumed life expectancy)  and the length of the marriage are each such that the Duxbury approach does produce a reasonably proportionate figure.

The method of the Duxbury approach is now far too deeply engrained in matrimonial practice for me to need to describe it, and figures have been produced in this case which it is agreed reflect, mathematically, the conventional approach (including making provision for receipt by the wife of the State old-age pension to which she will be entitled when she is aged 60).

There is only one area of dispute, namely as to the real rate of return which should be assumed. The real rate of return is found by adding the assumed income yield and capital growth and deducting the assumed rate of inflation.”

135.  He also cited F v F[52], a 2003 Hong Kong case where Hartmann J (as he then was)  commented on the limited usefulness of the method as follows:

“The Duxbury calculations, as mathematical models, are founded on a great many assumptions as to life expectancy, rates of inflation (or deflation), return on investment, incidence of tax and the like. In respect of a spouse in his or her middle years, such assumptions have to reach out over thirty or forty years. But a study of the past thirty or forty years teaches us that nothing can be predicted with certainty, not in the field of economics. As Ward J commented in B v. B [1990] 1 FLR 20 (at 24), when himself considering the limited usefulness of Duxbury calculations and warning against its unblinkered application : 'the only certainty [as to the future] is that it will not happen as we have predicted'....”

136.  The Respondent argued that the maintenance should not cover the Applicant’s entire actuarial lifespan for the following reasons:

136.1.  O was at 71 years old while the Applicant was 41 years old.  Had O outlived the age of 71, it is most likely that O would only maintain the Applicant up to a certain period but not for her entire lifespan. It is unfair to assume the periodical payment should run till the end of the estimated life expectancy of the Applicant.

136.2.  As the Applicant is in her mid-forties, there is nothing to stop her from an eventual fresh start in another relationship after O’s death.

136.3.  The period of maintenance is disproportionate to the duration of relationship, being four times longer.

136.4.  The Applicant is put in a better financial position than she would have, and that would be unfair.

J3.  Bespoke calculations

137.  The Respondent submitted that bespoke calculation gives a more flexible approach to suit the circumstances of the case. He cited ND v GD[53] where the judge has expressed the view of generating bespoke calculation by using a Capitalise programme (a software developed for the UK market):

“In my view the parties could very easily have used the Capitalise programme to generate bespoke calculations. What matters is the figures which are put into the programme by each party to calculate the outcome contended for. Often during a hearing, as issues crystallise, the judge will ask for specific calculations to be carried out; indeed, I did just that in this case. The underlying assumptions can be adjusted on the Capitalise programme if required.”

138.  The Respondent also referred to the following observations of Thorpe LJ in Wells v Wells[54] after noting how Duxbury is a programme making general assumptions:

“… It is for the judge to determine what assumptions should fairly be made in relation to the individual plaintiff and to instruct the computer to make its calculations accordingly.”

139.  In this case, the Respondent was not asking the court to use the Capitalise programme referred in ND v GD.  He asked the court to adopt the Duxbury formula but apply a fixed period up to the Applicant’s retirement age, instead of for the remaining years of the estimated life expectancy.[55] The Respondent did not take issue on the assumptions of inflation rate and the rate of return in the Duxbury Report, his criticism is on the assumed period of lifespan[56]. 

J4.  Chan/Ogden Tables and Multiplier-Multiplicand Method

140.  The Respondent further submitted that while bespoke calculations can and should generate a result that achieve fairness, the court is at liberty to use other methods, such as Chan/Ogden Tables or the Multiplier-Multiplicand method which had also been used in matrimonial cases.[57]

141.  The Respondent referred to Fournier v Fournier[58], a 1998 decision where the English Court of Appeal acknowledged “the quantification of a periodical payments claim by the Duxbury formula is a reasonably scientific quantification which is generally appropriate in ancillary relief litigation”.  The parties conceded that it would be inappropriate to turn to the Duxbury calculation in view of the ages of the parties. A multiplier was applied to reach a capitalised lump sum maintenance.

142.  In Tattersall v Tattersall[59], the English Court of Appeal held that the use of Ogden Tables in matrimonial cases is not an error of law.  Moylan LJ has held:

“38. We were not referred to the decision of Cobb J in HC v FW (Financial Remedies: Assessment of General and Special Needs) [2017] EWHC 3162 (Fam), [2018] 2 FLR 70. He specifically considered whether he should use the Ogden tables or Duxbury. The wife/appellant in that case had a combination of neurological conditions and cognitive disabilities. Cobb J referred to the differences in the underlying assumptions used in the Ogden and Duxbury tables. The former, the Ogden tables, ‘contemplate virtually no growth on an investment of virtually no risk, whereas Duxbury contemplates an element of risk’ (at para [79]). The judge recognised the ‘quasi-personal injury character of the wife’s claim’ in that case but, nevertheless, calculated the relevant part of his capital award by reference to Duxbury.

…

42. The second aspect of the judge’s calculation was his decision to use the Ogden tables rather than Duxbury. Following Pearce and Vaughan, it is clear that the court should use the latter rather than the former. But, is the use of the former an error of law or an error which means the judge’s award was wrong? Must a judge use Duxbury? In my view, the answer to all these questions is ‘no’. Although I would expect judges typically to use Duxbury, a judge can decide to use a method of calculation other than Duxbury. To do so is not, in my view, an error of law.

43. Further, although we were not provided with any alternative calculations, I doubt whether the amount calculated in this case by reference to Duxbury would be sufficiently different to that calculated by the judge, by reference to Ogden, to warrant interfering with his award. I would point out, in this context, that the judge was using Ogden tables as they were before the more recent changes referred to in HC v FW (Financial Remedies: Assessment of General and Special Needs) [2017] EWHC 3162 (Fam), [2018] 2 FLR 70.”

(emphasis added)

143.  In F v F (the English case), Holman J pointed out a basic difference between damages in tort cases and maintenance in matrimonial cases, which is that damages granted to a person injured by tort is to put him in the same position so far as possible as if the tort had not happened, the same premises does not apply to typical matrimonial cases:

“… the premise in personal injury cases as reflected in the passages from the Ogden Working Party and in the judgment of Collins J which I have quoted above, is that a person who has been injured by tort should be put in the same position so far as possible as if the tort had not happened. He should not be expected to have to assume any risk at all. I do not consider that the same premise applies in the typical matrimonial case where, during the marriage, the finances of the parties may usually be at some risk from the vicissitudes of life.”

(emphasis added)

J5.  The method adopted

144.  The court is not bound to use a specific method for calculating capitalised maintenance. 

145.  There are plenty of authorities approving or expressing preferences to Duxbury calculations in matrimonial cases, for example, Holman J in the English F v F acknowledged that Duxbury approach has “deeply engrained in matrimonial practice”, Moylan LJ expressed in Tattersall v Tattersall that the court should use Duxbury calculation rather than Ogden tables. In Hong Kong, Duxbury calculation was used in claims under IPFDO, for example In re the estate of Liu Wing On (deceased)[60].

146.  I do not rule out the use of methods other than Duxbury in appropriate cases.

147.  Bespoke calculation appears to have the benefit of flexibility to cater for special features in individual cases. An important condition for bespoke calculation is the correct identification of specific parameters and the figures to be adopted in these specific parameters. It is not prudent for the court to just pick a figure without supporting evidence. Often, expert evidence on these areas would assist the court.

148.  The Chan/Ogden Tables emerged to deal with the limitation of Multiplier-Multiplicand method commonly used in personal injuries cases. The basis for awarding damages in tort cases and maintenance in matrimonial cases is different. Expert evidence on the underlying basis and differences of these methods will be of assistance to the court.

149.  In this case, the Respondent suggested the bespoke calculation by using the Duxbury formula but replacing the parameter of life expectancy with a retirement age. The Respondent also invited the court to consider using the Chan/Ogden Tables and Multiplier-Multiplicand method.

150.  To satisfy the court that any of these alternative methods should be used, the Respondent is expected to at least:

150.1.  suggest an appropriate retirement age for use in the “bespoke calculation” and adduce evidence in support;

150.2.  suggest figures and/or multipliers to be used in Chan/Ogden Tables or Multiplier-Multiplicand method with supporting evidence;

150.3.  raise with the SJE the proposed method of “bespoke calculation” and ascertain his view on whether, if so how, will this affects (not only mathematically)  the Duxbury calculation;

150.4.  give the SJE an opportunity to respond to the Respondent’s criticism on Duxbury calculation, for example the distorting effect in the context of this case;

150.5.  give the SJE an opportunity to comment on the other methods, viz. Chan/Ogden Tables and Multiplier-Multiplicand method in the context of this case.

151.  The Respondent has not done any of the above. The court does not have the assistance of expert evidence to assess whether using the methods proposed by him is better than the Duxbury calculation in this case. As such, it is not prudent for me to adopt the proposed alternative methods.

152.  Having regard to the above and the evidence before me, I adopt the Duxbury calculations, based on which, the capitalised lump sum for a monthly maintenance of $75,000 from the Notional Trial Date is $40,092,000.

K.  Disposition

153.  By reasons set out in Section I3g above, the capitalised lump sum maintenance of $40,092,000 is subject to the Applicant’s undertaking in terms set out below to ensure no double recovery as she had confirmed at the sworn testimony during re-examination.

154.  I therefore order that upon the Applicant’s undertaking to the court and the Estate that she shall be responsible for settling by her own funds all the expenses for her maintenance, including all the items allowed herein and she shall not seek or allow the Companies and/or the Estate to pay such expenses or any part thereof without full reimbursement by her promptly:

(1)  The personal representative of the Estate shall transfer from the Estate 50% of the legal and beneficial title and ownership of Stubbs Road Property free of all encumbrances to the Applicant at nil consideration within 60 days from the date of their appointment.

(2)  The personal representative shall pay to the Applicant from the Estate a lump sum of $13,612,000[61] in the following manner:

(a)  Cash in the amount of $7,000,000 from the Estate within 35 days from the date of this Order;

(b)  The remaining sum (after taking account of the interim maintenance paid)  to be settled, at the discretion of the personal representatives acting in the best interest of the Estate, by cash and/or by transfer such number of the 4 listed shares proportionately on the basis of the value agreed in these proceedings within 35 days from the date of their appointment.

(3)  The Interim Maintenance Order be discharged.

155.  There be a costs order nisi that the costs of the Applicant and the Respondent, including all costs reserved, be paid out of the Estate on a common fund basis, with certificate for one counsel. The amount is to be taxed if not agreed.

156.  I thank all counsel for their helpful assistance to the court.