WKC v. KHC

FCMC 6652/2022

[2025] HKFC 20

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 6652 OF 2022

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

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This Hearing

1.  This is the hearing for the ancillary relief claims between the parties. It took place between 16 to 20 October 2023 for 5 days. Both parties are legally represented.

2.  The parties are the only two witnesses at this hearing, both of them gave oral evidence and were cross examined. Counsels returned on 1 March 2024 for further oral closing submissions.

Parties background

3.  At the time of this hearing, Petitioner husband (“H”) is aged 55 and Respondent wife (“W”) is aged 51. H works as Consultant / CFO / Managing Director to or Independent Non-Executive Director (“INED”) / Non-Executive Director (“NED”) of a number of listed companies in China; while W has been a housewife for a long time during the marriage, she only resumed working in 2014 and at the time of this hearing works as a consultant in business management.

4.  H was born in China and is a US citizen, he obtained a degree in accounting and business administration from a US university; he was subsequently sent by his US employer to work in Hong Kong in 1999. W was born in Korea; she obtained a degree in sociology from a US university after which she came to HK. The parties met in August 2003 when they worked together in the same company; they were engaged in March 2005. The parties then relocated to Shanghai shortly after when H received a job offer there. They were married on XX October 2006 in Hong Kong after H finalized his divorce from his previous W. They then moved to Beijing in December 2007.

5.  There are three children from this union, all born in Beijing. Twins BG and IF born in April 2008, and CJ, a son born in August 2009 (together the “Children”), respectively age 15 and 14 at the time of the hearing.

6.  W returned to Hong Kong in 2014 with the Children, the relationship between the parties deteriorated after. H started working in Shenzhen around 2015. W’s date of separation was 3 September 2017, she says they lived separate lives after. According to H, the separation date was 30 September 2020 when he moved out of the then matrimonial home on Old Peak Road. From this time on, W claims that H terminated all forms of communication with the Children and has not paid for their expenses, H does not deny that he terminated support but says he has entrusted all his finances to W.

Relevant Proceeding History

7.  H petitioned for divorce in December 2020 initially based on W’s unreasonable behaviour, which was subsequently changed to the ground of one year separation with consent in July 2022. By Order of 13 December 2021, the parties are granted joint custody of the Children, with care and control to W and reasonable access to the H.

8.  Decree Nisi was granted on 8 March 2023.

9.  In February 2023, H’s elder brother D was joined to the proceedings as Intervenor with regard to the beneficial ownership of a property in Shanghai (the “Shanghai Property”). This intervenor proceeding was brought 12 days before the original trial dates, and has managed to de-rail the trials which resulted in Cost orders made against H. By an Order made by consent dated 28 August 2023 on the preliminary issue regarding the Shanghai Property, parties agreed that D is the sole beneficial owner of the Shanghai Property, and further agreed that for the purpose of these ancillary relief proceedings, a sum of $1,500,000 be added to the H’s assets.

Parties Evidence

10.  Parties have filed extensive evidence, W has filed two Affidavits, while H has filed three. H’s 2^nd Affidavit dated November 2022 is in fact answers to questions raised in W’s specific discovery Summons in August 2022, which was filed beyond the timeline set down by the Court Order.

11.  Parties have filed 3 sets of Form Es, one in February / March 2021, the second set in September 2022, and the third set in September 2023.

12.  W provides two rounds of Answers to questionnaires in February 2022 and November 2022. H provides three rounds of Answers to questionnaires in April 2021, July 2022 and December 2022. It is of note that his second Answers came more than 5 months after the date of the questionnaire, and his third Answers came only after an unless Order was made.

13.  The following table shows the above timeline:

Date	H	W
24.2.2021	Form E
2.3.2021		Form E
17.3.2021		1st Questionnaire
16.4.2021	Answer to 1st Questionnaire
28.12.2021		2nd Questionnaire
29.12.2021	1st Questionnaire
15.2.2022		Answer to 1st Questionnaire (late)
29.7.2022	Answer to 2nd Questionnaire (very late)
25.8.2022		Specific Discovery Summons
8.9.2022		Form E
15.9.2022	Form E
7.10.2022	2nd Questionnaire	3rd Questionnaire
17.11.2022	2nd Aff to deal with Specific Discovery questions (late)
18.11.2022		Answer to 2nd Questionnaire
14.12.2022	Answer to 3rd Questionnaire (late)
6.9.2023	Form E	Form E

H’s case

14.  It is H’s case that during the marriage, he has entrusted W to be in charge of the family assets and she has control over various accounts. He also claims to have transferred his salary and consulting fees to the W’s bank accounts, who would then manage the expenses of the family and for investments.

15.  More specifically, H accuses W of the following conduct which will be dealt with at length below:

a.  Non-disclosure of the whereabouts of assets he claims that she has had or received

b.  Undisclosed bank accounts

c.  Unexplained withdrawals of a number of transactions

d.  Under-reporting her valuable items

e.  W’s cash position

H’s Open Proposal

16.  H asks that the parties are to share their matrimonial assets equally, the quantum of which and the equalisation sum to be calculated upon conclusion of the evidence. However, in H’s closing submission, he then put forward the proposal that the amount of W’s 6 sold handbags to be added back to the pot and matrimonial assets to be split on the basis of 65-35% in his favour, to “reflect W’s non-disclosure the extent of which remains unknown”.

17.  H also put forward his estimation that the Children’s expenses during secondary education should be around $1M per annum. Dividing this among the Children means that each child’s monthly expense on his calculation is $27,778 ($1,000,000 ÷ 12 ÷ 3).

W’s Case

18.  W says she had not received all the funds from H as he alleges. She also says that H manages the finance but often utilized her bank accounts to receive income from his employment, conduct investments and transactions, so as to avoid US tax reporting. She says as she neither read nor write Chinese (which is not disputed by H), she is unable to handle transactions in the bank accounts in China, which only send transaction confirmation to a China registered mobile number, which she does not have since she moved back to Hong Kong in 2014.

19.  She in turn accuses him of the following conduct, which will also be dealt with at length below:

a.  Non-disclosure of bank account statements

b.  Non-disclosure of bank accounts in the PRC

c.  Unexplained withdrawals

d.  Failure to provide information on his PRC tax

e.  Failure to provide information on his US 401K retirement fund

f.  Unsupported claims of his alleged loans and repayments

g.  Improper position H takes on his liabilities

W’s Open Proposal

20.  W assesses the total matrimonial assets as $20,186,487 with no less than $6,749,751 apportioned to H and $13,436,736 apportioned to herself.

21.  She says that on the basis of H’s significant non-disclosure, his income and higher earning capacity, there should be a departure from equality in her favour with 60% to her and 40% to H. This means that H should obtain $8,074,595, and she is to retain $12,111,892.

22.  For the purpose of equalization, W calculates this at $1,324,844, which she will transfer to H, and to be satisfied with her transfer to him of all her valuables (except for the car valued at $170,000), hence $615,700 - $170,000 = $445,700; and the balance of $879,144 in a lump sum.

23.  For the Children, she proposes a 60-40 split on the Children’s reasonable expenses, with H paying the larger amount, until they complete their secondary school education or until they complete their tertiary education and / or university education and / or reach the age of 18 years old whichever is later. She also asks for the Children’s maintenance to be secured against his current salaries or paid by way of a lump sum.

Issues to consider

24.  The parties have filed an updated Joint Statement of Issues in Dispute in September 2023. Other than the need to resolve the aforementioned conducts of the respective parties, they agreed that the following are the additional issues which have been identified:

a.  The amount of Children’s maintenance to be shared between the parties and in what proportion.

b.  What is the H’s actual income and / or earning capacity

c.  What are the parties’ respective reasonable needs

d.  Should the equal division of assets apply or should there be departure therefrom due to H's higher earning capacity, and the parties’ alleged lack full and frank disclosure on the part of their spouses

The Applicable Law and Legal Principles

25.  Section 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO”), Cap 192 sets out the matters that the court must have regard to when making orders for ancillary relief:

“(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.

26.  The Court of Final Appeal in its landmark judgment of LKW v DD [2010] 13 HKCFAR 537 has laid down a 5-step approach in assessing the division of the parties’ matrimonial assets:

1.  The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing (§§71 to 73);

2.  The assessment of the parties’ financial needs. If the total resources are not enough to meet the parties’ needs, the s.7 exercise should stop at this step and there is no room to apply any sharing principle (§§74 to 79);

3.  If surplus assets would remain after the parties’ needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division as part of that principle. This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division (§§80 to 82);

4.  In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of s.7 and the implicit objective of a fair distribution of the assets. Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations (§§ 83 to 130); and

5.  The weight to be given to each of the factors is a matter of discretion for the court (§131).

27.  These are to be considered against 4 guiding principles, namely:

(i)  objective of fairness,

(ii)  rejection of sex or role discrimination,

(iii)  yardstick of equal division, and

(iv)   rejection of minute retrospective investigation.

28.  The principles are trite and will be applied to the issues in this case hereinbelow.

Conduct

29.  There have been a number of allegations from both sides as to their respective litigation conducts. I will start with this topic as it will impact on the rest of the discussion below.

30.  The following are the positions of the respective parties in terms of the matrimonial pot. Numbers hereinbelow are rounded up / down from the decimal points):

31.  On the H’s side:

	H ($)	W says ($)
ASSETS
Bank accounts	1,256,250	Not less than 1,256,250
Shares: QM Investment Limited	50,000	Not less than 50,000
Money owed: rental deposit	24,686	24,686
Valuable	590,000	590,000
Others	1,500,000	1,500,000
Addback: Amb share options 60,000		840,000
Addback: Dissipated withdrawals from H’s HSBC account		2,354,000
Addback: Unaccounted withdrawal for purported loan repayment		778,760
Net	3,420,936	7,393,696
LIABILITIES
Various	-1,919,158	-643,945
TOTAL	1,501,778	Not less than 6,749,751

32.  And on the W’s side:

	W ($)	H says ($)
ASSETS
Bank accounts	10,350,032	Not less than 10,350,032
Addback: Unexplained withdrawal amount		421,685 and US$555,483
Shares/investments	2,854,590	Not less than 2,854,590
Add back: Investment income		For 20M from 2008, at 4%     per year estimated to be 9.6M
Valuable	615,700	1,496,200 From expert report
Pension/MPF	234,329	234,329
	14,054,651	Not less than 14,935,151
LIABILITIES
Various	-617,915	-737,915
TOTAL	13,436,736	Not less than 14,197,236

33.  As can be seen from the above numbers, the matrimonial pot could be $1,501,778 + $13,436,736 = $14,938,514 and based on the parties’ position, could be up to “not less than” $6,749,751 + $14,197,236 = $20,946,987.

34.  At this point, and for context, I would make the observation that on this size of this matrimonial pot, this has been a 5-day trial plus one more day for oral closing submission, involving 16 bundles of 3-inch level arch files, and parties having incurred more than $4M in aggregate for their legal costs up to the time of trial.

H’s allegations

35.  W’s Non-Disclosure

(1)  The following are allegations made by the H:

a.  Sale Proceeds US2,723,469 ($21,107,000 equivalent) generated from H’s stock option between December 2007 and April 2008, of which US2,000,000 ($15,600,000 equivalent) was transferred by W to her HSBC Hong Kong account in around April 2008. H says W never explains the whereabouts of this money.

b.  Sale Proceeds RMB9,160,000 ($11,248,000) from a Beijing property owned by H in October 2012, all of which was purportedly deposited to W’s CMB account.

c.  H claims that the two amounts above could have generated a total of $3.24M to $9.7M in investment return.

d.  H’s consultancy fees of $2,469,000 earned between January and October 2019, he says W received this as the director of a Hong Kong company which was the contracting party to receive these fees, all of which was purportedly deposited into W’s HSBC account.

e.  Proceeds of RMB4,500,000 representing redemption of the Anbang Life Insurance policy.

f.  H’s earning between 2008 and September 2020 which was purportedly controlled by W. H says in his second Form E that the total sum of money could be up to $37,000,000 (or $2,846,000 per annum).

g.  H says W never produced any financial record in relation to the cash and investment she declares to be in the sum of $16.8M.

h.  H says W brought $3M into the marriage from 2005-6.

i.  H then proposes that (a) $15.6M + (b) $11.248M + (d) $2,469,000 + (h) $3M = $32.317M, which represents $14.5M more than what W declared.

(2)  W says with regard to the sale proceeds of the BJ property, it was acknowledged by H that there was an outstanding mortgage at the time of sale, and half of the sale proceeds went to the purchase of the Anbang insurance policy, which is item e above. She also points to messages exchange between H and her that it was H who initiated the redemption of the Anbang Insurance and put the proceeds into her CMB bank account.

(3)  I do not find H’s reference to historical sums very useful, $3M in 2005-6, US2M/$15.6M in 2008, $11.248M in 2012. To submit that these sums should be added back to the matrimonial pot is not fair without also putting forward the expat package he mentions, the expenses of the family since the marriage, including their lives in Shanghai and then Beijing, and then when the family was split into two households since 2014.

36.  W’s Undisclosed bank accounts

H says that W was unhelpful in providing answers to questions regarding the following accounts, and evasive in providing particulars and statements. W says she has the following accounts (CMBx8693 and HSBC Beijing x2050) but claims she does not have the numbers as it was opened and controlled by H.

(1)  W’s CMB x8963 account

W declares a CMB account number in her first Form E, but not in the subsequent ones. Two CMB account numbers appear in evidence at trial, W confirms the two numbers are the same, in that the subsequent one is the same account being upgraded to their private bank. While W has repeatedly said that she had not used the ATM cards since 2014, evidence was referred to at trial which shows that she has taken money out from the account with 2 ATM cards in around June 2017. But she was not able to explain her withdrawals from the account which contradicts her evidence that she has not used the ATM cards. At trial, she says H put RMB into her CMB account into these ATM cards. Referring to messages exhibited by her to her Narrative Affidavit, it shows an exchange between H and W in April 2017 wherein H asked her for the bank account number for her CMB bank card, and her response was “You have that, I don’t have the card with me but you already have the phone banking for transfers”. This shows before the parties’ separation, and at that point of time, she is in possession of the ATM card but H manages transfers via phone banking.

(2)  W’s HSBC (Beijing branch) x2050 account

On this account, W has said she couldn’t access the account due to wrong password, and she said in her Form E that she would provide more information when the China-HK border re-opened. In August 2022, H produced a bank slip showing that RMB4.8M was deposited into this account from CMBx8693 in January 2014, he says W has failed to explain the whereabouts of this amount. H also says that in her second Affidavit, she changed her “excuse” of not going to China by saying she does not have a valid visa to go to China, she also says she could not access online banking as she does not have the account number nor a pin code which could only be obtained with a Chinese mobile number which she does not have. At trial, W gives other reasons for not accessing the statements, including expired Korean passport, no China visas, and that she needs three months advance notice to her employers to go to China.

(3)  I agree with H on this issue, W has put forward no reasons for her delay in producing these bank statements. As to her requirement for three months’ notice to her employer to go to China, W could have gone up to China on a weekend or make multiple weekend trips after China re-opens and visas are available. It is not accepted that she did not produce the relevant bank statements in a timely fashion when the accounts are in her name, regardless of her case on who has control over these accounts.

(4)  As for the RMB4.8M which H says W has failed to account for the whereabouts. I do not see this point making much headway at trial. However, my observation is that this amount was allegedly deposited by W to her account in January 2014, and she moved back to Hong Kong with the Children the following month. Clearly, I do not have the financial information of the respective parties at that point of time, but the parties were still on good terms then; and it is not impossible that W would be needing some capital with her for the family uprooting and moving to Hong Kong in February 2014.

(5)  W’s HSBC ONE account x7833

W says this account is dormant, and that she hardly used this account, until she designated this account to receive her salary. Statements show that this commenced in December 2021 when $72,500 came in as salary. This account was not declared in her Form E in February 2021, but H says that as W has withdrawn around $7,000 from this account in May 2021, she could not have forgotten about this account. She was asked by H’s solicitors about this account in August 2022, and H says that is the reason W reports this account in the subsequent second and third Form E. H did refer to evidence that she had $335,379 in this account in 2009; and then in around February 2018, there was a balance of $335,135. At trial, she maintains that since September / October 2018, she had not used this account for about 2 years. H also says that as W is aware that there needs to be a minimum of $300,000 in that account to avoid a charge, she could not have forgotten the account. W explains that HSBC looks at total relationship balance from all the accounts with them, she says as her premier accounts alone have reached the total relationship balance, she did not notice the money in this HSBC ONE account.

(6)  It is true that at the time of the first Form E, there was only about $30,000 in this account, although I am not totally convinced that she has forgotten this account. What she says about the account not being used for two years from 2018 was indeed borne out by the bank statements she subsequently produced, which also show her monthly income coming in from December 2021 onwards. Hence the rest of her case regarding this account (except for the initial non-reporting of it) is supported by the bank statements.

37.  W’s Unexplained withdrawal

(1)  H says that there had been several withdrawals from 5 different bank accounts: HSBC ($200,000 and US$326,000), Citibank (US$42,971), Hang Seng Bank (US$232,512), China Construction Bank ($190,000) and Bank of China ($231,684). Totalling around $621,684 and US$601,483, spread over a period from October 2020 to August 2023.

(2)  In the W’s closing submission, her counsel says that the transfers / withdrawals were dealt with in W’s evidence in chief, and all the amounts were explained with cross reference to exhibits in the bundles. Counsel argues that the amounts have stayed in the matrimonial pot and movements disclosed to H, no challenge were made during cross examination, and H’s closing submission and reply do not address these sums again.

38.  Valuable Items

(1)  The parties’ valuables were subject of valuation by a court appointed expert valuer, SS Appraisal (CHK) Limited. According to the report, W’s items come to $1,496,200. W contests this, claiming that the items are only worth $615,700. She says the difference is due to the very low market value of at least 10 of the items, so much so that she did not put down any estimated value; she also says a number of the items are old and used and some are “knockoffs”. She says that the jewellery is unbranded and only made from semi-precious stones. W’s opening submission also sought to challenge the valuation report on several grounds, inter alia, that there will be no willing buyers for those items and hence the valuation basis is faulty.

(2)  Furthermore, she claims to have sold 6 items from her handbag collection for a total value of $320,000, but H says all W produces was the date and amount of 6 bank transactions without particulars in her 2^nd Answer, and no documentary proof was provided to substantiate the deposit of $320,000 into her bank account. H therefore says that the total value of the expert report should be included on W’s side of the balance sheet, and a further addback of $320,000 for the alleged sold items.

(3)  On these valuable items, there is no justification in this case why a report from a jointly appointed expert of the valuable items should be ignored. W’s counsel quotes the legal principles from the Hong Kong Civil Procedure 2023 Vol 1 §38/41/7 to say that the court must take its own view of the expert evidence in the light of other evidence, and the assessment of the weight to be attached to the evidence of the single joint expert must depend on the circumstances of each case. Be that as it may, the SJE’s expert report was dated 13 February 2023. From then until the trial in October 2023, there was a lot of time for W to make proper application should she wish to challenge her own expert’s report. W never requested for the expert to be called and be cross examined on his report. I therefore do not accept the W’s position and the full value of the W’s valuable items is to be taken to be $1,496,20.

(4)  I agree with H that the W has failed to disclose properly her alleged sale of the 6 handbags. The evidence she produces has no bearing on the allegations that she has sold the said items, or that those proceeds were indeed the mounts she received.

W’s Allegations

39.  H’s Non-Disclosure

(1)  Bank Account BOA

H produces one statement from this account with his first Form E, told the W the account is dormant in his Answer to her first Questionnaire and did not produce statements then; thereafter he produces a “combined statement” from Aug 2021 to July 2022 with no detailed transactions, and claims he could not obtain statements because of Covid. H only provides bank statements from Feb 2018 to Feb 2020 after W brought a specific discovery application, thereafter, some more statements came after his third Answer while he kept maintaining that he could not get statements due to lack of movement in the account. Statements for some of the period is still missing by time of trial, it remains a fact that statements from H came in a piecemeal fashion, and not unlike pulling teeth. H made no further submission on this delinquency in his closing submission.

(2)  Bank Account ICBC China

H produces 12 months of statements and refuses to produce statements going back to 2018 as requested and questioned the W’s basis of making this request. After the specific discovery proceedings, H says that for both ICBC accounts, there are no statements prior to 2020 as both are replacement accounts and he could not obtain prior statements under the original accounts. W says this is on H’s mere say so only. H never produces any statements prior to March 2020, and W says this is highly suspicious given parties separated in 2017 and his income since then came from various companies in China, and there is no evidence on the H’s financials in this account during that period.

H relies on a 开換卡費 (card replacement fee) of RMB5 in March 2020 to say that his cards have been replaced. And also says that as he was not contemplating divorce in March 2020, he did not obtain proof that he could not obtain banking statements from his old cards / account.

I do not find either of this explanation acceptable, H has not even shown that he has attempted to approach the bank to obtain some corroboration to his inability to obtain statements for replaced accounts. His counsel submits that the RMB5 proves that there was a replacement card, but that is not sufficient to support his allegation that he could not obtain prior statements of an account(s) which was in his name. I also agree with W that the statements that he fails to produce are for a crucial period in this case.

(3)  Other PRC Accounts

W says that it is highly unlikely for H to work in China since 2005 and yet have no credit cards nor bank accounts other than the two ICBC accounts, and even with those, he has failed to produce any bank statements prior to March 2020. W cited a number of bank accounts in China. First H says that the accounts were either expired or obsolete, and there is an account which belongs to a HF company of which H says he is neither a legal person nor a shareholder. W points out from evidence that at least 3 accounts were used in recent years and produces records of online messages which shows their communication regarding transfers in 2016. H maintains that he has provided “all relevant active bank account information”, but no statement nor information was forthcoming from the accounts cited by W in her questionnaire. The following from his second Answer is one of H’s explanations:

“Due to tight controls by the financial institutions, the Petitioner face difficult times in using that above e-payments platform. E.g. his US citizenship prevents setup and use by these online payment platforms, lost ATM cards, old passport number doesn’t match new bank records, etc. As such, the Petitioner has always been using cash mostly and the debit cards has been disclosed in his Form E”.

(4)  Also in relation to China bank accounts, it also turns out in evidence that H has spoken to asking other people (family members and his driver) to open bank accounts in their names with which he used to move money out of China, as W could then withdraw money in HK with ATMs. There was in fact a message

exchange in evidence where H asked W whether she has received the ATM cards of accounts of his sister and “I”. While it is not within the scope of this decision to look at the legitimacy of the H’s method of removing money from China, it is relevant to me that H did use these “strategies” of moving money around using nominees.

40.  H’s Unexplained Transactions

(1)  W says that H has made withdrawals of $406,000, $398,000 and $650,000 respectively from his HSBC bank account; W says this have not been explained nor unsupported by documents and must be added back to H’s side of the balance sheet.

(2)  W also says that $900,000 was withdrawn from the HSBC bank account around the time of his first Petition. His explanation for some of the sums includes using this to pay tax of $343,000, $150,000 donation, $150,000 to mother as support for previous 5 years, and US$20,000 to sister for taking care of his mother the previous 5 years. W’s counsels submits that a study of the bank statements at that time shows that his explanation was unsatisfactorily, this includes tax payment which is not supported in terms of the amount and against a redacted tax demand notice; there was no evidence that the two amount to his mother and sister were actually transferred to them, and the receipt for his alleged donation says it was made by credit card. W also says this amount should be added back to the H’s side based on this.

(3)  I do not understand why H decides to make payments to his mother and sister for the previous 5 years at that particular point of time; nor do I find these transactions properly justified, explained or substantiated.

41.  PRC Tax

(1)  H was asked to produce documentation of his tax filing and demand note from tax authorities. H says he has not filed for PRC tax since 2014 because he has no full-time job in the PRC since then. This is the year when W moved back to HK with the Children. W says this is unbelievable, H has failed to produce any documents to prove that he does not have to pay PRC tax, and no tax related documents have been produced.

(2)  H was crossed examined on this topic. He says there is a minimum threshold for tax filing in China of RMB200,000 and he does not reach the threshold. For the company ZZ Investment, his evidence is that he provides his service via his brother’s company which signed a contract with ZZ Investment. His payment of RMB30,000 per month came in the form of reimbursement for hotel and travel expenses from his brother’s company and only a minimal amount is reported as consultation fee, he says this is an efficient and often used tax planning method.

(3)  With regard to another company Y, H says he has set up a HK limited company QM of which W is a shareholder and director, and he works as a consultant; Y signed contract with QM, and his consultation fee was received by QM and paid into a company account operated by the W. W resigned from the company when divorce proceedings commenced, and H says she has received $2.49M which she has failed to account for. H says he has not been in any full-time employment since 2014 and hence there is no obligation to pay PRC tax. H has been acting as INED or NED of various public listed company in the PRC and says his income are reported in his US tax return.

(4)  H has not provided any basis for not needing to pay PRC tax if he works part-time, albeit the income was sourced in China. I have not been taken to anywhere in the evidence that shows that there is a threshold of RMB200,000 below which he does not have to report his tax. It is also unbelievable that H has never paid PRC tax over the years because he does not make more than RMB200,000, on his own evidence, he averages an annual income of around $2,846,000 per annum.

(5)  It appears to me that H has been engaged with various tax planning schemes which legitimacy I am not able to comment on. What is apparent though, is that he is a resourceful and intelligent person who is able to navigate the system to limit his exposure to his potential liabilities. Not unlike the ancillary relief proceedings he is now facing.

42.  US 401K Account

(1)  H has worked in the US for 10 years before coming to work in HK, he does not deny that he has a 401K account but only says that the amount was minimal as he made only USD90,000 per annum then. W also says he goes to the US every year, although H says in Court that he has only been once since these proceedings. W says that whatever in his account should have grown over 20 years from the time he left the US.

(2)  H’s counsel quoted from H’s oral evidence, reminding me that H says that his 401K account is “immaterial”. He further submits that as the retirement fund “should not be a big sum of money”, there is “no incentive to hide it”.

(3)  H has not shown that he has even attempted to obtain any record from his retirement account service provider for the information requested of him. If there is no incentive to hide, why not just produce it then?

(4)  It is never up to a party to decide whether any evidence is immaterial or irrelevant, and it is never acceptable when a party picks and chooses what evidence he or she decides to put before the Court. This is a deliberate defiance to the duty of full and frank disclosure and is material conduct that shall be taken into regard in this decision.

43.  H’s alleged loans and alleged repayment

(1)  H declares nil loans in his first Form E, $200,000 (being RMB loans borrowed from friends/relatives/others) in his second Form E, and $50,000 (being loan borrowed from friends/relatives/others) in his third Form E. When asked about his various withdrawals from his bank account, H says in his third Answer that the withdrawals are for repayment of loans on 5 occasions which amount to $383,000 and US$51,000 between May 2021 to July 2022.

(2)  Practically over the same period, in explaining some money coming into his ICBC account, there were 12 transactions from October 2021 to June 2022 which he says are loans from various people. This tallies to RMB445,000 from Mr JR, RMB67,000 from his sister and $148,643 from Mr NS. In total, this comes to RMB 660,643 (equivalent to $726,707).

(3)  W points out that there were no documentation nor corroboration that these are loans, and for any loan repayment.

(4)  H explains at trial that he did not keep track of record of loans, and that loans given to him were paid in RMB but repaid in HK$ which he took from his HK$ account and repaid when he returned to China. He also explains the inability to reconcile his alleged loan amounts as he says that some loans were wired to him and some given in cash; and when he took money out in HK, it was for his personal use as well as for repayment of loans. He also says that there were no loan liabilities in his first Form E because he has forgotten to put them in.

(5)  In short, H confirms there is nothing to corroborate his loans and the alleged repayments. I find that all of the H’s explanation of these loan arrangements highly unconvincing. At the relevant time, H was working in China and no longer sending money to W nor supporting the Children, I do not find it credible that he needs to have all these ad hoc borrowing from his relatives and friends. He did not elaborate what the loans are for. His alleged income since this divorce commenced is in my assessment more than enough to support his own living. I am also of the view that he has used these alleged loan arrangements to disguise transactions from his bank accounts, and that he has failed to divulge the true nature of those transaction in his bank account.

H’s allegation that he has given all his income to W

44.  H’s case is that all his income from his employment and consulting work until September 2020 have been put into the W’s bank accounts and there is no hidden income.

45.  W says H did not produce any information as to the amount, the relevant employment, the timing and amount as to when these transfers are made.

46.  This very basis of the H’s case starts on an incredible note: As H says he transfers to W all his income (his second Form E refers), as if he did not require any money for himself. There was mention of expat packages the family enjoyed but there was no information as to from whom and when and of what nature and in what amount. This is particularly the case when W came to Hong Kong in 2014 and H stays in China by himself, it is not credible to say that he did not retain any money for his own use.

From 2018 to 2020

47.  W says that there were other income made by H between 2018 to 2020 which was unaccounted for, this is the period from W’s separation date leading up to H’s first Petition:

(1)  F Corporation Ltd

H says he held the title of director and managing partner of this company but was not involved in the business operation. He says he was paid US$20,000 (and then at trial says it should be US$30,000) paid to the W to her HSBC account in early 2020. No such amount showed up in the W’s bank record but W thought the number was US$200,000 as stated in the H’s affirmation.

(2)  ZZ Investment

H says he was the financial consultant to ZZ Investment for RMB30,000 for ten months. A review of W’s HSBC account and H’s HSBC account for the period from March to December 2018 do not show payment of RMB30,000 or $32,000-33,000. Record of H’s ICBC is not available prior to March 2020.

I add here that this is the arrangement which was explained by H where his payment came in the form of reimbursement and only a minimal amount was labelled “consultancy fees”; this will probably explain why no such amount in this figure appears in the respective bank accounts. But there is no disclosure as to how much “consultancy fees” he received.

(3)  BJ E-Town S T Co Ltd

H’s role as INED expired in December 2020 but he did not get off the record until March 2021. There was no information on how much he was paid or to which account payments were made.

(4)  TWR

H was INED of TWR between October 2011 to May 2020 earning at the end of that period $48,134. W says H’s HSBC account shows that he has been receiving a monthly amount of $48,000 from TWR at least since March 2018 to June 2020. From July 2020 to Feb 2021, he has been receiving $178,000 into this account, W says this is likely to be income from TWR as Chairman / executive Director of $2.1M per annum.

(5)  NAH

W says that there is an employment contract with NAH, showing he commenced employment from June 2016 and he worked there until June 2022. His HSBC account shows a receipt of USD17,875 which description was “2020 Q2 Director’s fees” which means he has an annual fee of US$71,500. This translates to $554,000 per annum and $46,177 per month. W says that H received this income, not her.

(6)  Amb

The contract in evidence between H and Amb dated 3 July 2019 shows that he earns $350,000 per annum received on a quarterly basis of $87,500. This shows up in his HSBC account in June 2020 of $87,500 as “salary”. W says this shows that H did not transfer all his income to W as he alleges.

Since 2020

48.  And from 2020, this is after the H has initiated divorce, H no longer supports the W and the Children, but the following is W’s case of the H’s disclosure:

(1)  BJ GM

From his three Form Es and his 3^rd Answer, H appears to be working for this company at least from March 2019, and only ceased in November 2022. H should be receiving RMB100,000 per year / 9,665 per month, but H’s account does not show this.

(2)  Unnamed non-public local Chinese firm

H says he was receiving $9,000 per month from this firm, but did not indicate for which period, W estimates this to be around 2022 but no record could be found for this income.

(3)  B Family Interactive Ltd

According to H’s 3^rd Form E, H makes $39,000 per month as INED, but no information was provided as to the period of employment. Based on date of Form E, W assumes that this started around 2022/2023. No such payments appear in the H’s bank account.

49.  Based on the above analysis, W says the estimated amount of unaccounted for income from 2018 onwards not paid to W nor found in evidence before the court is in the region of $2.553M. W also says that this shows clearly that H has failed to prove that he has paid all his income to the W, and that he has failed in his duty of full and frank disclosure. Looking at this topic, W raises this in her opening submission, so H would have known that she takes issue with these amounts, this was not dealt with in H’s closing, and H in his Reply merely says the amounts were not put to him in cross examination.

Parties’ respective liabilities

H’s Liabilities

50.  H claims liabilities items totalling $1,919,158. W says that H has incorrectly put in a few items:

a.  H puts in the costs orders he is to pay W under an Order made by me on 9 January 2023 and 14 February 2023, he claims $697,922. W says he has exaggerated the claim as she only asked for $377,412.

b.  H puts in costs orders he is to pay to the Intervenor pursuant to an Order made by HHJ CK Chan on 9 August 2023 when the preliminary issue on the Shanghai property was dealt with. H put down the amount of $300,000. Both parties were to pay 50% of the costs of the Intervenor.

W says that H was incorrect in placing these costs orders under his liabilities, which not only depreciate the matrimonial pot but affect her share in these cost order as well. As in the Intervenor’s case, leads to her paying 75% of the costs instead of 50%. I agree with W that those liabilities should not be taken into account under the matrimonial pot, as H is to pay for these by himself out of the funds he has after the division of the assets.

c.  H has also claimed an amount which he says is potential tax liability associated with consulting fees he earned. This is $547,800. Under cross examination, H admits that this potential liability has not materialised. Nor has he ever produced any documents in support of this alleged liability and amount.

51.  W asks that these amounts be removed from the H’s liabilities column, and the liability column should only read $643,945. I agree.

W’s liabilities

52.  There is a difference of $120,000 which is added on by H and labelled as “Estimated Costs payable per Order dated 9 August 2023”, W did not declare this as her liability. For the purpose of calculation of W’s net assets, the figure of $617,915 is accepted.

Parties’ Credibility

53.  I do not find either of the parties credible.

54.  H gave evidence in a flippant manner. What can especially be recalled from his oral evidence is that he has taken upon himself to decide what is relevant and material evidence to these proceedings. The way in which he produces his evidence before this court is extremely delinquent, these have been late, piecemeal, incomplete, and includes putting in exhibit of only half a page of HSBC statements, and tax documentation which was redacted. The explanations he gave to various questions from the W is less than credible. On the whole, his disclosure is totally unacceptable and only serves to give this Court the basis to infer that he is hiding his financial resources.

55.  Nor do I wholly believe in W. I accept that she has been managing some of the family finances prior to the breakdown in relationship, but largely from the perspective of homemaker and carer of the Children. I am not convinced that H has given her all his income, nor that she was in total control of the family investments, as he alleges; but I am not of the view that all that is left is what she declares to be in her possession. I agree with H’s comment that her oral evidence is evasive and argumentative and often launch into long rambling speeches which was irrelevant to the questions before her. I have also found that her explanation for failure to produce China bank accounts statements and her alleged handbag sale proceeds to be lacking.

56.  However, I find H to be far less credible by a long stretch compared to W, but it is clear to me that both sides are hiding their financial resources and continue their finger pointing exercise from the affidavits to the oral evidence in Court. I am of the view that both parties have more financial resources than they have let on.

Discussion on Conduct

57.  In addition to my observations above on the various issues, the following are my further considerations. For the H:

a.  H is a US citizen, he lives in and draw income from China and is subject to various financial and fiscal restraints from these two connections. He has deployed methods of getting money out of China including the use of various nominees. The Court does not have a clear picture of his income and transactions which are all very material prior to 2020, especially from his alleged only ICBC China account. I am of the view that his failure to deliver bank accounts statements is deliberate and intent on hiding his finances.

b.  I repeat my above point here that H has admitted to using methods (like his brother’s company) to reduce his tax exposure, he calls it saving tax for the family. Legitimacy aside, it sheds lights on his nature in how he deals with his financial liabilities.

c.  I find that H has the ability to operate W’s accounts in China through electronic means. I accept W’s explanations that such transaction confirmations would be sent to a China based mobile number, which W says she does not have and which contents she is unable to comprehend as she is Korean and does not read Chinese. W was not challenged on these points.

d.  I am unable to believe that H has no access to digital finances having been working in China for almost 20 years. H says he does not have credit card or any forms of electronic payment, and that he only uses cash, and hence have no other accounts or statements to produce other than the inadequate disclosures he has made. I do not find his explanation to be the least bit convincing.

e.  I do not find it credible that with H’s employment history and income track record, that he only has a net of $1,256,250 liquid assets to his name at time of trial; and yet he has chosen to spent around $2,234,400 (Form H from trial refers) for these proceedings.

58.  As for the W:

a.  It is one thing to say the H manages and controls her China bank accounts, it hardly justifies her failure to obtain bank statements as these accounts are in her name.

b.  Based on W’s Form H, she has also spent $1.84M up to and including the 5 days trial.

c.  As mentioned above, I could see stock options proceeds, property sale proceeds, and insurance redemption money going into W’s account other that the H’s usual income from work. There is indeed not much transparency on the deployment and destination of these monies. Admittedly, these span over the years and there has been family expenses, in particular when H fails to support the family at all; but in the absence of more detail information from W and taking into account her disclosure and demeanour when giving her oral evidence, I shall draw the inference that she has undeclared financial resources.

59.  It can be seen from the above the extent of non-disclosure by both the parties. Both have withheld a substantial amount of information. In these circumstances, I turn to the legal principles which govern the approach to such conduct as summarised by HHJ I Wong in the case of TCP v KLS [2020] HKFC 67:

47. The duty of full and frank disclosure is an absolute and continuing one. The principles are succinctly set out in Rayden and Jackson on Relationship Breakdown, Finances and Children:

[13.101] The importance of the duty of both parties to make disclosure of their assets which is full, frank and clear cannot be over emphasised. Unless a court is provided with correct, complete and up-to-date information on the matters to which, under the MCA 1973, s 25, it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that section. The duty on each party is absolute, and it must be discharged regardless of whether the application for a financial remedy is adjudicated upon by the court after full evidence has been heard, or settled after an exchange of financial information between the parties leading to a consent order. The duty is also a continuing one: a party must not mislead the other party and the court into assuming that his financial situation is unchanged if in fact it has changed. Any material changes in the financial situation of either party occurring between the filing of their Form Es and the final dispatch of the claims by the court must be brought to the notice of the other party and the court at the earliest opportunity. A party who seeks to negotiate and secure a settlement without informing the other party about a material change in his or her financial circumstances runs the risk that, if a settlement is reached and a consent order is made, the consent order will be set aside by the failure to provide full, frank and timely disclosure. Shortcomings in disclosure will be visited by orders for costs against the offending party, often on the indemnity basis. Furthermore, deviation from the standard of disclosure required may be visited by the court drawing adverse inferences against the party in default.

…

50.  Both Mr Chan and Mr Lee refer to NG v SG (Non-Disclosure) [2012] 1 FLR 1211. In that case, after having reviewed the authorities, Mostyn J summarised the relevant principles:

[16] Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then:

(i) The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.

(ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got.

(iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.

(iv) In making its judgment as to quantification the Court will first look to` direct evidence such as documentation and observations made by the other party.

(v) The Court will then look to the scale of business activities and at lifestyle.

(vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise.

(vii) The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the Claimant is seeking should not be used as the sole metric of quantification.

(viii) The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant.

51. There has been some development recently, in particular in respect of the principles set out in para [16] (iii) and (vii) of NG v SG (Non-Disclosure), in the English Court of Appeal case of Moher v Moher[2019] EWCA Civ 1482; [2020] 2 WLR 89; [2020] 1 FLR. 225; [2019] 3 FCR. 244. The court held that in the event of non-disclosure of a party's financial resources in a financial remedies case, the court was not obliged to give a precise figure or bracket for the undisclosed resources before making an order. Instead, it should: (i) seek to determine the extent of the undisclosed resources; (ii) draw such adverse inferences as were justified; and (iii) where appropriate, infer that resources were sufficient that the proposed award represented a fair outcome. Moylan LJ said,

86. My broad conclusions as to the approach the court should take when dealing with non-disclosure are as follows. They are broad because, as I have sought to emphasise, non-disclosure can take a variety of forms and arise in a variety of circumstances from the very general to the very specific. My remarks are focused on the former, namely a broad failure to comply with the disclosure obligations in respect of a party's financial resources, rather than the latter.

87. (i) It is clearly appropriate that generally, as required by section 25, the court should seek to determine the extent of the financial resources of the non-disclosing party.

88. (ii) When undertaking this task the court will, obviously, be entitled to draw such adverse inferences as are justified having regard to the nature and extent of the party's failure to engage properly with the proceedings. However, this does not require the court to engage in a disproportionate enquiry. Nor, as Lord Sumption JSC said, should the court “engage in pure speculation”. As Otton LJ said in Baker v Baker [1995] 2 FLR 829, inferences must be “properly drawn and reasonable”. This was reiterated by Baroness Hale of Richmond JSC in Prest v Prest [2013] 2 AC 415 , para 85:

“the court is entitled to draw such inferences as can properly be drawn from all the available material, including what has been disclosed, judicial experience of what is likely to be being concealed and the inherent probabilities, in deciding what the facts are.”

89. (iii) This does not mean, contrary to Mr Molyneux's submission, that the court is required to make a specific determination either as to a figure or a bracket. There will be cases where this exercise will not be possible because the manner in which a party has failed to comply with their disclosure obligations means that the court is “unable to quantify the extent of his undisclosed resources”, to repeat what Wilson LJ said in Behzadi v Behzadi [2009] 2 FLR 649 .

90. (iv) How does this fit within the application of the principles of need and sharing? The answer, in my view, is that, when faced with uncertainty consequent on one party's non-disclosure and when considering what Baroness Hale and Lord Sumption JJSC called “the inherent probabilities” the court is entitled, in appropriate cases, to infer that the resources are sufficient or are such that the proposed award does represent a fair outcome. This is, effectively, what Munby J did in both Al-Khatib v Masry [2002] 1 FLR 1053 and Ben Hashem v Al Shayif [2009] 1 FLR 115 and, in my view, it is a legitimate approach. In that respect I would not endorse what Mostyn J said in NG v SG [2012] 1 FLR 1211, para 16(vii).

91. This approach is both necessary and justified to limit the scope for, what Butler-Sloss LJ accepted could otherwise be, a “cheat's charter”. As Thorpe J said in F v F [1994] 1 FLR 359 , although not the court's intention, better an order which may be unfair to the non-disclosing party than an order which is unfair to the other party. This does not mean, as Mostyn J said in NG v SG, at para 7, that the court should jump to conclusions as to the extent of the undisclosed wealth simply because of some non-disclosure. It reflects, as he said at para 16(viii), that the court must be astute to ensure that the non-discloser does not obtain a better outcome than that which would have been ordered if they had complied with their disclosure obligations.

60.  The relevant principles to be drawn from the above cases for the matter before me are as follows:

a.  The Court needs not engage in a disproportionate investigation on the extent of undisclosed financial resources

b.  The Court is entitled to draw the necessary adverse inference in the process having regard to the nature and extent of the non-disclosure

c.  There are occasions when the court is “unable to quantify the extent of his undisclosed resources”

d.  In these circumstances, the court is entitled, in appropriate cases, to infer that the resources are sufficient or are such that the proposed award does represent a fair outcome

Does the principle of “add back” apply?

61.  Both counsels have cited the case of ARAV v VP [2011]3 HKLR 759, and have submitted that the value of various assets/issues should be added back into the pot due to “financial misconduct” in dissipation of family assets which bears the characteristics of extravagance, recklessness and wanton behaviour.

62.  I turn to my recent decision of KKSR v CLH also known as ZL [2024] HKFLR 24 and make reference to paragraphs 159-162 therein. My summary of the add-back principles relevant to this case are as follows:

a.  The proof of wanton and reckless dissipation of assets has a very high bar

b.  Dissipation takes the form of overspending or frittering of family assets, and even with this conduct, add-back is not always the resolution

c.  It would require a situation in which family assets have been spent with an element of deliberate intention although this latter legal point is yet to be settled.

d.  Non-accountability of the whereabouts of family assets does not equate wanton dissipation of family funds.

63.  Returning to this case, I am not of the view that the principle of add-back is applicable here. All the allegations turn on the issue of non-disclosure, nor was I addressed on dissipation of family assets. Furthermore, I am not at all convinced that the non-disclosed assets are no longer in the respective parties’ possession.

Discussion

The Matrimonial Pot

64.  As part of Step I of the guidance under the case of LKW v DD, I am supposed to assess the extent of the matrimonial assets.

65.  Despite all the analysis above, and a further disproportionate exercise in analysing more numbers of which evidence I do not have, it is apparent that I am unable to determine the size of the matrimonial pot:

a.  H has submitted that I should consider assets which date back to the time when W brought money into the marriage in 2005. He also asks to consider all the amounts that he says he has made from 2008 to 2020 and proposes an unrealistic and unsubstantiated rate of growth to these gross amount without furnishing me with evidence as to how this money was spent during the marriage even for the time when the parties were still on good terms.

b.  H has failed to fully support his employment status with documentary evidence which should show at what time he was employed by which company for how long and for how much.

c.  H failure to produce statements to his China bank accounts which must have been receiving income from his employment during the years when the relationship was declining indicates a clear intention to hide his income and resources for a crucial time of investigation into the marital assets.

d.  Further non-disclosure can be gleaned from H’s failure to explain withdrawals from his bank accounts or reconcile his alleged loans and repayment, his deliberate selective attitude in producing information as to what he thinks is material and relevant, and his various strategies to reduce exposure to liabilities or exchange regulations as discussed above.

e.  While accepting that H did not transfer all his income to W, I am still unable to gauge how much was received by W and spent by her; making my assessment of the credibility of the amount of her assets at hand a difficult task.

66.  On the guidance of the abovementioned caselaw, I am entitled to infer that there are sufficient resources, and to ensure that the decision to be made represents a fair outcome.

Section 7 MPPO

67.  As I am not able to address even Step 1 from the guidelines from LKW v DD, I shall turn to the law and the factors that I have to take into consideration pursuant to Section 7 of the MPPO (Cap 192). The relevant factors, in my view, are below.

H’s income and earning capacity

68.  It is not in dispute that H was the breadwinner of the family. From the record of his employment, he has a successful career and a lucrative stream of income, although the information before me is quite fragmented.

69.  W says H made US$31,250 per month ($242,188 @ 7.75) in 2019 and over $2.1M in 2020 (which is $175,000 per month). H complains that W has not produced any supporting evidence for her allegations.

From H’s first Form E dated 2 March 2021:

70.  H says he was the non-executive Chairman of TWR earning $100,000 per month, prior to this between October 2011 to May 2020, he was the INED of TWR earning an income of $48,134. In the previous 24 months, he was also the NED of TWR, INED of NAH earning $44,076, INED of Amb earning $29,167, W calculates his total income per month $100,000 + $44,076 + $29,167 = $173,243.

71.  His declared expenses then were $146,602, of which $42,400 was general expenses and $104,202 was personal expenses.

72.  W says that putting aside whether H declared expenses are supported, he should still have surplus of $26,641.

From H’s second Form E of September 2022:

73.  H was then still employed by TWR. As a consultant and INED, he was then paid $55,000 as consulting fee. Furthermore, he held various directorship the previous 24 months, including paying position. INED with Amb earning $29,167, and INED with BJ GM earning $9,665. He says he was voted off as NED for TWR in June 2021 and voted off as INED for NAH in June 2022. His total income on these numbers is therefore $55,000 + $29,167 + $9,665 = $93,832. I also have in mind during the relevant time he was still INED of NAH, he had a further $44,076.

74.  His declared expense in this Form E was $89,500, $50,000 of general expenses and $39,500 of personal expenses.

75.  Again, H should have excess funds based on his alleged expenses. But W says that the funds in H various bank accounts show a decrease by $100,000.

In his third and most updated Form E dated September 2023:

76.  H left the income column at 3.1 blank. He declares TWR as his employer but says he now only makes $20,000 (just one year ago in his last Form E his pay from TWR was $55,000).

77.  In this Form E, he says his engagement with BJ GM ceased in November 2022.

78.  He is also employed by Amb at $31,500 per month and B Family Interactive Limited at $39,000 per month. (US$90,000 per annum).

79.  In this Form E, his total income is $39,000 + $31,500 + $20,000 = $90,500. His declared expenses are $87,000, again giving H a small surplus.

80.  W says that looking at his bank accounts, H’s funds has gone down by a further $500,000.

W’s Income and earning capacity

81.  According to W’s third Form E, her current income is $90,680 ($77,680 and $13,000 bonus), together with a dividend income of $13,213, this tallies $103,893.

82.  At the time of her first Form E, W earned $49,963. She then changed to her current job since October 2021 when she declared in her second Form E that she earned $72,500. Her income was only recently changed to the above amount. H says this suggests that she can be making more in the coming years.

Discussion on parties’ income and earning capacity

83.  The W’s salary is declared, supported, and accepted. Her income has increased by a small percentage in her latest Form E, but the rest are made up of a discretionary bonus (her employment contract refers). The H seems to think her income has increased from $72,500 to $90,680 within a short time and hence she can be making more in the coming years, this is misconceived. I accept the W’s declaration in her latest Form E to be the range of her earning capacity for the purpose of this decision.

84.  On the other hand, I am not able have a clear picture of what H has been earning in the past few years when the parties’ relationship broke down, this is because he had overlapping engagements as NED or INED or consultant with various companies of various durations at different points of time. I fail to comprehend why H, in his duty for full and frank disclosure, is unable to clearly state the period he works for whom and at what income, so as to assist the court to work out his average monthly income.

85.  W has reminded this Court the numerous attempts H has made to avoid providing details of his employment and income, she says there were limited letters of employment, or information on directors’ fees; and in his answers to questionnaire, he told W to find this information from the annual reports of the companies he was working for. This latter comment is typical of the attitude H takes in making disclosure.

86.  I notice in particular that H has been working for TWR since 2011, he was making the highest income of $100,000 from TWR when he commenced his divorce proceedings, since then and over the course of 2½ years, it dropped to $50,000 and then to $20,000. I find this dramatic and coincidental decline of his income from a company he knew for a long time rather suspicious.

87.  H is an intelligent businessman, and has been in the China market, rubbing shoulders with various public listed companies, and acted for a number of them in various capacities. It is also in evidence that as a CFO to one company, he has taken that company into a successful IPO. Since 2014, he says he works part-time, this takes the form of various senior positions to various companies, which has brought in handsome income to the family.

88.  I also remind myself that from H’s own case, he says his earning between 2008 and September 2020 which was purportedly controlled by W, is in the sum of $37,000,000. Based on this, his average income prior to his first initiating divorce in December 2020 was $2,846,153 per annum and $237,180 per month. H also says his consultancy fee from January to October 2019 from one company alone was $2,469,000, which means in 2019, he was at least making $246,900 per month. I am of the view that H has an earning capacity of these figures ($237,180 – $246,900 per month), that by the nature of the work he does and the connection he has in China, he has orchestrated a downward trend of his income as part of his litigation tactics.

Needs of the Parties and the Children

For the H

89.  The following is extracted from the H’s third Form E:

General Expenses

Items	H’s Estimate ($)
Rent	35,000
Utilities	2,000
Food	6,000
Household expenses	3,000
Car expenses	3,000
Domestic helper (part time)	1,000
Subtotal:	$50,000

Personal Expenses

Items	H’s Estimate ($)
Meals out of home	13,000
Transport	3,000
Clothing / Shoes	2,000
Personal grooming	500
Entertainment / presents	500
Holiday	1,000
Medical / Dental	2,000
Tax	10,000
Contribution to parents	5,000
Subtotal:	37,000
TOTAL:	87,000

For the W

90.  According to W’s third Form E, the following are the needs of the W and the Children:

General Expenses

Items	W’s estimate ($)
Rent	48,000
Utilities	2,600
Food	16,000
Household expenses	1,600
Car expenses	2,000
Insurance premia	514
Domestic helper	6,000
Subtotal: Share between 4 people	76,714   19,178

W’s Personal Expenses

Items	W’s Estimate
Meals out of Home	8,000
Transport	3,000
Clothing/shoes	15,000
Personal Grooming	3,000
Entertainment/presents	3,000
Holiday	4,000
Tax	3,000
Insurance premia	1,100
Contribution to parents	5,000
Subtotal:	45,100

Children’s Expenses

Items	W’s Estimate ($)
School Fees	63,500
Extra tuition fees	6,000
School books/stationery	3,000
Transport to school (school bus)	3,000
Medical/Dental	3,000
Extracurricular activities	6,000
Entertainment/presents	3,000
Holidays	9,000
Clothing/Shoes	3,000
Insurance Premia	1,000
School lunch and pocket money	6,000
Uniform	500
Subtotal Each Child	107,000     35,667
TOTAL:	228,814

91.  W continues to submit that her total expenses is therefore $64,278.50, being $19,178.50 (share of general expenses) and $45,100 (her personal expenses).

92.  As for the Children, the per child expense is $35,667 (inclusive of school fees), adding their share of general expenses $19,178.50, this will come up to $54,845.50; which could be rounded up to $55,000 per child. The total monthly expense for the Children is $165,000.

Discussion for the H

93.  W attacks H’s numbers as excessive. Looking at the general expenses, she says the rental, utilities and food expenses are excessive for a one-person household. I agree. It is not clear where H is residing at this moment and he appears to be quite nomadic, his three Form Es report he lives in a hotel in HK, then Shanghai, then Chengdu. Using W’s general expenses (net of rental) as a guideline and considering a more reasonable rental expense for one person, and unnecessary excessive spending on food and household expenses, I would estimate H’s general expense to be $35,000.

94.  His personal expenses are also excessive, in particular the meals out of home and transport since he already has a car. I agree with W that he should prioritize payment for the Children over his parents, or he needs to economize for himself to keep both expenses on-going. On a broad-brush basis, I assess his personal expenses to be not more than $25,000.

95.  This makes H’s expense, without payment for the Children, to be not more than $60,000.

96.  On the analysis above, and my finding that H has the financial resources and a much higher earning capacity than he let on, I am of the view that H can well afford his own expenses as well as the amount that he has to pay for the Children under this Judgment.

Discussion for the W

97.  I find the W’s assessment for the general expenses to be reasonable. The only observation is for the accommodation as to whether a $48,000 rental unit is the family’s usual standard of living. I have taken into consideration her various residence in Hong Kong (see paragraph 107 below). At the end of the day, this is a matter of affordability after the divorce proceedings has been finalized, and must take into regard the need for stability for the Children, the ease of transport to school and their other activities. In the round, I do not find this to be extremely excessive.

98.  I think the W’s personal expenses are on the high side, and some discretionary spending, like her meals out of home, her spending on clothing and shoes, personal grooming and transport can all be pared down. Again, this will be a matter of affordability in the long run. It is my assessment that she is able to afford her own expenses and share of general expenses out of her own income, together with her contribution to the Children’s expenses.

Discussion for the Children

99.  W reminds the Court that H has said in his first Affidavit that he will be fully responsible for the Children’s education and living expenses for their tertiary education, whether in Hong Kong or elsewhere. While this no longer appears in his open proposal, this is not an unreasonable position given H’s higher earning capacity.

100.  In the H’s open proposal, his assessment of the Children’s needs comes to $1,000,000 per annum, and $83,333 per month for the three of them. Netting their total school fess of $63,500 per month, which has not been challenged by H; this leaves $19,833 to cover the rest of the Children’s expenses, equating $6,611 per child per month. This calculation on the H’s apart is wholly unrealistic.

101.  W’s ask, as mentioned above, is for H is to pay 60% of the Children expenses. I accept W’s assessment of the Children’s needs. They are approaching the age for university; some of their ECAs may fall away, but the school fees and tuition will increase with time, in particular if they are going overseas. $55,000 per month per child is not an unreasonable estimate.

102.  Taking the age of 23 as a reasonable time for the Children to finish their first degree. The calculation of the lump sum needed on a straight-line basis is as follows. The twins have 6 years to go, that is $55,000 x 2 children x 12 months x 6 years = $7,920,000. The youngest has 7 years to go, that is $55,000 x 12 months x 7 years = $4,620,000. On a broad-brush basis, the Children will need at least $12,540,000 if paid as a lump sum.

103.  I assess that the H’s and W’s share of the Children’s expenses to be 70/30 split, with H paying the larger portion. This is based on the H’s higher earning capacity. On this basis, H is looking at $8,778,000 if a lump sum payment is to be ordered. And if on a monthly basis, H has to pay $165,000 x 70% = $115,500 per month.

104.  Checking this against the affordability of the parents, I assess H’s expenses to be $60,000, and $115,500 for contribution to the Children, referencing his pre-divorce earning capacity, he has more than enough to pay for himself and the Children.

105.  On the W’s part, her personal and share of general expenses come up to around $64,280, adding $49,500 tallies $113,780. This cuts quite close to the W’s monthly income as her bonus may fluctuate. However, she does have assets in various banks of $10.36M, and investment worth $2,854,589. The difference has to be made up from some economizing on her part, or from diving into her capital.

Standard of Living of the Parties

106.  W says that while in China, they lived in an upscale area with luxurious compounds, there were nannies, domestic helper and driver. H adds that they live a luxurious expat lifestyle in China and Hong Kong.

107.  When W returned to Hong Kong in 2014, they rent accommodation of around 2,000 square feet with a rental of $80,000 to $120,000. From the evidence, they have resided at Parkview, Marinella, and Red Hill Peninsula. In around June 2020, the family was renting accommodation on Old Peak Road (measured around 2,000 square feet which rental was $97,000) and after that they moved to Chung Hom Kok (a 1,600 square feet apartment which rental was $65,000).

108.  The Children have always been enrolled in private international schools. The family went on vacation and stayed at 5-star hotels and exclusive resorts at least twice a year.

109.  W says she received presents from H of branded jewelleries and handbags purchased with their centurion credit card.

Duration of the Marriage and Contribution of the Parties to the Marriage

110.  The parties were married in October 2006, by W’s separation date according to the agreed chronology, they separated in September 2017, this is 11 years. According to H, they separated in September 2020, making this a 14-year marriage.

111.  H was the initially the sole, and then main breadwinner since 2014, until he ceased all support to W and Children from September 2020.

112.  Three children were raised, with W as the primary carer; who has also given up her own career in the process, until she returned to work in 2014 after moving back to Hong Kong.

H’s health condition

113.  H also alleges that he has “early stage of vision illness” which run the risk of “permanent eyesight loss” and affecting his ability to work; on this he produces a one pager out-patient medical assessment from a hospital in Chengdu dated 28 September 2022, which reports his glaucoma condition, and directs him to seek medical help should condition worsens. He also claims to have a medical problem brought about a surgery by a urologist in 2006, and also suffers from high blood pressure. His counsel submits that these will affecting his future earning capacity. Looking at H’s affidavit, he only says that this might affect him in terms of medical bills and higher medical insurance premiums.

114.  I do not accept that H’s alleged medical problems are deterrent to his ability to work or his earning capacity. I have not been taken to any evidence on his medical condition except for the one I found mentioned above. There is no evidence before me that his alleged conditions are untreatable, or that it affects his ability to work.

Conclusion

115.  Based on my findings that both parties have failed in their duty of full and frank disclosure in these proceedings, and that they both have more financial resources than what has been disclosed herein, and taking into consideration that both parties are asking for a clean break based on their respective open proposals; I am of the view that for both parties to retain their own assets is the fairest way to deal with their respective claims; both parties are to bear their own liabilities.

116.  I have also taken the view that both parties have the income / earning capacity to take care of their own expenses and share of the Children’s expenses.

117.  The Children expenses are to be shared with H bearing 70% of their expenses, and W to bear 30% thereof.

118.  I recall that W has asked for lump sum or secured payment for the Children. I do acknowledge the W’s concerns on Hs compliance with the Children payment or in a timely fashion. I am not going to make a lump sum Order; and any kind of security or enforcement W wishes to seek on legal advice will have to be made on a separate occasion and with proper application. For this reason, I will make an Order for liberty to apply for implementation of the Order to be made.

Costs

119.  On the basis of my findings and despite I have given an apportioned split of Children’s maintenance closer to the W’s proposal, I make no order as to Costs of these ancillary relief proceedings.

Order

120.  The Order to be made are as follows:

a.  The parties’ respective ancillary relief claims against each other are dismissed.

b.  H shall pay to W as maintenance for each of the Children $38,500 per month, this payment to commence from 1 January 2025 and thereafter on the first of each month until each child reaches age 18 or completes full time education, whichever is later. With the January 2025 payment to be made together with the February 2025 payment.

c.  There be no Order as to costs, including all costs reserved. This to be a Costs Order nisi to be made absolute 14 days hereof.

d.  Liberty to apply as to the implementation of this Order.