WCY v. CTL

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 6428 OF 2008

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BETWEEN

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(Ancillary Relief and Section 17 Applications)

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JUDGMENT

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1.  There are 2 applications before me, both by the Petitioner Wife, one for general ancillary relief for herself and the child of the family, a son now aged 12, upon the dissolution of her 16 years marriage with the Respondent Husband (“Ancillary Relief Application”), and the other for an order to set aside a disposition by him of his registered half-share in the former matrimonial home to his father, the Intervener herein, shortly before their divorce proceedings with what she believes to be his intention to defeat her claims, by virtue of section 17 of Matrimonial Proceedings and Property Ordinance, Cap. 192 (“Section 17 Application”).

2.  The Husband denies to have any intention to defeat the Wife’s financial claims, as he insists that he never has any beneficial interest in the former matrimonial home, a 750 sq. ft. 2-bedroom flat at Yat Hei House, Tung Hei Court, 38 Yiu Hing Road, Shaukiwan, Hong Kong (“Tung Hei Court Property”) purchased by his father in 1996 under the Home Ownership Scheme from the Housing Authority in exchange for his own public housing unit, which the Husband had allowed himself to be registered in the title as a joint owner merely to assist his father in obtaining a bank mortgage for the purchase, but he has never made any financial contribution towards its purchase or any of the subsequent mortgage payments, and that it was only when he realised the imminent divorce with the Wife and possible financial claims from her that he decided to return the share in the property to his father to avoid it being implicated by the proceedings.    

3.  It is not in dispute that the Tung Hei Court Property has a market value of about HK$1.7 million, which means that if the Husband is indeed found to have a half interest therein, it will be worth HK$850,000, but after taking into account of the outstanding mortgage on the property as well as the substantial premium that would have to be paid to the Housing Authority in the event that the property has to be sold to realise such share of the Husband, the Wife accepts that whatever lump sum she hopes to obtain as a result would not be significant, and that it would probably be useful only as some form of security for the child’s future education needs.

4.  It is also accepted that there are no other matrimonial assets of any substance between the parties that would require the court’s determination other than their MPF which is of course not realizable until they reach 65, and the only remaining major issue between them in respect of the Ancillary Relief Application is over the extent of the Husband’s earnings and his ability to pay maintenance by way of periodical payment for the Wife and their 12 year old son who is under her care.

5.  For this claim the Wife seeks periodical sums of HK$16,000 per month for the child and HK$4,000 per month for herself as she has her own job as a company clerk with income albeit limited, making it a total claim of HK$20,000 per month, while the Husband’s case is that his current income as an insurance agent has recently been affected by the 2008 Global Financial Crisis, and given the fact that it is based on his monthly commission and hence irregular but without any fixed basic salary, and more seriously because of his many debts and liabilities owed to various financial institutions which need to be repaid or otherwise risking being made bankrupt and thereby losing his job, he claims that he can only afford to pay HK$7,000 or so per month for the child for the time being.

6.  His proposal is of course not acceptable to the Wife as she believes that he is actually earning, or capable of earning, a lot more than he has admitted in the region of at least HK$40,000 to $50,000 per month and probably more based on his past tax returns and other records, in addition to other possible income sources from his various dealings in the stock and property markets which she believes that he has failed to disclose fully or frankly in these proceedings, and has instead deliberately created numerous liabilities in the form of bank and credit cards loans so as to mislead the court of his financial situation.   

7.  Be that as it may, it is clear from the above that this is far from being a big money case, and that in fact the quantum of either of the Wife’s claims can certainly not be said to be substantial, yet somehow the case had dragged on far too long with far too many interlocutory applications and hearings in between, with more than 40 affirmations filed by all relevant parties in the entire proceedings and a trial lasting some 10 days in evidence, resulting in clearly disproportionally amount of time and costs, as typified by those representing the Wife who saw fit to run up her closing submission to some 145 pages, which just about sums up what in my view has gone wrong with this litigation, of which I will no doubt have more to say later in this judgment.                  

Background

8.  The Husband is now aged 48 and has worked as an insurance agent for more than 20 years. He is currently a branch manager at Prudential Assurance Co. Ltd. (“Prudential”) and lives with his parents in the said Tung Hei Court Property, while the Wife is a 42 year old company clerk currently living temporarily free-free in a friend’s apartment in Tseung Kwan O with the son since moving out of the former matrimonial home in 2008.

9.  The parties had first lived together for 1 ½ years in their own property, a 3-bedroom flat at Ravana Garden, Shatin (“Ravana Garden Property”) before registering their marriage on 13^th December 1992. Both had worked throughout their relationship and marriage, although it is accepted that it was the Husband who paid for the down payment of the property purchased for HK$1,520,000 with the assistance of a bank mortgage. They subsequently sold the property in September 1992 for HK$2,520,000 and then moved to a 2-bedroom rented apartment at Sceneway Garden in Lam Tin.

10.  In 1994 the Husband purchased another property at Belleve Garden in Kwan Tong and a car parking space (“Belleve Garden Property”) for HK$3,100,000 with the profit from the said previous sale and the assistance of a bank mortgage. The parties later moved into this property after the expiration of their lease of the Sceneway Garden apartment.  

11.  In February 1996 the said Tung Hei Court Property was as noted above purchased in the joint names of the Husband and his father the Intervener, then aged 63, as joint tenants under the Home Ownership Scheme for HK$1,288,100 by means of a mortgage loan of HK$1,223,695 (95% of the purchase price) from Hang Seng Finance Ltd., of which both were named as the mortgagors and borrowers, and a loan account was also created in their joint names for payment of the monthly instalment of about HK$11,000 at that time.  As noted above the Wife’s case is that the Husband had contributed his half share in the property as to the down payment, the subsequent monthly mortgage instalments as well as its decoration expenses. 

12.  Upon completion of the decoration the Husband’s parents moved into the said property but the parties remained residing at their Belleve Garden Property until January 1997 when the Husband sold it for HK$3,800,000 again for a profit. Thereafter the parties moved into another rented apartment.

13.  In October 1998 the Wife gave birth to the son, and a domestic helper was employed to look after the child while the parties were at work. It was only in 1999 that they moved to the said Tung Hei Court Property to reside with the Husband’s parents where they would occupy the remaining bedroom with their son, while their helper would sleep in the living room, thus turning the said property into their former matrimonial home.            

14.  In about July 2005 the Wife discovered that the Husband was having an affair with a woman who was a resident in Shenzhen, China which led to the breakdown of their relationship and eventually to their separation when the Husband moved out of their bedroom beginning from 2006. Initially the Wife sought marriage counselling to try to save the marriage, but when that was not successful, the parties agreed to try to work out their divorce through mediation, but it was not fruitful either.

15.  In April 2007 the Husband left American International Assurance Co. Lt. (“AIA”) where he had worked for more than 5 years to join Dah Sing Insurance Services Ltd. (“Dah Sing”) as a unit manager apparently with a team of his former subordinates.  

16.  Shortly thereafter, and unbeknown to the Wife, he obtained consent from the Housing Authority to transfer his registered half-share in the Tung Hei Court Property to the Intervener, and on 2^nd October 2007 he executed such transfer to his father who on the same date also created a new mortgage to Hang Seng Bank for HK$583,000 on his own in place of their original joint mortgage. As noted above, it is not disputed that the Husband’s action was caused by his concern over possible claims by the Wife against the said property in the event of their divorce which he admitted as inevitable.  

17.  Further changes were to follow when in June 2008 the Wife was made redundant of her job at a trading company where she was then earning HK$15,000 per month. Shortly thereafter on 3^rd June 2008 she filed for divorce in these proceedings on legal aid against the Husband on the ground of their separation for at least 2 years since January 2006 in separate households albeit under the same roof. In her petition she also sought custody of the child and general ancillary relief. It was only then when she discovered through her solicitors the said transfer of the Tung Hei Court Property by the Husband that triggered off the Section 17 Application.

18.  Several weeks later she moved out of the Tung Hei Court Property with the child to a 400 sq. ft. 2-bedroom rented apartment in the same neighbourhood of Shaukiwan. This prompted the Husband to instruct his own solicitors to come to court on 29^th August 2008 to seek an urgent order for the interim custody care and control of the child and for his immediate return. The application was naturally opposed by the Wife and the Social Welfare Department was therefore directed to submit an investigation report on the matter.  

19.  Further applications from the parties would soon come fast and furious, starting with the Wife’s for interim maintenance for herself and the child in view of her unemployment situation and alleged lack of financial support from the Husband. Upon hearing arguments from their solicitors at a short hearing on 14^th October 2008, I took a broad brush approach primarily on the basis of the Wife’s urgent needs and the Husband’s average income in the past as disclosed in his then Form E, and awarded the Wife a monthly sum of HK$20,000 to commence forthwith pending further discovery of the parties’ means or the final outcome of the divorce proceedings.

20.  This caused the Husband to promptly discharge his lawyers and applied in person on 4^th November 2008 for leave to appeal against that order on the ground that he was earning much less from his new job at Dah Sing than when he was at AIA and hence he wanted to set aside the said interim maintenance order, but at the hearing on 27^th November 2008 he was granted an adjournment for him to consider applying instead for variation of the said maintenance.

21.  Meanwhile the Wife issued a judgment summons on 2^nd December 2008 against the Husband for his failure to pay the said interim maintenance in full, as apparently he was then paying only HK$10,000 or less instead of the full amount under the order. On the same day the court also pronounced the decree nisi of divorce. There soon followed numerous applications on behalf of the Wife for further discovery against the Husband’s financial means.  

22.  Without sufficient maintenance from the Husband and having exhausted her own savings including the redundancy payment received from her last employment, the Wife moved out of her apartment in Shaukiwan with the son into a friend’s flat in Tseung Kwan O in March 2009 where they were said to be residing rent free for the time being. She initially worked on a number of temporary jobs earning less than HK$5,000 per month on average until June 2010 when she found a full-time job at a monthly salary of HK$10,000 later increased to HK$12,000 in October of the same year, while the Husband left Dah Sing in about mid-2009 to later join Prudential Assurance Co. Ltd. (“Prudential”) as a branch manager.

23.  The Wife’s judgment summons had subsequently been restored for hearing on several occasions, but each time had to be adjourned for the Husband to make further disclosure in particularly as to his alleged debts and loans repayments. Eventually it was decided that to save time and costs the parties should proceed forthwith to set down both the s. 17 and ancillary relief applications for trial while the judgment summons be adjourned pending the outcome of those applications.

24.  It was also agreed by the parties that the s. 17 application which involved the Intervener should be heard first, followed immediately by the ancillary relief application in what turned out to be a 10 days trial. As noted above the Wife was represented by Ms Ng on legal aid, while both the Husband and the Intervener were acting in person.    

Section 17 Application

25.  Given that both the Husband and Intervener are unrepresented, it would in my view be of assistance to them that the relevant parts of that section be set out as follows :

“(1)   Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as “financial provision”) are brought by a person (hereafter in this section referred to as “the applicant”) against any other person (hereafter in this section referred to as “the other party”), the court may, on an application by the applicant –

(a)   if it is satisfied that the other party is, with the intention of defeating the claim for financial provision, about to make any disposition or to transfer out of the jurisdiction or otherwise deal with any property, make such order as it thinks fit for restraining the other party from so doing or otherwise for protecting the claim;

(b)   if it is satisfied that the other party has, with the intention  aforesaid, made a disposition to which this paragraph applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payment or the disposal of any property);

(c)   …

(2)   Paragraphs (b) and (c) of subsection (1) apply respectively to any disposition made by the other party (whether before or after the commencement of the proceedings for financial provision), not being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such intention as aforesaid on the part of the other party.

(3)   Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application or to a disposition or other dealing with property which is about to take place and the court is satisfied –

(a)   in a case falling within subsection (1)(a) or (b), that the disposition or other dealing would (apart from this section) have the consequence, or

(b)   in a case falling within subsection (1)(c), that the disposition has had the consequence, of defeating the applicant’s claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property.

26.  It is clear from the above that the Husband’s transfer of his interests in the Tung Hei Court property to his father took place less than one year of the Wife’s divorce proceedings, hence well within the period under subsection (3), and that on his own evidence it was not made for valuable consideration, the burden is therefore on him to rebut the presumption under that subsection that it was made with the intention to defeat the claims for financial provision.

27.  It is equally indisputable that the Husband’s decision on the transfer was driven by his concern over the Wife’s claim against the said property in the event of their divorce, and so was the Intervener, as it is accepted that it was his wife who urged the Husband to effect the transfer, hence at the heart of the issue is whether or not the Husband indeed has a half beneficial interest in the said property.

28.  Ultimately, since he was registered as one of the owners at the time of the purchase of the said property, and in the absence of any written declaration of trust, even without the presumption under subsection (3), the burden still lies squarely with the Husband to show that he has no beneficial interest in the property. Essentially it all boils down to whether or not he did make any financial or monetary contribution towards the purchase of the property and its mortgage payments.

The Wife’s Case

29.  Before considering such evidence, it would be relevant to first refer to the Wife’s case over the circumstances in which the property was purchased as set out in her 9^th Affirmation where she said as follows (B : 120) :

“6. In or about 1996, the Respondent told me that he was prepared to purchase the Former Matrimonial Home with his father…under the Home Ownership Scheme. It was because his father was unable to afford buying it and at his advanced age of around 62 at that time it would also be difficult for him to obtain a mortgage loan. I also further understand at the time that the Respondent’s 2 other siblings were not interested in buying the Former Matrimonial Home jointly with his father and that they were both married. His elder brother was and/or is a civil servant and obtained housing allowance from the Government. His younger sister and brother-in-law had their own property. When considering the purchase price of the Former Matrimonial Home being below the prevailing market price under the Home Ownership Scheme and with my understanding at the material time that at the end of the day the entire property would be left to us, I had no objection to the Respondent’s proposed purchase. In fact, I normally accepted and followed the Respondent’s decisions in these types of matters. When we were living with his parents, I was present when his father told the Respondent that he wished to let us have his share of the Former Matrimonial Home at the end of the day. The Respondent’s parents also told me the same directly on a separate occasion.

7. On or about 16^th February 1996, the Former Matrimonial Home was purchased from The Hong Kong Housing Authority (“the Housing Authority”) by the Respondent and his father as joint-tenants at the purchase price of HK$1,288,100.00 subject to a Legal Charge Memorial No. UB6553659 created by them on the same date in favour of Hang Seng Finance Limited to secure a fixed mortgage loan of HK$1,223,695.00 (“Original Legal Charge”) to cover 95% of the purchase price. Both the Respondent and his Father were the mortgagors and/or the borrowers at the material time. A loan account for the payment of the mortgage instalments was also set up in joint names of the Respondent and his father. The respondent has paid half of the mortgage instalment each month…”

30.  It seems therefore the Wife’s case that while she does not dispute that it was the Husband’s intention to assist his father to obtain the bank mortgage by allowing himself to be registered as a joint purchaser, she however believes that he did actually purchase the said property by contributing towards its down payment and half of its monthly mortgage instalments as he had told her that it was a good buy at below market price and that he would stand to inherit his father’s half share when he dies. If what she said is true, it would have been a planned or considered decision on the part of the Husband prior to the purchase.

The Husband’s Case

31.  The Husband’s case is that it was never his intention to purchase the said property with his father in the first place, that it was all along his father’s own decision to exchange his own public housing unit for the said property under the Home Ownership Scheme for himself and his wife, and that he merely accompanied his parents to the Housing Authority for the selection of the unit and the subsequent purchase as he happened to be available on that day, but when his father applied for a mortgage from Hang Seng Finance Limited which had a counter at the location on the same morning, his father was told that as a matter of the bank’s policy it would be difficult for him at the age of 63 to obtain a mortgage even though he had the financial means to secure the repayment, and was advised that a younger member of his family such as the Husband could be named as a joint purchaser and joint borrower with him to improve his chance of obtaining the mortgage.

32.  Hence, it was only there and then that he agreed to become a joint purchaser with his father of the property and a joint borrower of the mortgage in name only to help out his father, and that it was not the case that his father needed him to fund the purchase as his father owned a small air-conditioners business and had his own financial means to meet the down payment as well as the mortgage instalments, whereas he himself had had his own investments in the property market at that time and would not have been able to spare any fund for the said property in any event.

33.  One of his investments was the said Belleve Garden Property which he bought jointly with the husband of his cousin a Mr Shiu with whom he also had other business dealings. Although the Belleve Garden Property was bought with the profit gained from his earlier investment in the said Ravana Garden Property, its mortgage was for more than HK$2 million and hence his share of the monthly instalment repayment would have been such a heavy burden to him that he could not have afforded to invest in the Tung Hei Court Property as well, as he was then earning only slightly over HK$20,000 per month, as evidenced by his tax return for 1995/96 and the assessment by the Inland Revenue Department for the same period (G : 27 – 36), and certainly would not have been able to come up with HK$5,500 every month to meet his half share of the Tung Hei Court Property’s mortgage instalments. 

34.  As noted above the said Belleve Garden Property was sold in January 1997 for HK$3,800,000 at a profit of HK$700,000, with which the Husband and the said Mr Shiu would shortly thereafter use to fund their purchase of 2 units in Hipway Towers at Hip Wo Street, Kowloon for HK$2,350,000 each through 2 holding companies known as Kingtech Industrial Ltd. (“Kingtech”) and Lucky Win Enterprises Ltd. (“Lucky Win”) respectively with the assistance of a bank loan from HSBC for each purchase.

35.  The Husband has produced as evidence bank documents from HSBC (D : 230 – 234) to show that Kingtech’s bank loan amounted to HK$1,645,000, while Lucky Win’s bank loan was also of similar amount, hence his case is that his share of the mortgage repayments for these 2 units would have been beyond his means if he was then already burdened by the mortgage of the said Tung Hei Court Property.

36.  These 2 Hipway Towers units were subsequently sold in mid-1997 for a total gain of about HK$700,000. The Husband’s case is that the money were however seized by HSBC as part-payment of certain charges against either the holding companies or the said units for debts and liabilities incurred by his investment partner Mr Shiu in other dealings who had then gone into hiding, hence he was alone held liable for the remaining debts for which he had had to make lengthy repayment by instalments, not to mention that he had never pocketed any of the profit made from the sale, while the 2 holding companies were eventually dissolved a few years later in 2004.

37.  As his investments with Mr Shiu had gone busted and he was as a result put in great financial difficulties, and after the birth of the son he decided that he could no longer afford to rent his own accommodation and therefore asked his parents to allow him to move his family into their home at the Tung Hei Court Property in 1999.  However, given his limited income and increased expenses that came with the arrival of their new born child including hiring a domestic helper, his case is that he could never make any regular payment to his parents for living in their property other than some of the household utility bills, but he had never made any payments towards the mortgage payments.          

The Intervener’s Case

38.  His father the Intervener has filed 3 affirmations in response to the Wife’s Section 17 Application (B : 421 – 425, 435 – 437, 448 – 449) and also given evidence at the trial. His case is essentially the same as the Husband’s on how it was decided to purchase the said property and what happened on the day of the purchase, but he has also provided more details as to his own financial background and his means to purchase the property on his own without his son to contribute towards either the down payment or the mortgage repayments.  

39.  His evidence is that he started his business known as Shanghai Refrigeration Service in 1966 initially with a partner selling and repairing air conditioners, and in 1967 he was allocated a public housing unit in Choi Hung Estate where he lived with his wife and 3 children including the Husband. By late 80s all his children were grown up and had gradually moved out of his public housing unit, while he had also taken over his partner’s share in the business to become its sole proprietor.

40.  In 1995 he decided to up-grade his home and applied to the Housing Authority to exchange his public housing unit for the right to purchase a bigger flat under the Home Ownership Scheme, and when his application was successful, he asked his second son the Husband to accompany him and his wife to attend at the Housing Authority on 16^th February 1996 for the purchase. He explained that he asked the Husband instead of his 2 other children to go with him that day simply because the Husband as an insurance agent had more flexible working hours, while his other children, a civil servant and a school teacher, had more regular working hours and would not be able to accompany him for the process which was expected to take up the better part of a morning.

41.  To demonstrate his financial ability to purchase the said property on his own without the Husband’s help, the Intervener has produced bank statements of his HSBC and Hang Seng Bank accounts going back to the time of the purchase (G : 41 – 98) showing his payments of, or the funds to pay, the down payment of HK$64,405, various expenses including legal costs in respect of the purchase of HK$43,433, the decoration and furnishing expenses of the property of some HK$200,000 odd, and the subsequent mortgage instalments of about HK$11,000 per month.

42.  It is his evidence that while his small business may not have earned him a lot of income, it was nevertheless sufficient to enable him to support his family, and when his 3 children had finished their schooling and started working, he was able to save up some money which he would put in his wife’s safe keeping, hence not only could he afford to purchase the said property without the Husband’s help, he had also from time to time rendered financial assistance to the Husband, such as in 1990 when his wife lent him HK$300,000 for his purchase of the Ravana Garden Property, which he only repaid in 1994 after its sale, and another loan of HK$400,000 later in the same year for his purchase of the said Belleve Garden Property, not to mention numerous other smaller sums to him over the years for which he had never repaid. Hence he insists that the Husband simply did not have the means to participate in the purchase of the said property. 

43.  He has also produced receipts proving that it was he who paid for the down payment of the property and its legal costs, while his HSBC bank account statements which in fact go back to late 1993, some 2 years before the purchase of the Former Matrimonial Home, indeed show a regular cash balance of between HK$20,000 and HK$70,000 throughout the period from December 1993 up to February 1996 when the said property was purchased, and substantially more thereafter in excess of HK$200,000 most of the time, which tend to support his case of his financial ability to purchase the property on his own.

44.  However, all these even if true would not necessarily exclude the possibility that the Husband may still have made financial contribution towards the said property, as it is the Wife’s case that he had paid for the decoration expenses as well as his share of the monthly mortgage instalment payments.

45.  For the allegation over decoration expenses, the Intervener has produced what he claims to be the receipts and invoices for those expenses (G : 102 – 158), which were all dated during the 3 months after the purchase and amounted to HK$233,795 in total. His evidence is that these expenses were all met by him without any contribution from the Husband.

46.  However according to the 2 tables of these receipts prepared by Ms Ng for the Wife (G : 159 – 160), it appears that some of the expenses were paid by the Husband, a fact admitted by him during cross-examination by Ms Ng. The Husband’s explanation is that he was requested by his father to handle the decoration, again due to his flexible working hours, and while a decorator friend of his was to carry out the basic work, he had to shop for the materials for the floors and tiles for the bathroom as well as various furniture and electrical appliances on behalf of his parents, some of the expenses for which he would first pay for at the shops and was reimbursed by his parents afterwards. He therefore denies that he has as a result acquired a beneficial interest in the property.

47.  To the allegation that the Husband had contributed towards the mortgage payments, the Intervener insists that he has not even paid him or his wife any pocket money, or any payment for taking up residency in his property since 1999 other than some small contribution towards the household utility bills, let alone something as substantial as the mortgage payments over all these years.

48.  As to his own income, while the Intervener has conceded under cross-examination that after 1997 his business was no longer as profitable as before and that as he was getting old and unable to work long hours, his income had dropped to HK$7,000 to 8,000 per month on average, but he claims that he still had savings while his 2 other children would each regularly pay him several thousand dollars every month as pocket money which he would from time to time use to meet his living expenses including his mortgage payments.

49.  He has also produced his wife Madam N as a witness who has also filed an affirmation (G : 99 – 101) to corroborate his evidence as to the purchase and funding of the said property, that she had over the years kept the income from her husband’s business in her savings accounts, that her son the Husband could not have afforded to purchase the said property, that she had from time to time lent or given him money for his use, and that the Wife well knew from the very beginning that the said property belong only to her and the Intervener.  

Discussion

50.  Much issues had been taken by the Wife of what she argues to be discrepancy, inconsistency or outright fabrication about the Husband’s various dealings and transactions which took place after the purchase of the Tung Hei Court Property, such as his failure to account for the profits from the sale of the 2 Hipway units, his misrepresentation about the sale proceeds of the Belleve Garden Property being seized by the bank, his lying about his heavy debts and financial difficulties after 1997, or his deceit about his inability to make any regular payments to his parents after moving in with them in 1999, and so on which occupied the bulk of the trial and took up more than 50 pages of Ms Ng’s closing submission, which just go to show what has gone astray with the Wife’s case.

51.  Her case as clearly noted above is that the Husband purchased the property jointly with his father to help him to obtain a bank mortgage but also that it would be a good investment. Hence it was built on the foundation that the Husband had paid his half share of the down payment at the time of the purchase as well as the subsequent mortgage instalments every month thereafter over the years, and possibly part of the decoration and furnishing expenses after the purchase, and it is not just evidence of such payments, but equally essential is the timing of the payments, as it is not her case that the Husband only acquired his interest at some later stage or by some other arrangements, nor is it her case that it was a gift from the Intervener at the beginning.

52.  Henceforth at the heart of the issue must be whether there are evidence of his payment towards his half-share of the down payment of HK$64,405, the legal costs of  HK$43,433, and the mortgage instalment of HK$11,000 every month thereafter up to at least the time of his transfer to his father in 2007, and possibly his contribution towards the decoration and furnishing expenses of HK$230,000 odd. I say “possibly” for this last item because payments, or its absence, towards such expenses are in my view not conclusive or even necessary evidence to prove or disprove ownership in the property, in particularly in this case when it is not disputed that at the time of its purchase, it was not the Husband’s intention to move into the property, such decoration and furnishing must therefore be for the benefit of the intended occupiers : his parents, hence evidence of the Husband’s payment or non-payment of these expenses will not be determinative on the issue of ownership.

53.  It therefore follows that any dealings by the Husband after the purchase of the property in 1996 such as what he did with the proceeds of the sale of his other properties more than a year later would have no direct bearing or relevancy to the issue before me. At best they can only be considered as circumstantial evidence on the Husband’s financial ability to meet his half-share of the mortgage payments after the purchase, but clearly and indisputably of no probity value at all as to whether or not he did pay for his share of the purchase of the property a year ago.        

54.  From the voluminous documents before the court, and there are altogether 7 trial bundles of almost 2,000 pages in total, including bank records and statements of the Husband and both of his parents, some of which going back to even before the purchase of the property in 1996, I am unable to find a single shred of evidence of the Husband’s actual payment of his half-share of any of these items save for some of the decoration expenses which he has explained were just to assist his parents and for which he had been reimbursed. In other words, there is not one single withdrawal from the Husband’s bank accounts or one single deposit into the bank accounts of either of his parents that the Wife can point to and say that it was the Husband’s payment of his share of the down payment or the subsequent monthly mortgage payment over the next 10 years after its purchase.

55.  The only documents that may connect him to the mortgage payments are his annual tax returns submitted from 1999 to 2006 (D : 144 – 149) in which he had claimed tax allowance on Home Loan Interest paid by him during each of those years. The Wife‘s argument is that since he claims to have owned no property during those years, the home loan interest which he declared in those tax returns to have paid must be of the said Tung Hei Court Property, thus constitutes what to her the irrefutable evidence that he had indeed paid his share of the mortgage payments.

56.  The Husband’s explanation is that after they had moved to the said Tung Hei Court Property, even though he was not making any payment for its mortgage, he decided to claim for the tax allowance on home loan interest in his tax returns, especially when it had not been claimed by his father who was not required to pay tax due to the limited profit of his business. In other words, he argues that he was merely taking advantage of a tax allowance to reduce his tax liability, which does not necessarily mean what he had stated there was actually true.             

57.  This of course goes to show that the absence of documentary evidence of the Husband’s actual or direct payments for the property will not necessarily or entirely exclude the possibility, no matter how unlikely it may seem, that he may still have paid his share of the down payment and legal costs to his father in cash, given the relatively minor sums involved, or his share of the monthly mortgage instalment of HK$5,500 again in cash from sources other than his bank accounts to his parents all these years, and that they may have never deposited the entire sum of such payments into their bank accounts, hence it is not possible to identify these payments of the Husband from any of the bank records before in court. Whether this is in fact the case is where circumstantial evidence would come into consideration.

58.  The first question to ask then must be whether the Intervener was financially incapable of purchasing the said property on his own, hence he needed the Husband to join in the purchase as alleged by the Wife? It is not disputed that he had his own business at that time, while his bank records as noted above show sufficient funds both to meet the down payments, legal costs and decoration expenses for the purchase, as well as the subsequent monthly mortgage payments all on his own. These records also show regular deposits which he claimed to be either from his business or pocket money from his 2 other children, which together with the savings kept by his wife would enable him to purchase the property by himself without the Husband.

59.  To demonstrate his financial ability, the Intervener has produced bank records of payment of various sums given or loaned to the Husband ranging from HK$20,000 to HK$200,000 by him and his wife between 1993 and 1999 (F : 256 – 258), which on the other hand he says also show that the Husband had already been habitually seeking financial assistance from them at that time.       

60.  Much had been said by the Wife over his admission of less business and hence lower income to him after 1997 to meet the monthly mortgage payments, which is as I have noted above irrelevant to the issue of whether or not the Intervener had had the means to purchase the property back in February 1996, and the answer I would say is yes.

61.  That the Intervener was financially capable of purchasing the property on his own does not however necessarily exclude the possibility that the Husband did decide also to join in the purchase to acquire a beneficial interest. Hence the next question would be whether his financial situation at that time would allow him to do so.

62.  As noted above he was then earning slightly over HK$20,000 per month in 1996 from his job as an insurance agent, while the Wife herself was also earning, although it is not clear exactly how much but possibly less, and that in any event it is his evidence that she would not have to contribute towards their accommodation or household expenses. Hence it would be from his income that he had to meet such expenses. While there is some issue over whether he had additional income from his other dealing with the said Mr Shiu, his tax returns around that period show that such income were insignificant and certainly not regular, hence it is highly questionable that he could at that time afford this property when he already had to meet the substantial mortgage of his Belleve Garden Property.   

63.  Furthermore, given the pattern of his investments at that time, which appears progressively more aggressive or even risky : from Ravana Garden at HK$1.5M in 1992 to Belleve Garden at HK$3.1M in 1994, and then 2 units at Hipway Tower at HK$4.7M in 1997, applying for bigger and bigger mortgage loans while all the investments were for relatively short term with the Belleve property lasting the longest of only 3 years, I find it difficult to believe that the Husband would have considered the Tung Hei Court Property a good investment as alleged by the Wife, even if he could afford it, when it was supposed to be his parents’ home and hence realistically his share would not be realised until their demise.

64.  For the same token, it is also questionable that if he had indeed already purchased the said Tung Hei Court Property and was paying HK$5,500 per month for his share of its mortgage, while he was earning about HK$23,000 per month as evidenced by his 1997 tax assessment (G : 36), that he could still afford to buy the 2 Hipway Towers units with substantial mortgage liability. He may have been an aggressive speculator in the property market at that time, but that would have been seriously beyond his means.

65.  While much issue had been taken by Ms Ng, as noted above, about the Husband’s alleged financial difficulties caused by the debts incurred by Mr Shiu in their business or the whereabouts of the profits made from the sale of his various properties including the 2 Hipway Towers units,  it is inconceivable to me that the Wife was not aware that he was at least in some sort of financial problems when they decided in 1999 to move out of their own apartment to take up accommodation with their new born son in a small bedroom in his parents’ home at Tung Hei Court Property where their helper had to sleep in the living room. 

66.  Ultimately it all boils down to the credibility of the Husband and his parents. There is no question in my mind that the Husband is a smooth and confident witness, which perhaps goes with his job, but I do find his testimony in the main straightforward, spontaneous, determined and consistent, and while his recollection of his dealings with Mr Shiu may not be altogether clear or in details, it is understandable given that they happened well over 10 years ago.

67.  I am in fact even more impressed with the evidence of both the Intervener and his wife Madam N which were clear, precise, spontaneous and consistent with their recollection of the purchase of the property and its financial arrangements thereafter notwithstanding their age. I do not get the impression that their evidence had been rehearsed as suggested by Ms Ng for the Wife. In fact quite to the contrary I got the impression of a genuine sense that they were simply stating what they have always known to be the truth about the ownership of their property, and an equally genuine sense of indignation over the Wife’s claim against something which they felt she has absolutely no right.        

Conclusion

68.  For the reasons aforesaid I am satisfied that the Husband has been able to prove, on balance of probabilities, that he has no beneficial interest in the said Tung Hei Court Property and that he was merely holding it in trust for the Intervener when he transferred his half-share to him in 2007, and while it was done to avoid the Wife’s financial claim, it was not his property in the first place against which she can make such her claims for ancillary relief, of which I shall now come to consider.

Ancillary Relief Application

69.  This application appears more straight forward as there is no serious dispute by the Husband as to the Wife’s financial means or the needs and expenses of her and their son, hence mainly just the question of what should be the reasonable amount of monthly maintenance for them, of which as noted above she is seeking a total monthly sum of HK$20,000 while he is offering HK$7,000 to 8,000 as the best that he can afford at the moment, with a promise to make the necessary adjustment if and when his income improves. Appearance can of course be deceptive, and in this case nothing was as simple or straight forward as it appears, especially as to the Husband’s income. I shall however start with the least controversial : the Wife’s financial situation.

The Wife’s Financial Situation

70.  As noted above the Wife now earns HK$12,000 per month as a clerk in a trading company at Tsimshatsui, Kowloon. She also receives interim maintenance from the Husband at an average sum of about HK$9,500 per month, while he also pays for the son’s school bus and interest group fees directly. Her latest Financial Statement (Form E) of 26^th July 2010 (B : 165 – 186) discloses no other assets and virtually no savings after she has exhausted the redundancy payment from her last employer to meet her deficits since she left the former matrimonial home. None of this was disputed by the Husband.

71.  As regard her expenditure, she has put the total amount for herself and the son at HK$18,370 per month, being HK$6,700 for utilities, food and general household expenses, HK$7,385 for her personal expenses and HK$4,285 for the son’s expenses. This is however calculated on the basis that she has been staying rent-free at her friend’s flat in Tseung Kwan O which can only be a temporary and charitable arrangement by her friend. She proposes to rent another apartment upon the conclusion of the proceedings in the same neighbourhood to suit the son’s schooling which she believes will cost HK$7,000 per month in rent. In addition she claims that there will be private tuition fees for the son for HK$2,000 and HK$800 for a part-time helper, thus bringing the total future expenses for her and the child to more than HK$27,000 per month (B : 180 – 181).

72.  One of the items of her personal expenses of HK$2,500 is for the regular treatments for her diabetic condition for which she has been diagnosed since late 2009, which include regular medical consultation and daily insulin injections. Sadly her condition has also started to affect her eyes which also requires regular medical attention  as evidenced by her medical and hospital consultation records (F : 104 – 122).

73.  As aforesaid there are no serious disputes to these expenses by the Husband, whose case is that he just cannot afford to meet all of these needs, hence at the heart of the issue is what exactly is his means, which however according to the Wife must be examined closely going back at least to the time when he started his affair in the mid-2000s if not earlier, as she believes that it was then when he was already plotting to put his finance in such a state so as to confuse and mislead the court with the sole intention to frustrate her financial claims in the inevitable event of a divorce.

74.  Specifically, the Wife’s case is that the Husband has been able to earn at least HK$40,000 to $50,000 per month on average from his insurance job over the past several years as evidenced by his tax returns even before taking into account of any income from his side dealings and property speculation which she believes he is still engaging, but in order to defeat or obstruct her financial claims, he has over the years deliberately created huge amounts of debts and liabilities by means of numerous bank loans so as to paint a false picture of his financial ability, hence she argues that all of these so-called liabilities of his, mainly loans from banks and credit card companies, their alleged repayments and the whereabouts of his monthly income going back the years must be closely examined. This exercise indeed took up the remaining bulk of the trial as well as her voluminous closing submission. That being her position, I shall henceforth turn to the Husband’s financial situation.

Husband’s Financial Situation

75.  The Husband has remained working at Prudential as a branch manager, and in his latest Form E of 19^th July 2010 (B : 391 – 412) he put his average income earned from Prudential at slightly over HK$26,000 per month with no other sources disclosed. He also disclosed no assets or savings save for some insurance policies of insignificant value and 2 MPF worth just over HK$100,000.

76.  His declared expenses however far exceeded his declared income, in fact more than twice as much at HK57,386 per month albeit included what he claims to be his current maintenance for the Wife, with the largest item, as pointed out by the Wife, being repayment of debts at more than HK$23,000, the particular of which he has set out on p402 under Part 2 of his Form E for Liabilities, where he has listed 17 creditors, of which all except for his mother Madam N of HK$60,000 were banks and credit card companies in the tune of more than HK$800,000 in total, which if all were indeed genuine and legitimate would no doubt be the biggest obstacle to him meeting the Wife’s claims.

77.  That was then but by the time of the trial, the number of loans has according to the Wife grown to 39 in the total amount of as much as HK$1.690,000 based on Exhibit P-7, a document prepared by her which purportedly traced each of these loans through the Husband’s bank records.   

78.  While the Husband does not accept the Wife’s figures as entirely accurate as to the number or amounts of his loans, suggesting that she has wrongly duplicated many of the same loans which have been revolving over and over after he has settled some of them, but he agrees that his situation has become worse due to impact of the 2008 global financial crisis and the fact that business at Dah Sing turned out not as good as expected, which caused him to change job again to Prudential where he has to rebuild his clientele during the transition.

79.  He has of course earlier already explained how these debts and liabilities originated from his financial losses and liabilities incurred in the 1990s from his various business dealings with the said Mr Shiu which he was obliged to repay by instalments from his income, so that he was unable to meet his family and other expenses, which then led him to keep borrowing from financial institutions, and hence a never-ending vicious cycle of constantly borrowing, repaying and renewing loans on different terms up to the present, with seemingly no way out unless his income drastically improves.

80.  According to the Wife’s Exhibit “P-3” which summarised his income based on both his tax returns and bank deposits records and was recited on Page 92 of her closing submission, and which were not challenged by him during the trial, his income position from April 2007 to March 2010 during which he moved from Dah Sing to Prudential indeed show a much healthier situation with a total income of HK$2,034,076 over that period at an average HK$56,000 per month, seemingly sufficient to meet what he claims to be his monthly expenses without having to resort to borrowing.

81.  The Husband however argues that “P-3” is misleading, or at least does not reflect his true income situation, as the Wife has included a sum of HK$374,600 paid to him by Prudential in July 2009, which was an one-off joining fee and should not be used to reflect or indicate his future income. While he may have a point in this argument, it nonetheless formed part of his income for that year.  Be that as it may, however, at the heart of the issue must be whether these debts were indeed deliberately created after he started his affair in about 2005 as suspected by the Wife, or that they in fact went back much earlier to the days of his business dealings with Mr Shiu in the 1990s.

82.  Ms Ng for the Wife submits that the Husband would not have been in serious debts or financial difficulties back in the 1990s because all the evidence show that he had made good profits from the sale of those 4 properties referred to above, that if he was indeed in financial difficulties they would have moved into the said Tung Hei Court Property with their parents much earlier instead of in 1999, and that he would not have been able to afford to send her to the expensive and private St. Teresa’s Hospital for the birth of their son in 1998.

83.  She further argues that after moving into the Tung Hei Court Property and from 1999 and 2006, they did not have any rental expenses, and instead they would just pay for his half-share of its mortgage payment and only some of the household expenses and their domestic helper, bringing their total monthly expenses to between HK$20,000 and $30,000, which should be well within their annual total income of HK$320,000 to HK$780,000 over that period as evidenced by the tax returns before the court and summarised in her 10^th Affirmation (B : 140 – 152, 145), which gave an average monthly amount from HK$26,700 to HK$65,000, hence there was simply no reason for him to incur all those bank loans.

84.  These figures of the Wife may well be correct, in particularly of the parties’ income as evidenced by their tax returns which went back to the early 1990s, but by looking at their financial situations now of more than 10 years later in hindsight, and by using their average monthly income calculated for that same lengthy period to deduce that the Husband therefore must have sufficient income every month to meet their average monthly expenses over the same period is in my view too simplistic and does not accurately reflect the actual situation of any particular given time.

85.  Putting it in the simplest illustration : if the Husband had to incur debts for the first 2 years of his employment because of insufficient income, the fact that on the 3^rd year he was given a big raise and a bonus so that he could meet his expenses without resorting to borrowing anymore does not change the fact that he did incur those debts during the first 2 years. Therefore by showing that the average figure of the Husband’s income from 1999 to 2006 had exceeded his average normal expenses over the same period to argue that he could not have been in debts or financial difficulties during the early part of that period, the Wife has in my view fallen into the same fallacy with her argument.

86.  It will be recalled from his evidence for the s. 17 Application that he got into some serious financial problems back in 1998 over certain business dealing with the said Mr Shiu involving Kingtech and Lucky Win which not only caused the profits gained from the sale of the 2 Hipway Tower units to be seized by their mortgages banks, but that he alone became solely liable for the remaining debts after Mr Shiu had gone into hiding.

87.  Apart from these 2 companies, there was a third company known as Southern Petroleum Company (“Southern Petroleum”) in which he was registered as the sole proprietor but which he says was in name only in trust for the said Mr Shiu for his own business, and for which banking facilities including a term loan of HK$220,000 had been granted by HSBC to Southern Petroleum, but after Mr Shiu had gone into hiding from his creditors, the Husband claims that he had become personally liable for the said loan, which just added to his financial burden.    

88.  All these claims were of course not acceptable to the Wife, but according to documents produced by the Husband (D : 204 – 211), in particular the letter dated 11^th March 1998 from Wing Hang Bank (D : 204) that he did borrow a fixed loan of HK$300,000 from Wing Hang Bank in 1998 repayable by 120 monthly instalments in partial settlement of certain outstanding debts due to the bank by the said Lucky Win, for which he was held liable under a personal guarantee for General Banking Facilities granted to Lucky Win earlier.

89.  There were also letters from HSBC between 1997 and 1999 (F : 242 – 248) produced by the Husband in respect of the loan due from Southern Petroleum to HSBC, from which it appears that he also had to make repayment by monthly instalments, and that by May 1999 the loan remained outstanding at more than HK$203,000 (F : 247).

90.  While the number of loans for which he was liable was much fewer then, they do tend to support his case that his financial situation at that time was not as rosy as suggested by the Wife, and that in fact it seems true that not only had he not pocketed any of the proceeds and profits from the sale of the Hipway Towers units and hence he did not make any money out of them, but that he also had to make further repayments by monthly instalments for years to come. I believe that this also explains why he decided to move his family to his parents’ home at the said Tung Hei Court Property as he could no longer afford his own accommodation. 

91.  According to him that was the beginning of his financial foes and his increasing reliance on borrowing from financial institutions to meet his needs and expenses, as in the case with HSBC noted above, he had also applied to Wing Hang Bank in July 1999 to extend or renew the credit facilities subject to the existing instalment loan, and it seems that by May 2002 when he again applied for extension of the credit facilities he was still owing Wing Hang Bank more than HK$145,000 under the said loan (D : 208 - 211). Hence it is clear from the evidence that there was indeed a time when the Husband did owe at least 2 banks more than HK$300,000 for which he had to make substantial monthly repayments.   

92.  Still much time and issue was taken by Ms Ng for the Wife over how these bank loans came about, why the Husband ended up liable for them if they were Mr Shiu’s own business dealings, and whether he was indeed also involved in such business with Mr Shiu, none of which however in my view should distract from the fact that the Husband had been held liable, rightly or wrongly, by the banks for these loans, and that he did not seem to me to have any choice but to make repayment, otherwise risk, as he has pointed out on more than a few occasions in court, being made bankrupt and loses his licence as an insurance agent.

93.  The fact that the Husband already had bank loans to repay back in the late 1990s of course does not necessarily provide the full explanation for his current much bigger debts due to many more creditors, which must in turn be relevant to his income situation over the years. In other words, the higher his income has become, the less reason for him to go into debts, and vice versa.

94.  As noted above his annual income as well as those of the Wife from 1999 to 2009 have been set out and summarised in her 10^th Affirmation (B : 145) based partly on the available tax returns which were not disputed such as those for 2003/04 at HK$291,741, 2004/05 at HK$144,875, 2006/07 at HK$242,373, 2007/08 at HK$892,998 and 2008/09 at HK$392,444, and partly on the Wife’s own estimation in the absence of tax return or other documentary evidence for the other years but were disputed by the Husband as less than accurate.

95.  Be that as it may, for those income evidenced by tax returns, the Husband earned on average no more than HK$25,000 per month between 2003 and 2007, and it was only after 2007 when he joined Dah Sing and received a substantial joining fee that brought his average income significantly higher to more than HK$70,000 per month in 2008, but for 2009 as he has explained due to poor performance business at Dah Sing and his subsequent move to Prudential, his average income for that year had dropped back to more like before at about HK$32,000 per month after taking into account of the one-off joining fee from Prudential.

96.  It is against this income information of the Husband over that period of time that I have come to consider the Wife’s case about all these loans of his that she suspects were deliberately created to paint what she says to be a façade of his inability to meet her claims for maintenance.

97.  To properly and fully understand the basis of her case, it is necessary to go to Ms Ng’s closing submission where she has devoted more than 30 pages (p104 – 138) of forensic analysis of those loans coupled with tracing exercise of many of the transactions in the Husband’s bank accounts and credit cards records which she suspects to be related to these loans, and which she has summarized in 2 tables Exhibits P-3 and P-7 based on the Husband’s further disclosures and answers to her many requests for further and better discovery and questionnaires prior to or during the trial.

98.  It would not be helpful to recite all of the analysis here, but the gist of Ms Ng’s conclusion is that since not all the cash from these loans could be properly traced from the exercise, and that which the Husband has failed to properly account for, and given his adequate income on average over that period, these loans were therefore deliberately created to mislead the court of his ability to meet the Wife’s claim for maintenance, and that as a result he may have in fact stashed away as much as HK$800,000 in cash which he has not disclosed.

99.  This argument however has not taken into account, wrongly if not fatally in my view, of 2 important and factually indisputable points : Firstly, the Husband was already in serious debts of more than HK$300,000 in late 1990s which I have earlier found to be supported by irrefutable evidence, for which he had had to rely on borrowing from banks to repay in view of his lower income at that time.

100.  Secondly, the Husband’s income from his insurance job all these years was always irregular and never fixed per month, and by taking an average monthly figure from his total annual amount as his monthly income to support her argument that he would have sufficient means to meet his monthly needs and expenses simply ignore the reality that there would be some months, as evidenced by his bank records, when his actual income would not be sufficient to meet his expenses in those months, and if he had no savings or other resources to fall back on, then borrowing from banks or credit card companies would be one easy and quick solution. This fallacy in the Wife’s argument has in fact been pointed out earlier in my judgment.

101.  All these exercises merely show, in my considered view, that the Husband had some questionable spending with his credit cards such as those on expensive jewellery and watches, which he claimed were for a certain friend of his for which he was always reimbursed later, or certain dubious-looking transactions in his bank statements which he explained were payments of insurance premium by some of his clients, but they do not in my judgment unequivocally support the Wife’s case, which is whether those loans were deliberately created by the Husband to defeat or obstruct her claims.

102.  Such a case must be premised on the assumptions that, firstly, sometime after starting his affair in 2005, the Husband came to realize that it might lead to a divorce by the Wife and her financial claims, which is in my view entirely possible, and did happen as evidenced by his action in respect of the Tung Hei Court Property.    

103.  Secondly, it follows that he must be concerned that the Wife might be granted custody of their son and hence even though she was then also earning, he was not prepared to run the risk of having to end up paying her the kind of monthly maintenance that might not be acceptable to him, hence his decision to start putting all these loans in place in anticipation of such claims, which is again possible, but how likely it actually is must be judged against the following facts :

(a)   that the Wife was then earning HK$15,000 per month and no  indication that she was to be made redundant later in 2008;

(b)   that he has all along been willing to pay almost HK$10,000 per month on average as maintenance for her and the son;

(c)   that he has offered to pay at least HK$7,000 per month to her for the son plus some of his schooling expenses and his insurance premium after the divorce.

104.  Hence this is not a case where the Husband is hell bent not to pay any maintenance at all, as evidenced by the record of his such payments summarised under paragraph 128 of the Wife’s submission, but rather only a dispute over the amount, which now seems to be a difference of about HK$10,000 or so, and while the Husband would not have known about this at that time, given the circumstances referred to above, it is questionable that whatever his concern about the Wife’s financial claims in the event of a divorce might have been, that it would actually compel him to conjure up such an elaborate and complicated scheme to mislead the court, and to actually carry it out over the past several years without fail.   

105.  To appreciate what implementing such a scheme actually entails, consider the following process which the Husband would have to go through to apply for just 1 bank loan and to maintain it throughout its term : submit the necessary documents for the application, draw down the loan if successful, put the money somewhere that it cannot be traced, put part of it back into the loan account for the instalment payment every month for the rest of the term, and renewing the terms at the end to start all over again, all these from 2005 up to the trial.

106.  Then imagine what the Husband would have to go through with 39 loans every month for the past 4 or 5 years. Even at this day and age of internet-banking, it would in my view still be a daunting proposition for the Husband with that kind of numbers involved, and this is before taking into account of the kind of consideration and calculation that the Husband would have to undergo as to his ability to make repayment for each loan to ensure that he would not run into any default problem despite not knowing exactly how much income he would be getting the following month.

107.  The Wife may of course argue that the fact that he actually has these loans means that he had already gone through such “daunting” process which shows that it can be done. The reply to that is there is a big difference between doing it out of necessity, as alleged by the Husband, and doing it by design as suggested by her, which brings us to that all important question :  How likely under the circumstances would he actually go through the whole process for the past several years in the hope that he would not have to pay more maintenance to the Wife than he was willing?

108.  The answer must be very unlikely in my view. As explained above not only would it be an extraordinary complicated process to carry out for any person, it would indeed be something totally out of the Husband’s character. As already noted above, he has throughout the proceedings struck me as a straightforward and confident person who spoke fast and simple with little patience for anything else. He gave his answer forthwith and to the point, and would not shy away from any question from Ms Ng throughout her lengthy cross-examination, including his relationship with his girlfriend and the financial provisions he has made for her. I simply do not get the impression that he would find it necessary to device such a scheme, nor would he have the patience to carry it out. In other words, it simply does not appear to me in his character that he would be bothered to carry out something like that.   

109.  That these loans were not deliberately created to defeat the Wife’s claims does not of course mean that they were all used to meet the Husband’s debts and liabilities, as he has conceded under cross-examination that he should have exercised better control or discipline over his spending, of which I shall now come to consider.

110.  As he has filed 2 Form E in these proceedings, one in October 2008 in response to the Wife’s earlier maintenance pending suit application and where he set out his total monthly expenses at slightly over HK$78,000, while his more recent one filed in July 2010 show a somewhat reduced expenses at about HK$57,000.

111.  Perhaps for comparison purposes, Ms Ng has listed both sets of his monthly expenses in paragraph 162 of her submission. It seems that the main reasons for the reduction of some HK$20,000 in his current expenses were due to his lower household expenses which he said he could no longer afford to pay to his parents save for some of the utilities, and a lower loans repayment at HK$23,000 instead of HK$35,000 in 2008. It also appears that he is no longer required to pay any income tax, or at least for last year, due to his lower income.

112.  While the Wife did take issue with many of his stated expenses such as his utilities of HK$2,000, his insurance premium as well as their son’s totalling HK$4,500, or his entertainment expenses of HK$2,000, but which I do not find to be unreasonable given the nature of his job, and clearly the main obstacle to him being able to meet the Wife’s claim must remain with his monthly loan repayments, of which as I have pointed out above may not be all due to his debts and liabilities carried from the 1990s, and it will be relevant to revisit Ms Ng’s analysis of some of the transactions seen from his bank records, of which 2 items stand out in particularly.

113.  His HSBC bank statement for July 2009 showed a purchase at Prince Jewellery for HK$29,355 on 2^nd July 2009, while his HSBC credit card statement for August 2009 revealed another purchase at Emperor W & J for HK$87,570 on 22^nd July 2009. The Husband’s evidence was that on both occasions he accompanied his friend a Mr Sze to buy some watches for which he paid for them first and received reimbursement in cash afterwards.

114.  The Wife of course found this explanation suspicious, questioning the rationale of Mr Sze not bringing sufficient means with him when shopping for what appear to be expensive items not once but on 2 separate occasions, and that the Husband happened to accompany him on both occasions. I too find such explanations questionable, and in the absence of any documentary evidence of their reimbursements which I would have expected by cheques deposited into one of the Husband’s bank account given the relatively large sums involved. I agree that the Wife does have good reason to suspect that these purchases might have been for someone else, such as his girlfriend.

115.  Which bring me to his spending on her. His evidence is that he has been paying her HK$5,000 per month mainly for her accommodation. Apart from that there is very little information about any other spending on her or about her personally, mainly because somehow Ms Ng for the Wife decided not to be bothered with during her lengthy cross-examination of the Husband, but which in my view could have shed some light on the Husband’s actual spending on her.

116.  His relationship with his girlfriend has gone on for more than 5 years and appears to be a serious one. It would not be difficult to imagine that to maintain such a serious relationship, they would have to meet and spend times together regularly on either side of the border, during which no doubt the Husband would have spent more than the monthly sum of HK$5,000 that he has admitted. As a matter of fact, neither of this sum nor his other spending ancillary to this relationship have been reflected in his declared monthly expenditure in either of his Form E.

117.  Despite substantial debts and liabilities incurred since the 1990s, which together with his disclosed or undisclosed monthly expenditure have according to him far exceeded his income, it seems that the Husband has been able to remain afloat of his financial foes and manage to avoid being made bankrupt all these years. The Wife believes because he still has other dealings on the side including speculations in stock and property markets as he had in the 1990s but which he has not disclosed. He of course put it all down to his reliance on obtaining new loans to cover old ones. While I am unable to find any evidence to sufficiently indicate the former, it cannot be argued that his ability to borrow is in law a factor that the court can take into account to determine his ability to meet the needs of his spouse or child.

118.  Firstly, amongst the matters which the court is required by Section 7 of Matrimonial Proceedings and Property Ordinance, Cap. 192 to have regard in deciding on ancillary relief application, (1)(a) specifically refers to “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.” 

119.  Hence in the English case of J-PC v J-AF [1995] P 215, 239, CA where a husband with a very small income asserted that he was ‘living on borrowed money and starving off a number of creditors while developing certain properties’, he was nevertheless shown to have maintained by means of bank loans a consistent standard of living over a substantial period, the court in effect held that if he could borrow for himself he must likewise borrow for his wife.

120.  The principle was that he was able to touch resources from which payments could be made, as he had the ability to obtain the necessary money, albeit bank loans, and it was assumed that his ventures were such as not only to justify the loans but also reasonably to contemplate their repayment in due course.

121.  So the fact that a man is presently unemployed and in receipt of social security benefits does not necessarily mean that an order will be refused against him, or that only a nominal order should be made, hence in the case of Jacobson v Jacobson (1961) 105 Sol Jo 991, Div Ct, a substantive  order was made where a man was a market trader who intended to resume his calling, the reality being that he had a potential earning capacity.

122.  The matter can perhaps be best summarised in J-PC when Sachs J said on p.233 :

“From these authorities it appears that the word “ability” – so carefully used in the statue without adjective or ancillary words – should be broadly construed in the light of the realities of each case. It seems highly inadvisable to try to list or define the many varying elements that may constitute “ability” to provide maintenance – especially as each generation has it own ways in relation to money matters. Suffice it to say that ability, in my view, undoubtedly may include in certain circumstances ability to provide money by overdrafts or through loans. One cannot follow the precept “look at realities” and at the same time shut one’s eyes to the fact that as regards a section of the business community this is to some degree an age of overdrafts and capital gains. Thus in the present case we have a typical instance of a man who is earning capital gains with the aid of his ability to obtain overdrafts. Such man and such occupations are far from unknown – and include those who acquire reversionary interests of various types upon borrowed money. They may live more than comfortably without being possessed of salary, of dividends or of assets readily realizable for sums much in excess of their overdrafts. Nevertheless a man will not be required to borrow money where it is plain that he cannot at least reasonably pay the relevant interest as it falls due.”

123.  It is plain that the Husband in this case has been using his borrowing ability, not just from banks and credit card companies but apparently also from his parents, to deal with his liabilities from his failed investments back in the 1990s, but also to handle any of his cash flow problems and his family expenses for more than 10 years while changing jobs twice during a global financial crisis, and still able to make regular provisions for his girlfriend. Such ability in my view cannot be overlooked nor underestimated.            

124.  While he may have a point in explaining that his interim maintenance for the Wife has come down from HK$10,000 to HK$7,000 per month since last year due that fact that having just started his new post at Prudential, he needed time to build up his clientele and his income, yet during which he has continued to pay HK$5,000 per month to his girlfriend to whom he has no legal obligation and money which he should have used to meet the maintenance pending suit order instead. He has now been with Prudential for almost 2 years and with these proceedings coming to a conclusion, he should be able to focus his time and energy to re-establish his insurance business, but for now and taking into account of what he has been paying his girlfriend, I find that he is in a position to pay at least HK$15,000 per month as maintenance for the Wife and the child.

125.  This together with the Wife’s own income would give her a total sum monthly sum of HK$27,000, as it is essential for the Husband to recognise the fact that she needs to rent her own accommodation not just for herself but more importantly to provide a roof over the head of his son, and hence the quantum of the maintenance that I believe to be the minimum that they need at this stage. In addition she will need to pay for her moving cost as well as her rental deposits, for which the Husband should pay her an additional sum of HK$50,000 no doubt from his many resources.

126.  The Husband himself already has the security of free accommodation in his parents’ home, while his former wife and son are at the charity of her friend. Taking into account of the facts that this has been a substantial marriage, with the Wife’s full contributions during the marriage, and with her comparatively more limited earning and earning capacity and her health condition, not only is it essential for her reasonable needs be met accordingly, but that it is also just in the circumstances.         

Conclusion

127.  In the premises and for the reasons set out above, I order that the Husband shall pay to the Wife periodical payment at the rate of HK15,000 per month being to be apportioned at HK$5,000 for her and HK$10,000 for the child, such payment to commence on 1^st July 2011, and thereafter on the 1^st day of each month into her designated bank account.

128.  The Husband shall also within 3 months of the decree absolute pay a lump sum of HK$50,000 to the Wife specifically for her new accommodation expenses and accordingly I direct that it should not be charged by any Legal Aid first charge.

129.  I do not propose to make any order as to costs in respect of either applications, given that each party is successful in one, and that any costs order against the Husband will certainly cripple his ability to comply with this order in view of the substantial amount incurred by the Wife in the proceedings. The Wife’s own costs to be taxed in accordance with the Legal Aid Regulations.