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[English Translation - 英譯本]
CACV461/2022, [2023] HKCA 560
ON APPEAL FROM: [2022] HKFC 149
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO 461 OF 2022
(ON APPEAL FROM FCMC NO 9689 OF 2016)
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| BETWEEN |
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CHAN（陳） |
Petitioner |
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and |
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CHUNG（鍾） |
Respondent |
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| Before: |
Hon Chu VP, Cheung and Au JJA in Court |
| Date of Judgment: |
19 April 2023 |
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JUDGMENT
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Hon Cheung JA (giving the Judgment of the court):
I. Appeal against ancillary relief order
1. The petitioner (“the wife”) pursuant to the leave granted by this court ([2022] HKCA 1733) lodged an appeal against the decision on ancillary relief by District Judge K.K. Pang dated the 29 July 2022. Leave was granted only for the issue of whether Judge Pang’s decision to add one third of the pension of the respondent (“the husband”) to the matrimonial property was correct. As the parties have no objection for this court to deal with the appeal by way of paper disposal, we shall handle the present case accordingly. The parties have also lodged their respective written submissions.
2. The wife and the husband were married in October 2003. Their son was born in June 2009 who is now about 13 years old. The parties separated in August 2014. The wife petitioned for a divorce in 2016 and was granted a “decree nisi” on 16 August 2017. Their marriage lasted for over 10 years. The husband is about 54 years old. He has joined the Hong Kong Police Force since 1986 and will retire by the end of April 2023. He is currently a station sergeant. The wife is about 47 years old. She is a part-time worker receiving an unstable income. The parties have joint custody of the son with care and control to the wife who takes care of the son six days a week.
II. JudgePang’sdetermination
3. In respect of the wife’s application for “ancillary relief”, District Judge K.K. Pang made the determination as follows:
1) Total assets of the parties
4. Leaving aside the issue of calculation of the pension in the present appeal, the total assets of the parties are worth HK$235,442, including HK$221,331 from the husband and HK$14,091 from the wife. Judge Pang held that there was no reason to depart from the principle of equal division in the present case. Since the wife is in possession of assets worth HK$14,091, she could get a total of HK$103,620.
2) The husband’s assets
5. The husband’s assets are as follows:
(1) Assets
(a) Wristwatch
Rolex wristwatch $ 27,000.00
(b) Insurance
Interests in two insurance policies $ 66,551.00
(c) Hong Kong Police Credit Union Account
Hong Kong Police Credit Union Account $ 150,000.00
(d) Pension
Pension around $ 6,168,960.00
(2) Debt
(a) School admission deposit for the son
School admission deposit for the son $ 22,220.00
6. The total assets of the respondent including wristwatch, insurance policies and Hong Kong Police Credit Union account are worth HK$243,551.00 (HK$27,000 + HK$66,551 + HK$150,000), and the net assets are worth HK$221,331 (HK$243,551-HK$22,220).
3) The wife’s assets
7. The wife’s assets and debt are as follows:
(1) Assets
(a) Insurance
Interests in insurance policy $ 18,545.68
$ 18,545.68
(b) Wristwatches
Rolex $ 21,500.00
Cartier $ 40,000.00
$ 61,500.00
(c) Total $ 80,045.68
(2) Debt
(a) Outstanding credit card payment $ 65,953.71
$ 65,953.71
8. The wife’s net assets are worth HK$14,091.97 (around HK$14,091.00) (i.e. HK$80,045.68 minus HK$65,953.71).
4) Pension
9. When the husband retires at the age of 55 by the end of April 2023, he will receive a pension of about HK$6,168,960. The pension scheme provides that if the husband does not draw any lump sum, he will receive monthly pension of HK$36,720. However, if he chooses to draw 25% of the pension in a lump sum, he will receive a lump sum of HK$1,542,240 and a monthly pension of HK$27,540. The calculation of a lump sum pension can only be a multiple of 5% and the maximum is 25%. This pension is the most valuable property of the parties.
10. Judge Pang held that one third of the pension be added to the matrimonial property and the wife receive half of this one-third pension, i.e. one sixth of the pension. Judge Pang, in his judgment on ancillary relief dated 29 July 2022, held as follows:
“24. The wife added the husband’s entire pension to the matrimonial property. The husband has joined the police force since 1986. He will have served the police for more than 36 years when he retires in 2023. The parties to the proceedings were married in October 2003 and their marriage only lasted for more than 10 years when they separated in August 2014. Therefore, it is fairer to add only one third of the husband’s pension to the matrimonial property.
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42. In addition, if one third of the husband’s pension is divided equally, namely, the wife will get one sixth of the pension.
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43. It is hereby ordered as follows:
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(7) The husband shall pay the wife upon the decree nisi being made absolute or when he receives the retirement [pay]:
(a) A lump sum payment equals to one sixth of the lump sum of pension (if any); and
(b) one sixth of the monthly pension to be paid on the first day of each month in the [bank] account designated by the wife.”
III. The wife’s appeal
11. The wife lodged an appeal against Judge Pang’s determination that she would get one sixth of the husband’s pension. She submitted that she should be awarded the portion equivalent to one third or even half of his pension.
IV. Legal principles
12. Before the marriage, the husband has been entitled to a pension to be received at the time of his retirement. It involves the issue of whether the pension should be regarded as matrimonial property or not. The Court of Final Appeal analysed this issue in LKW v DD (2010) 13 HKCFAR 582(Chinese translation of the judgment). First of all, the Court of Final Appeal explained at paragraph [82] that the total assets should be divided equally between the parties unless there is obvious and good reason for departing from an equal division. Then, the Court of Final Appeal dealt with the matter that the principle of equal division might not be applicable to non-matrimonial property.
“90. In White v White, Lord Nicholls gave as examples of assets within this class, ‘property acquired during the marriage by one spouse by gift or succession or as a beneficiary under a trust’ and ‘property acquired before the marriage’.
91. He made it clear, however, that there is no hard and fast rule as to whether such property should be excluded. It is very much a matter within the judge’s discretion to be exercised taking account of all the circumstances of the particular case:
... when present, this factor is one of the circumstances of the case. It represents a contribution made to the welfare of the family by one of the parties to the marriage. The judge should take it into account. He should decide how important it is in the particular case. The nature and value of the property, and the time when and circumstances in which the property was acquired, are among the relevant matters to be considered.
92. However, an important factor which comes into play is the duration of the marriage, the factor mentioned in section 7(1)(d). As Baroness Hale pointed out, ‘the importance of the source of the assets will diminish over time.’ Her Ladyship explained:
‘As the family’s personal and financial interdependence grows, it becomes harder and harder to disentangle what came from where.’
93. So where it is a short marriage, the court may well be inclined to regard as excludable non-matrimonial property, assets acquired by one of the parties before the marriage or acquired in the course of the marriage from some wholly external source. But after a long marriage, those factors are likely to have much less weight. Thus, in White v White itself, Mr White had benefited from an initial cash contribution made by his father but, as Lord Nicholls commented, that could not carry much weight 33 years later.
94. Where one of the parties acquires certain assets after separation without any help or contribution from the other, the court may well exercise its discretion to exclude such property from an equal division. However, if at Step 2, an endeavour to meet the parties’ financial needs is the sole or paramount concern, its acquisition after the separation may not prevent such property from being included in the award.” (emphasis added)
13. In Z v X (C Intervener) [2015] 5 HKLRD 791 at paragraph [24.6], this court said, “the longer the marriage the more likely non-matrimonial property will become merged or entangled with matrimonial property.”
V. Our views
14. When the parties got married in 2003, the husband has worked as a police officer for 17 years. His entitlement to a pension has accumulated for 17 years which cannot be treated as matrimonial property at the time of their marriage. As their marriage has lasted for a rather long period of time, this non-matrimonial property gradually becomes part of the matrimonial property as time goes by. When the parties divorced in October 2017, the husband was yet to be retired and he could only get his pension in five and a half years. In the circumstances, Judge Pang might exercise his discretion not to treat the entire pension as matrimonial property. In our view, when Judge Pang exercised his discretion, he was plainly wrong to only regard one third of the pension as the matrimonial property. He overlooked the point mentioned earlier that when a marriage has lasted for a long period of time of 10 years, the original non-matrimonial property will gradually become part of the matrimonial property. This is because the longer the marriage, the parties’ interdependence grows, it becomes harder and harder to disentangle what came from where. When the court exercises its discretion, the principal consideration should be fairness. The court ought not take time to distinguish whether it is matrimonial property or not. Judge Pang had overlooked this important factor as he only awarded a ratio of one third. Taking into account the overall circumstances of the case, including the length of the marriage and the husband could only get his pension in five and a half years, we are of the view that it is appropriate to treat 80% of the pension as matrimonial property in which the wife could get 40% of the entire pension.
VI. Conclusion
15. We allow the appeal and amend Judge Pang’s decision on the wife’s award of the pension from one sixth to 40%. Paragraph 7 of the order of Judge Pang be varied as follows:
(7) The husband shall pay the wife upon the decree nisi being made absolute or when he receives the retirement pay:
(a) A lump sum payment equivalent to 40% of the lump sum pension (if any); and
(b) 40% of the monthly pension to be paid on the first day of each month in the bank account designated by the wife.
16. We will not disturb the other orders made by Judge Pang. We make a costs order nisi that the parties do bear their own costs of the appeal and the application for leave to appeal (CAMP 419/2022).
(Carlye Chu)
Vice-President |
(Peter Cheung)
Justice of Appeal |
(Thomas Au)
Justice of Appeal |
The Petitioner, in person.
The Respondent, in person.
Translated by the Judgment Translation Unit of the Judiciary and vetted by Mr. Walter Lee, solicitor.
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