WLK v. TMC

CACV 339/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 339 OF 2008

(ON APPEAL FROM FCMC 5508/2005)

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BETWEEN

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J U D G M E N T

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Hon Stone J:

This appeal

1.  This is a matrimonial finance appeal.

2.  By a Judgment dated 14 July 2007, His Honour Judge Bruno Chan ordered that in full and final settlement of the parties’ claims against each other, within 3 months from the date of this Order the respondent husband do first, transfer his interest in a property in the Federal Hill district of Kuala Lumpur to the petitioner wife, and second, that the respondent should pay to his wife the lump sum of HK$4.25 million.

3.  It further was ordered that upon compliance therewith, that the order for interim maintenance be discharged, that any claims which each party should have against the other should be dismissed, and that the issue of costs should be restored for argument; as at the date of this appeal this latter issue of costs has not been resolved.

4.  The petitioner wife is aggrieved at this decision, and by Notice of Appeal dated 12 November 2008 she appeals to this court seeking an Order that the Order of the court below be set aside, that the respondent “do pay to the appellant such lump sum as this Court thinks fit”, and that the costs of the appeal be paid by the respondent husband.

5.  By a Respondent’s Notice dated 3 December 2008 the decision of the learned judge below is sought to be maintained on grounds in addition to those relied upon by the trial judge.

The open proposals

6.  This is an unusual case given the starkness of the difference between the parties’ as to the appropriate level of ancillary financial relief upon the dissolution of this marriage.

7.  By her open proposal dated 31 October 2007, the wife indicated that the total lump sum required to meet her future needs came to a sum between HK$36 - $47 million.

8.  In contrast, by his proposal dated 9 November 2007, the husband offered a total package of approximately HK$6.3 million, consisting of the transfer to her of the Federal Hill property then worth about HK$2.39 million together with a lump sum of HK$4 million, and in addition he proposed to allow his wife to retain a share portfolio of about HK$1.5 million, although it now appears clear that currently this portfolio is fully charged with legal costs.

9.  There was thus a differential of about $40 million between the parties’ respective proposals, the only common ground being that both wanted a ‘clean break’ over the financial claims.

10.  After a 12 day hearing which took place during the period between 12 November 2007 and 26 June 2008, with 4 days being taken up in November 2007 and a further 8 days in June the following year, the sum ultimately awarded by the learned judge came to an overall amount not greatly different than that which had been proposed by the husband – hence the wife’s dissatisfaction with this result, which now has led to this appeal.

The background

11.  There is a good deal of background fact which is not in dispute.

12.  The parties first met in 1985 in London and shortly thereafter formed a relationship.

13.  At that time the husband was doing A levels at Davies College, and the wife was in her first year of a degree course in music at King’s College.

14.  As the judge recounts, she soon moved in to stay with him and his two dogs at his residence in Sydenham Hill in south east London in a property then owned by his family but thereafter transferred to the husband, whose father is a local Hong Kong businessman of some repute.

15.  During the period of their cohabitation the husband was responsible for the household expenses and would also meet the expenses arising when they went out, whilst the wife would pay some grocery and utility bills; as the judge comments, the fact is that both were then financially dependent upon their own families.

16.  The two students frequently would travel together, and over a period met each other’s parents and family members.

17.  In September 1988 the husband went on to study at Cambridge University whilst the wife, having graduated from King’s College in that year, opted not to pursue a Masters degree in music in Oxford, Paris or New York, but instead remained in London, studying piano performance privately and working as a part-time music teacher; her evidence, which is undisputed, is that one of the main reasons for which she needed to stay on in the Sydenham Hill residence was to look after the property and the couple’s two dogs, which the husband had adopted from Battersea Dogs’ Home; in fact, both parties referred to these dogs, Idi and Georgie, as “our kids”.

18.  When the husband returned to Hong Kong for the first two summers of the relationship in 1986 and 1987 the wife stayed behind in the Sydenham Hill property to ‘dog sit’.

19.  Moreover, during this period, when the wife was in London and the husband in Cambridge, they would continue to meet each other when the husband came down to London during weekends or holidays, alternatively the wife visited him in Cambridge.

20.  This pattern continued until 1991, when upon his graduation the husband left London for Singapore to join his family business there, whilst the wife remained in London for a further four months whilst she dealt with closing up Sydenham Hill, dealing with the cars, and closing bank accounts; after this, she left London, taking the two dogs with her, and returned to Malaysia, initially staying at her parents’ home in Ipoh, subsequently moving to her present home in Kuala Lumpur, once more with the parties’ two dogs.

21.  It was at that stage, the judge records, that she gave up her aspirations to become a concert pianist, and continued to work as a part‑time music teacher, in addition to caring for the dogs; the parties would continue to see each other by meeting at various places, and the wife would accompany the husband on many of his business trips.

22.  The husband remained in Singapore until late 1992 or early 1993, and in 1993 he returned to Hong Kong for good and became extensively involved in his family business, mainly with regard to the development of certain property projects in the New Territories.

23.  He also was appointed a director of, and allotted shares in, some of his father’s companies, and over the next several years the parties would continue to visit each other: in Malaysia where the husband would stay at the wife’s place, in Hong Kong where similarly the wife would stay in the house of the husband’s parents, and elsewhere when they travelled together during the husband’s many business trips.

24.  At times the parties talked of marriage, and on two occasions they even booked an appointment to register their marriage in Hong Kong during 1992-93, and again in London in 1995; although the husband had given the wife a ring in 1993, these formal marriage plans did not, however, reach fruition for a variety of reasons, one of which appears to have been the parlous state of health of one of the dogs.

25.  During these years the relationship does not seem to have been conspicuously happy; it is not in dispute that there had been break-ups and reconciliations, particularly between 1995-1997, but on each occasion the parties got back together in 1997, and subsequently formally registered their marriage in Las Vegas on 21 September 1997, although rather sadly they even had a quarrel on the night before this event, and indeed they did not see fit to inform their respective families of this formal union until much later.

26.  In any event, after the marriage in September 1997 the parties resided with the husband’s parents at the family home, a four storey, 20,000 square feet mansion in Tsuen Wan, New Territories; the wife did not work and, as she described the situation, she spent her time by keeping her mother-in-law and her sisters-in-law company, as well as travelling with her husband.She was given one of his ATM bank cards, and 2 credit cards for her personal use and expenses.

27.  During the next three years or so the parties continued to travel together on business trips and for holidays, and from time to time there was discussion about moving out of the parents’ house into their own home; however, there were quarrels between the parties, with the wife accusing the husband of infidelities and inflicting violence upon her, and the husband taking the view that she was emotional, impulsive, unstable, and unable to get along with his family members.These altercations often resulted in the wife packing up and returning to Malaysia, only for there to be a reconciliation and her return to Hong Kong.

28.  The learned judge recounts that matters finally came to a head in April 2000 when the wife left for Malaysia purportedly to renew her passport, but did not return, during which time the husband had a brief affair with another woman.

29.  It appears that during the next few years there were several attempts at reconciliation, when the husband spent a considerable amount of time pleading with the wife in Malaysia, and even on some occasions, the judge notes, “stalking” her and literally camping outside her house waiting to speak to her.

30.  Sadly, however, the wife never returned to Hong Kong, and the parties never resumed cohabitation.

31.  Back in Hong Kong, the husband did himself move out of his parents’ house and into one of the houses in a project known as “the GV project”, which was developed by one of his father’s companies.

32.  In 2004 the husband suggested to the wife that they divorce in Guam, and there were discussions to this end through lawyers, but this Guam divorce did not materialize.

33.  Finally, on 1 June 2005 the wife came to Hong Kong to institute the present divorce proceedings based upon the husband’s unreasonable behaviour after he had cancelled her credit cards; the petition was later amended to one based upon two year’s separation since April 2000, and a decree nisi was granted on that basis on 7 February 2007.

34.  Subsequent to the decree nisi the parties exchanged their ‘Form E’ questionnaires, and on 1 December 2005 there was a Consent Order under which the husband paid her a sum of $25,000 by way of maintenance pending suit, which sum was increased to $35,000 on 5 July 2007 when the wife unsuccessfully applied for a more substantial increase to include the husband’s contribution towards her legal costs; at this stage the wife had a share portfolio then worth about $2 million, which originally had been funded by the husband as an investment in her name and was managed by one of his brothers in Malaysia, and which the husband agreed could be used to meet her legal costs.

35.  However, when this share portfolio had become fully charged by mounting legal costs, by further agreements in November 2007 and May 2008 the husband advanced payments respectively of $400,000 and $840,000, on the basis that these advances would be without prejudice to his right to set them off against whatever lump sum subsequently would be awarded to the wife.

The cases as advanced in the court below

36.  At the ancillary relief hearing the learned judge was faced with two markedly different cases, as indeed the parties’ open proposals had reflected.

37.  The judge recounts the parameters of the two cases thus.

38.  For the wife, it was contended that her resources were relatively limited.Aside from the share portfolio, which not only had diminished and which in any event was by now charged with the payment of legal expenses, she had no valuable assets save for a BMW 520i which had been purchased for her in 1999, and some wrist watches worth some $300,000, and an earning capacity of about $1,500 per month only.

39.  The learned judge notes that her open proposal had been put forward on the basis that from the start of their relationship in 1985, the husband had impressed upon her that she was not to have a career of her own, that her role in this relationship and in their future family was that of full-time homemaker and mother, that she should be free and available to travel with him and generally accompany him anywhere, and that he would provide for her in accordance with their luxurious lifestyle and high standard of living both before and after their marriage, with no limits on expenditure upon any aspect of their lives nor any limit on her own spending.

40.  The wife further asserted that had their marriage continued, they would have lived in a large house provided by the husband, with cars and chauffeurs and maids readily available, that they would have continued to holiday extensively, travelling at least on business class and staying in 5 star hotels, and that she would not have been required to work at any time.

41.  Her case was that divorce at this time of her life necessarily meant that now she would be unlikely to have children even were she to remarry, and that her chance of a career had become practically nil.

42.  Her position was that she had foregone everything for the prospect of a stable and prosperous future with her husband, a future which he had promised to share with her equally, but which now was to be no longer available through no fault of her own, and that as a result she should still be provided for by the husband as in fact he had promised.

43.  The wife therefore sought an award commensurate with being his wife, which meant a high standard of living and a luxurious lifestyle for the rest of her life, and she sought compensation, also, for the loss of opportunity of her music career.

44.  She also stated that throughout their relationship and marriage, the husband had been abusive and violent, and that such conduct should be reflected in any award.

45.  This case was disputed by the husband.

46.  His position was that by reason of the brief duration of the marriage, her claim should be determined by reference to the principle of needs alone, and that this was not a case wherein the principle of sharing of the ‘marital acquest’ was engaged, nor is it a case where the principle of compensation would arise, and that, as regards needs, the wife’s needs required to be fairly assessed not just by reference to the standard of living during the marriage – asserted by the husband to be considerably more modest than that which now was claimed by the wife – but also upon what was reasonable in the circumstances of the case, bearing in mind that the wife now was living in Malaysia.

The judgment in the court below

47.  In the court below Judge Chan has written a careful and lengthy judgment of some 61 pages and 161 paragraphs; if I may say so, the effort put in by the learned judge has been substantial, albeit, as will shortly be seen, the results of his deliberations have been the subject of significant criticism in this appeal.

48.  After fully setting out the background – much of which for present purposes I have gratefully adopted in terms of the foregoing (and essentially undisputed) narrative as to the sequence of events – the learned judge sets out the applicable principles, unimpeachably reciting the necessity to inquire into all the circumstances of the case, including those matters set out in section 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192, and noting, consistent with recent authority, that the “overarching objective [is] to reach a fair outcome between the parties, and [that] there is no place for discrimination between the husband and wife in their respective roles” – citing White v White [2001] 1 AC 596, Miller v Miller and McFarlane v McFarlane [2006] 2 WLR 1283, Charman v Charman [2007] 2 FCR 217, and DD v LKW [2008] 2 HKC 134 – the latter, of course, being the landmark case in which the principles adumbrated in White, op cit., first were considered and applied by an appellate court in Hong Kong.

49.  The judge then proceeds to consider in detail the various major issues thrown up by this case, several of which have figured large in this appeal.

50.  In particular, he concluded that the lengthy period of pre‑marriage cohabitation between these parties did not alter his view that this must be placed in the category of a short marriage, commenting (at para 37):

“[the relationship] had been a long but unstable, turbulent and tumultuous relationship that eventually led to a shorter but equally unstable and turbulent marriage”

and further, under the specific heading of ‘Length of Marriage’, he states (at para 148):

“There is no question that this marriage lasted less than 3 years when the wife left in April 2000, and any attempts to stretch it to 2007/2008, as she appears to be doing with her argument that it was only until then when the husband finally realized that there was not to be any reconciliation and started to take these proceedings seriously, must in my view fail, as not only was it the wife’s evidence that in her mind the marriage was finished when the husband told her sometime in 2000/2001 not to return to their home in Hong Kong, but it was also on this basis that the court made the finding of their separation in April 2000 that led to its granting of the decree of divorce to her petition…”

51.  As to the wife’s complaint for compensation for loss of a career, he observes (at para 52):

“the wife’s case [is] highly speculative at best and ultimately fatal to her claim for compensation for loss of career, as it is plain from the evidence that she had not even begun to seriously work at any stage of her life, let alone to have a career…”

52.  In terms of the wife’s complaint as to ‘gross and obvious conduct’, the learned judge rejects the wife’s case, stating (at para 67):

“…even if the alleged violent behaviours of the husband were proved to be true, they do not in my view amount to such gross and obvious conduct that the court should take into account, or that it would be inequitable to disregard them.I therefore do not accept the wife’s case on this issue either.”,

albeit he does not disagree (at para 66) that such conduct clearly demonstrated the “emotional locking together” of the parties, but that it should more appropriately be viewed as part of the background and circumstances of this union.

53.  With regard to the crucial aspect relating to the assets of the parties – or, as it constantly been referred to in the hearing of this appeal, ‘the size of the pot’ – the judge notes (at para 69) that the wife’s assets “add up to no more than $1.8 million in total”, and comments:

“The main dispute between the parties on the size of the pot is clearly over the husband’s assets in particular his … debts and liabilities according to the schedule of assets produced by the wife’s accountant, which the husband claims he owes his father and others that should be taken into account when computing the net value of the total assets…

In the event, after considering in some detail the various loans which the husband maintained were owed by him to family members and/or companies, and recognizing that “the huge amount of these loans, more than $70 million in total” had a signal effect upon the husband’s net worth, and after considering the relevant figures, the judge finally concludes (at para 115):

“…I therefore arrive at [the husband’s] total net worth at $35.8 million, being $57.057 million less $21.254 million.” (emphasis added)

54.  In terms of the wife’s earning capacity, the learned judge adopts a relatively hard line; he comments (at para 121):

“There is no question in my mind that she is a smart, intelligent and impressive person with great talent in music, and it is therefore all the more difficult to fathom why she has virtually put her working career on hold for the past 8 years since separation with almost no income at all, when she did not have to keep the husband or his family company or to look after any dogs, if it were not, as the husband argues, for her unwillingness to work.I agree with Miss Yip [counsel for the husband] that the wife, with her talent in music, should be able to earn much more than her present monthly income of $1,500 by giving piano lessons, as even at a more comfortable and manageable 2 hours per day on average at the rate of what the husband believes she would be able to earn should get her an income of at least $30,000 per month, or better still, that she should return to pursue her Master degree which she had planned to do during her London years, so as to improve on her prospect of working as a full-time university lecturer in music…” (emphasis added)

55.  This hard line continues when the judge comes to consider the issue of the wife’s needs, in his view the only real aspect to be considered in resolving this case, and he observes at the outset of this discussion that “I can say outright” that he agreed with the husband’s contention that this is “a much inflated and exaggerated aspect of the wife’s case”, further commenting (at para 133):

“Like many of her evidence on their pre-marital relationship or the husband’s conduct, I find the wife’s evidence about the standard of living and lifestyle during their relationship/marriage smacked of inflation and exaggeration, and unsustainable on close scrutiny.”

After discussing her residential requirements and other expenses the judge rejects her claims that she needs $120,000 – $150,000 per month as “unreasonable and unrealistic”, and states (at para 145):

“Taking into account of the standard of living and lifestyle she used to enjoy during the marriage and the subsequent separation, as well as the evidence before me, and with proper adjustments made to various items as aforesaid, I propose to round up the wife’s personal expenses to a generous $30,000, bringing her total needs and requirement to $55,000 per month.This would give an income needs of $660,000 per annum, which translates roughly to a capitalized requirement of $11.3 million using the wife’s Duxbury calculation but substituting for the above figures.(emphasis added)

56.  As to the question of future accommodation for the wife, the judge notes (Judgment, paras 134-135) that the husband did not dispute that the wife should have her own accommodation, and that if she did not want, “for security purposes” to move into the Federal Hill property which he owned, then the husband believed that with the sale proceeds from this property and the lump sum from his offer that the wife easily could buy a decent house of similar size and standard in her preferred area for about MR650,000.With the addition of some capital for decoration, and additional sum of $500,000 was considered sufficient, and as for a car, the judge rejected the wife’s claim for a top BMW model, and again considered $500,000 as sufficient.

57.  Accordingly, the judge summarises the position (Judgment, para 158) in the following terms, a summary which forms the basis of his Order as made:

“I have earlier capitalised the wife’s income needs at $660,000 per annum, which now must be set against my findings of her earnings and earning capacity of $30,000 per month ($360,000 p.a.), giving a net annual sum of $300,000 which she would require from the husband to meet her needs (generously interpreted), and hence a capitalised income needs by using the same Duxbury calculation to arrive at roughly $5.6 million, which I would round up to $5.2 million.Adding her housing needs, decoration, a new car and a new piano as I have found above will give a total capital of about $9.2 million, but taking into account of the $1.5 million of her share portfolio, I arrive at a net sum of $7.7 million which she would require from the husband.Given his offer of the Federal Hill property valued at $2.25 million, this would mean a lump sum of $5.45 million against which should be set off the $1.2 million which he has earlier advanced to her, giving a net sum payable of $4.25 million.”

58.  With regard to the issue of contribution (and against which finding there is no appeal), the learned judge rejects this concept; he says (at para 146-147):

“Ms Yip [counsel for the husband] submits that this case is unique in that there is almost nothing to say about contribution in kind or in monetary terms, with the wife contriving to cast a role of a “mother” who contributed by looking after the dogs which is therefore negligible or unmeritorious, while monetary contribution was also unremarkable as the turbulent relationship had consumed all the energies of the husband who had achieved nothing to increase his personal portfolio, having let know his father’s expectations and had been unable to deliver standard performance, and at the end there was just a mutually destructive relationship with hardly any positive aspect, let alone positive contribution by either party to this marriage.

Mr Egerton [counsel for the wife] while acknowledging the husband’s contribution as a financial provider has conceded that the wife was never expected to be other than as a wife at home.Both submissions I agree just about sum up the uniqueness of this case as far as contribution, or the lack of it, is concerned.”(emphasis added)

59.  I have set out in broad terms the attitude and findings of the learned judge to these issues because the shape of the debate in the court below substantially reflects the manner in which this appeal was conducted.

60.  However, prior to examining these matters, it may be useful to set out the approach adopted by this court in this appeal.

The approach of the appellate court

61.  In terms of applicable principle, this case has been argued – as indeed was the position in the court below – on the basis of the principles set out in the English authorities of White and McFarlane, Miller, Charman, op cit., as interpreted and applied in the 2008 Hong Kong Court of Appeal case of DD v LKW, op cit., where it was held that the “reasonable requirements” principle in C v C [1990] 2 HKLR 123 was outdated, and should be replaced by the new “fairness” approach of White v White, the court in DD v LKW thereafter setting out the relevant principles governing the practical application of the “fairness” or “equality of division” approach.We are informed that this decision is shortly to be considered by the Court of Final Appeal, but for present purposes we take this to be the law currently in force in Hong Kong in dealing with matrimonial finance disputes.

62.  Thus, whilst each case will turn on its own facts, the following factors are at play:

(1) the sole objective is fairness;

(2) there must be no discrimination between roles of spouses as breadwinner and homemaker, the focus instead being on equality of contribution in their respective spheres;

(3) there is a yardstick or principle of equal division, to be departed from only for good reason;

(4) the three determinative factors or “strands” to be considered in the context of ancillary relief are:

(a) needs (generously interpreted)

(b) compensation, and

(c) the sharing principle.

63.  So far so good.Indeed, there was no dispute between leading counsel that this represented the current position as to operative principle, at least pending consideration of this area by the final appellate court, the difference between them arising only in terms of the application of such principle by the judge below.

64.  However, Mr Shieh SC, appearing in this appeal with Ms Yip for the respondent husband, took the opportunity at the outset of his submissions to add an additional, and significant, constraint.

65.  His position in “this wholly unmeritorious appeal”, as he boldly suggested this to be, was that this court should be careful indeed to interfere with the judgment of an experienced judge of the Family Court, who had seen and heard the parties, and who had formed very definite views about them, and that very considerable weight should be accorded to the observations of Lord Hoffmann in his celebrated judgment in Piglowska v Piglowski [1999] 1 WLR 1360, in particular at 1372D-1373E, that:

“An appellate court should resist the temptation to subvert the principle that they should not substitute their own discretion for that of the judge by a narrow textual analysis which enables them to claim that he misdirected himself…”

and that:

“The appellate court must be willing to permit a degree of pluralism in these matters” [that is, the differing considerations statutorily required to be weighed in the balance].

66.  What this submission really amounted to, it seemed to me, was that in this instance the judgment of the learned judge was not only, as Mr Shieh put it, “a prime example of care and fairness” but that it was effectively inviolate in terms of the primary findings therein, and accordingly that in the circumstances, wherein even the grant of leave to appeal, in Lord Hoffmann’s words in Piglowski (at 1373G), had had the effect of “killing the parties with kindness”, this unhappy dispute finally should have ended with the pronouncements of the learned trial judge.

67.  For my part I was, and am, wholly unable to agree with the contention that the judge’s analysis, and his findings consequent thereon, are inviolate, notwithstanding the wisdom of Lord Hoffmann’s general observations that there is a “penumbra of imprecision” inherent in all primary findings and the exercise of judicial discretion by an experienced judge, and the absence of any rule or principle as to which of the ‘section 7 factors’ are to carry greater weight than others.

The issues on this appeal

(i)  Length of the marriage

68.  The central premise upon which the learned judge acted in this case was that this marriage, albeit “wealthy” was “a short childless marriage which lasted less than 3 years as far as post-marital cohabitation as husband and wife is concerned”.

69.  Given that the date of the formal registration of the union between these parties in Las Vegas was 21 September 1997, and that the wife left for Malaysia on 30 April 2000, this statement is, of course, literally true.

70.  However, Mr Coleman SC, appearing on this appeal for the wife together with Mr Egerton (who appeared as counsel below) takes fundamental issue with the judge’s view that this union should be regarded as falling within the ‘short marriage’ category.

71.  He says, with some force, that to regard the situation thus is to miss the big picture, and that this was an intense and ongoing (and committed) relationship which began after their meeting in 1985 and which culminated in the formalization of this union in September 1997.

72.  Mr Coleman notes that although the wife’s evidence was that it was not until about March 2004 that she really thought that the husband had accepted that the relationship was over, and the Petition was filed in June 2005, the husband’s evidence was that he had “only taken the proceedings seriously” from around Chinese New Year 2008, as until then he had hoped for a reconciliation.

73.  Moreover, counsel maintained, analysis of the history of the parties’ relationship demonstrated the ‘interlocked’ nature of these two personalities, as indeed the learned judge had recognized in his judgment (at para 66) wherein he did not disagree with counsel’s characterization of “how interlocked the parties were both physically and emotionally throughout their relationship”, and that neither party was able to move on with their life “due to the ‘emotional connection’ preventing them from doing so, as emotionally they were ‘locked together’.”

74.  Thus, concluded Mr Coleman, the learned judge plainly had been in error in finding (Judgment, para 36) that this was a mere “student romance” which had come to an end after the parties left London in 1991, and that even though they had maintained a relationship, albeit on and off, up to their marriage in 1997, there was thus, as the judge incorrectly saw it:

“…a lack of permanence or commitment in that relationship which was in fact wrought with uncertainties and instabilities that it cannot be said to have moved seamlessly to marriage, and certainly not without any major alteration in the way they lived, as they were then living with their own respective family or at least in the case of the husband, in 2 different cities separated by a 4 hours flight…

and that (at para 37):

“The fact is that, no matter how close that relationship might have been, or how often the parties might have seen each other or travel together during the intervening period, there was simply no common household to share, and in my view no common intention to do so prior to the marriage which could be described as cohabitation, let alone one that should be included as part of the duration of the marriage.At best it had been a long but unstable, turbulent and tumultuous relationship that eventually led to a shorter but equally unstable and turbulent marriage.” (emphasis added)

75.  On the other side of the fence Mr Shieh maintained that this was no more than an “aggressive but unfair” argument of the wife to the effect that a long term relationship of boyfriend/girlfriend should count as years of marriage or cohabitation so as to influence the exercise of a ‘section 7 discretion’.He argued that in the present case the judge had been absolutely correct in his view of the situation, and that factually there was little or no cohabitation prior to the marriage, and that in any event it was not even a ‘seamless’ relationship because on the evidence the parties had had break‑ups in the period between 1995-97, and that at one stage the husband had even had another relationship.

76.  Indeed, he said, on the wife’s own evidence the years 1992-95 had been a “volatile period” between them, and that the relationship was so tumultuous that even on the night before the wedding they were having serious arguments, so that against this background the judge was perfectly entitled to place little or no weight on the existence of a long-term relationship of the nature now asserted to have been the case.

77.  A leading authority in this area is the case of GW v RW (Financial Provision: Departure From Equality) [2003] 2 FLR 108, in which Nicholas Mostyn QC, sitting as a deputy High Court judge, had to assess the ‘duration of the marriage’, and (at paras 32-35 of his judgment) confronted the questions of first, whether pre-marital cohabitation should be equated to marital cohabitation, and second, whether a period of estrangement should be excluded in assessing the length of the marriage?

78.  As to this, Mr Mostyn noted that White v White, op cit., had emphasized that the law in this area must move to reflect changing social values, and that he could not imagine anyone nowadays seriously stigmatizing pre-marital cohabitation as ‘living in sin’ or in lacking the quality of emotional commitment assumed in marriage; the deputy Judge continued (at para 33):

“Thus, in my judgment, where a relationship moves seamlessly from cohabitation to marriage without any major alteration in the way the couple live, it is unreal and artificial to treat the periods differently.On the other hand, if it is found that the pre-marital cohabitation was on the basis of a trial period to see if there was any basis for later marriage then I would be of the view that it would not be right to include it as part of the ‘duration of the marriage’.This was the finding made in the recent case of F v F (unreported) 14 January 2003 by Hartmann J in the High Court of Hong Kong…

By the same token I am of the view that it is equally unreal to characterize the 18-month period of estrangement, conducted under the umbrella of a divorce petition which alleged the irretrievable breakdown of the marriage, as counting part of ‘the duration of the marriage’…” (emphasis added)

79.  I confess that I have not found this unusual case easy to characterize, the more so because in turn this informs the basis upon which the present claim for ancillary relief should be approached, since this conclusion is reflected in the engagement (or disengagement) of the ‘strands’ of compensation and sharing, and at bottom impinges upon that which Baroness Hale in Miller v Miller, op cit, at 1317, termed “the ultimate objective [which] is to give each party an equal start on the road to independent living”.

80.  At the end of the day, however, I have come to the conclusion that the learned judge did misdirect himself and was incorrect simply in regarding this as a ‘short’ marriage, and that after taking all the circumstances into account, the practical reality was that for at least fully 15 years, that is, almost immediately after the parties met in 1985 until, at the earliest, the time of their separation, with the wife returning to Malaysia, this was a continuous union during which, in effect, the Las Vegas registration was, in date terms, a mere fortuity.

81.  As the wife observed at one stage during her evidence, “he [the husband] was my universe”, and looking at the background it is clear that from the outset she gave up everything in deference to conducting herself in the manner in which the husband considered was appropriate and proper for a person in his position; this had been the situation since she had moved in with him at the Sydenham Hill property in order to keep house and in order to look after the two dogs, which animals appear to have been regarded by both parties as their substitute children: “our kids”.

82.  Whilst admittedly this is a curious case factually, for my part I do not consider that the fact of continuous cohabitation is a necessary or conclusive indicia of a permanent union, which in my judgment most certainly existed between these parties during all those years; indeed, there is an argument that in practical terms this ‘emotional interlocking’ had continued even after the wife left Hong Kong in 2000, because, as Mr Coleman has observed, matters did not really come to a head until the husband’s farewell note of March 2004, finally enclosing divorce papers, wherein he stated that “after almost 2 decades of our relationship I have decided to pursue it no longer”.

83.  In my view this conclusion is crucial to the basis upon which the application for ancillary relief should have been approached, because on these, albeit unusual, facts there was thus no proper basis for departing from the ‘sharing’ principle by reason of the fact that, as the learned judge clearly regarded the position, this was no more than a “short, childless marriage”.

(ii)  Compensation

84.  If it be correct that the learned judge thus was in error in mischaracterizing this union, in turn this misdirection further is reflected in his views on the principle of ‘compensation’, which does not arise out of any issue of ‘blame’ or ‘responsibility’ but is intended as a mechanism, over and above ‘needs’, to assist in the fair redistribution of resources upon divorce.

85.  As Baroness Hale succinctly expressed the position in Miller v Miller and McFarlane v McFarlane, op cit., at para 140:

“A second rationale [for redistribution of resources], which is closely related to need, is compensation for relationship-generated disadvantage.Indeed, some consider that provision for need is compensation for relationship-generated disadvantage.But the economic disadvantage generated by the relationship may go beyond need, however generously interpreted.The best example is a wife…who has given up what would very probably have been a lucrative and successful career.If the other party, who has been the beneficiary of the choices made during the marriage, is a high earner with a substantial surplus over what is required to meet both parties’ needs, then a premium above needs can reflect that relationship-generated disadvantage.”

86.  In the same case Lord Nicholls made substantially the same point; he noted (at paras 13-15):

“In most cases the search for fairness largely begins and ends at [the needs] stage.In most cases the available assets are insufficient to provide adequately for the needs of the two homes.The court seeks to stretch modest finite resources so far as possible to meet the parties’ needs…

Another strand, recognized more explicitly than formerly, is compensation.This is aimed at redressing any significant prospective economic disparity between the parties arising from the way they conducted their marriage.For instance, the parties may have arranged their affairs in a way which has greatly advantaged the husband in terms of his earning capacity but left the wife severely handicapped so far as her own earning capacity is concerned.Then the wife suffers a double loss: a diminution in her earning capacity and the loss of a share in her husband’s enhanced income.This is often the case.Although less marked than in the past, women may still suffer a disproportionate financial loss on the breakdown of a marriage because of their traditional role as home-maker and child-carer.”

87.  Although the learned judge seemed to have had these principles in mind – he quoted the like passages in his judgment – nevertheless he took the view that this wife in this case did not deserve any recognition in terms of what she had given up as a potential career.

88.  He found (Judgment, at para 39) that this was a case of “an innocent and naïve young girl swept off her feet in her admittedly first romance” with a Cambridge-bound young man from a wealthy and socially prominent family, and that she had decided “there and then” to devote herself to him instead of her music career: “In other words, it was simply her choice of choosing romance over her future career” and that it was unfair, in his view, “for her now to put all the blame or responsibility entirely on the husband.”

89.  With respect, I find this a view with which it is difficult to agree; moreover, it seems to fly in face of the undisputed facts.

90.  For it was the husband’s admitted position, and indeed the judge’s own finding (Judgment, para 45), that the husband was concerned that their relationship could not be maintained if the wife had to travel extensively for concerts since “he might lose her”, and that he had objected to her engaging in the composition of film music not by reason of being unsupportive but because of his negative impression of the film industry.

91.  In any event, the husband believed that “he should be the bread-winner of the family” and, as the judge specifically observed (Judgment, para 45):

“It is also plain from his evidence that he was then concerned about the effect of the wife’s career as a concert pianist would have on their relationship, in particular when he clearly preferred that she kept him company during his traveling, which must in turn have affected the wife’s decision over her own career”.

92.  Notwithstanding his clear recognition of this fact, the judge nevertheless came to the view (Judgment, para 51) that “cogent evidence” as to the spouse’s loss of career was required before this ‘strand’ properly could be engaged, and thus that the court was required to consider appropriate compensation, in this context the judge apparently basing this view on the observations of Lord Nichols in McFarlane, op cit.,that, absent a proven track record, the wife’s future success was a matter for “speculation”.

93.  The judge in fact says (Judgment, para 52) that in terms of loss of career the wife’s case was “highly speculative at best and ultimately fatal to her claim for loss of career”, basing this on the fact that she never had seriously begun to work at any stage of her life, let alone to have a career, and that unlike more usual professional careers such as teaching, engineering and medicine, the aspiration to become a concert musician was “something so intangible”, and thus (Judgment, para 53):

“…even assuming the wife would become a concert pianist, renowned or otherwise, had she not decided to give it up for the relationship, there is simply no evidence before me as to how much she would have been able to earn from giving concerts, let alone other sources of income such as recordings and endorsements.In other words, there was simply no career as a concert pianist upon which she can base her claim for compensation.”

94.  I regret that I am unable to accept this analysis, which Mr Coleman was pleased to term a ‘compensation paradox’, namely that, on this line of reasoning, monetary compensation could be claimed for those who had some form of a ‘track record’ – such as a wife who had given up a job certain for homemaking, and thus was in position to advance ‘hard’ evidence of loss of earnings – but that someone such as his client, with little more than initial scholastic achievement and aspiration but with no such track record, thus was disentitled to this ‘strand’ of relief as now was developed in the existing jurisprudence.

95.  I agree with this submission.The problem in this type of situation is that, in instances wherein, as here, the principle of ‘compensation’ clearly is engaged on the facts, there is not always the evidence conveniently to hand with which to perform an appropriate calculation, which is precisely the difficulty the learned judge appears to have regarded as insuperable.

96.  With respect, this approach cannot be correct.True it is that compensation for ‘loss of a chance’ – for it is just that – is difficult fairly to compute, and often can only represent a factor which is placed into the discretionary ‘mix’ and given weight at the time of computing a final award, but in my view this is no reason simply to abandon the ‘compensation’ aspect and regard it as not even having been engaged, when on the current factual matrix it is obviously apposite and appropriate to include in any award of ancillary relief; indeed, on the present facts I should have thought, with respect, that this is a paradigm case, wherein the wife no longer pursued her studies, and had dropped everything, including giving up the potential for a burgeoning music career in order to care for and to be with the husband – and, what is more, at his request or, more probably, his insistence.

97.  Accordingly, to say that this is a matter of which no account should be taken plainly is a misdirection as to the correct approach, and thus entitles the appellate court to interfere with the conclusion of the learned judge, notwithstanding Mr Shieh’s admonishment to the contrary.

(iii)  Conduct

98.  In the court below the wife had pressed on the judge that the husband’s conduct was of a “gross and obvious” nature, in terms of his treatment of her and in particular episodes of physical violence, and in this court Mr Coleman, in his written skeleton at least, had submitted that it was inequitable for the judge to have disregarded this element, and to have considered, as he did, that such conduct should “more appropriately be viewed as part of the background and circumstances” (Judgment, para 66).

99.  However, it is fair to say that in his oral argument Mr Coleman did not press this aspect, and for my part I agree with Mr Shieh that the real complaint in this context was that the judge did not give this element the sort of weight which the wife obviously wished should be the position.

100.  It follows that I do not think that the judge can be criticized in this context for taking the broad view that he did of this aspect of the case.

(iv)  Wife’s Earnings and Earning Capacity

101.  The wife’s case in the court below, as recorded by the judge (Judgment, para 116) was that she had virtually nil income or earning capacity, and had been earning the equivalent of about HK$1,500 per month on average as a part-time music lecturer at a university, responsible mainly for one-on-one piano lessons together with some group lessons, and occasionally preparing students for their music examinations.

102.  The judge also notes that this position is “not acceptable” to the husband, who had taken the view that she is unwilling to earn for a living, that she had rejected the options of giving private piano lessons or being a full-time lecturer by reason of her not having a required Masters degree, or the means to put a grand piano (which in any event she does not own) at home.

103.  As for the law, the judge correctly recognized (Judgment, para 119) that at the wife’s age of 43, it generally has been recognized that it would be difficult, if not impossible, for a wife with no particular skill who has not been gainfully employed during the marriage to go out and find work on the breakdown of the marriage, nor would it be fair and just to expect her to do so if the husband has the means and resources to support her, and thereafter the judge cites the leading authorities in this area.

104.  However, the judge qualifies this position by reference to the specific statutory guidelines requiring the court to have particular regard to the earning capacity of each of the parties, and notes (Judgment, para 120) that the court now would expect a wife who is not encumbered with pre‑school age children to take such steps as are necessary to acquire or increase an earning capacity in order that she should not be financially dependent on her former husband in perpetuity, citing in this regard Singer J in T v T (Financial Relief: Pensions) [1998] 1 FLR 1072, at 1080E.

105.  Taking this as his key, the learned judge then observed (Judgment, para 121) that there is no question that the wife is “a smart, intelligent and impressive person with great talent in music”, and thus that it is “all the more difficult to fathom why she has virtually put her working career on hold” for the past 8 years of separation from her husband with almost no income at all, and at a stage when she did not have to keep the husband or his family company or to look after any dogs “if it were not, as the husband argues, for her unwillingness to work”.

106.  Thus, the judge agreed with the submission of Miss Yip for the husband (Judgment, para 121) that:

“ the wife, with her talent in music should be able to earn much more than her present monthly income of HK$1,500 by giving piano lessons, as even at a more comfortable and manageable two hours per day on average at the rate of what the husband believes she would be able to earn should get her an income of at least HK$30,000 per month, or better still, that she should return to pursue her Master degree which she had planned to do during her London years, so as to improve on her prospect of working as a full-time university lecturer in music which should not in my view interfere with her plan to invest in real estate, if she is indeed serious about it.”

107.  If I may say so, upon this aspect the learned judge has taken the wrong fork in this particular financial road, and for my part I am unable to accept this reasoning, which strikes me as incorrect and inappropriate in the present circumstances.

108.  In this context, four matters come to mind.

109.  First, it seems odd that the learned judge, whilst on the one hand being entirely dismissive of the wife’s “speculative” ‘compensation’ claim, should on the other now seek to invoke her musical talent in order to buttress the figure of $30,000 which it is said that she should be able to earn by way of income, or, “better still”, that she should now attempt to resurrect her music studies, notwithstanding that these were peremptorily abandoned at the insistence/heavy persuasion of the husband so many years previously in order to take care of him and his dogs at the time when this course fitted in with his wishes.

110.  Second, it seems equally odd that the figure of $30,000 should have been arrived at solely on the basis of the husband’s ipse dixit, with no reference to any expert, objective and unbiased evidence as to that which private piano teachers might be expected to earn on a monthly basis in Malaysia.This figure of $30,000 appears to be founded on the hypothesis of the wife giving two hours of piano lessons per day, that is, say 40 hours per month “at the rate of what the husband believes she would be able to earn.”The mathematics of this produces a rate of $750 per hour, and whilst in Hong Kong terms this may not be unusual, there was no evidence of what is the ‘going rate’ in Kuala Lumpur.Moreover, at the current exchange rate of MR1 to HK$2.2, this would translate into MR340 per hour, which is more than 5.5 times the rate at which the wife currently is being remunerated (at MR60 per hour) as a part-time lecturer.

111.  Accordingly, this monthly sum of $30,000 seems unrealistically high, and is a figure which appears to have been plucked from the air at the suggestion of the very party who stands most to gain from its inflation, in the sense that thereby the amount which he will be required to pay to his former wife is substantially reduced – hardly a fair or satisfactory state of affairs in my view.

112.  Third, if and in so far as the learned judge was influenced by the evidence of the wife (Judgment, para 117), apparently recorded as being that if she were to give piano lessons on a freelance basis to diploma students at home she could charge Malaysian Ringgit 300-400 per hour, the court has been told by Mr Coleman that, whilst the transcript appears inconclusive on the point, nevertheless his junior, Mr Egerton, believes that this evidence in fact was a reference to MR 300-400 per month and not per hour; in any event, and apart from the lack of specificity as to whether this figure referred to an hourly or monthly rate per student, there was no evidence of the demand in Kuala Lumpur for this level of teaching to warrant any finding that the wife would be able to teach 40 hours per month at that hourly rate.

113.  Fourth, that in any event this calibre of ‘home piano teaching’ would, as the judge recognized, mean the wife having to purchase a grand piano, which costs MR80,000 or more in Malaysia (I gather from the evidence that she presently is using an electronic/digital device as a substitute), and as to which the undisputed evidence of the wife was that this is something “which she cannot afford, and which also would be too big for her house in any event”.I recognize, of course, that in his final order the judge purported to have made provision for the purchase of such a piano, and possibly even for the purchase of a home which could accommodate the size of such an instrument, but to criticize the wife for not having earned to-date the sort of income the judge has in mind strikes me as a bit rich.

114.  It follows from the foregoing, therefore, that I am also unable to accept the conclusion of the learned judge as to the wife’s potential earning capacity.The view taken as to this element of the case seems to me to be significantly out of kilter, and based upon no proper admissible evidence.

(iv)  Wife’s assets

115.  The complaint which Mr Coleman makes under this head is that the learned judge was in error when, in considering the state of the wife’s assets, he took into account (Judgment: para 158) “the $1.5 million of her share portfolio” which, as counsel has pointed out, in real terms is not an ‘asset’ at all, since it is undisputed that this portfolio now is charged with the wife’s legal fees incurred to date.

116.  For his part Mr Shieh counters by saying that there is no legal principle which requires that when the husband makes financial provision for the wife he has to do so ‘net’ of the wife’s legal costs, otherwise in every case the husband will have to ensure that he pays an additional ‘buffer’ to cover costs the wife already has spent, thereby de facto resulting in a costs’ order against the husband in every case.

117.  Whilst Mr Shieh no doubt is correct in his description of the possible effect, it strikes me as inappropriate and unrealistic to include in the collation of the wife’s assets a share portfolio which is fully encumbered, and which in any event begs the question as to the appropriate costs order in any given case.In fact, the learned judge as yet has made no finding as to the costs incurred below – I am unsure why this appeal has come on for hearing before the parties had returned to argue the point before him – but, that aside, it seems to me wrong in principle to have equated a fully encumbered portfolio with that of an wholly unencumbered asset.

118.  In the event, the judge considered the wife’s assets (Judgment: para 69) thus:

“The asset position of the wife is simple, as aforesaid her share portfolio has been re-valued at about $1.5 million after a recent slide in the stock market, which together with some savings, insurance policy, pension and other personal items add up to no more than $1.8 million in total”

and whilst it may not greatly matter in the overall scheme of things, given the vast disparity in the wealth of this husband and this wife, it seems to me that the figure of $1.8 million is illusory as a matter of practical politics, and that in real terms the wife currently has no more than a few hundred thousand Hong Kong dollars to her name.

(v)  The husband’s resources: ‘the size of the pot’

119.  Undoubtedly this is the most contentious aspect of this case, and indeed of this appeal, and in my judgment merits detailed consideration and forms the key to a fair and equitable resolution of this matrimonial finance dispute.

120.  This issue forms a central part of the judgment below, with the learned judge extensively analyzing the position (at paragraphs 69-115); as he correctly remarked (Judgment, para 69):

“The main dispute between the parties on the size of the pot is clearly over the husband’s assets in particular his following debts and liabilities according to the schedule of assets produced by the wife’s accountant, which the husband claims he owes his father and others, that should be taken into account when computing the net value of his total assets…”

121.  The judge thereafter concerns himself with considering 4 separate loans, which are described as the ‘Jade Seal loan’, ‘the Magnicon loan’, ‘the brother’s [D’s] loan’, and finally, ‘the loan repayment to Dahoon International Ltd’, together with his interest in a company known as Harrow Asia Ltd.

122.  I have more to say about certain aspects of some these loans later in this judgment.However, more to the immediate point is that fact that, as Mr Coleman has pointed out – and indeed as Mr Egerton also had emphasized in the court below – these loans have formed the central element in that which Mr Coleman describes as “the massive variation of valuation” in the husband’s disclosed assets during the course of this action, whereby the asset valuation within the husband’s first ‘Form E’ bore little relation to his subsequent Form E valuations, this solely by reason of the subsequent claims as to the enormous debts allegedly owed to family members – and which, all other considerations apart, in any event would appear to be statute barred.

123.  In this connection the hard facts tell the story, and whilst the interpretation of this story clearly is a matter of judgment, for my part, for the reasons hereinafter adumbrated, I have been unable to accept some of the conclusions of the learned judge.

124.  As a matter of record the asset valuation sequence in the husband’s Form E valuations are as follows:

(1) Form E dated 16 August 2005 :HK$38,031,106

(2) Form E dated 13 October 2007 :HK$11,875,067

(3) Form E dated 16 April 2008 :HK$10,819,769

125.  Mr Coleman’s attitude is that so far as his client is concerned, none of these figures was, or was accepted to be, correct.He says that the learned judge failed to take proper account of the massive variation of valuation in disclosed assets, wherein such an enormous fluctuation was the result of the husband undervaluing his assets in the 1^st Form E, and by the subsequent claims to enormous debts owed to family members – and all this in context of the husband throughout having been advised by specialist solicitors and counsel, and himself being a Cambridge graduate with a degree in economics, a director of numerous companies, and a successful businessman.

126.  Counsel asserted that the 1^st Form E of August 2005, wherein he put his assets at HK$38,031,106 was “blatantly untrue”.He noted that by September 2006 the husband had put his assets at HK$58,049,644 (an increase of 52%) the differential being accounted for by, inter alia, the Federal Hill property and his Goldman Sachs account ($18,598,538); the agreement transferring the property into his own name was dated 28 January 2005, a matter of months before the 1^st Form E, and his suggestion that his ownership of this property somehow could have been ascertained by analysis of payments from his bank account was as risible as his suggestion that the Goldman Sachs account was an “oversight” by him or his previous solicitors.

127.  Mr Coleman further noted that the husband’s original figure for liabilities had been HK$2,775, 993, and yet in his 2^nd Form E these liabilities had increased from that figure to an “astonishing” HK$71,235,156, and his gross assets from HK$40,545,939 to HK$82,598,952; at this stage he also had mentioned for the first time a loan due to Dahoon International Ltd of HK$28,784,219.38, and whilst relying on his accountant’s report for a detailed explanation of this transaction, he then failed to disclose that he himself had signed to himself on Dahoon’s account a cheque of HK$28 million – a fact which had become apparent only after persistent inquiries from the wife’s solicitors.

128.  Thereafter, counsel said, in the 3^rd Form E dated 16^th April 2008 the husband’s liabilities are apparently reduced to HK$39,213,486, the HK$28.8 million loan to Dahoon International having been repaid on 20 February 2008, together with interest – albeit up to that date no interest had been mentioned.

129.  Thus, Mr Coleman submitted, in the matter of his finances the husband had shown himself prepared to lie on oath, and clinically to attempt to mislead the court, and that it was this ‘catch me if you can’ attitude, whereby significant assets initially were not disclosed, and thereafter the alleged liabilities hugely increased in order to reduce the resources available for distribution, which ought to have informed the learned judge’s approach, although regrettably this had not proved to have been the case.

130.  I agree with the thrust of this submission.The judicial treatment of these extraordinary – and apparently wholly self-serving – discrepancies is, if I may say so with respect, less than compelling, and in my view forms the most unsatisfactory aspect of this case.

131.  For his part the judge below clearly recognized that the third party loans would have a very significant impact on the evaluation of the husband’s resources; he observed (Judgment, para 70):

“It is plain that the huge amount of these loans, more than $70 million in total, which if taken into account would no doubt reduce the husband’s net worth very substantially, which in turn would have a serious impact on the wife’s claims, and naturally raise her suspicion over them as well as the husband’s credibility in the disclosure of his means, or rather his non-disclosure of them in his first Form E of 16^th August 2005, when he put his total liabilities, mainly credit card and bank loans, at a then significant $2.7 million, with a net asset of $38 million…”

132.  He also recorded the wife’s submission that this 1st Form E declaration was “blatantly untrue”, as by September 2006 the husband had increased his assets by more than 50% by adding his interest in the Federal Hill property, his Goldman Sachs account, and his Pacific Club membership with a total value of more than $20 million, her argument being that it was “simply incredible” for him to blame this on mere oversight or on his previous solicitors failing to make disclosure in his first Form E.He also records (Judgment, para 72) the submission made by Mr Egerton that two of the alleged loans, namely the $10 million from his brother and the $22.3 million from his father were acquired back in 1997, yet the first occasion on which the husband made reference to them was not in his 1^st Form E, but in his Answer of 27 October 2005 to the wife’s questionnaire when he disclosed the existence of these liabilities and that they had to be repaid with interest; further information about them was only given in yet another Answer dated 20 January 2007, accompanied by no documentation whatever, when the husband had stated that there were no explicit terms or conditions about when the principal and interest under these loans would be payable, and that in respect of the father’s loan in particular, it would be repaid “at such time that [the husband] was in a position to do so”.

133.  Further, the judge takes some care to set out Mr Egerton’s critical submission that the husband finally had disclosed the full details of these loans almost 2 years after his 1^st Form E, thus demonstrating that he was prepared to lie on oath in order to mislead the court, and that this evasive attitude had continued right up until the trial, at which point he had made yet further disclosure about his alleged loan due to Dahoon International, thus raising his total liabilities from “a mere $2.7 million then in 2005 to a staggering $70 million over a period of little more than 2 years”.

134.  Thus, as the judge summed up the position as follows (Judgment, para 74):

“In summary the wife’s case is that these loans to the father and brother should not be taken into account as they have only ‘emerged’ during these proceedings, that no repayments have been made all these years save for the $32 million during these proceedings, that they are sufficiently large that if real and repayable now should not have been “forgotten” by the husband when he made his 1^st Form E, and that there is no prior empirical evidence that the monies ‘loaned’ have to be repaid.”

135.  However – and I am constrained to say, most surprisingly given the established facts –whilst the learned judge appeared to agree (Judgment, para 78) that this sequence of events had entitled the wife to “raise her eyebrows” over the timing of the disclosure of his various debts due to his father and brother, “some of which were incurred years before his 1^st Form E”, and that they warranted “thorough investigation in each and every one of them in particular over the necessity of their repayment with interest”, nevertheless he goes on to express the view (Judgment, para 76) that whilst it was true that the husband or his former solicitors should better have clarified the summary of his net worth in his Form E, “I do not think [that there] was any attempt on the part of the husband to conceal” his assets.Indeed, on a fair reading of this part of the judgment the judge appears to have accepted the overall probity of the disclosure as given by the husband, notwithstanding the circumstances in which the disclosure of the alleged liabilities had emerged.

136.  In light of the undisputed history of events, I confess that I find it extraordinary that the husband’s financial probity thus is accepted, and that the judge sees fit to proceed upon that basis.

137.  Be that as it may.His analysis of the husband’s assets and liabilities is extensively set out in the Judgment (at paragraphs 114-115 thereof).The assets as found to exist, before taking into account liabilities, comprise the following:

“Assets :

Landed properties	$ 6.686m
Interest in all bank accounts	$22.588m
Shareholding in private companies	$-3.886m
Stocks and shares	$ 6.076m
Debts owed to him	$23.767m
Pensions	$ 0.500m
Additional adjustments	$ 1.326m
Total Assets:	$57.057m ”

138.  Although the judge identified two items of liability, namely, (1) a loan from his brother (“D”) of $21.254 million (inclusive of interest) and a loan from his father of $17.894 million, he found that the father’s loan was a long-term liability which was not to be set against the husband’s current assets, and that only the brother’s loan of $21.254 million fell to be deducted as a liability in arriving at the sum of $35.8 million as representing the husband’s net assets (that is, $57.057 million minus $21.254 million).

139.  With respect, I find it difficult to agree with this conclusion, and I do not do so.

140.  At this juncture, it is worth considering the time-line, and highlighting certain matters that occurred following the commencement of this trial in November 2007 – all of which are apparent on a careful review of the assembled papers –absent which the cogency and extent of the wife’s challenge to the husband’s asset‑position cannot, I think, fully be appreciated.

141.  After the initial 4 hearing days, the trial was adjourned, part‑heard, on 15 November 2007, and prior to the resumed hearing on 5 May 2008, the following events occurred:

First, on 6 December 2007, the husband signed a “Memorandum of Acknowledgment” addressed to the father acknowledging that he was indebted to his father in the sum of $17,897,074 being the outstanding principal sum of a loan advanced to him, and also for interest accrued on that outstanding principal sum calculated from 1 October 1997 to the date of repayment at 1.5% below prime.The husband’s 3^rd Form E, as revised on 16 April 2008, disclosed that the loan in question was originally for $22,385,000 (“the Magnicon loan”) but that part of it (i.e. $4,490,926) had been set off against debts due to the husband from Dahoon Co Ltd (“the Dahoon set-off”). The date of the set-off was not stated.

Second, on 20 February 2008, the husband made a payment to Dahoon International Ltd (“Dahoon International”) of $32,855,577 (“the Dahoon International repayment”). The loan of $28.8 million had been disclosed in his 2^nd Form E dated 13 October 2007.The repayment of a loan inclusive of interest was disclosed in the 2008 Form E.

Third, by letter dated 2 May 2008, the father’s solicitors wrote to the husband regarding the Magnicon loan, the Dahoon set‑off and stating that the father had “agreed to charge interest” on the principal amount outstanding at 1.5% below prime calculated from 1 October 1997. The husband was informed that the father expected repayment with interest within 30 days. Pausing here, it is worth remarking, by way of contrast, that there was no written demand from Dahoon International for repayment of the Dahoon International loan, much less for any interest in respect of the same.

142.  Against this backdrop, therefore, Mr Coleman submitted that the following items should be ‘added back’ as part of the husband’s net assets available for distribution: (1) the Dahoon International repayment; (2) the Dahoon ‘set off’; and (3) the brother’s ‘loan’, including interest.

143.  I consider these elements in detail below.

The Dahoon International repayment

144.  Dahoon Company Ltd (“Dahoon”) is a company owned and controlled by the husband’s father, who holds 99% of its issued share capital.The husband and the other family members together hold the remaining 1%.

145.  In 1991, a new grant of land in Tsuen Wan was made to Dahoon, the development of which became the GV project comprising 18 houses.The husband became involved in that project from about 1993.In 2001, as part of a restructuring exercise, Dahoon entered into an agreement to sell the project to Dahoon International for $200 million to facilitate the sale and leasing of the houses by Dahoon International, and the project was charged to Wing Hang Bank to secure general banking facilities by a legal charge dated 11 December 2002.

146.  The husband, who was in charge of the project, was appointed a director of Dahoon International.Dahoon International’s share capital consisted of 2 issued shares: one was held by the father and the other single share was held by Dahoon.Insofar as the judge found (Judgment, para 99) that the husband was given 1 share (the other being held by Dahoon), he appeared to have misunderstood the evidence.

147.  On 5 January 2006, the husband, with the father’s consent, signed an agreement on behalf of Dahoon International to sell the GV project to Evermax Ltd for $144 million. The agreement was made pursuant to an earlier provisional agreement, dated 20 December 2005, also signed by the husband for and on behalf of Dahoon International. By 5 January 2006, deposit payments totalling $28.8 million had been paid by Evermax to Dahoon International.The balance of 80% of the purchase price was payable on completion scheduled for 28 February 2006.

148.  With his father’s permission, on 12 January 2006, the husband signed a cheque on behalf of Dahoon International to himself in an amount corresponding to the amount of the deposits received, that is, in the sum of $28.8 million.This was said to be a loan to him for his leasing business in Shanghai, his request for a loan (for an unspecified amount) having been made in his father at the end of 2005.

149.  The judge found that the sale to Evermax never had proceeded to completion due to objection from family members, who were unhappy with the sale price. Evermax in fact commenced proceedings on 2 March 2006 against Dahoon International for specific performance/damages. This action was discontinued on 7 February 2007 by a consent order. The Judgment records (para 104) that the basis of the settlement was the refund of the deposit of $28.8 million by Dahoon International upon a cancellation agreement between Evermax and Dahoon International signed by the father.The cancellation agreement itself was dated 15 February 2007, some 8 days after the date of the consent order discontinuing the action.

150.  Later that year, the trial for ancillary relief began. The ‘Dahoon International repayment’ then was made during the adjournment, on 20 February 2008, but was not disclosed until the husband filed his 3^rd Form E on 16 April 2008, shortly before the hearing was due to resume.

151.  The trial resumed on 5 May 2008.According to paragraph 6 of a note relating to “Status of the case since Nov 2007”, as prepared by the wife’s counsel, the husband then had yet to produce, inter alia, the audited accounts for Dahoon International for 2006 and 2007; it would appear that the 2006 and 2007 accounts for Dahoon International were only produced sometime later that same day.

152.  The judge rejected the wife’s submission that the Dahoon International repayment should be added back to his assets.That sum comprised the loan of $28.8 million and interest of $4,055,577.

153.  With regard to this loan, it is instructive to consider the treatment of the loan of $28.8 million as made to the husband, as well as the Evermax transaction itself, within the audited accounts of Dahoon International.

154.  First, contrary to reasonable expectation, this loan was not recorded in Dahoon International’s accounts for the financial year ended 31 March 2006; rather, it is recorded in the accounts for the following year.The explanation proffered for this accounting oddity was that it had not been decided ‘how to book the loan’.It would appear that the judge’s intervention during cross-examination put paid to Mr Egerton’s attempts to explore the matter further.Second, a puzzling feature emerging from the accounts of Dahoon International is that while the Evermax litigation is recorded in note 19 to the 2006 financial statements, the 2006 accounts do not record the receipt of $28.8 million.Nor do the 2007 accounts record the refund to Evermax.On any view, such accounting treatment was ‘unusual’, if not seriously deficient: it cannot be correct to treat the receipt and refund as if they had never occurred.

155.  Whether the repayment of the loan by the husband is an inevitable consequence of having to ‘unscramble’ the Evermax transaction requires closer analysis.It has not been suggested that the Dahoon International repayment was necessary in order to effect the Evermax refund, nor that there was any understanding or agreement to that effect.They were certainly not simultaneous events: the latter had occurred almost a year earlier.

156.  Given the acquisition cost to Dahoon International of the GV project of $200 million, objection to a sale at $144 million is perhaps understandable. But objection to the Evermax transaction must be distinguished from objection to the making of an unsecured and interest-free loan to one of the directors. There is no evidence to suggest that any of the other minority shareholders objected to the loan as such: the father (who owned 99% of the company) had consented to the advance to the husband, and the evidence was that the father “had the final say” in matters concerning Dahoon International.

157.  Further, the fact of the loan having been made is one matter; when it had to be repaid is quite another.The two should not be elided. Repayment of the loan in February 2008 by the husband does not establish that it had to be repaid on that date, a matter which does not appear to have been addressed by the judge at all.

158.  In my view a plausible explanation was required as to why the repayment of the loan was necessary at that particular juncture; there had, after all, been no written demand from Dahoon International for repayment.The matter is rendered the more acute when viewed in the context of the time-frame, and when coupled with the apparently gratuitous and voluntary payment of interest upon this loan.

159.  For my part, in the absence of any evidence from the father (whose witness statement was withdrawn on day 5 of the trial, this being the first day of the resumed hearing in May 2008, upon notice being given to cross-examine), I do not consider that the judge reasonably could have concluded that the husband’s burden of satisfying the court that the amount paid was due and payable as at 20 February 2008 had been discharged.In those circumstances, I do not consider that there was any reason, much less sufficient reason, to warrant any conclusion that the $28.8 million loan had to be repaid when it was, conveniently, in the middle of the trial.

160.  The ineluctable and irresistible inference from the circumstances highlighted above, together with the timing of the repayment (made several months after the trial had commenced at a time when it was part heard), is that the sole purpose of the payment was cosmetically to reduce the husband’s apparent assets.

161.  In my view, therefore, the repayment of the loan of $28.8 million to Dahoon International should have been added back to the husband’s assets, and that the learned judge was in error in declining so to do.

162.  As to the interest component on this loan, it is also unclear upon what basis the judge considered that the loan in fact attracted interest, given the unambiguous terms of note 10 to the financial statements of Dahoon International for the year ended 31 March 2007 (approved by the board of Dahoon International on 30 January 2008), which reads:

“10. AMOUNTS DUE FROM A DIRECTOR

Particulars of amounts due from a director/related companies disclosed pursuant to section 161B of the Companies Ordinance are as follows:-

Name of Director : [the husband]

Balance at 31.03.2007 : $28,784,219

Balance at 31.03.2006 : NIL

Maximum amount outstanding during the year : $28,784,219

The amount due from a director and related companies were unsecured, interest free and carried no fixed terms of repayment.”

163.  In his evidence-in-chief, the husband said he was “not sure” why interest was repayable; subsequently he proffered an explanation to the effect that it was because Dahoon International had “suffered damage”, and that such “damage” meant the “loss of interest”.

164.  The transcript reveals that on re-examination the husband was referred to note 14 to the 2007 audited accounts for the first time.This stated inter alia, that during January 2007 the mortgage loan had been uplifted to the amount of 48 million, that it was repayable by 240 monthly instalments of 330,000 each, and that interest was charged at 5.5 per annum, subject to the fluctuation of the market rate.The following exchange then occurred:

“ Q. …Now, what does this tell you?

A. The repayment – the – of the – of the deposit was financed by a bank loan.

Q. I see.So the repayment of that 28.8 million to Evermax right?

A. Yes, madam.

Q. Was financed by a bank loan.

A. Yes, madam.

Q. Who borrowed the loan?It’s obvious, yes.Who…

A. The company.

Q. Yes, the company.

A. Yes, madam.

Q. And interest was paid at 5.5 per cent per annum, right?

A. Yes, madam.”

(Tr. 511K-511P)

165.  The audited accounts for 2006 and 2007 show that Dahoon International had a mortgage loan for the financial years ended the 31 March 2005, 2006 and 2007.The amounts outstanding for the years ended 2005 and 2006 were approximately $26.4 million and $24.9 million respectively. That which note 14 of the 2007 accounts shows is that additional borrowings (of the order of $23 million) were obtained from the bank in January 2007, the mortgage loan outstanding at year end being $46.4 million; however, the notes yield up no further information as to the application of the additional loan.

166.  The husband’s evidence in re-examination sought to suggest that the refund was financed by way of a bank loan. However in my view, that evidence should be rejected.First, it was not led in-chief, appearing only in re-examination, so that Mr Egerton, counsel for the wife, had no opportunity to explore the point.Second, there are in any event intrinsic difficulties with the husband’s evidence.Liability to pay interest is flatly contradicted by, and inconsistent with, note 10 to the 2007 audited accounts (as approved by the board on 30 January 2008), which covered the financial year up to and including 31 March 2007.Nor do the management accounts of 31 March 2007 record any interest as being payable. Further, the amount of the loan raised did not correspond to the amount of the deposit to be refunded: it was of a lesser amount.In any event, it was not the husband’s evidence that the additional loan was obtained partially to fund the repayment to Evermax.

167.  Even if one were to take at face value the husband’s belated suggestion that the refund was financed by a bank loan, the following passage from the husband’s re-examination, as to the rate of interest payable by him, strikes me as not worthy of belief:

“ Q. And it’s put to you that for the accounts ended 31 March 2007, it says here, “The amount due from a director and related companies were unsecured, interest free and carried no fixed terms of repayment.”Your answer was, “At that time, yes.”I remember distinctly that was your answer.

A. Yes.

Q. Yes.But you were not asked to clarify what that answer meant, could I ask you what that answer meant, “at that time, yes”?

A. We can’t decide on the -- on the interest rate.

Q. Pardon?

A. We could not decide on the interest rate.

Q. So what happened subsequently?

A. We decided on the interest rate payable to the company recently and then now I repaid the loan.”

(Tr. 497S-498E)

168.  Thus, the husband’s evidence effectively amounted to this: notwithstanding the terms of the loan from the bank, the interest the husband was to pay on that loan was something that only recently had been agreed, namely at prime less 1.5% compounded monthly (the schedule of interest calculation refers); this rate not only well exceeded that payable to the bank of 5.5%, but also interest was paid for a period a year before any loan was raised from the bank. One might ask rhetorically, why?As to that, the answer seems to me to be tolerably clear.

169.  It follows that, in my view, the judge’s conclusion as to interest also is unsustainable, and that the interest element of $4,055,577 also should have been added back to the husband’s assets.

The ‘Magnicon loan’

170.  This arose in this way.In the mid-90s, the husband and his father were the only shareholders of Magnicon, each holding 50% of the issued shares.The father had injected into Magnicon a piece of land which was its only asset.In about 1997, the husband successfully had negotiated with the government for a new grant at a premium of $16.23 million.He raised $6.23 million from his own resources.His brother, D, caused Freeman Investment Corp., a private investment company he owned, to pay the balance of $10 million direct to the government on 30 May 1997.

171.  Later the same year, it seems by 1 October 1997, the land was sold for $61 million.After deducting the premium of $16.23 million, the net profit arising from the transaction came to $44.77 million, resulting in a net profit of $22.38 million for each of the husband and the father.The husband apparently was allowed to retain his father’s share (that being the ‘Magnicon loan’) as working capital for his other business pursuits and investments.Accordingly, the amount of the Magnicon loan was $22.38 million.Magnicon was wound up in 2003.

172.  According to the husband, interest is payable on this loan and the loan itself is repayable upon his father’s request, or when he is able to do so.Pausing here, although the judge appeared to accept the husband’s explanation at face value, it should be noted that he considered that the husband’s obligation to repay depended on the husband’s ability to repay.As the ‘Dahoon set-off’ operates as a partial repayment of the Magnicon loan, the husband’s ability to repay at the date of the Dahoon set-off thus becomes relevant.

173.  However, the ‘Dahoon set-off’ disclosed in the 3^rd Form E of April 2008 did not state when it had occurred, although it would seem from the self-serving Memorandum of Acknowledgment of 6 December 2007 that this set-off had taken place by that date but after the commencement of the trial.The event triggering the set-off is even less clear. As earlier noted, the judge considered the Magnicon loan to be a long-term liability and ought not be set against the husband’s current assets in arriving at his total net worth.In those circumstances, the logic of accepting the ‘Dahoon set-off’ is difficult to follow.In my view, in the absence of compelling evidence establishing the necessity of such a set-off at that particular time, it should have been disregarded, such that the entire Magnicon loan, and not just a reduced amount, should be treated as a long‑term liability, and thus should not be taken into account in arriving at the husband’s total net worth.

174.  Or, to put the matter another way, the ‘Dahoon set-off’ amount of $4,490,926 should, it seems to me, have been added back to the husband’s assets.

D’s [the brother’s] loan of $10 million

175.  The brother’s loan of $10 million arose out of the Magnicon project which I have described.The judge found that this loan from D carried interest, although D’s evidence at trial was that interest was mentioned, but that no fixed rate was agreed because he expected “a quick repayment”. At 1.5% below prime, interest accrued up to 1 April 2008 came to $11,254,014 which exceeded the amount of the loan itself.The total amount the judge found owing to D was $21.254 million.

176.  The brother must have known about the sale (which took place within months of the advance) and the profit it produced.However, the court has not been shown any evidence explaining why the loan was not repaid when the land was sold since, plainly, Magnicon could be said to have been awash with cash at that time.The husband’s ‘explanation’, in his 2^nd Form E of 13 October 2007, to the effect that he “kept all the proceeds and had not repaid” the 10 million to his brother is simply a factual assertion and constitutes no explanation whatever.

177.  It may well have been that the audited accounts of Magnicon would have shed some light on the loan. Nevertheless, although the wife had sought the production of those accounts, they never were forthcoming.I do not consider the fact that the company went into liquidation in 2003 is necessarily an answer.

178.  The earliest ‘demand’ from D for repayment that is in evidence is a letter dated 31 May 2000.There is no apparent reason why this demand should have been made ‘out of the blue’, as it were, although coincidentally the demand was made within weeks of the separation of the wife and the husband; nor is there any explanation as to why the husband was not required to make repayment to D upon completion of the sale, given the significant amount of profits the transaction apparently had generated.Subsequent requests for repayment, at a time manifestly advantageous to the husband, must ring hollow when no demand appears to have been made when it was most natural for such a demand to have been made, quite apart from the issue of statutory limitation which was never addressed.

179.  Moreover, as to the element of interest on the brother’s loan, D’s evidence in cross-examination was that the rate never was mentioned in his discussions with the husband, although in re-examination his evidence was that over Chinese New Year, either in 2008 or 2007, he had agreed with the husband that interest would be at prime rate, and that his accountant, who had discussed the matter with the husband, had prepared a schedule of interest.Accordingly, in view of that evidence, and quite apart from the limitation issue mentioned above, it seems to me that in any event the judge plainly was wrong in deducting the ‘interest element’ of the loan in ascertaining the husband’s assets.

Summary

180.  It follows from the foregoing analysis, therefore, that in my judgment the wife’s challenges possess very considerable merit, with the result that in my view the following amounts should also have been taken into account in ascertaining the husband’s assets:

	HK$
The Dahoon International repayment	32.855 m
The Dahoon set-off	4.491 m
The brother’s loan	21.254 m
	58.6 m

Accordingly, when added to the assets as identified by the judge (Judgment, para 114), upon such recomputation the husband’s total assets would come to the figure $115.657 million; alternatively, if and in so far as the learned judge was incorrect only in his treatment of the interest element of the brother’s loan (which amounted to HK$11,254,014) this figure would be $105.657 million.

181.  I recognize, of course, that not only are the foregoing figures hugely at variance with the relatively small sum of $35.8 decided upon by the learned judge as representing the husband’s available asset pool, but also that this conclusion is considerably removed from this aspect of the case as was advanced by Mr Coleman, leading counsel for the wife, on this appeal.

182.  Towards the end of his submissions Mr Coleman was asked to crystallize the figures he was propounding as representing the available ‘pot’, and over the lunch adjournment he produced, as requested on a sheet of A4 paper, a supplementary summary of the position which he maintained should have been found by the learned judge below.

183.  His argument, as thus expressed, was that since the husband plainly had not made full and frank disclosure, thus precluding accurate identification of the size of the available ‘pot’, it followed that in the circumstances all adverse inferences as reasonable could be drawn against the husband thus should be drawn.

184.  Accordingly, by looking at the assets of the husband as could be shown to exist, in Mr Coleman’s submission they totalled either in or about the sum of $94.5 million, or, if the Dahoon loan principal of $28.8 million was to be deducted therefrom, around $65.7 million, such differential being dependent upon the reaction of the court to the Dahoon loan, and on the assumption that adverse inference was not to be drawn from the lack of any loan document, the signing by the husband to himself of the cheque for $28 million, the lack of any evidence that it was a loan requiring repayment at some point during these proceedings – as indeed appeared to have occurred – and the highly questionable features surrounding the other transactions.

185.  To either of these sums, said counsel, must be added the fact that the husband plainly had other significant corporate resources, on which he had drawn throughout the relationship for the benefit of both parties, and on which it is reasonably assumed he will continue to be able to draw; for example, apparent access to interest-free capital was a resource, as is the likely benefit to accrue from his expectation of inheritance.

186.  Mr Coleman further emphasized that the report of the wife’s expert accountant had not been challenged, and also that even if there had been little accretion of assets during the marriage, so that there was no marital acquest as such, in itself this was evidence of the fact that the husband had not had to rely upon his own generation of wealth or income because he could rely – as he obviously had, and continued to do – on the resources and support of his wider family, in particular that of his extremely wealthy father.Indeed, throughout his years with the wife, beginning with the transfer to him of the Sydenham Hill property in the 1980’s, such financial support had been patent, and there was no reason, Mr Coleman said, not to expect such support to continue.

187.  Moreover, issues of wider family wealth apart, it was, counsel asserted, a self-evident proposition that the husband had a high earning capacity as would allow him to refill the capital coffers upon payment of a lump sum to the wife, in contradistinction to the current lamentable financial position of the wife.

188.  Thus, Mr Coleman concluded, approaching the matter by reference to the three ‘strands’ of needs (generously interpreted), compensation and sharing, he submitted that a figure of in or around $40 million was appropriate to meet the objective of a just result which would serve to provide an equal start on the road to independent life.

189.  This approach vigorously was criticized by Mr Shieh as far too ‘broad brush’, and as inherently unfair to his client.

190.  He made the point that the whole subject of late disclosure had been ventilated fully before the judge below, who had made the findings that he had, and that in particular in October 2005 the husband had made voluntary disclosure of the loans due to his brother and his father in his Answer to the wife’s Questionnaire.

191.  Moreover, said Mr Shieh, the attack on the husband about the Dahoon International loan also had been canvassed in detail before the judge, who clearly had been well aware of the need to be vigilant and critical in his analysis of the husband’s allegations of the loans owed to third parties, and that even against this heightened standard of scrutiny the judge still had accepted the husband’s case as to the genuineness of the Dahoon loan, and of his repayment thereof, and thus that in the circumstances it was the judge’s evaluation of the position which should carry the day.

192.  As to the “ambitious attempt” to tap into the resources of the husband’s tycoon father, and into the value of the family’s interests in listed companies, Mr Shieh asserted that there was no legal principle deeming the property of a rich man to belong to his sons or that rich fathers are likely to succumb to pressure to pay off a son’s debts or maintenance.He said that the law on ‘third party resources’ was that as set out in Thomas v Thomas [1995] 2 FLR 668 and TL v ML [2006] 1 FLR 1263, as had been correctly cited by the judge, and it is therefore a straight matter of fact as to whether a paterfamilias is, or is not, likely to allow his resources thus to be ‘tapped’ – and in this regard the judge had made a clear finding (Judgment, paras 129-132) that the husband could expect no further bounty from his father.Nor had there been evidence to demonstrate that there was a willingness on the part of other family members to allow their listed shares to be utilised for the benefit of funding the wife’s future “luxurious life”.

193.  In any event, Mr Shieh submitted, it was incumbent upon the wife to articulate, in dollars and cents terms, the precise figure she wished the court to find or infer to be the husband’s wealth and associated family resources, the better to articulate how these matters impacted upon the ‘size of the pot’, and by what route she now sought to justify a particular award – and that in the present case the obviously “haphazard nature” of the wife’s case was telling, since in the skeleton filed on her behalf she simply had plucked a figure from the air of “in the order of HK$40 million”, absent either reasoning or assistance to the court.

194.  Notwithstanding Mr Shieh’s urging this court to accept the findings of the judge below, and thus effectively to ‘swat away’ the submissions made on behalf of the wife that, when looked at in its totality, something obviously had gone very badly wrong in the judge’s assessment of the husband’s available resources, I have come to the firm conclusion that the learned judge below was in clear error in accepting the good faith and probity of the husband’s disclosure, and that notwithstanding the substantial portion of his judgment devoted to this topic, the learned judge never really had got to grips with, nor, with great respect, properly had understood the issue of the available ‘pot’, although it must be recognized that the machinations of the husband in terms of his disclosure of his assets and the inflation of his liabilities no doubt created an efficient smoke-screen, and certainly served to obscure the reality of the situation – which no doubt was precisely the intention.

195.  In my judgment, to borrow Mr Coleman’s phrase, the husband indeed has been playing ‘catch me if you can’ with the court, and that, when he realized the reality of and the significance of the asset declaration, during the adjournment of this ancillary finance hearing he embarked upon an egregious and entirely self-serving course of conduct.

196.  Rarely can there have been such a dramatic ‘reduction’ in the valuation of available assets – from some $38 million in August 2005 to some $10.8 million in April 2008 – on the part of this scion of a tycoon father, with all the trappings of, and access to, considerable wealth and corporate position.Thus, the husband’s description of himself as “a salaried man just like anyone else in my company since 1991”, and that his tax returns would demonstrate his income, and thus that “it was impossible that I could maintain the lifestyle that the petitioner alleged”, seems to me to be an absurd characterization in the circumstances.

197.  The fact also remains that, save for the loans issue, the husband did not challenge the wife’s accountant’s expert report, and in particular the reference therein to the value of the family business interests (at $1.778 billion) was not challenged.So that even if there had been little actual accretion of assets during the marriage, there was clear evidence that the husband had not had to rely on his own generation of wealth or income because he could rely on the resources and support of his family, in particular that of his father.

198.  In fact, as Mr Coleman submitted, given the finding that the debts claimed by the husband to be owed to his father (even if real) were not in fact likely to be called upon at any material time such that they should not be taken into account in calculating the husband’s net asset value, the learned judge below also had failed to take the logical step from that finding, which was to realize that the husband could and would be the recipient of significant family resources and support, both during his father’s lifetime and, in all probability, by way of inheritance.

199.  I agree.Throughout his time with the wife, the husband clearly had the benefit of his parents’ financial support, beginning with the transfer of Sydenham Hill to the husband in the 1980’s, and there is no reason to anticipate that such support will no longer continue.

200.  If therefore, as I now hold, the learned judge was significantly in error in accepting, it must be said relatively uncritically, the husband’s evolving (and hugely questionable) case as to his net asset value, the question arises as to what value this court should ascribe to his asset base, given Mr Coleman’s expressed alternatives of $94.5 million or $65.7 million, and further in light of the calculation which emerges after detailed examination of the documents and which, on the basis hereinbefore explained, would appear to put the figure at at or around HK$115 million.

201.  At the end of the day, it seems to me that the best, and perhaps the fairest, way of approaching this conundrum, is to place to one side my own evaluation of the probable position – in which context I gratefully acknowledge the invaluable insights of Le Pichon JA - on the basis that this figure, and the rationale therefor, never was mooted during this appeal, and given that Mr Shieh for the husband has had notice only of the alternative figures postulated by Mr Coleman.

202.  On this basis, therefore, if I am to choose between the lower or the higher figure propounded on behalf of the wife, in light of my conclusion as to the husband’s calculated efforts in this case to represent to the court the lowest possible asset base, and after factoring in the residual uncertainties, I am prepared to approach this matter on the basis that the ‘size of the pot’ is HK$95 million, whilst at the same time noting that, in my view and for the reasons hitherto explained, this figure almost certainly is to err upon the distinctly conservative side.

Decision

203.  As the result of the foregoing, therefore, in my judgment this appeal on the part of the wife must be allowed, and that the award of the learned judge made in her favour, amounting in total to no more than HK$7.7million, consisting of the Federal Hill property valued at approximately $2.25 million and the lump sum of $5.45 million (against which was to be set-off the sum of $1.2 million already advanced), leaving a net lump sum of $4.25 million, is a financial award which, if I may respectfully say so, does not come close to doing justice in the circumstances of this particular case.

204.  This begs the question of what the appropriate award should be.

205.  Contrary to Mr Shieh’s persuasive submissions, and indeed contrary to the learned judge’s findings, in my view in the circumstances of this case the “sharing” and “compensation” principles indeed are engaged, and cannot simply be brushed aside on the basis that, as the judge held, this is purely a “needs” case.

206.  However, I of course accept, as Mr Shieh has pointed out, and as the courts in Hong Kong have emphasized, that “each case must be decided on its own facts and on its own merits” and that there is a danger of “decreeing a principle which is applicable in all cases” (per Rogers VP in W v H and Z, unrep., CACV 127 of 2008, at para 48).

207.  I also accept that even the law of England, as it has now developed in this area, and the principles of which currently are applicable in Hong Kong, does not necessarily dictate an equal sharing of assets; as Baroness Hale expressed the position in Miller, op cit. (at para 142) “of course, an equal partnership does not necessarily dictate an equal sharing of assets”, although by the same token she commented (at para 143) that “there are many cases in which the approach of roughly equal sharing of partnership assets with no continuing claims one against the other is nowadays entirely feasible and fair”.

208.  The answer, perhaps, is that ultimately it all depends on the proved circumstances, and upon the ‘feel’ of the court, given that the ultimate objective is to give each party an equal start on the road to independent living; in fact, as Mr Shieh observed, departures from ‘pure’ equality of division are numerous: for example, in White v White, op cit., wherein there was pre-marital acquest, the wife was awarded about 38% of the total assets, whilst in McCartney v McCartney [2008] 1 FCR 707, wherein there was a short marriage, one child, and no marital acquest, the wife was awarded no more than about 5% of total assets.

209.  For my own part I do not consider that, save as to general principle, any guidance can be gleaned from the many and various decisions in this area, given the necessarily ‘fact sensitive’ nature of each inquiry; nor do I consider that it helps, as Mr Shieh suggested, that on the findings of the learned judge in this case, the wife ended up with about 25% of the total assets, since I have seen fit to disagree with the judge below as to the significant elements of the length of this union, the engagement of the strands of ‘sharing’ and ‘compensation’, and of course in terms of the ‘size of the pot’ available for distribution.

210.  At the end of the day, this is not a mechanical exercise (much as one might wish it to be), and the court simply has to take a view.

211.  Accordingly, after reflecting at length on the circumstances of this case, in my judgment an appropriate award to the wife would be in a lump sum of HK$37.5 million, although this figure must be subject to the deduction of the cumulative sum of HK$1.24 million as advanced by the husband on the basis of an agreed set-off against whatever lump sum subsequently was to be awarded to the wife (paragraph 35 above refers).

212.  I have arrived at this figure by broadly taking the approximate value ascribed to the Federal Hill property, which the wife has no wish to retain, and which it was anticipated that in any event she would resell – as Mr Coleman neatly put it, a house “in which she had never lived and which she did not want” – and by adding to that value to the sum of HK$35 million, which final figure in all the circumstances seems to me to be fair and equitable, and amounts to a fraction under 40% of the available assets, at least on the basis of the upper echelon figure as put to this court by the wife’s leading counsel.

Order

213.  It follows from the foregoing, therefore, that my Order on this appeal would be in the following terms:

(1) The appeal against the Judgment of HH Bruno Chan dated 14^th July 2008 is allowed and the Order consequent thereon be set aside;

(2) The respondent is to pay the petitioner a lump sum of HK$36.26 million within 28 days from the date of the judgment herein;

(3) Upon compliance with paragraph (2) above, any claims which each party may have against the other or their estates for capital, income or other property adjustment including periodical payments, secured periodical payments, lump sum or sums, transfer or settlement of property and order for sale whether under the Matrimonial Causes Ordinance, Matrimonial Proceedings and Property Ordinance, Married Persons Status Ordinance, Inheritance (Provisions of Family and Dependants) Ordinance, or any other relevant Ordinance shall be dismissed.

(4) There be an order nisi as to costs, such order to become absolute within 28 days of the judgment herein absent application made by either party to vary the same, that the costs of and occasioned by this appeal, and of the hearing below, are to be paid by the respondent to the petitioner, such costs to be taxed if not agreed;

(5) There be liberty to apply as to the terms of the Order.

 

Hon Le Pichon JA:

214.  I agree.

Hon Tang VP:

215.  I also agree. Accordingly, there will be an Order in terms of paragraph 213 above.