JTMW v. NAV

FCMC 8504/2017

[2022] HKFC 46

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 8504 OF 2017

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____________________

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J U D G M E N T

( Ancillary Relief )

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1.  This is a high conflict case lasting for about 9 years.  There has been a total breakdown of trust and communication between the parties.  There have not been any reasonable or sensible compromises in respect of any matters and all differences, big or small, have ended in court.  During the course of these years, I have given no less than 11 written judgments and numerous ex tempore judgments. It is hopeful that this judgment is the final chapter of this saga. 

2.  In this Judgment, for the ease of reference, I shall refer to the petitioner as “the husband” and the respondent “the wife”.  Their two children, both boys, are referred to as “L” and “B”.  L is nearly 15 years old and B is 12. I shall also continue to refer to the husband’s partner as “V”.

Background

3.  The husband is Danish and the wife Australian.

4.  The parties met in Sweden in 2002 when the wife was travelling there.  According to her, they soon started cohabitation in June 2002.  They gave birth to L in Sweden in April 2007 and were married in February 2008. 

5.  The husband is a professional pilot.  In June 2008 he secured a job in Hong Kong and so the whole family moved here.  B was born in Hong Kong in February 2010.

6.  It is unfortunate that marital discord soon developed; that led to their separation in November, 2011.  On 26 March 2012, the wife petitioned for divorce on the ground of the husband’s unreasonable behaviour (under FCMC 4191/2012).

7.  At the beginning, the parties were able to come to terms through mediation settling all the ancillary relief and children matters.  Insofar as the ancillary relief is concerned, the wife said according to the settlement the husband agreed to pay her $4,500,000. 

8.  Conflicts, however, soon developed.  It is fair to say that at that time their conflicts centred much on the care and control arrangement of the boys.  Sadly, it turned out that starting from early 2014 the parties’ relationship had deteriorated to a point where they argued on essentially all issues arising from the divorce proceedings.  There was a series of litigations seeking non-removal orders, non-molestation orders, application for relocation to Australia, temporary removal orders, maintenance pending suit, directions on expert reports together with assorted appeals and other less important orders.

9.  On the court’s own motion, the Official Solicitor was brought in to represent the boys. 

10.  After a 5-day trial, by a Judgment dated 23 February 2017 (“the Custody Judgment”),^[1] the custody, care and control of the boys was given to the husband.  The wife was given access by way of emails, limited to 2 emails per week, to the boys.  This has been so arranged up to this day because of the boys’ estrangement due to the wife’s conducts.  She was accused of hitting the boys and was convicted of ill treatment or neglect of L under section 27(1) of the Offences Against the Person Ordinance (Cap 212).  Supervised face-to-face and FaceTime access were proved to be futile as a result of which email access has been implemented upon the recommendation of the Official Solicitor and the social investigation officer. 

11.  In view of the reluctance on the part of the wife to obtain a decree nisi in her own divorce petition, on 4 July 2017 the husband took out the present proceeding on the ground of 2 years’ separation.

12.  Decree nisi was granted on 20 November 2017.

13.  Even by the time of the decree nisi, the parties were not ready to deal with their ancillary relief matter.  That was due to the husband’s 2 applications for relocation to Denmark.  The 1^st application went through a 4 ½ day-trial and was dismissed by this court on 16 April 2018 (“the 1^st Relocation Judgment”) with an order that the husband was to pay the wife’s costs.  The husband’s application for leave to appeal was also dismissed by the Court of Appeal on 23 November 2018: see JRMW v NAV [2018] HKCA 883, CAMP 131/2018.

14.  The husband made a 2^nd application and succeeded this time, at the expense of a 5-day trial: JTMW v NAV [2020] HKFC 244, FCMC 8504/2017 (date: 3 December 2020).  I shall refer to this Judgment as “the 2^nd Relocation Judgment”. 

15.  The husband and the boys have since December 2020 relocated to Denmark.

Current Situation of the Parties

The Husband and the Boys

16.  At the time of the husband’s 2^nd application for relocation, his plan was to have his reporting port transferred to his employer’s base in London so that he might live in Denmark while reporting duty at Heathrow, London.  The husband managed to have him so transferred but unfortunately, the Covid-19 pandemic continued to hit the travel industry, as a result of which the London base had to be closed. The husband was given two options. The first was to have him relocated back to Hong Kong with lower remuneration and much reduced fringe benefits. The second was to have his employment terminated on the ground of redundancy. The husband chose the latter.  His employment was terminated in October 2021.

17.  The husband and the boys have settled in a town in Denmark and are living in a house bought by the husband in February 2021 for about $3,783,000.  That was made possible by utilizing the husband’s provident fund in Hong Kong as a down-payment.  V is staying with the husband and the boys but has not been granted a residency visa yet. 

18.  The husband is not working now for the reason that he has since 30 August 2021 pursued full-time education for a law degree at a university there.  The boys, said the husband, have been settling well in school and are enjoying their new lives in Denmark.

The Wife

19.  The wife’s personal circumstances have not changed since the 2^nd application for relocation.  She continues to live on her own in a rented village flat in Mui Wo of Lantau and continues to work as a private English tutor and face-painter.

The Former Matrimonial Home

20.  Following the breakdown of the marriage, the former matrimonial home in Lantau was sold in January 2013, resulting in $4,645,997 being liquidated.  Much of these monies have been evaporated or, to be more accurate, turned to legal costs.  What remained so far is a modest sum of $928,000 (“the Net Proceeds”), having been paid into court pending the determination of the ancillary relief.

Parties’ Open Offer

21.  Both parties set their eyes on the Net Proceeds. 

22.  The husband seeks the entire Net Proceeds.  In return, he is prepared (1) not to enforce the costs orders granted in his favour in the previous interlocutory proceedings; and (2) not to seek any maintenance for the benefit of the boys.

23.  As regards the wife, she seeks a lump sum of $4,500,000.  This is the sum that ought to have been paid to her under the settlement agreement.  She recognises that in reality the only asset on the table is the Net Proceeds and so she is seeking the entire sum.  Any remaining balance would have to be met by the husband by way of periodical payments until full payment.

The Law and Legal Principles

24.  The jurisdiction of the court in granting financial provision for a party is governed by section 4 of the Matrimonial Proceedings and Property Ordinance (Cap 192) (“MPPO”).  Pursuant to sections 6 and 6A of the same legislation, the court has the power to grant orders for transfer, settlement or sale of properties. 

25.  The principles upon which this case is to be considered are the conventional ones, namely those set out in section 7 of MPPO which confers a broad discretion on judges dealing with ancillary relief.  That said, these principles are to be interpreted in the light of the Court of Final Appeal judgment in LKW v DD (2010) 13 HKCFAR 537.  In that case, Riberio PJ referred to the four principles which are applicable to all ancillary relief proceeding, viz, (1) the objective of fairness: [56], (2) rejection of discrimination: [57], (3) the yardstick of equal division: [58] – [61] and (4) avoidance of ‘minute retrospective investigation’: [62] – [69].

26.  Ribeiro PJ further set out the steps to be taken by the courts in undertaking the exercise.  In brief, they are:

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

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

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

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

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

27.  Lastly, I do bear in mind the reminder given by Thorpe LJ in Parra v Parra [2003] 1 FLR 942 at [22] that the proper judicial task of the court is to exercise a singularly broad judgment that obviates the need for the investigation of minute detail. 

Identification of Assets

28.  I have already mentioned the Net Proceeds.  The other items and their quantum are largely undisputed.  Where the items are in Danish Krones (DDK), I shall adopt an exchange rate of DDK 1: HK$1.18. 

29.  According to the husband’s Form E dated 25 June 2018, his Hong Kong provident fund was about $1,780,000.  He made use of about $1,285,000 as down-payment for his house in Denmark.  The total consideration paid was about $3,783,000 with a mortgage finance.  I reckon that, net of mortgage standing at $2,478,000, the house should be worth about $1,305,000.  The remaining part of the Hong Kong provident fund was used for expenses and outgoings.  He currently has about $24,000.

30.  Prior to coming to Hong Kong the husband had worked for some years in Norway.  That part of the retirement fund is currently about $154,000 which cannot be liquidated until he retires. 

31.  The wife is the sole-proprietor of a business through which she delivers her teaching and face-painting services.  No value has been assigned to this business in the husband’s Lists of Assets and Liabilities.

32.  The parties’ assets are set out below.

Schedule of Assets

Item No.	Assets Jointly Owned	In  the Husband’s Name	In the Wife s Name	Amount (HK$)	Total Amount (HK$)
1.	Net proceeds of the former matrimonial home			928,000
Sub-total:					928,000
2.	Cash/Deposit	24,000
3.	Property at Denmark	1,305,000
4.	Car in Denmark	63,000
5.	Norwegian retirement fund	154,000
Item nos. 2 to 5                                                               Sub-total:					1,546,000
6.	Cash/Deposit		263,000
7.	MPF		5,140
Item nos 6 to 7                                                                Sub-total:					268,140
Total :					$2,742,140

Liabilities

33.  The husband said he is mired in debt. 

34.  The husband’s last Form H of 24 November 2021 reported his costs incurred with his current solicitors for the children’s matter are $426,500.  These are costs incurred after his 1^st application for relocation was rejected by this court.  As for the costs for ancillary relief, the Form H stated $453,500.  Taking the two figures together the husband would have to pay about $880,000.  The husbands testified that he has already paid $200,000, which came from the loans from his father and a friend in Hong Kong.  These legal costs and loans are not family liabilities.

35.  As for the wife, she is essentially debt-free.

The Husband’s Earning Capacity

36.  The husband is 47 years old; he has been a commercial pilot since 2004.

37.  Before the pandemic, the husband’s basic salary in Hong Kong was $95,000, plus housing and education allowance of about $63,000 and other allowances around $5,000 to $10,000, so a total of $160,000 to $168,000.  At the London base and during furlough, his salary was cut half and was about $43,270.

38.  The husband was made redundant in October 2021.  As part of the redundancy package, the husband is entitled to receive salary for 8 months, this would end in June 2022.

39.  The husband said he would need 3 years to complete his bachelor degree and another 2 years for a masters’ degree in order to be qualified as a lawyer.  He added that law graduates normally start working after obtaining a bachelor degree.

40.  He is in receipt of student grant of about DDK6,500 (or about HK$8,000) net from the Danish government.  He will try to get a job as a law intern in the second year of his study. 

41.  The husband admitted it is imperative for him to secure a job before the summer of 2022.  He said due to the Covid-19 pandemic, inter-continental flights have not rebounded.  The labour market is not favourable.  A recent recruitment exercise by a start-up airline with a small fleet of 5 planes attracted as many as 2,800 applicants. Nevertheless, he assured that he would keep trying and would not miss any opportunity of flying inter-continental jets.

42.  We all know that the aviation industry has been suffering a setback for the time being because of the Covid-19 pandemic.  This happens to other trades and businesses, too. Yet, the objective fact is, as I see it, the husband is highly qualified and has impressive flying experience behind his back.  From what I gathered as the docket judge throughout these years, he is qualified to fly at least the Boeing 747 and Airbus 350 or Boeing 777.^[2] The husband has huge earning potential as a commercial pilot. I acknowledge that I do not have a crystal ball informing me when the pandemic is going to end.  Yet, I am sure when the pandemic is debilitated, he serves a very good chance of flying inter-continental jets again.

43.  I have not forgotten the husband’s partner, V.  The husband agreed that V would be able to get employment when she is granted the Family Reunification Visa.  This apart, V is available for taking care of the boys with whom she is no doubt in close relationship.  Her presence would definitely be of great assistance to the husband by releasing some of his time for making a living. 

The Financial Needs of the Husband and the Boys

44.  The husband said because of the stringent financial situation, he has had to economise by spending less and even cutting some items.  He gave some new figures at trial. His general expenses and personal expenses are $30,020 (inclusive mortgage instalments $8,330) and $9,660 respectively and the boys’ expenses are $9,000, totalling $48,680. 

45.  The wife pointed out that the husband, as a full-time law student, is entitled to the Danish Educations Grant and Support (“Statens Uddannelsesstotte”) like all students in Denmark, including higher thresholds for having two children under 18 at home and there should be other kickbacks and discounts from being a student.  The husband denied having been in receipt of any of these benefits.

46.  The wife also pointed out that the boys are entitled to some allowances or tax benefits from the Danish government.  When being questioned by the wife on this matter, the husband said there was a change in the rules.  For the reason that the boys left the country for more than 6 years out of 10 years, they were not in receipt of any allowance and mentioned vaguely about the need to accumulate the time staying in Denmark.  In view of the fact that the boys have already relocated to Denmark since December 2020, when being questioned by the court as to whether the boys have been in receipt of any allowance, the husband replied he had to check.  With the leave of the court, he checked and confirmed that DDK375 of Child Support was received on 20 November 2021; and DKK478 of “Children and Young Support” covering the period between 1 October 2021 to 31 December 2021 was also received.  The Child Support Allowance would be increased on a scale every 6 months.  B would be entitled to the full sum upon the age of 17 years but L would cease to be entitled to it upon the age of 18.

47.  All in all, it is not entirely clear as regards the exact amount of allowance to which the boys are entitled.  The husband said he only has cash of about $24,000 at the time of his evidence and admitted that he is running on a deficit.  He has been relying on the redundancy payment which would end by June 2022.  His financial situation is acute.  He said he must be able to find a job after the winter in order to keep the family afloat.  In my view, if the husband has been in such a tight financial situation, he should have highly concerned about when and how much allowance would be available for his use but seemingly this was not the case.

48.  The husband emphasized he needs to pay full-time attention to his study; yet at the same time he recognized he has to find a job after the winter.  He also assured that he would not miss any opportunity of returning to inter-continental flying.  I must say I have difficulty in understanding how he could have all these worked out.

49.  It has to be recalled that during the husband’s relocation applications, it was repeatedly emphasized by him that he would be able to provide a better life there for the boys, on a lower salary than in Hong Kong.  He said the schooling, food, medical care and housing were cheap or even free because of the Danish social model. When the husband was seeking leave to appeal against the dismissal of his 1^st Relocation Judgment, his counsel Mr Clough even urged the court to take judicial notice of the fact that Denmark has one of the most advanced systems of social support from “cradle to grave” in the world. ^[3]

50.  I conclude the husband is not transparent regarding the State benefits he and the boys are entitled to.  The parties have appeared numerous times before me during the last 9 years.  The husband impressed me as a highly conscientious, loving and caring father.  He always places his boys a top priority.  The change of his home base to London and the relocation to Denmark were all for the boys.  The purchase of the new house was to provide a stable and comfortable home for them.  He is also a man with prudence and with an eye to the future.  I am sure every move he took was well thought-out, calculated with the best interest of his boys in mind.  It would be entirely out of his character for the husband to venture into full-time study without having the financial needs of the boys being at the forefront of his mind.  I am sure the husband must have fully taken all possible financial eventualities into consideration when venturing into full-time study as he did. 

51.  On the above analysis, I arrive at a conclusion that the husband is able to make ends meet.  This is made possible from the earnings of the husband and V and from the State’s benefits.

The Wife’s Earning Capacity and Financial Needs

52.  The wife said since the resumption of school after lockdown and for various reasons, her income has dropped from $21,000 to $18,500. In any event, there are ups and downs in the business.  As I shall explain at [57] below, I have some doubts over these figures.

53.  I acknowledge that the wife does not have a degree and her career potential is further hampered by her criminal record, which apparently deprives her from working in schools or learning centres.  I accept that at the age of 43 she is limited to freelance, private teaching, where she would be able to get work through word of mouth.

54.  The wife acknowledged that returning to Australia is an option but at the moment she has not considered this option.  She is a permanent resident of Hong Kong and has renewed her tenancy for another 2 years. 

55.  I accept she will be staying in Hong Kong in the foreseeable future.  Her work opportunity as a private native English tutor would be very limited in Australia when compared to what she has had in Hong Kong. 

56.  Over all these years the wife has been able to sustain on her own.  She reported she needs about $26,685 per month.  This has not been met with challenge by Mr Hotten.  With about 27,000 per month, her lifestyle is apparently rather basic, if not frugal.  She is living in a village flat at an affordable rental of $12,000 per month.  Except on one occasion when she supported a trip to the Mainland some years ago, the wife has not been paying any financial support for the boys. 

57.  I accept she needs about $27,000 per month.  However, this figure does not sit well with the level of income reported by her.  If the wife has been earning around $18,500 to $21,000, she would have been in the red but the fact is, as I said, she is essentially debt-free. The irresistible conclusion is that either she understated her earnings or she had other financial resources, or both (maybe in the region of a few thousand dollars).  I find the wife is able to maintain herself.

Deciding to Apply the Sharing Principle

58.  I have come to the conclusion that the parties should be able to meet their daily needs.  There are still assets of very modest value available for division.  The court generally decides, at this stage, that the sharing principle applies to the total assets, so that they should be divided equally between the parties unless good reason exists to the contrary: WLK v TMC (2010) 13 HKCFAR 618, at [82]

Whether there are Good Reasons for Departing from Equal Division?

Duration of the Marriage

59.  The wife raised the issue as to when the parties started cohabitation. She adduced her travel records as shown on her passports and the permanent residency papers issued by the Swedish authorities to show she started to cohabit with the husband since 2002.  The wife relied upon the husband’s denial to demonstrate that his evidence should not be believed. 

60.  The husband accepted that they met in Sweden in 2002 but it was not until 2006 that they started cohabitation. Yet he admitted he applied for residency permit in Sweden in 2002 for the wife on the basis that they were in a relationship and that from 2002 to 2006 the wife was staying at his house and was able to work there because of his sponsorship for the residency permit.  When being cross-examined by the wife on matters regarding their relationship during that period of time, the husband was not forthcoming in this regard and conveniently gave replies that he had no recollection.  In my view, the application papers for the Swedish residency should carry weight.  On the evidence before me, I find they started to cohabite with each other at least since June 2002.  Hence, inclusive of the period of cohabitation up to November 2011 when they separated this is a 9-year relationship. This is not a short period of time by today’s standard and what is more, the parties have raised two children.  As a starting point, equal division should apply.

The Husband’s Grounds for Departure

61.  Mr Hotten, for the husband, relied upon two grounds to justify a departure from equal division.  The first ground is the litigation misconduct of the wife.  He submitted that the wife bears much of the responsibility for the dissipation of the matrimonial assets as legal costs.  The second ground is that the wife has had financial resources from her family.  Mr Hotten is specifically relying upon the principles laid down by the Court of Final Appeal in KEWS v NCHC, (2013) 16 HKCFAR 1, [2013] 2 HKLRD 314, FACV 18/2012.

Litigation Misconduct

62.  Mr Hotten submitted that the wife previously raised unmeritorious applications of which most, if not all, were dismissed with adverse costs orders against her.  Specifically, he referred to the wife’s application for maintenance pending suit which was dismissed by this court on 8 July 2014 and the alleged physical abuse on the boys that led to the immense difficulty in facilitating access and eventually the estrangement of the boys towards their mother.  The wife, so submitted by Mr Hotten, must surely have been aware, and no doubt properly advised, that such behaviour would not only cause further distress and pressure on both parties and to the boys but likely financially ruinous.  He suggested that the wife’s litigation was being funded by her family.  The husband had no alternative but to spend enormous time and costs in defending the wife’s applications, inter alia, in the best interests of the children.  The husband was finally given the sole custody, care and control of the boys under the Custody Judgment.

63.  It is on this basis that Mr Hotten argued the husband should be given the entire Net Proceeds in order to meet his legal costs.  This would relieve some of his financial burden and in turn be of benefit to the boys, particularly when he is not seeking any contribution from the wife for the maintenance of the boys.  The $928,000 could assist in an immediate, if small way, in placing the husband and the boys on a more secure financial footing at least for the next 12 months.  It could provide a stopgap for the husband, to get himself back on his feet whether as a pilot, a law intern or some other job paying regular income before his redundancy payment is exhausted by summer 2022.

64.  The wife is also pointing her finger against the husband for these marathon legal proceedings resulting in the evaporation of family assets.  The end result, submitted by wife, has been more for the lawyers and less for the parties, not to mention the stress caused to them.

Legal Principles

65.  Apart from LKW v DD (2010) 13 HKCFAR 537, I was not referred to any further judicial authority.  It has come to my attention from a separate matter that Moylan LJ of the English Court of Appeal recently considered this issue in Rothschild v De Souza [2020] EWCA Civ 1215, [2020] 3 FCR 664 (also reported as TT v CDS [2021] 1 FLR 996) where, similar to this case, there was a highly acrimonious divorce and destructive litigation on a massive scale. 

66.  Moylan LJ agreed that litigation conduct could be taken into account under s 25(2)(g) of the Matrimonial Causes Act 1973 (Hong Kong’s equivalence is section 7(1), MPPO).  The learned judge reviewed the authorities^[4] and helpfully set out the legal framework with respect the correct approach to the issue of litigation conduct.  The general approach is that litigation conduct within the financial remedy proceedings will be reflected, if appropriate, in a costs order. However, there are cases in which the court has determined that one party’s litigation conduct has been such that it should be taken into account when the court is determining its award.  The depletion of matrimonial assets through litigation misconduct will plainly not always be remedied by an order for costs.  Such an order simply reallocates the remaining assets between the parties and does not necessarily remedy the effect of there being less wealth to be distributed between the parties.  What is important is that, whether by taking the effect of the conduct into account when determining the distribution of the parties’ financial resources (both income and capital) and/or by making an order for costs, the outcome which is achieved is a fair outcome which properly reflects all the relevant circumstances: see [65] & [78]. 

67.  Reference was made by Moylan LJ to two classes of litigation misconduct: misconduct within the financial remedy proceedings and misconduct in relation to other litigation. In my view, reference was so made because of the specific provision under Rule 28.3 of the English Family Procedure Rules 2010 (“FPR 2010”) that, in the context of financial remedy proceedings, as a general rule the court will not make an order requiring one party to pay the costs of another party except where it considers it appropriate to do so because of the conduct of a party in relation to the proceedings (whether before or during them): see Rule 28.3(6), FPR 2010.  Hong Kong does not have a similar rule. As a matter of law, costs are in the court’s discretion: Order 62, rule 3, Rules of the High Court.  In my view, the apparent difference in the legal provision of the 2 jurisdictions is immaterial.  It is clear that Moylan LJ took the view that where litigation misconduct is at issue, whether it is within the financial remedy proceedings or in relation to other litigation, ultimately the outcome must be a fair one: [76] to [[78].

68.  It is recognised by Moylan LJ that in some rare cases awarding costs in favour of the victims may not provide for full compensation.  The court should ensure that ‘the litigant responsible bears the costs of waste in full’: at [70], citing Clark v Clark [1999] 2 FLR 498 at 509.

69.  Further, Moylan LJ also agreed with Moor J in R v B and Others [2017] EWFC 33that misconduct is a relevant factor to be considered even in a “needs” case.  At [80] he said,

[80]   … I agree with Moor J in R v B when he said that, if required to achieve a fair outcome, the court ‘must be entitled to prioritise the [needs of the] party who has not been guilty of such conduct’. It is clear from the outcomes in M v M and B v B, as referred to above, that the financial consequences of the litigation misconduct, perhaps combined with other factors, might be such that it is fair that the innocent party is awarded all the matrimonial assets. In this respect, I also agree with Moor J’s observation that an order can be made which does not meet needs because to exclude that option ‘would be to give a licence … to litigate entirely unreasonably’.

Discussion

70.  It is clear that Mr Hotten is referring to the incidents at the early stage of the proceedings where the parties were litigating mainly on the care arrangement of the boys before the Custody Judgment of 23 February 2017.

71.  As I have already set out in details how the conflicts evolved and the interlocutory applications made by the parties leading to the trial on the custody issue at paras [7] to [57] of the Custody Judgment, I do not propose to repeat them here.  Suffice to say is that during that period of time the arrangement of the boys was at the centre stage of the dispute.  Briefly stated, both fought for the responsibility for taking care of the boys and hence made his / her own applications for custody, care and control.  Both took out his / her own application for non-molestation and for various directions, such as for expert reports and temporary non-removal orders.  It is unnecessary to conduct an audit or a stock-taking exercise.  By and large, it is clear that in terms of applications, there were more applications taken out by the wife than those of the husband.  Perhaps this is the reason for Mr Hotten’s submission that the wife bears “much” of the responsibility rather than the “sole” responsibility for the dissipation of the matrimonial assets as legal costs.

72.  The wife is criticised for being unreasonable.  Hale J (as she then was) once made the celebrated remark in R v R (Costs: Child Case) [1997] 2 FLR 95 at 98B that all parents are expected to be unreasonable in the attitude towards their children. When assessing whether a party’s conduct has been unreasonable, what should be considered is unreasonableness in the attitude to the litigation.

73.  Where an unrepresented litigant is found to have been unreasonable in the attitude to the litigation, he or she would be given a degree of generosity but would not be given a license to litigate entirely unreasonably: see Re G (Costs: Child Case) [1999] 2 FLR 250, at 252 G; and at Rothschild v De Souza, supra, at [77].

74.  It is to be remembered that in the present case when the wife was faced with the criminal charge regarding the abuse of the boys, she withdrew her application for relocation to Australia and for interim care and control: see [40] of the Custody Judgment.  When the custody matter came to trial, she agreed to the care and control of the boys be remained with the husband for the time being, with a clear path towards returning to shared care and control.  Before this was realized, she sought regular and defined access: see [80] of the Custody Judgment.  I commented at [86] that the wife had taken the correct approach by focusing on ways to improve her relationship with the boys rather than labouring on custody, care and control issues.

75.  The Custody Judgment disposed of all the parties’ summonses relating to the arrangement of the boys and the outstanding costs issues at that time.  In respect of the costs issues, I referred to the relevant authorities at [131] to [154] of the Custody Judgment. ^[5]

76.  As far as the wife’s own application for relocation was concerned, I found she was an expatriate and came to Hong Kong because of the husband’s job.  Her application for relocation could not be said to have been an unreasonable or a hopeless application, though the same was overtaken by subsequent events: see [142] of the Custody Judgment.

77.  As for the parties’ respective applications for custody, care and control and other relating summonses dealing with the boys, I did not find the wife’s conduct could be regarded as reprehensible in the proceeding nor did I find any unusual circumstances that warranted a departure from the usual no order as to costs: see [147] to [154] of the Custody Judgment.

78.  There was also the wife’s application for a non-molestation order against the husband on the basis of some allegations that the husband had spied and stalked her via some spywares installed in her computer.  This application was never argued because it was compromised by way of a mutual undertaking from each other not to hack or spy on the other’s computer.  This court held that each party was to bear his or her own costs: see [129] of the Custody Judgment. 

79.  I have not lost sight of the fact that there are matters on which costs orders were made against the wife.  There were 3 substantial costs orders.[6]

80.  The first was the husband’s application for an order to remove or redact certain parts of the wife’s affirmation that made reference to the husband’s communications with his former lawyers in Denmark on the ground that the communications were privileged and confidential.  The wife subsequently agreed to the application before the substantive argument was heard but the parties were not able to agree on how the costs issue was to be disposed of.  It was after a full argument that, by way of a Judgment dated 10 February 2014, this court awarded the husband one-third of his costs.  The reason being, as stated in para [45], there were ways that the wife could have dealt with the matter expeditiously and to save costs if she did not wish to argue on the summons.  Significantly, I took the view that the wife’s inclusion of these materials in her affidavit could not be said to be improper conduct that attracted the proceedings. 

81.  The second was the wife’s application for maintenance pending suit which was dismissed with costs in favour of the husband on 8 July 2014.  I shall return to this MPS application below when I deal with the issue of whether or not the wife has been in receipt of financial assistance from her family.

82.  The third was the wife’s application for single joint experts on two areas namely, (1) a psychologist and (2) an immigration expert.  Her application was dismissed on 23 October 2014 and by a Judgment dated 30 June 2015 she had to pay 2/3 of the husband’s costs: see NAV v JTMW, FCMC 4191/2012 (date of Judgment: 30 June 2015).

83.  The above narrative is all about matters well before the trial on the custody, care and control of the boys.  That was the focus Mr Hotten tried to draw the court’s attention to. 

84.  The court’s records show that during this earlier stage of the proceedings outlined above both parties were on and off represented by specialized family law firms. 

85.  On the part of the wife, she was so represented on various time intervals between 26 March 2012 and 30 July 2015.  The latter date being shortly after she had costs awarded against her in respect of the application for single joint experts. 

86.  As for the husband, he was so represented for a slightly longer period, from 10 April 2012 to 27 April 2016. 

87.  As mentioned at [20] above, the former matrimonial home was liquidated for $4,645,997.  Since then $2,327,998 and $1,390,000 were released to the husband and to the wife respectively.  I was told the husband made use of all the monies in settling his legal costs.  As for the wife, she accepted that she spent about $2,400,000. 

88.  It is significant to note that by the time of the custody, care and control came to trial in November 2016 (still under FCMC 4191/2012), both parties were already unrepresented with the Official Solicitor appearing for the boys. 

89.  Mr Hotten made no submissions regarding the wife’s litigation misconduct post-Custody Judgment.  As I see it, he was not able to do so because there was none.  At the same time, what happened after the Custody Judgment should not be forgotten.  In this regard, the husband’s 1^st application for relocation (under the present case reference) immediately comes to my mind. The husband was found to have fabricated his case as a result of which had costs awarded against him.  I specifically mentioned at [116] of the 1^st Relocation Judgment that the husband’s conduct was nothing but a reprehensible litigation conduct. 

90.  It was after the husband’s 1^st application for relocation had been dismissed by this court that he started to instruct solicitors and counsel to represent him again.  This has been the situation up to this day.  The husband’s application for leave to appeal against the 1^st Relocation Judgment failed not only before this court ^[7] but also before the Court of Appeal, too.  The Court of Appeal criticised the husband’s application as totally without merit and awarded costs in favour of the wife. ^[8]

91.  It was submitted by Mr Hotten that the costs payable by the wife under various costs orders amount to about $800,000.  This figure was obtained from the husband’s former solicitors but I was not taken to any documents or correspondences in support.  It seems clear that the relevant bills (not even the skeleton bills) have not been prepared.  There were not any ballpark figures as to the party-and-party costs and the solicitor-and-client costs.  Given that out of the 3 adverse costs orders, 2 were for part of the costs only, I am not satisfied that the costs to be payable by the wife are as much as $800,000.  In the present case, prima facie, the previous litigation conduct, whether within the children proceeding or not, have been reflected in the costs orders made by this court. 

92.  Mr Hotten also accused the wife of engaging a top family law firm. The objective fact is, both engaged specialist law firms, which no doubt caused them a fortune.  The animosity and high level of conflicts between the parties cannot be attributed to the wrongdoings of one side; after all, “it takes two to tango”. 

93.  The wife said in evidence that she has chosen not to be represented because she does not have the means.  I agree with the wife that it was a choice on the part of the parties whether or not to be represented.  The husband could have chosen to conduct the 2^nd application for relocation and the ancillary relief proceeding on his own if he was constrained by his means.  There is no assumption that the legal costs would, as a matter of course, be paid out from the Net Proceeds at the expense of the other party. 

94.  On the above analysis, I am not convinced that the wife is guilty of litigation misconduct that warrants a departure from equal division.

Financial Assistance from the Wife’s Family

95.  Mr Hotten placed much emphasis on the fact that the wife comes from a wealthy family.  Her parents are dentists and have a dentistry practice in Australia and her 2 younger sisters are globally renowned entertainers.  He submitted that the wife has not made a full and frank disclosure of her assets and in particular, the support from her family.  The wife is a general beneficiary under her family’s trust fund, as can be seen in the Trust Deed produced by her mother.  Under the Trust Deed, the trustee may at any time apply for part of the trust fund to be set aside for the purpose of the general beneficiaries.

96.  In response, the wife said her parents are well-off but not super-wealthy.  She earns her own living and does not rely on anyone.  There has been some support from her parents but it is not on regular basis.  Except some used clothes and bags, she received nothing from her sisters.  Her sisters have their own families and children; their wealth has nothing to do with her.  She has her pride.  That said, she agreed that if she is utterly destitute or in emergency, she could ask her family for help.

97.  The wife admitted she is one of the beneficiaries under the trust.  The trust was established in 1970’s for paying mortgages, the children’s school fees and for tax planning. She has never received any payments or incomes from the trust.

The Law

98.  In KEWS v NCHC [2013] 2 HKLRD 314, Mr Chief Justice Ma clarified the approach that the court should take.  He said as follow,

E.2   The identification of the parties’ financial resources

33.   Section 7(1)(a) is stated in wide terms.  Two points are of note:-

(1)  The court is not restricted to taking into account only those assets which in law represent the property of either spouse.  Section 7(1)(a) is widely drafted to include “other financial resources” of the parties.  These resources will therefore include those assets or resources to which the relevant spouse has or is likely to have access but to which he or she may not have a legal entitlement.

(2)  Nor is the court constrained to look only at the present position.  The court looks into the financial resources which a party actually has (or should have) at present or which that party is likely to have in the foreseeable future.

E.3   Treatment of financial assistance from third parties under s 7(1)(a)

34.   The width of the wording of s 7(1)(a) of the MPPO will include financial assistance made by third parties to the parties to a marriage.  Accordingly, such assistance made by a third party to the husband or wife may be taken into account in the computation of that party’s overall financial resources.

35.   As stated in para 2 above, such third party assistance may take various forms.  The authorities, to which I shall presently turn, show commonly trust situations or where relatives have provided financial assistance.  There are of course other factual situations.

36.   In every case where third party assistance is involved, there are two critical evidential questions for the court to consider:-

(1)  What is the extent of the financial assistance provided by the third party to the husband or wife?

(2)  What is the likelihood of such financial assistance continuing in the foreseeable future?

37.   It goes without saying that in the fact finding exercise, the court must look at the reality of the situation and have regard to matters of substance and not just form.  In looking at reality, the court can take into account not only what a party actually has, but also what might reasonably be made available to him or her if a request for assistance were to be made.  In O’D v O’D [1976] Fam 83, which involved the court taking into account the financial support given to the husband by his father, Ormrod LJ said at 90 D-E “In making this assessment the Court is concerned with the reality of the husband’s resources, using that word in a broad sense to include not only what he is shown to have, but also what could reasonably be made available to him if he so wished”.

38.   In addition, in looking at what may occur in the foreseeable future, past conduct is often a useful guide: see SR v CR (Ancillary Relief: Family Trusts) [2009] 2 FLR 1083, at 1091 (para 27).

39.   Having ascertained the extent of the financial assistance provided by the third party and then finding on the evidence on a balance of probabilities that there is a likelihood of the continuation of such financial assistance in the foreseeable future, the court is then in a position in law first to take this into account in the identification of the financial resources of the parties and secondly, in determining the appropriate ancillary relief to be granted.  This is an approach that is entirely consistent with the court’s duty under s 7(1) of the MPPO.  Needless to say, the outcome in any given case is inevitably fact-sensitive.

99.  Thus, the court needs to ascertain the extent of the parents’ financial assistance to the wife and the likelihood of such assistance continuing in the foreseeable future.  In doing so, the court needs to look at the reality of the situation and has regard to matters of substance and not just form.  The court could take into account not only what the wife actually had, but what might reasonably be made available to her if a request for assistance were to be made.

What is the extent of the financial assistance provided by the parents to the wife?

100.  Mr Hotten in his opening submissions drew my attention to the affidavit evidence filed at the earlier stage of the proceedings.

101.  In her affidavit of 12 September 2014 in support of the wife’s application for relocation to Australia, the wife’s mother confirmed she and her husband had provided their children financial support over the years, while these could not be said to be extravagant support.  They were in the form of cash gifts of several thousand Australian dollars during special occasions.  In the same affidavit, the grandmother also confirmed that AUD9,500 was distributed from the family trust for the renovation of the parties’ kitchen in Hong Kong.

102.  Similarly, in her 6^th Affidavit of 15 September 2014 when she applied for maintenance pending suit from the husband, the wife also acknowledged that some of her deposits could be attributed to gifts and loans from her family as well as disbursements from her parents’ family trust.

103.  Mr Hotten relied upon the conclusion that I made in the Judgment when the wife’s application for maintenance pending suit was refused.^[9] There I found the wife had other sources of income and that she failed to give a full and frank disclosure of her financial situation.  Mr Hotten highlighted what I said at [38]:

38.  I agree with Ms Irving that the (wife) does not give any information on the sums received from third parties.  She gives no details and identifies no sums of money that are gifts, loans or disbursements of her parents’ family trust.  She has produced no evidence whatsoever of any debts that she alleges exist, and no details at all of her earnings.  She has not referred to a single transaction where she earned some money from ‘up-selling’ as alleged.  The ability to borrow is also a financial resource but there is a dearth of particulars and supporting evidence.  To me, all these explanations are mere say-so on her part.  I agree with Ms Irving’s submissions that the (wife’s) alleged earnings are inconsistent with her financial position.

104.  Mr Hotten did not probe into this issue further in his cross-examination.  The overall impression is that the husband was not serious about this issue. Anyway, the above evidence is apparently inconsistent with what the wife testified in court, saying that she has never received any money from the trust.

105.  Mr Hotten accepted that there is no direct evidence on the wife’s actual income and expenses to infer her living standard.  It is also unclear as to how many landed properties in the family trust are. The husband said there are 6 and the wife said there are 2 only, viz, her parents’ home and the dentistry practice.  Nevertheless, it is the husband’s stance that the wife has sufficient financial resources to maintain her living standard. 

106.  The evidence is that at least back in 2014 there was some financial assistance from the wife’s parents.  As for the present situation, I found at [57] above that the wife’s monthly needs do not sit well with the level of income reported by her; there is a difference of a few thousand dollars.  The inference that can be drawn is that the wife has been in receipt of some financial assistance from Australia. For these reasons, I agree with the husband that the wife is able to maintain her living standard.  That said, the extent of such financial assistance has to be seen in light of the wife’s lifestyle which, as I found, is rather basic. 

107.  On the evidence before me, I conclude that the extent of financial assistance should not be substantial and are likely to be occasional.

What is the likelihood of such financial assistance continuing in the foreseeable future?

108.  I am sure the financial assistance has been given to the wife out of her parents’ love for her.  This is entirely understandable.  There is nothing special at all.  As has been observed by Ma CJ, past conduct is always a useful guide: KEWS v NCHC, supra, at [38].  On the evidence before me, there is no reason why the occasional financial assistance would not continue.

109.  Given that the extent of financial assistance, as I found, is not substantial and it is seemingly for the maintenance of the wife, I am driven to the tentative conclusion that these financial assistances should carry little weight in the distributive exercise.

Discussion

110.  I have determined that litigation misconduct is not a factor that needs to be taken into account and that the financial assistance of the wife’s parents should carry little weight.  Considering that the parties spent most of the sale proceeds of the former matrimonial home on litigation, I enquired at trial whether they would consider giving the Net Proceeds for the benefit of the boys.  However, both were not in favour of the proposal.  After having reviewed all the circumstances of this case, I also consider that this is not the most ideal solution.  There are, in my view, the following factors that I need to consider in this exercise.

111.  First, the husband is a professional commercial pilot.  The wife supported the husband’s flying career by giving up her opportunities and accompanying him to Hong Kong.  Before the breakdown of the marriage, the husband was the breadwinner of the family while the wife was until December 2010 a full-time mother.  There was in the past always a large disparity in the earning capacity between the husband and the wife.  The husband has huge earning potential as a pilot and has also taken up the opportunity of equipping himself with a law degree.  In mid-and-longer term, the husband should be in a better position to improve in terms of living standard and savings.

112.  In contrast to the husband, the wife does not have a degree, does not speak the local dialect, and it was after the breakdown of the marriage that she had to be serious about her business.  In many ways her employment opportunities in Hong Kong are rather limited. I am sure this is something that I have to bear in mind.

113.  Second, I should give weight to the fact that the husband has been and will be solely responsible for the maintenance of the boys.  The wife could at most pay some insignificant figure for the benefit of the boys.  The husband obviously recognises this is the reality and so he is not seeking any contribution from the wife. 

114.  Third, I am persuaded by the wife in her Closing that if she is given the Net Proceeds she would be in a position to send some pocket monies from time to time to the boys – a small step to mend their relationship.

115.  Fourth, the husband made use of his Hong Kong MPF to secure a home in Denmark to meet his and the boys’ housing needs.  This is something the wife does not have.  The MPF was the fruit of the husband’s 12 years’ service in Hong Kong out of which the first 4 years were during their relationship.  I accept that much proportion of it was post-separation.  In any event, the wife agrees to keep the house intact for the benefit of the boys.  This is a sensible approach; hence I would exclude the Danish house for distribution.  With the Danish house being excluded, the matrimonial assets would reduce to $1,437,140 ($2,742,140 - $1,305,000).

116.  Fifth, while it can be argued that the Danish home is mostly non-matrimonial, this cannot be so said for the Net Proceeds.  Out of the proceeds of sale that have already been paid out, the husband obtained $2,327,998 while the wife obtained $1,390,000 only. In other words, the husband obtained $937,998 more than the wife. 

117.  Finally, I recognise that the Norwegian retirement fund cannot be liquidated until the husband reaches retirement age. 

118.  Hence, some of these factors are in favour of the husband and the others in favour of the wife.  Obviously, some factors should carry more weight in the balancing exercise.  Considering all these factors in the round and taking a broad-brush approach, it seems to me that equal division of the matrimonial asset is a fair solution.

Deciding the Overall Outcome

119.  I have come to the final stage of the exercise. At this stage, the court is required to give an examination of the overall picture.

120.  The matrimonial assets are worth $1,437,140 (with the Danish house excluded), half of them are $718,570 ($1,437,140 ÷ 2).  If the assets are to be shared equally, since the wife is already in possession of $268,140 worth of the assets, she would be entitled to $450,430.  As for the husband, he is in possession of $241,000.  He would have the balance of $477,570 or thereabout to be paid out to him. 

121.  This is in reality a relationship lasting for 9 years, I am persuaded that the wife should not walk out from this marriage empty-handed.  I recognise the fact that the husband has taken the entire Hong Kong MPF but at the same time he has been taking care of the boys and will do so in the future.  I am satisfied that this is a fair financial outcome.  The distribution is to achieve a clean break for the ancillary relief as between the husband and the wife.

122.  I realize that both parties may have a true conviction that he or she should be entitled to the entire Net Proceeds and are not be happy with the outcome.  Be that as it may, it is hopeful that the proceeding may finally draw to a close; and it remains to be my wish that one day the relationship between the wife and her boys may be restored.

Order

123.  For the reasons aforesaid, I make the following orders:

1.  Within 14 days upon the grant of the decree absolute, a sum of $450,430 be paid out from the payments into court to the wife; and

2.  The balance be paid out to the husband.

Costs

124.  As neither party is successful in his or her claim, it seems to me the appropriate costs order in the circumstance is no order as to costs of the ancillary relief (including all costs reserved) and I so order by way of an order nisi.

Section 18 Declaration

125.  Lastly, I am satisfied that the arrangements made in respect of the children of the family to whom section 18 of MPPO applies for their welfare are satisfactory or are the best that can be devised in the circumstances and I accordingly make a declaration to this effect.

126.  The petitioner’s solicitors do draw up, file and serve these orders.