C v. F

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 1701 OF 2000

_________________

_________________

____________________

J U D G M E N T

____________________

1. This is the Respondent Wife’s application for ancillary relief against the Petitioner Husband upon the dissolution of their lengthy marriage.  They married in 1967 under some form of marriage which was subsequently formalized by registration in 1994 at the Marriage Registry.  They have 4 children out of their marriage, 2 sons who are twins, and 2 daughters, all of whom are now adults and are married.  In October 1997 the parties separated when the Husband moved out of their matrimonial home, but the decree nisi of divorce based on the parties’ separation for at least 2 years was not granted until 21^st August 2004, which has since been made absolute.  The Wife is now 55, while the Husband is 5 years older at 60.

Relevant Background

2. I did deal with some of the background of the parties in my earlier judgment on the Wife’s application for maintenance pending suit on 20^th September 2004, but given the emergence of much more evidence and information since, it would be relevant to go into the background again but in more details.

3. The Wife was born in Shanghai, China in 1951 and came to Hong Kong in 1957 when she was about 6 years old.  Her grandfather was in the property development business in Shanghai and came to Hong Kong in the early 1950s where he continued his property business and was joined by the Wife’s father in Hong Kong 2 years later.  The Husband was also born in Shanghai in 1946 and came to Hong Kong in 1962.

4. The parties met in about 1965 when they were still secondary school students, with the Wife then only about 14 and the Husband 19.  The Wife was then living with her parents and siblings in Shan Kwong Road, Happy Valley, while the Husband lived with his maternal grandfather nearby in Yuk Sau Street.

5. In or about the end of 1966 the Wife became pregnant by the Husband and gave birth to twin sons CL and CR on 9^th September 1967.  As a result she had to drop out of school to become a full time teenage mother.  Not surprisingly this situation was met with complete disapproval from her family, in particularly with her father who declared a severance of their relationship and cut off all his financial support for her.  She therefore moved to live with the Husband at his grandfather’s home in Yuk Sau Street, while the Husband also quit schooling, as well as his part-time job as a taxi-driver, and through his grandfather, found employment in a printing company at a salary of $350 per month plus commission, which was clearly insufficient to support his family and therefore had to rely on subsidies from his grandfather.

6. At or about this time the Wife’s parents encountered serious difficulties with their property development business and left Hong Kong for Taiwan.  As a result the Wife’s younger brother and sister came to stay with the parties until the early 70s when the sister married and moved away, while the brother left in the early 80s after completing his tertiary education.

7. In about 1968 / 69 the Husband left his job and, with some money borrowed from his grandfather, went into the printing business of his own with 2 other partners in North Point.  It started off as more of a trading business when he and his partners would only act as agents and broker printing contracts between customers and printing companies.  In 1970 the Wife gave birth to the elder daughter A, and by then her relationship with her father had improved, and her contact with her parents had resumed.

8. In about 1972, the Husband and his partners moved their business to Jaffe Road, Wanchai where they rented a shop and an attic and purchased some machinery to do their own productions.  Shortly afterwards the Husband moved his growing family to bigger premises by renting a 1,500 sq ft flat at Blue Pool Road, Happy Valley.  While business was starting to take shape, his financial situation was still unstable, especially when his grandfather was no longer able to offer any more assistance after he bought a flat to live with one of his sons who had come to join him in Hong Kong.

9. In about 1973 / 74, the Husband broke up with his 2 partners and formed his own printing company as a sole proprietor.  In 1976 he purchased his first real property, the first of several industrial units on Sing Teck Industrial Building, at No. 44 Wong Chuk Hang Road, Hong Kong in the Wife’s name for use of his business.  In the same year the Wife gave birth to their youngest child E, and a domestic servant was hired for the family.  It was also at around this time when the Husband’s younger brother and cousin came to live with the family, both of whom ended up helping out at the Husband’s company.

10. In 1981 the Husband’s business was incorporated into a limited company known as T Printing Company Limited (“TPCL”) in which he made himself and the Wife a director and equal shareholder, and arranged for the industrial units to be transferred to TPCL.

11. The business continued to grow and in the early 80s the company obtained a substantial printing contract from Coco-Cola which caused his business to flourish further.  Soon the parties moved into a 3,300 sq ft luxurious flat in Estoril Court at mid-level Hong Kong purchased for $24 million under the name of TPCL, employed 2 domestic servants and a driver for the family, and sent their sons to study in the U.S.

12. In about 1991 / 1992 the Husband moved the production line of his business into Wong Kong, China.  In order to expand his business, he formed a new company in 1994 known as T Printing (Holding) Company Limited (“TPH”) with an investor headed by a Mr Fong of the Fong Family which had their own company listed in Hong Kong and their own factory and printing machines in Shajing Town, Shenzhen, China.  TPH is a B.V.I. company with 76.19% shareholding held by TPCL and the remaining 23.81% shares held by a company of the Fong Family known as G Electronics (Overseas) Ltd (“G Electronics”).  TPH does not carry out any trading activities and only hold investments in its following subsidiaries : -

(a) T Printing (H.K.) Company Limited (“TP Hong Kong”) principally involved in trading activities and to receive orders from external customers for printing services, with TPH and the said Mr. Fong  each holding 1 share, with the latter, I understand, in fact holding on trust for the former.

(b) T Printing (China) Company Limited (“TP China”), a B.V.I. company principally involved in manufacturing activities and prints production with TPH as the only shareholder.

13. In or about the same year the Husband also formed another B.V.I. company under the name of R International Limited (“R International”) for the purpose of receiving his income from his printing business.  In 1995 the Husband and R International entered into a consultancy agreement with TP China to pay a monthly consultancy fee of $155,000 plus a year end bonus to the Husband through R International up to the year ended 31^st March 1999.  Since then no new consultancy agreement had been entered into but the Husband has been receiving a monthly consultancy fee well in excess of the original sum of $155,000, a matter which I will no doubt return to later in this judgment.  I am also given to understand that the T Group of Companies has also used this company to pay commissions to some of its customers in order to secure business.

14. A further company known as G Printing Company Limited (“GP”) was formed in 1999 specifically to receive orders from a single customer F in order to minimise any potential conflict of interest between F which sells mainly in Europe, and the customers of TP Hong Kong which sell similar products in the US market.  The Husband is the sole beneficial shareholder of this company.

15. It was also in 1994, on 11^th April when the parties formally registered their marriage at the Cotton Tree Drive Marriage Registry, which the Husband says was for the main purpose of the parties’ subsequent application for emigration to the U.S. in 1996 at the suggestion of their sons due to their concern over the stability of Hong Kong upon her return to the sovereignty of China in 1997, and upon the advice of their U.S. lawyers to avoid any tax implication on their application, the parties transferred their respective shareholding in TPCL to their younger daughter E on trust.  The shares were subsequently transferred by E to 2 nominee companies on trust for the Husband.

16. The expansion of business naturally brought in more wealth to the Husband and enable the parties to enjoy a high standard of living and life style, including large sums of spending money for the Wife and the family, membership of the Hong Kong Jockey Club, regular consumption of bird’s nest and shark fins at home, the use of several luxurious family cars and holidays in the U.S. and Europe.  The Wife also started to frequent karaoke clubs in the evenings with her friends, as well as throwing dinner and drinking parties with them at her home.  In addition to substantial sums for living expenses every month from the Husband and the use of his supplementary credit cards for shopping, the Wife also received a salary from TPCL, mainly for the company’s tax purpose, initially at $15,000 per month, gradually increasing to $50,000 per month in the year of 2000.

17. The parties also started to invest in the stock market, and in 1994 the Husband purchased an apartment at the Convention Plaza, Wanchai, in his own name for $7.5 million, and 2 years later in 1996 he bought a flat at Shiu Fai Terrace, Hong Kong in the name of TPCL for $5.7 million, both of which were let out for rental income.

18. In 1996 the eldest son CL returned from the U.S. to Hong Kong with his wife and children to stay with the parties at the Husband’s request to assist him with his business with a view to eventually take over the business.  However several months later CL and his family decided to return to the U.S.  The Husband then turned to CR who returned to Hong Kong in 1997 to work for the Husband and has since been staying in the Estoril Court property.

19. One night in October 1997 the Husband left the matrimonial home, after a quarrel with the Wife in one of her drinking parties, to stay in a hotel in Admiralty for about 2 weeks.  Thereafter he moved into his apartment at the Convention Plaza where his stayed until about February 1998 when he moved to a flat at Sceneway Garden, Lam Tin, Kowloon purchased in the name of a Ms Chau for $5.5 million but which was all paid for by the Husband.  Ms Chau was a friend of daughter E who became a regular guest of the parties’ dinner and drinking parties.  She has since early 1998 been cohabitating with the Husband.

20. In May 1998 the Husband, finding it inconvenient to go to work from Sceneway Garden, bought a flat Hillsborough Court, Old Peak Road, Hong Kong for $14.15 million in his sole name where he lived with Ms Chau until about late 1999 when he bought another property in Tai Tam, south of Hong Kong, a 4,000 sq ft town house at House No. 28,  Pat Shan Road, for $45 million under the name of a holding company called L Ltd of which he and Ms Chau are equal shareholder, and where he and Ms Chau has since made their home.

21. On 25^th February 2000 the Husband filed his petition for divorce in these proceedings on the basis of his separation since October 1997.  After the divorce papers were served on the Wife in June 2000, no further steps were taken by the parties in the proceedings for the next several years until early 2004 when the Wife applied for maintenance pending suit, which brought a flurry of affidavits by the parties including their financial statements.

22. In his Financial Statement (Form E) of 23^rd March 2004 filed in response to the Wife’s application, the Husband put his monthly income from his companies at slightly more than $618,000, which included a consultancy fee of $375,000, bonus of $83,333, housing allowance of $125,000 and some miscellaneous allowances of just below $10,000.  He also disclosed additional income from letting out some of his residential properties and the factory units for about $200,000 per month, giving him a total income of over $800,000 per month.

23. With 2 households to maintain, the Husband not surprisingly also disclosed very substantial outgoings every month, totalling almost $770,000 including various mortgage payments as well as his then payment of $90,000 per month for the Wife’s maintenance, which she claimed to have been substantially reduced by the Husband unilaterally from the amount of what he used to pay her, which triggered off her application.

24. In the summary of Assets and Liabilities of his Form E, the Husband put his total assets at about $36 million, but with a total liability of $45 million, he in fact ended up with a deficit of more than $8.8 million.

25. In his later affirmations of 26^th August 2004, the Husband sought to explain his financial predicament that he had been facing since 1997 as follows : -

“15.  …… The printing business did generate quite phenomenal profits and we all lived very comfortably.  However, the business started to decline gradually after the 1997 Far East economic crisis.  There had been a very marked decrease in the turnover and profit in the year 2003.

16. My primary income is from a consultancy fee and bonus paid by the printing business.  As the profitability of the business declines, it can no longer afford to pay me the same level of payments.  My secondary income is unstable as it is from rental payments of real properties.  If the property cannot be leased out, my income will decrease.  A good example is the leasing of the Convention Plaza unit.  It was left empty for 6 months until February 2004.  The Hillsborough property has been vacant for (26) months already.

17. After the separation in 1997, the Petitioner continued to live at the matrimonial home.  It is upon her insistence that I must continue to pay $100,000 each month for her to save up, pay all her 5 credit card bills at about $10,000 / month, pay her chauffeur at $9,000 / month, pay all her utility bills at an average monthly sum of $15,690 and then to pay her another $30,000 for her personal spending.  At the same time, she also received $50,000 / month salary and of 3 luxurious cars for her use from T Printing Co Limited.  However her most ridiculous demand was that I should pay her a monthly rental of $6,600 for 2 car parking spaces located at the matrimonial home of which she is the registered owner.

18. Most important of all is the reason for the Respondent’s outrageous spending was to punish me.  The Respondent openly broadcasts that she punished me by spending “my” money.  I am very disturbed to be told in late 2003 by my son that the Respondent would check whether she had spent enough money each month on her supplemental credit card and if she found that she had not spent up to $100,000 for the month she would rush out to purchase a number of luxurious items for the sake of causing me to pay for them.  My said son had an argument over her such malicious act.  I do crave leave to invite this Honourable Court to such false spending and her malicious intent.  Produced and shown to me is a copy of her spending through credit cards as paid by me, marked as exhibit “CHS-1”.  It can be seen that the monthly average spending was $107,798.10 in 2001; $113,665.58 in 2002; and $98,218.49 in 2003.

My Financial Situation

19. The Respondent refused to listen to my explanation that the business had fallen since the 1997 economic crash.  In 1998 I proposed to her that the total monthly maintenance I could possibly afford was $130,000 to $140,000.  This offer was rejected by the Respondent.

20. In fact and in truth, I found it impossible to support the uncontrolled spending of the Respondent.  In order to satisfy her unreasonable financial demands I sank myself into deeper and deeper financial difficulties by borrowing from banks in form of mortgages and also from the T printing business.  The latter had caused my partner, namely the Fong family represented by Mr Fong severe objections.  The continual payment of a salary by the T China to the Respondent also caused much disquiet from my business partner.

21. The disharmony with the Fong family had escalated in the recent months.  Mr Fong refused to sign the “audited” accounts ending 31^st December 2003.  That greatly delayed the filing of this affirmation as I was advised that I should disclose the said accounts in support of the fact that the business and profits had declined sharply in 2003.  In the end, my negotiation with Mr Fong broke down.  For the first time since we went into business together in 1993 he would not sign the accounts even though they were prepared in exactly the same accountant firm under the same accounting principles as in the past years.  Produced and shown before me copies of the “audited” accounts of T group of companies for the year ending 31^st December 2003, marked as exhibit “CSH-2”.

22. The management accounts up to the end of June 2004 have been produced.  It also shows that the profit continues to drop in the first half of this year.  Produced and shown before me are copies of the half year management accounts of the T group of companies, marked as exhibit “CSH-3”.

23. At present, I am indebted to the T group of companies to the extend of about $38 million.  Under great pressure from Mr Fong I started to repay of the same by instalment and also to stop any further “borrowings” in the future.  In fact and in truth, I am overdrawing my Bank of China account in order to repay $100,000 / month to the T group of companies since March 2004.  Out of the said $38 millions, about $35 million were incurred after I left the Respondent.  $30 million of which were solely for upkeeping the Respondent because I was made to pay her about $4 millions / year for about 6 1/4 years.  I also paid for the renovation of her home, purchased her furniture and her luxurious cars at the total sum of about $5 million.

24. My monthly liabilities and expenses have increased to $869,440 as I have to repay the debt owed to T printing group.

                        .

                        .

                        .

26. As pointed out by the Respondent in paragraph 31 of her affirmation, I have since 1998 urged the Respondent to reduce her spending.  In fact and in truth, in the preparation of this suit, I have been advised by my legal advisors that I should only pay to the Respondent what I can afford and it is wrong in principle to get myself into great financial hardship in order to satisfy her deliberate and punishing spending.  I therefore provided $90,000 / month as maintenance to her.  On top of that I am still paying the chauffeur at $9,000 / month, and the utilities bills at $15,690 / month.  T Printing Co Ltd is still providing and maintaining the 3 cars for her use.  All together she is actually enjoying the benefit of not less than $150,000 / month”.

26. The Wife of course did not agree with what the Husband said, and accused him instead of trying to put financial pressure on her when she asked for his financial disclosure, by cutting off her credit cards and refusing to pay her maintenance or her salary from the company since February 2004.

27. She also accused him of trying to present a false and misleading picture of his financial circumstances or his business, when in fact he was able to spend more than $65 million in purchasing those real properties mentioned above for himself and Ms Chau including their present 4000 sq ft house, as well as luxurious cars such as a Porsche 911 Carrera for Ms Chau, several Mercedes Benz for himself, and a Ferrari for son CR, all of which since he left her in 1997.

28. At the hearing of the Wife’s application for maintenance pending suit, when no oral evidence was given and by taking a broad-brush or “rough guess” approach, as is typical in this sort of application on the basis that a more thorough investigation would be made at a later stage, when the long-term post-suit situation is investigated, and accepting that the evidence then before the court supported the Wife’s claims that the total average amount of maintenance, benefits and spending that she used to receive or enjoy from the Husband and his company, directly and indirectly, for herself and her household was in the vicinity of $200,000 per month, I made that order for her maintenance pending suit accordingly on 20^th September 2004 and dated it back to February 2004.

29. As aforesaid the Husband was granted the decree nisi of divorce on 21^st August 2004, which was then made absolute on 4^th January 2005.  Meanwhile the parties had undergone extensive discovery of their respective means, and had also jointly instructed the accounting firm Deloitte Touche Tohmatsu to prepare a report on the value of the Husband’s T group of companies as at 31^st August 2005 (“Deloitte Report”), which was submitted to Court on 10^th April 2006, as well as formal valuation reports on all the real properties by jointly appointed surveyor Savills.

30. The Deloitte Report put the fair value of all the Husband’s shares in the T Group as at 31^st August 2005 at $103.7 million, which was later at the hearing, by agreement between the parties, adjusted to about $96.9 million, which together with his interest in the various real properties and personal properties, and after deducting his personal overdraft liabilities as well his debts due to TPCL and TP China in the total amount of $69.28 millions, the bulk of which he claims was the result of the Wife’s unreasonable financial demands and excessive spending since their separation, the Husband estimated his total net assets at about $76.26 million, and the Wife’s at about $10.98 million, of which about $6 million were cash in bank and shares investment, giving a net joint assets of $87.24 million.

31. The Husband then submits, by his Counsel Mr David Pilbrow SC, that the main assessment of the Wife’s claims this Court must make, being bound by the decision of the Court of Appeal in C v C [1990] HKLR 183, is the appropriate monthly / annual “reasonable requirements” of the Wife in the light of all the circumstances and the factors listed in s. 7 of Matrimonial Proceedings and Property Ordinance (“MPPO”).

32. Although she has been in receipt of maintenance pending suit at the rate of $200,000 per month, the Husband submits that from the further evidence subsequently revealed at the hearing, the Court should not assess the Wife’s monthly requirements in excess of $80,000, at which rate and at her present age of 55, she would therefore require a capital sum of $16.6 million to meet her reasonable requirements according to his Duxbury calculations.

33. Accepting that the Wife is entitled to suitable accommodation in addition to the amount required to meet her reasonable requirements, the Husband proposes to cause the transfer to her of the unencumbered title of the former matrimonial home at Estoril Court, although he also feels that in the circumstances of the children having fled the nest, the property is unsuitably large and expensive to maintain for the Wife, and he requests the court to recognise that transfer of such a property will represent considerable financial security to the Wife in future years, and if she were to downsize at a later date, the balance could well contribute to the capital necessary to meet her reasonable requirements.

34. The Husband therefore submits that the Wife’s appropriate entitlement would be met if she was to retain the Estoril Court property and have further liquid assets of about $16 million.  With her own assets of about $10 million, a further contribution by him of $6 million appears to be required.  He however offers $5 million as the appropriate lump sum, as he believes that he has been over-paying her by $120,000 per month since February 2004 under the maintenance pending suit order which should be taken into account, and that it is also what he can afford as times are likely to be comparatively hard on this family in the forthcoming years in view of the fact that the TPCL Group has been incurring losses, and in the opinion of the Deloitte Report that it is likely to continue to incur losses and unlikely to achieve maintainable positive earnings in the future, there should be a considerable tightening of belts by all concerned, including the Wife.

35. The Husband’s proposals for settlement, submitted by Mr Pilbrow, would leave the Wife with capital assets of about $39 millions : Estoril Court property of $24 million, own assets of $10 million, and lump sum of $5 million, representing about 45% of the joint assets according to the Schedule of Assets on the back of Mr Pilbrow’s Final Submission and prepared by the Husband’s company accountant Mr Pun, which should not be considered as an unfair share of the joint assets, even after this length of relationship.

36. Unfortunately, the only common ground between the parties is that the Estoril Court property be transferred without any encumbrances to the Wife, as Ms Anita Yip for the Wife rejects the Husband’s argument that the main assessment the Court should make is the Wife’s reasonable requirements in the light of all the relevant factors and circumstances, but rather that it is a case about re-distribution or making best use of all the parties’ assets, as the Court should be guided by fairness in the exercise of discretion under s. 7 of MPPO and reject the notion of discrimination between the role played by a home-maker and a money-earner as a concept being inherently contrary to fairness and justice, which principle is in line with the modern concept of fairness and equality of treatment of spouses in a marital partnership, following the English case of White v White [2001] 1 AC 596 and the posterior cases such as L v L, HCMC No. 1 of 2003 but at the same time is not in conflict with the spirit of the decision of C v C and Duxbury v Duxbury [1987] 1 FLR 7.

37. Before making a fair re-distribution of the parties’ assets, Ms Yip submits that the following upward adjustments to the Husband’s total net assets of $76 million should first be made because : -

(a) it was wrong for the Husband’s accountant Pun, in preparing the said Schedule of Assets, to reduce the value of his assets by $5 million by taking in depreciation changes from September 2005 to August 2006 without the benefit of the balance sheets.  Hence she believes that the $5 million should be added back to the Husband’s total assets;

(b) it was wrong for the Husband to unilaterally make a 5% downward adjustment of the values of the properties from the agreed valuation provided by the jointly appointed surveyor Savills without proper basis.  Hence she argues that 5% should be added back to the total valuation of the properties in the Schedule;

(c) it was wrong for the Husband to exclude the Sceneway Garden property, which is in Ms Chau’s sole name, and her 50% share of L Ltd which holds House 28, both of which the Husband has admitted were gifts to her, from the Schedule of Assets as they were both purchased with family assets without any financial contribution from Ms Chau, and that the Husband should not be allowed to fritter away family assets in the fashion dictated by him.

38. By adding these value / assets back to the Schedule, Ms Yip submits, will bring the Husband’s total net assets to $108.5 million, and the total net joint assets to $118.5 million as set out on p. 49 of her Closing Submission, instead of only $87.2 million as estimated by the Husband.

39. Of these total assets of $118.5 million, the Wife asks for $55 million, which she says can be made up by the Estorial Court property ($24 million), her own assets ($10 million) and a lump sum of about $20.6 million from the Husband, which means that the Husband will still end up with the majority of the total joint assets at $63.5 million.

40. In effect, the gulf between the parties is over the amount of the lump sum to be paid by the Husband which he proposes $5 million, and which the Wife asks for $20.6 million, a difference of more than $15 million, which cannot be said to be insignificant, and as I see it, is due not just to large number of disputed factual issues, but equally to conflicting views between the parties as to the applicable law.

The Law

41. As submitted by Mr Pilbrow, there appears to be a fundamental difference between the parties as to the line of authorities, which each considers the Court should follow in the particular circumstances of this case.  Ms Yip for the Wife suggests that the principle of fairness from White v White and the ratio of L v L is the governing authority, upon which this Court should base its award thereby giving the wife a percentage share of the matrimonial assets, whereas Mr Pilbrow for the Husband, submits that this Court should follow the guidelines and is indeed bound by the decision of the Court of Appeal in C v C as followed by Hartmann J, also in the Court of First Instance, in F v F [2003] 1 HKLRD 836, with the essential difference between L v L and C v C being that in L v L the wife had been an equal partner in and equal contributor to the family fortune, which represented the matrimonial assets, as Lam J said at paragraph 6 page 3 of his judgment :

“Further, …… it is common ground that equal division is appropriate on the facts of the present case.  In other words …… both sides accepted the other party had contributed equally to the welfare of the family.  Hence it would not be necessary for this court to discuss at length as to what had happened in the past”.

                    And at paragraph 13, page 6 :

“Both of them worked hard in running Club B.  In their testimonies, both the Husband and the Wife acknowledged the other party to be an equal partner in business.  Each of them played an important role in the success of the business”.

42. It is not in dispute that the facts of this case are quite different from L v L, and in the present case the Husband even avers that the Wife has done little or nothing to contribute to the financial standing of the family, and complains that her action in the main had a deleterious effect on the finances of the family, and that her contribution quo wife / mother has also been far from satisfactory.  He relies on the following observation of Lam J in L v L : -

“66. The “big money” cases previously decided in Hong Kong could broadly be divided into two categories.  The factual matrix in C v C and F v F were different from White v White in one important aspect.  In the former cases, the wives did not need to work since the marriage.  On the other hand, in White v White, the parties were partners in the business sense as much as in the domestic sense.  Hence, in C v C and F v F the court was not faced with the problem of the inter-relationship between the concept of reasonable requirements and the determination of a fair share of a spouse who is also a business partner and how Section 7 should operate in the latter context.  In the present case, it is common ground that the two parties had been business partners and I have to grasp the nettle”.

43. There, Lam J appeared to agree with Hartmann J in F v F that he was bound by the decision of the Court of Appeal in C v C albeit indicating a preference for the ratio of White v White when he said : -

“63. In F v F, Hartmann J regarded C v C as settling principles of interpretation on Section 7 which are binding on courts of lower or concurrent jurisdiction and hence guidance on similar legislation from other common law jurisprudence cannot take precedence over it.  His Lordship regarded the reasonable requirements approach as a principle of interpretation concerning the effect of Section 7 as a whole (see Para. 57 to 63).”

44. He concluded, however, that C v C did not bind him where the facts confirmed an equal partnership when he said : -

“72. The Court of Appeal in White v White suggested that a fair result could be achieved by examining the matter from the angle of entitlement as opposed to contribution.  That was encapsulated in the judgment of Butler-Sloss LJ at p.320E to F.  Although the House of Lords rejected that approach, Mr Kotewall invited this court to adopt the same.

“In a case where the spouses were in business together, the starting point has to be their respective financial positions at the end of their business relationship.  This may in many cases be achieved by a broad assessment of the financial position and I am not advocating a detailed partnership account.  At this stage it is not a question of contribution to the family, which is to be found at subsection (2) (f) but of entitlement.  The partnership case where the wife is found to be an equal partner, even if the assets are large, is in a wholly different category from the “big money” cases such as Dart v Dart [1996] 2 FLR 286 of Conran v Conran [1997] 2 FLR 615.  In the latter cases, the origin of wealth was clearly on one side and the emphasis was rightly on contribution not entitlement”.

73. In that dictum, Her Ladyship identified the crucial difference between cases where the spouses were business partners and cases where they were not.  The approach of reasonable requirements was developed in the context of the latter but it does not fit well in the former.  As mentioned, C v C and F v F fall within the latter category.  Given such material distinction, I am of the view that as a matter of stare decisis, C v C does not cover a case where the spouses were genuine business partners insofar as it decided that reasonable requirements should set the ceiling for ancillary relief award in big money cases.  This was in fact recognized by Hunter JA in C v C, see the citation at p.187B from Preston v Preston [1982] Fam 17 at p.25 in proposition (7).  The criterion of reasonable requirements has never set the ceiling for awards in cases where the spouses were also business partners”.

45. There can be no doubt, Mr Pilbrow submits, that this case falls within the definition of a “big money case”, and hence the prevailing law pertinent to the fact of the case should therefore be those guidelines set out by Hunter JA in C v C on p.183, and as this Court can not justifiably conclude that the Wife in this case has made any exceptional contribution of a financial or partnership nature to the marriage, it follows that the appropriate award should be based with flexibility on a Duxbury calculation of the Wife’s reasonable requirements as assessed by the Court together with the provision of suitable accommodation.

46. Ms Yip, on the other hand, submits that this Court is well aware of attempts in the pre-White era to disapply the “reasonable requirement” principle, with one such leading attempt by Thorpe LJ in Dart v Dart [1996] 2 FLR 286 where he tried to reconcile the existing practice with the statutes when he said at p. 296 : -

“Used thus the consideration of needs ceases to be paramount or determinative but an elastic consideration that does not exclude the influence of any of the others.  …… in a big money case where the wife has played an equal part in creating the family fortune it would not be unreasonable for her to require what might be even an equal share”.

47. While this judgment was subsequently criticized by the House of Lords in White v White, Ms Yip submits that it was because the House of Lords was of the view that there simply was no justification to put the gloss of “reasonable requirements” on the interpretation of the statue, as the only binding principle is a fair and just application thereof, i.e. s. 7 of the Matrimonial Proceedings and Property Ordinance, and that this is not a Duxbury case, as it is merely a tool to assist the Court’s evaluation of the applicant’s reasonable needs, and should not interfere with the wide discretion of the Court under the statute, as otherwise allow this “prerequisite” to dictate the result is no doubt a wholly unjustified fetter on the Court’s discretion.

48. As pointed out by Hartmann J in F v F, this conflict as to the applicable law has been brought about by a fundamental change in the manner in which the courts in the U.K. now approach contested ancillary relief applications in what are called “big money” cases, when he said on page 846 para 19 : -

“ …… The change was effected by the House of Lords in October 2000 in the landmark decision of White v White [2001] 1 AC 596.  As I understand it, this is the first “big money” case in Hong Kong in which it is submitted that, as the relevant legislation is essentially the same as that of the United Kingdom, this Court should adopt the White v White principles, setting aside the restrictive approach that has previously applied in this jurisdiction, an approach that is said to be inherently discriminatory against the home-maker in favour of the wealth creator”.

49. He then went on to examine all the relevant authorities that led to White v White and concluded that notwithstanding that he found the principles in White “persuasive” and in line with the “modern concepts of fairness” which “the local legislature intended”, he was nevertheless bounded by C v C.  Before going into details of his reasoning behind such a conclusion, it would be relevant to first examine exactly what the Court of Appeal had decided in C v C.

50. That was an appeal from a decision of Mortimer J given in the High Court, as it then was, in 1989 whereby he made various orders regulating the financial position of the parties at the end of their 29 years marriage, during which the husband was a successful solicitor and entrepreneur which had brought him great wealth, much of which was put into the wife’s name, and at the end of the marriage the wife had also benefited substantially from her father’s estate, with the result that out of the total assets of $90.338 million, $60.424 million was controlled by the wife and $29.914 million by the husband.  It was therefore in form that the husband was the applicant when he sought a lump sum provision for himself.  It was then the first time that the court in Hong Kong had had to consider the impact of s. 7 (1) of MPPO in relation to vary wealthy parties, where the usual constraints of insufficiency or of illiquidity of assets did not apply.  Mortimer J ordered, inter alia, the wife to pay $19 million to the husband, which was the equivalent of a 55 : 45 division in favour of the husband.  He appealed this part of the order.

51. In the appeal Mr Charles Ching QC (as he then was) for the husband took the Court to a number of decisions of the Court of Appeal in England where the problem of very wealthy parties had been considered under the parallel English legislation which was s. 25 of the Matrimonial Causes Act 1973, and invited the Court to follow and apply the guidelines advice offered by that authority, whereas Mr Peter Singer QC (as he then was) for the wife made 2 submissions, first, invited the Court to construe s. 7 for themselves in the light of their perception of Hong Kong’s need, and to ignore all English authority, and secondly he subjected the English authority to a critical analysis with a view to persuading the Court that it was unpersuasive, inconsistent and in certain respects erroneous.

52. In rejecting both submissions, Hunter JA said this in his judgment at page 186 for the Court of Appeal : -

“Mr Singer’s first submission ignores history.  From as early as the Divorce Ordinance of 1932, the original Cap. 179, where s. 29, dealing with what was then called permanent alimony, precisely followed s. 190 of the Supreme Court of Judicature (Consolidation) Act 1925, the Hong Kong legislature has followed the example of the English Parliament.  Thus s. 5 (1) of the English Matrimonial Causes Act 1963, which by sub-s. (c) first empowered the court to order “the husband to pay to the wife such lump sum as the court thinks reasonable” was enacted in Hong Kong in identical terms in s. 28 (1) of the Matrimonial Causes Ordinance (Cap. 179).  Section 7 of the MPPO was taken almost verbatim from s. 5 of the 1970 U.K. Act.  The important difference is that between 1970 and October 1984 the UK statute required the court :

“So to exercise those powers as to place the parties, so far as it is practical and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other”.

The “target” provision, as it was conveniently called in argument, was omitted by the Hong Kong legislature from s. 7 (1).  Part only of it, the reference to the “conduct of the parties” was adopted and inserted as part of the opening words of the section.  In s. 7 (2) on the other hand the English target provision was included intact.  This leaves no room for doubt that the omission was deliberate.

Subject to this change, the history of matrimonial legislation, and more particularly of that relating to financial provision, demonstrates a legislative intent in Hong Kong to use English experience and to follow English’s example.  This has inevitably and properly led to the repeated use in the Hong Kong courts of English authority and of English textbooks.  I therefore have no hesitation in rejecting Mr Singer’s first submission.

In order to consider Mr Singer’s second submission, it is necessary to put into context the guideline advice which emerges from the English authorities namely : O’D v O’D [1976] Fam 83 : S v S unreported in the Court of Appeal, but the first instance judgment of Balcombe, J is reported in The Times, 10^th May 1980.  Page v Page (1981) 2 FLR 198 : Preston v Preston [1982] Fam 17, where Ormrod, LJ took the opportunity to summarise the effect of the earlier decisions at pp. 24 – 25.  More recently there is Gojkovic v Gojkovic (1990) 1 FLR 140 in the Court of Appeal, and two decisions at first instance referred to by Mr Singer, namely of Ward, J in B v B (1990) 1 FLR 20, and of Stephen Brown, J, in Richards v Richards 1989, unreported.

53. Hunter JA then summarized the guideline and principles from these English authorities that the Hong Kong courts should adopt at page 187 : -

“1. The court’s first task is to consider “all the circumstances” and all the factors set out in paragraphs (a) to (g) of s. 25 (1) in England and of s. 7 (1) here.

2. Until 1984 in England this had to be done with a view to satisfying what I have called the “target” clause.  This aspect features significantly in all these cases, and I shall have hereafter to attempt to assess its importance.

3. The arithmetical approach suggested as an appropriate starting point in Wachtel v Wachtel [1973] Fam 72 is wrong and quite inappropriate at this level of case.  Mr Singer did not dispute this.  He admitted that in the absence of any provision for community of property, which for a short time in England was considered as a possible effect of s. 5, he cannot invite the court to start from equality.  Rather it was the result he invited it ultimately to reach.

4. The inquiry can conveniently start at the evaluation under sub-s. (a)of “the income, earning capacity, property and other financial resources” of both parties.  This usually involves the evaluation of the husband’s contribution to the family fortunes which are under his control.  But resources of both parties derived from any source, e.g. inheritance, have also to be considered.

5. The next stage is to evaluate what Ormrod LJ more than once referred to as the wife’s “unreasonable requirements”.  Mr Singer’s criticism of this phrase as un unjustified judicial gloss only has substance if it could be said that Ormrod LJ was seeking to substitute this phrase for the words of the section.  It is quite clear that he was not and that he was simply using it as a convenient paraphrase of the effects of the section.  He was in effect saying that the section requires that a monetary value has to be put upon the wife’s total claims upon the available assets.

6. In making this monetary assessment it has to be borne in mind that : “possible dispositions by will are not relevant matters for consideration under s. 25.  The scheme of the act is to give the court jurisdiction to make orders for the benefit of wives and dependent children” per Dunn, LJ in Page at p.203.  So in Preston it was held that a lump sum intended to provide income should be assessed on the basis not of the return on the capital sum, but upon the basis that the capital would be exhausted during the wife’s lifetime.  The court was thus accepting that for either party maintenance is assessed for no longer than what was once called “the life” of the other.  This principle has consistently been applied in England since Preston, e.g. in Duxbury v Duxbury (1987) 1 FLR 7 and Gojkovic v Gojkovic at p. 143.  I can see no substance in Mr Singer’s criticisms of it.

7. In the words of Ormrod, LJ in Preston op cit at p.25 :

“Active participation by the wife either by working in the business or by providing finance, will greatly enhance her contribution to the welfare of the family under paragraph (f), and may lead to a substantial increase in the lump sum over and above her “reasonable requirements”.  This, in effect, recognises that she has ”earned” a share in the total assets, and should be able to realise it and use it as she chooses : S v S”.

This does not downgrade the contribution of the lady who only fulfils the very important role of wife and mother, as Mr Singer suggests.  It simply recognises the different types of contribution which the award must reflect.  All the cases are consistent in recognising the particular claim which can be advanced by the working wife.  Again I can see no force in Mr Singer’s criticism.

8. Again in the language of Ormrod LJ in Preston op cit at p. 28 :

“I think that on the true construction of s. 25 there does come a point, in cases where the available resources are very large, as Mr Johnson submitted when the amount required to fulfil its terms “level off” and redistribution of capital as such, in some unspecified ratio beings, which is outside the section”.

This conclusion was particulary attacked by Mr Singer.  But it seems to me necessarily to follow from the terms and effect of s. 25 above considered, and from the fact, pointed out by Bagnall J in Harnett v Harnett [1973] Fam 156 that the legislature did not direct the court “to exercise its power so as to achieve a fair or just …… division of the capital and income resources of the parties”.  Any assessment based upon realities and requirements necessarily has a ceiling.  The court’s discretion under s. 25 is wide but it is conditioned by the terms of that section, and is not unlimited in the sense urged by Mr Singer.

9. “Where the court is dealing with very large resources the ambit of reasonable disagreements is very wide” per Ormrod LJ in Preston op cit at p. 29.  It follows that an appellate court will disturb a judge’s assessment only if he misdirects himself or if his assessment falls outside such generous ambit and is clearly wrong.

In my view the courts of Hong Kong can and should derive considerable help from the much wider experience of the English courts in this field.  The English courts seems to me faithfully and carefully to have construed their s. 25 and I am unimpressed by Mr Singer’s criticism.  For my part I gratefully accept and follow the guidance of these decisions”.

54. In applying the above principles, His Lordship then found the judge at the first instance had failed to make the proper quantification of the parties’ reasonable needs and requirements, and instead simply engaged in a re-distribution of capital between them, and hence he erred in principle and reached the wrong decision.

55. Allowing the appeal and increasing the lump sum for the husband from $19 million to $30 million, Hunter JA on behalf of the Court of Appeal gave the following reasons at page 190 : -

“ …… Both parties were in their 50’s, and neither suffered in the judge’s view any relevant disability.  The husband had effectively retired from his practice but retained a residual earning capacity.  Much more significantly the standard of living set and enjoyed by the parties during the marriage was agreed to have been of the highest.  They wanted for nothing.  It was against that very high standard that the wife’s reasonable requirements fell to be assessed.  They were quantified by her in her evidence in terms of income at $900,000 p.a.  Putting her inheritance on one side, the wife did not fall into that special category who have actively participated in the creation of wealth by working or by the provision of capital.  But during nearly 30 years of married life she had made a major contribution to the family welfare in her role of wife, mother and hostess.

In these circumstances it seems to me that the wife required :

A.	(1)            A suitable home.
	(2)            A capital sum which -

(a) would produce over her life time an income sufficient to enable her to maintain the standard of living set by the marriage;

(b) provide a cushion sufficient to cover periodical capital requirements and indeed emergencies;

(c) properly reflect her contribution to this family over 30 years.

                        Of these the wife had :

B. (1) A suitable home.  By agreement the old matrimonial home in Wong Nei Chung Gap Road valued at $4.175 m was to be conveyed to her by the husband, and the judge separately so ordered.

(2) Her inheritance of about $14 m.  Much of this is now illiquid, and the income is only a somewhat derisory $252,000 p.a.  As the winding up of her father’s estate proceeds, greater income and freer capital is bound to be created.  At its lowest, this fund provides a considerable capital cushion.

The crucial question then is what further sum should the wife receive by way of retention.  In assessing it regard must be had to a number of special factors beyond the general considerations above noted.  It is the fund to which she must initially look for the production of the bulk of her necessary income.  Secondly she cannot take advantage of any liquidity problem created by her taking of the jewellery, but I think that two pieces, the presents from her mother on marriage, out of the so-called family jewels should be regarded as non-convertible.  Thirdly the fact that part of her fund is notional, and that she had incurred substantial past and future liabilities in costs, cannot be directly reflected, but equally cannot be wholly ignored.

I think that the appropriate sum for the wife to have by way of retention in addition to the flat and to her inheritance is the sum of $17m making a total of $35.175m.  Rounding this up to $35.424m, this leaves a balance of $30m which ought to be returned to the husband by way of lump sum award”.

56. It is clear that the Court of Appeal had fully embraced the then English authorities and followed their guidance, in particularly the dicta of Ormrod LJ in Preston, in reaching their decision in C v C.  Some 13 years later in 2003, in what was then the first “big money” case in Hong Kong since C v C, Hartmann J in F v F was taken to the task of deciding whether our courts should adopt the White v White principles, and should therefore set aside the restrictive approach that had previously applied in our jurisdiction, an approach that was said to be inherently discriminatory against the home-maker in favour of the wealth creator.

57. As I understand it, full arguments as to the prevailing principles in “big money” cases were conducted by Mr Pilbrow, also for the husband, before Hartmann J in F v F where all the authorities were examined up to and in fact after White v White, with a view to examine how those principles had evolved over the years during which “reasonable requirements” had prevailed in U.K., and when His Lordship subsequently so eloquently and effectively summarised in his judgment under a sub-title “Should this Court follow White v White” from pages 847 to 863.

58. His Lordship started off by confirming the objective of the court to achieve a fair outcome between the parties after having regard to all the circumstances and the criteria listed in s. 7 (1) of MPPO when he said : -

“ …… That being the case, as between spouses, whatever approach is adopted, the authorities appear to be unanimous in holding that the legislative intent must be to weigh the necessary criteria in order, within the parameters of those criteria, to achieve fairness between the parties.  As Thorpe LJ said in Dart v Dart [1996] 2 FLR 286 at p. 294, the “statutory design was to give the judge exercising the power of equitable distribution the widest discretion to do fairness between the parties”.  As Lord Nicholls observed in White v White [2001] 1 AC 596 at p. 604, the objective “must be to achieve a fair outcome”.

In C v C [1990] 2 HKLR 183, at this time, the defining judgment in Hong Kong as to the manner in which our courts should discharge their duties under s. 7 of the MPPO, Hunter JA observed that the history of our matrimonial legislation, more particularly that relating to matters of ancillary relief, demonstrates a legislative intent in Hong Kong to “use English experience and to follow England’s example”.  This is illustrated by the fact that s. 7 of the MPPO was to quote the words of Hunter JA, taken “almost verbatim” from s. 5 of the English Matrimonial Proceedings and Property Act 1970 (the 1970 Act) which itself had been enacted in order to modernise and rationalise the powers of the courts in ancillary relief matters.

 Although s. 7 of the MPPO was drawn in almost identical terms from s. 5 of the 1970 Act, there was one important difference.  As originally enacted, s. 5 (1) of the 1970 Act (the equivalent of s. 7 (1) of the MPPO) stated that the purpose behind the duty of the courts to consider the criteria detailed in the section was to :

…… place the parties, so far as it is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other.

The Hong Kong Legislature chose not to include this explicit aim, the “target provision” as Hunter JA termed it in C v C [1990] 2 HKLR 183.  Instead as between spouses, our courts are obliged, in the absence of a stated aim, to have regard to “the conduct of the parties” and “all the circumstances of the case” including the criteria listed in paras (a) – (g) in order, in the particular circumstances of each case, to achieve an equitable financial settlement.

In the United Kingdom, the relevant provisions of the 1970 Act were re-enacted in substantially similar terms in Pt. II of the Matrimonial Causes Act 1973 (the 1973 Act).  Sections 23, 24 and 24A of the 1973 Act are reflected in ss. 4, 6 and 6A of the MPPO while s. 25 of the 1973 Act reflects s.7 of our Ordinance. In the 1973 Act, however, in late 1984, the “target provision” inherited from s. 5 (1) of the 1970 Act was deleted from the legislation, no provision defining a specific purpose being inserted in its place.  In the result, it may be said that, as between spouses, the almost identical wording of s. 25 of the 1973 Act and s. 7 of the MPPO seek the same result; namely what the circumstances of each particular case dictate should be a fair outcome”.

59. His Lordship then pointed out that when in the U.K. and thereafter in Hong Kong the reformed legislation came into force, there was obvious curiosity and speculation amongst practitioners as to how these new powers were to be interpreted and utilised by the courts, especially after the mathematical approach proposed by Denning MR in Wachtel v Wachtel [1973] 1 ALL ER 275 was disapproved, how the insistence that the courts must direct themselves to the criteria detailed in the legislation and not to a calculation of fractions other than a broad brush against the fairness of outcome, left uncertainty as to the outcome in “big money” cases where the assets were very large and there was no serious liquidity problem, and how the principle of “reasonable requirements” was developed as follows (at p. 850) : -

“ …… The uncertainty, however, was set aside by Ormrod LJ in a series of cases in which the principle of “reasonable requirements” was developed in O’D v O’D [1976] Fam 83, he said :

The next stage is to consider the wife’s position, not from the narrow point of “need”, but to ascertain her reasonable requirements, bearing in mind that she will have to provide an appropriate home and background for herself and the children.

In Preston v Preston [1982] Fam 17, he expanded upon this by saying :

Secondly, the word “needs” in para. (b) of s. 25 (1) in relation to the other provisions in the subsection is equivalent to “reasonable requirements”, having regard to the other factors and the objective set by the concluding words of the subsection.

Paragraph (b) of s. 25 (1) of the 1973 Act is reflected in para. (b) of s. 7 (1) of the MPPO, which places our courts under a duty, within the context of the conduct of the parties and the general circumstances of the case, to have regard to :

…… the financial needs, obligation and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.

The “reasonable requirements” approach, although elastic, did not encompass in “big money” cases, where there was a surplus after meeting the spouses needs, any power to order the transfer of a capital sum to an applicant so that, for example, provision could be made in the applicant’s will for his or her beneficiaries.  In Preston v Preston [1982] Fam 17, Ormrod LJ said :

…… the powers of the court ought not to be exercised for the benefit of adult children, by enabling the wife to set up a child in business or to provide by will for a child who is unlikely to benefit under the husband’s will or otherwise.

In the same judgment, Ormrod LJ said :

I think that on the true construction of s. 25 there does come a point, in cases where the available resources are very large, as [counsel] submitted, when the amount required to fulfil its terms “levels off”, and redistribution of capital as such, in some unspecified ratio begins, which is outside the section”.

60. His Lordship then described the case of Dart v Dart [1996] 2 FLR 286, a decision of the English Court of Appeal in 1996, as the high water mark of the “reasonable requirements” approach, with the Court endorsing the applicable principles as having been settled in “big money” cases for over a decade, and agreed with the comment of Thorpe LJ that the certainty brought about by that approach had enabled practitioners to negotiate settlements in a large number of cases and, if there was to be a change, it would have to be brought about by the House of Lords or Parliament.

61. In Dart v Dart Thorpe LJ, having considered all the relevant authorities from which the “reasonable requirements” approach evolved, made the following comment (at page 294): -

“From those passages it is implicit that reasonable requirements are more extensive than needs.  As a matter of ordinary language what a person requires is likely to be greater than what that person needs.  So the check on what the applicant subjectively requires is the word “reasonable”.  There must be an objective appraisal of what the applicant subjectively requires to ensure that it is not unreasonable.  But the objective appraisal must have regard to the other criteria of the section, obviously including what is available, the standard of living to which the parties are accustomed, their age and state of health and, perhaps less obviously, the duration of the marriage, contributions, and pension rights both as affected by the marriage and as accrued or likely to accrue.  Used thus the consideration of needs ceases to be paramount or determinative but an elastic consideration that does not exclude the influence of any of the others.  As Mr Singleton rightly submitted, in a big money case where the wife has played an equal part in creating the family fortune it would not be unreasonable for her to require what might be even an equal share.  Therefore in my judgment the essential function of the judge in the big money case is to declare the boundary between the applicant’s reasonable and unreasonable requirements applying all the statutory criteria to the myriad relevant facts of the individual case”.

62. But the endorsement of the “reasonable requirements” approach by the Court of Appeal was not, pointed out by Hartmann J, however without reservation.  Peter Gibson LJ of the same court commented (at page 299): -

“I of course appreciate that in the present case the judge expressly disclaimed feeling limited by any ceiling or arbitrary limit to the amount which he could award the applicant wife and said that he was not limited to her reasonable requirements.  However, when putting together his award, the judge added to the £6m which was his assessment of her “reasonable annual routine needs” a further capital sum which it was “a reasonable requirement of this wife” to have available to her.  And a little later he said that it seemed to him that this particular wife had “reasonable requirements” over and above her annual routine expenditure.  By that route he arrived at the overall figure of £10m and in doing so he faithfully followed the practice of the Family Division.

But the statutory discretion, it seems to be, might have been differently interpreted by the courts to allow a more generous approach to the applicant in a big money case, so that the award was not in effect limited by the applicant’s reasonable requirements.  Paragraph (b) is but one of the paragraphs to which particular regard is to be had, and both parties’ reasonable requirements must be taken into account.  Other paragraphs refer to matters which have had nothing to do with the applicant’s financial needs, for example para (d) with its reference to the duration of the marriage and para (g) with its referent to conduct.  And I come back again to the width of s. 25 (1), I entirely accept that in a big money case it is a relevant and important consideration whether the wealth of the respondent is largely attributable to his inheritance and whether the applicant contributed to that wealth.  I also accept that once one goes beyond the reasonable requirements of the applicant, the exercise of discretion becomes more difficult to explain in a way that can ensure consistency of approach by the courts.  Nevertheless standing back and looking at the position overall, were I unconstrained by authority I would have to say that I regard an award of £9m to a good wife in a marriage of 14 years and a good mother to the respondent’s children out of the respondent’s resources of £400m as on the low side.  However, for the reasons given by Thorpe LJ and in the light of the authorities to which he refers, I do not think it open to this court to hold that the “millionaire’s defence” is wrong in law or that an award based on the wife’s reasonable requirements can be impugned.  Preston v Preston [1982] Fam 17, (1981) 2 FLR 331, Thyssen-Bornemisza v Thyseen-Bornemisza (No 2) [1985] Fam 1, [1985] FLR 1069 and O’Neill v O’Neill [1993] 2 FCR 297 seem to me to be particularly significant decisions of this court binding on us”.

63. Butler-Sloss LJ, as she then was, also shared the doubts raised by Peter Gibson LJ when she went through the development of the “reasonable requirements” approach and contrasted it against the increased recognition of contributions by a wife as a home-maker (at page 300) : -

“The Matrimonial Causes Act 1973, as amended in 1984, provides the jurisdiction for all applications for ancillary relief from the poverty-stricken to the multimillionaire.  It is obvious that a court, in the exercise of the discretion provided by ss 25 and 25A, will apply the relevant criteria according to the widely differing facts of each case before it.  In the low-income cases the assessment of the needs of the parties will lean heavily in favour of the children and the parent with whom they live.  If; therefore, the only asset is the house, and the mother is caring for the children, she will get the house and probably outright, even though the effect of that order is to deprive the husband of the whole of the capital accrued during the marriage and directly financed from his resources.

At the other end of the scale, the affluent and the very rich families may have acquired it all during the marriage and by the efforts of both spouses by way of a working as well as a marriage partnership, see for instance Gojkovic v Gojkovic (No 2) [1992] Fam 40, [1991] 2 FLR 233.  In the case of a wife whose contribution to the marriage is indirect by way of keeping the home and bearing and bringing up the children, the well-known observation of Sir Jocelyn Simon P in a lecture in 1965, and recorded in the judgment of the Court of Appeal in Wachtel v Wachtel [1973] Fam 72, 92, is apposite, He said :

“The cock can feather the nest because he does not have to spend most of his time sitting on it”.

It is however useful to remember the context in which he said it.  Ancillary relief orders prior to the 1960s did not provide for any capital distribution unless there was a trust.  In 1963, for the first time, the courts were given the power to award lump sums, which were modest.  It was not until the Matrimonial Causes Act 1970, re-enacted in the 1973 Act, that an order for transfer of property was introduced.  The President was speaking at a time when the indirect contribution of a wife was not widely recognised and the normal order was a maintenance order for the wife during the joint lives of the former spouses or secured for her life.

Gradually the importance of the different contributions made by the spouses during their marriage has been recognised in a series of cases since the 1970s.  The approach of the courts has inevitably reflected the type of case coming before them.  Orders vary from the applicant spouse receiving the whole or the larger part of modest assets to receiving a small proportion of a large fortune.  The exercise of discretion and the criteria laid down in s 25 of the 1973 Act as amended have to encompass the enormous variations in the circumstances of each case coming before the courts.

                        .

                        .

                        .

In the process of applying the s. 25 (2) criteria to the facts of this case, the needs of the wife are a highly relevant factor.  “Needs” has been defined by Ormrod LJ in Page v Page (1981) 2 FLR 198, 201 as the “reasonable requirements” of the spouse seeking an order.  Where the resources are great Ormrod LJ in Preston v Preston [1982] Fam 17, (1981) 2 FLR 331 said at 28 and 339 respectively that there had to be a levelling off or a ceiling on the amounts to be taken into account.

                        .

                        .

                        .

I should however like to feel that within the consultation process the views expressed by Peter Singer QC in 1992 were carefully considered.  I share the doubts raised by Peter Gibson LJ in his judgment.  I wonder whether the courts may not have imposed too restrictive an interpretation upon the words of s. 25 and given too great weight to reasonable requirements over other criteria set out in the section.  On the present state of the law as interpreted in the authorities Johnson J’s order is clearly right.  If this appeal was not bound by authority I would not wish to make an order or a kind suggested by Mr Munby, but as the sums with which the courts are asked to deal become very large indeed, it may be that we are now perhaps somewhat over-modest in our awards”.

64. It is apparent that Her Ladyship was then sympathetic with the views expressed by Peter Singer QC back in 1992, which were earlier soundly rejected by our Court of Appeal in C v C, and had her reservation about whether “reasonable requirements” had been given too much weight over other criteria set out in the section.

65. In Piglowska v Piglowski [1999] 1 WLR 1360, a House of Lord’s decision preceded White v White, and cited by Lam J in F v F, where the court’s duty to consider the parties’ competing right for their respective housing needs was examined, Lord Hoffmann commented that the section, while listing the various criteria to which particular regard should be had, did not rank them in any kind of hierarchy, and that which of them would carry most weight must depend upon the facts of the particular case.

66. Then came White v White in October 2000 when the House of Lords expressly disapproved of the “reasonable requirements” approach with its inherent ceiling, as noted by Hartmann J, when Lord Nicholls started off by stating that it was necessary for the first time in 30 years since the 1973 Act to lay down clearly the principles that trial judges should apply when hearing applications for financial relief in “big money cases” (at page 599): -

“ …… divorce creates many problems.  One question always arises.  It concerns how the property of the husband and wife should be divided and whether one of them should continue to support the other.  Stated in the most general terms, the answer is obvious.  Everyone would accept that the outcome on these matters, whether by agreement or court order, should be fair.  More realistically, the outcome ought to be as fair as is possible in all the circumstances.  But everyone’s life is different.  Features which are important when assessing fairness differ in each case.  And, sometimes, different minds can reach different conclusions on what fairness requires.  Then fairness, like beauty, lies in the eye of the beholder.  So what is the best method of seeking to achieve a generally accepted standard of fairness ?  Different countries have adopted different solutions.  Each solution has its own advantages and disadvantages.  One approach is for the legislature to prescribe in detail how property shall be divided, with scope for the exercise of judicial discretion added on.  A system along these lines has been preferred by the New Zealand legislature, in the Matrimonial Property Act 1976.  Another approach is for the legislature to leave it all to the judges.  The courts are given a wide discretion, largely unrestricted by statutory provisions.  That is the route followed in this country.  The Matrimonial Causes Act 1973 confers wide discretionary powers on the courts over all the property of the husband and the wife.  This appeal raises questions about how the courts should exercise these powers in so-called “big money” cases, where the assets available exceed the parties’ financial needs for housing and income.

The powers conferred by the 1973 Act have been in operation now for 30 years.  This is the first occasion when broad questions about the application of these powers have been considered by this House.  The House considered the statutory provisions recently, in Piglowska v Pigslowska [1999] 1 WLR 1360.  But there the main issue concerned how appellate courts should approach appeals from trial judges’ decisions, rather than the principles trial judges should apply when hearing applications for financial relief in this type of case.  It goes without saying that these principles should be identified and spelled out as clearly as possible.  This is important, so as to promote consistency in court decisions and in order to assist parties and their advisers and mediators in resolving disputes by agreement as quickly and inexpensively as possible ……”

67. Lord Nicholls then stated that the implicit objective of the courts when exercising those wide powers conferred by the legislation must be to achieve fairness between the parties (at page 604) : -

“ …… the legislation does not state explicitly what is to be the aim of the courts when exercising these wide powers.  Implicitly, the objective must be to achieve a fair outcome.  The purpose of these powers is to enable the court to make fair financial arrangements on or after divorce in the absence of agreement between the former spouses :  see Thorpe LJ in Dart v Dart [1996] 2 FLR 286, 294.  The powers must always be exercised with this objective in view ……”

68. Having stated this objective, Lord Nicholls went on to disapprove the “reasonable requirements” approach in view of its discriminatory nature as fairness requires that whatever the division of labour chosen by the husband and wife, this should not prejudice or advantage either party when considering the factor relating to the parties’ contributions, although equality by no means follows that there is a presumption of equal division of assets between the parties (at page 605) :-

                    “Equality

Self-evidently, fairness requires the court to take into account all the circumstances of the case.  Indeed, the statute so provides.  It is also self-evident that the circumstances in which the statutory powers have to be exercised vary widely.  As Butler-Sloss LJ said in Dart v Dart [1996] 2 FLR 286, 303, the statutory jurisdiction provides for all applications for ancillary financial relief, from the poverty stricken to the multi-millionaire.  But there is one principle of universal application which can be stated with confidence.  In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles.  Typically, a husband and wife share the activities of earning money, running their home and caring for their children.  Traditionally, the husband earned the money, and the wife looked after the home and the children.  This traditional division of labour is no longer the order of the day.  Frequently both parents work.  Sometimes it is the wife who is the money-earner, and the husband runs the home and cares for the children during the day.  But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f), relating to the parties’ contributions.  This is implicit in the very language of paragraph (f) : “the contributions which each …… has made or is likely …… to make to the welfare of the family, including any contribution by looking after the home or caring for the family”.  (Emphasis added)  If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets.  There should be no bias in favour of the money-earner and against the home-maker and the child-carer.  There are cases, of which the Court of Appeal decision in Page v Page (1981) 2 FLR 198 is perhaps an instance, where the court may have lost sight of this principle.

A practical consideration follows from this.  Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets.  More often, this is not so.  More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other.  Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division.  As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so.  The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.

This is not to introduce a presumption of equal division under another guise.  Generally accepted standards of fairness in a field such as this change and develop, sometimes quite radically, over comparatively short periods of time.  The discretionary powers, conferred by Parliament 30 years ago, enable the courts to recognise the respond to developments of this sort.  These wide powers enable the courts to make financial provision orders in tune with current perceptions of fairness.  Today there is greater awareness of the value of a non-financial contributions to the welfare of the family.

There is greater awareness of the extent to which one spouse’s business success, achieved by much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required mush sustained hard work over many years.  There is increased recognition that, by being at home and having and looking after young children, a wife may lose for ever the opportunity to acquire and develop her own money-earning qualifications and skills.  In Porter v Porter [1969] 1 WLR 1155, 1159, Sachs LJ observed that discretionary powers enable the court to take into account “the human outlook of the period in which they make their decisions”.  In the exercise of these discretions “the law is a living thing moving with the times and not a creature of dead or moribund ways of thought.

Despite these changes, a presumption of each division would go beyond the permissible bounds of interpretations of section 25 …… the 1973 Act makes no mention of an equal sharing of the parties’ assets, even their marriage-related assets.  A presumption of equal division would be an impermissible judicial gloss on the statutory provision.  That would be son, even though the presumption would be rebuttable.  Whether there should be such a presumption in England and Wales, and in respect of what assets, is a matter for Parliament.

It is largely for this reason that I do not accept Mr Turner’s invitation to enunciate a principle that in every base the “starting point” in relation to a division of assets of the husband and wife should be equality.  He sought to draw a distinction between a presumption and a starting point.  But a starting point principle of general application would carry a risk that in practice it would be treated as a legal presumption of equal division”.

69. Lord Nicholls then turned to examine those authorities from which the “reasonable requirements” approach developed and to clarify the confusion that it has since caused (at page 606): -

“I turn next to a point where the current state of the law is not altogether satisfactory. That this is so emerges clearly from the decision of the Court of Appeal in Dart v Dart [1996] 2 FLR 86.  The point concerns the relationship of paragraph (a) and paragraph (b) in big money cases.  Paragraph (a) concerns the available financial resources of each of the parties.  Paragraph (b) is concerned with the “financial needs, obligations and responsibilities” of each of the parties.  In practice, paragraph (b) seems to have become largely subsumed into a wider, judicially-developed concept of “reasonable requirements”.  This wider concept appears, in turn, to have displaced consideration of the parties’ available resources as a factor in its own right.

This development had its origins in a decision of the Court of Appeal in O’D v O’D [1976] Fam 83 where the alluring phrase “reasonable requirements” was coined.  In that case Ormrod LJ, at p. 91, considered the wife’s position, “not from the narrow point of “need”, but to ascertain her reasonable requirements”.  A similar approach was adopted a few years later, in Page v Page 2 FLR 198, 201.  This was a case where there was enough capital to provide adequately for both husband and wife.  Not surprisingly, the court held that when considering the needs and obligations of the parties a broad view could be taken.  Ormrod LJ, whose judgments are a valuable source of much of the jurisprudence in this area of the law, said :

“In a case such as this “needs” can be regarded as equivalent to “reasonable requirements”, taking into account the other factors such as age, health, length of marriage and standard of living”.

The third case in this trilogy of cases where resources exceeded financial needs is Preston v Preston [1982] Fam 17.  Ormrod LJ, at p. 25, set out a list of general propositions.  His second proposition was :

“the word “needs” in section 25 (1)(b) in relation to the other provisions in the subsection is equivalent to “reasonable requirements”, having regard to the other factors and the objective set by the concluding words of the subsection ….. ”

Rightly or wrongly, these passages have been understood as saying that reasonable requirements is a more extensive concept than financial needs.  This seems then to have led to a practice whereby the court’s appraisal of a claimant wife’s reasonable requirements has been treated as a determinative, and limiting, factor on the amount of the award which should be made in her favour.

The soundness of this approach was considered by the Court of Appeal in Dart v Dart [1996] 2 FLR 286.  Thorpe LJ, who has much experience in this field, gave the leading judgment.  He sought to reconcile the existing practice with the statutory provisions : see p 296F-H.  Reasonable requirements are more extensive than needs.  What a person requires is likely to be greater than what that person needs.  The objective appraisal of what the applicant requires must have regard to the other criteria of the section, including what is available, the parties’ accustomed standard of living, their age and state of health and “perhaps less obviously” the duration of the marriage, contributions and pension rights.  Thorpe LJ said, at p. 296 :

“Used thus the consideration of needs ceases to be paramount or determinative but an elastic consideration that does not exclude the influence of any of the others ….. in a big money case where the wife has played an equal part in creating the family fortune it would not be unreasonable for her to require what might be even an equal share”.  (My emphasis)

This conclusion, I have to say, seems to me worlds away from any ordinary meaning of financial needs.  Moreover, this conclusion gives an artificially strained meaning to reasonable requirements, the more especially as this phrase was adopted originally as a synonym for financial needs.

                        .

                        .

                        .

Subsequently this question arose again, in Conran v Conran [1997] 2 FLR 615.  Wilson J was of the vies that, notwithstanding the observations of Thorpe LJ in the Dart case, one could not sensibly fit an allowance for contribution into an analysis of a wife’s needs.  That would do violence to language and to section 25 (2), where contribution and needs are set out as different matters to which the court is required to have regard : see pp 623 – 624.

Thus, as matters stand, there is a degree of confusion.  I venture to think this has arisen because the courts have departed from the statutory provisions.  The statutory provisions lend no support to the idea that a claimant’s financial needs, even interpreted generously and called reasonable requirements, are to be regarded as determinative.  Another factor to which the court is bidden to have particular regard is the available resources of each party.  As my noble and learned friend, Lord Hoffmann, observed in Piglowska v Pigslowska [1999] 1 WLR 1360, 1379, section 25 (2) does not rank the matters listed in that subsection in any kind of hierarchy.  The weight, or importance, to be attached to these matters depends upon the facts of the particular case.  But I can see nothing, either in the statutory provisions or in the underlying objective of securing fair financial arrangements, to lead me to suppose that the available assets of the respondent become immaterial once the claimant wife’s financial needs are satisfied.  Why ever should they ?  If a husband and wife by their joint efforts over many years, his directly in his business and hers indirectly at home, have built up a valuable business from scratch, why should the claimant wife be confined to the court’s assessment of her reasonable requirements, and the husband left with a much larger share ?  Or, to put the question differently, in such a case, where the assets exceed the financial needs of both parties, why should the surplus belong solely to the husband ?  On the facts of a particular case there may be a good reason why the wife should be confined to her needs and the husband left with the much larger balance.  But the mere absence of financial need cannot, by itself, be a sufficient reason.  If it were, discrimination would be creeping in by the back door.  In these cases, it should be remembered, the claimant is usually the wife.  Hence the importance of the check against the yardstick of equal division.

There is much to be said for returning to the language of the statute.  Confusion might be avoided if court were to stop using the expression “reasonable requirements” in these cases, burdened as it is now with the difficulties mentioned above.  This would not deprive the court of the necessary degree of flexibility.  Financial needs are relative.  Standards of living vary.  In assessing financial needs, a court will have regard to a person’s age, health and accustomed standard of living.  The court may also have regard to the available pool of resources.  Clearly, and this is well recognised, there is some overlap between the factors listed in section 25 (2).  In a particular case there may be other matters to be taken into account as well.  But the end product of this assessment of financial needs should be seen, and treated by the court, for what it is : only one of the several factors to which the court is to have particular regard.  This is so, whether the end produce is labelled financial needs or reasonable requirements.  In deciding what would be a fair outcome the court must also have regard to other factors such as the available resources and the parties’ contributions.  In following this approach the court will be doing no more than giving effect to the statutory scheme”.

70. This approach, Lord Nicholls pointed out, also furnishes a solution to what Ms Yip called a paradox, the Duxbury calculation in this type of case, when the longer the marriage and hence the older the wife, the less the capital sum required for a Duxbury type fund, when he said (at page 609):-

“A Duxbury calculation is, no doubt, useful as a guide in assessing the amount of money required to provide for a person’s financial needs.  It is a means of capitalising an income requirement.  But that is all.  As I have been at pains to emphasise, financial needs are only one of the factors to be taken into account in arriving at the amount of an award.  The amount of capital required to provide for an older wife’s financial needs may well be less than the amount required to provide for a younger wife’s financial needs.  It by no means follows that, in a case where resources exceed the parties’ financial needs, the older wife’s award will be less than the younger wife’s.  Indeed, the older wife’s award may be substantially larger”.

71. While Hartmann J in F v F recognized that the differences between the principles from those cases which developed and confirmed the “reasonable requirements” and those laid down by the House of Lords in White v White are not simply ones of emphasis or a shift in the tone of guidance but are fundamental and go to applicable principles, and that he in fact found the philosophy underlying certain of the propositions in White v White persuasive, in line not only with modern concepts of fairness but in accordance with what our legislature intended, he was still of the view that C v C, as the defining judgment in Hong Kong on the application of s. 7 to big money cases, prevented a first instance judge in Hong Kong from following the approach of White v White, when he said at page 856 :-

“There is no need for a more in-depth analysis of those cases which developed and confirmed the “reasonable requirements” principles as contrasted with those laid down in White v White [2001] 1 AC 596 to find that the differences are not simply ones of emphasis or a shift in the tone of guidance.  The differences are fundamental, they go to applicable principles.  The differences are fundamental, they go to applicable principles.  As Thorpe LJ observed in Dharamshi v Dharamshi [2001] 1 FLR 736 at p. 742 : “The ceiling of reasonable requirements originated by Ormrod LJ and applied by this court for nearly a generation must now be rejected”.  Certainly in England, judges of great experience in family matters such as Singer J, who is extra-judicial pronouncements expressed misgivings as to the correctness of the “reasonable requirements” approach, nevertheless felt bound to adhere to it.

What then of the Hong Kong courts, how have they interpreted and utilised the criteria contained in s. 7 of the MPPO ?  As I have said earlier, the defining judgment is that of our Court of Appeal in C v C [1990] 2 HKLR 183, a judgment given in 1990.  In that judgment, Hunter JA, giving the judgment of the court, noted that it was the first time that the court had to consider the impact of the s. 7 (1) criteria in relation to very wealthy parties where the usual constraints of insufficiency or of illiquidity did not apply”.

72. While accepting that Hunter JA did embrace the principles applicable to “reasonable requirements” developed in the courts of England, Hartmann J found that he did not say that our courts must follow the example of the English Court of Appeal in future in respect of the interpretation and utilisation of the criteria contained in s. 25 of the 1973 Act, whichever way that example led, and that although Hunter JA did not in his judgment squarely answer the criticism that the contribution of a mother and home-maker is equal to that of a bread winner, he felt that nevertheless the matter of discrimination was raised and dealt with by the court in C v C.

73. Nor did His Lordship think that Hunter JA was in any way equivocal in adopting the “reasonable requirements” approach not to interpret a particular word or phrase within s. 7 but as a principle of interpretation concerning the effect of the section as a whole, and in conclusion he felt he was bound by C v C (at page 858) : -

“Nor, in my judgment, can it be said that Hunter JA was in any way equivocal in adopting the “reasonable requirements” approach.  As to the criticism that the consideration of a claimant’s “reasonable requirements” constituted an unjustified judicial gloss, he said that the criticism would only have substance if :

…… it could be said Ormrod LJ was seeking to substitute this phrase for the words of the section.  It is quite clear that he was not and that he was simply using it as a convenient paraphrase of the effects of the section.  He was in effect saying that the section requires that a monetary value has to be put upon the wife’s total claims upon the available assets.

                        .

                        .

                        .

I have been at some pains to consider the principles set down in C v C [1990] 2 HKLR 183 (and followed in Li Wai Tat v Li Man York (unrep., CACV No 70 of 1998)) and the background against which those principles were adopted by Hunter JA to illustrate that, as in England, the Hong Kong authorities have given more than mere guidelines to the interpretation of the relevant legislation, they have set principles of interpretation which are binding on courts of lower or concurrent jurisdiction.  In Li Wai Tat v Li Man York, the essential questions were whether the judge at first instance had applied the correct principles (i.e. the principles defined in C v C) and whether, if he was aware of those principles, he had applied them correctly.

Prior to the change of sovereignty in 1997, the House of Lords’ decision in White v White [2001] 1 AC 596 would, I believe, have been binding on this court : see De Lasala v De Lasala [1979] HKLR 214.  But the House of Lords’ decision was given in 2000, well after the change in sovereignty.  Art. 84 of the Basic Law permits the Hong Kong courts to “refer to precedents of other common law jurisdictions”.  Clearly, when those precedents relate to legislation which is drafted in the same or substantially the same terms as the Hong Kong legislation then valuable guidance can be obtained from those precedents as to the proper approach to the interpretation of our legislation : see, for example, A – G of Hong Kong v Lee Kwong Kut [1993] AC 951 at p. 967.  But guidance obtained from other common law precedents – even those as influential and pressing as the House of Lords – can never take precedence over binding local authorities.  On behalf of the wife, however, Mr Griffiths has submitted that I should abandon the principles set down in C v C [1990] 2 HKLR 183 and adopt those enunciated by the House of Lords in White v White [2001] 1 AC 596.

I confess that I find the philosophy underlying certain of the propositions in White v White [2001] 1 AC 596 persuasive, in line not only with modern concepts of fairness but in accordance with what I believe our Legislature intended.

But the fact that I find principles set down in other common law jurisdictions to be persuasive does not mean that I am free to adopt them, not when I am bound by local authority to a different effect.

In any event, the shift brought about by White v White [2001] 1 AC 596, as I have attempted to show, is not a matter of small moment, simply a permissible sideways move across the spectrum of discretion.  White v White has presented its own difficulties, often profound.  As one Judge observed (N v N (Financial provision : sale of company) [2001] 2 FLR 69) :

As is glaringly apparent from this case, the theory behind White v White is one thing, the actual practicalities involved in valuing, dividing up, and / or realising certain species of assets make the attaining of the White v White objective sometimes either impossible or only achievable at a cost which may not overall be in the family’s best interests.  In this regard of one thing I am convinced.  I am sure the House of Lords did not intend courts to exercise their far reaching powers to achieve equality on paper if in doing so they, Samson-like, brought down or crippled the whole family’s financial edifice to the ultimate detriment of the children (whose interests, of course, remain the top priority in this and every case).

Mr Griffiths, correctly in my view, submitted that matrimonial law, especially in regard to matters of ancillary relief, is not static and must move with the times.  In this regard, he underscored the observations of Sachs LJ in Porter v Porter [1969] 1 WLR 1155, cited with approval by Lord Nicholls in White v White [2001] 1 AC 596.  (see para. 42 supra)  But Sachs LJ was talking about the exercise of discretion.  While, in my view, the exercise of that discretion must of course be fluid and responsive to the changing outlook of society, its exercise must nevertheless be contained within binding principles of interpretation.  If not, a consistency flies out of the window.

Hong Kong, a “first world” city, has experienced many of the social changes that Lord Nicholls spoke of in White v White [2001] 1 AC 596.  The traditional division of labour within the family is no longer the norm in Hong Kong.  Typically both parents work, perhaps leaving the children with other family members during their working hours.  Both share domestic routines.  They care for their children together, they save for the future together.  In the exercise of the broad discretion vested by s. 7 of the MPPO and within the elastic confines of “reasonable requirements”, when that principle is appropriate.  I venture that our family courts have, on a day-to-day basis, responded to those changes.  But, just as our family courts are bound by our legislation, so they are held to binding principles of how that legislation is to be interpreted.  What must be remembered is that White v White itself has laid down binding principles of interpretation, as broad as they may be.

                        .

                        .

                        .

In any event, in C v C [1990] 2 HKLR 183, Hunter JA directed that in all “big money” cases, such as the present, the primary focus must be on the wording of s. 7 itself, holding that, “reasonable requirements” constituted a “convenient paraphrase” of the “effects of the section”.  In summary, Hunter JA adopted the “reasonable requirements” approach not to interpret a particular word or phrase within s. 7 but as a principle of interpretation concerning the effect of the section as a whole.

                        .

                        .

                        .

In the circumstances, I am satisfied that this court is bound by C v C [1990] 2 HKLR 183 and that White v White [2001] 1 AC 596, while it may offer valuable guidance, may only do so within permissible limits.  However, having come to that conclusion, I am of the view that in the present case, even if I had been free to fully adopt the principles in White v White, the awards which I intend to make would not have been materially different”.

74. In L v L, as noted above, Lam J felt that C v C did not bind him where the facts of that case supported an equal business partnership between the parties, as opposed to the facts in C v C where the wife did not need to work since the marriage.  Hence in C v C and F v F the court was not faced with the problem of the inter-relationship between the concept of reasonable requirements and the determination of a fair share of a spouse who is also a business partner and how Section 7 should operate in the latter context.

75. His Lordship then raised the difficult question of whether our courts should continue to derive guidance in big money cases from the English authorities after C v C when he said (at page 23): -

“Ironically, Hunter JA also rejected the contention of Mr Singer that English authorities were to be ignored in Hong Kong (at p. 185F to 186B).  At p. 187 I, Hunter JA said,

“In my view the courts of Hong Kong can and should derive considerable help from the much wider experience of the English courts in this field”.

His Lordship also stressed in proposition (1) at p. 186 that the first task of the court is to consider “all the circumstances” and all the factors set out in Section 7 (1).  In the light of these dicta, it may not be too difficult to project what would be the outcome in C v C if White v White had been decided before it.  The difficult question is whether the court in Hong Kong should continue to derive guidance from the English authorities after C v C (and therefore could properly take into account of subsequent English developments including White v White) or whether judges here (at least first instance judges and the Court of Appeal) should regard the law as fossilized by C v C as far as the prevalence of reasonable requirements in the operation of Section 7 is concerned and leave it to the Court of Final Appeal to restate the law if it deems appropriate”.

76. Above all, His Lordship questioned the approach in C v C when he asked why should the question of the lump sum claim be determined by reference to the reasonable requirements of one party, the wife, as opposed to that of the other party, the husband, at page 25 : -

“It is noteworthy that on the facts of C v C, the lump sum award was in favour of the husband because a larger part of the family wealth was held in the name of the wife.  The Court of Appeal however did not examine the lump sum claim of the husband by reference to the reasonable requirements of the husband.  Because of the finding that with the exception of a $14 million inheritance by the wife and $10 million attributable to a claim in a piece of hostile litigation, the balance represented the husband’s financial contribution to family assets, the Court of Appeal asked the question what sum should the wife “receive by way of retention” with reference to her reasonable requirement (see p.191B to H)

But it is not clear how the test would be applied to a scenario where both parties had contributed financially to the family wealth and both spouses held more assets under his or her name than his or her respective reasonable requirements when the marriage broke down.  Presumably since the parties already had sufficient assets to meet his or her reasonable requirements, there should not be any adjustment on the status quo if reasonable requirements were to be the maxima for any exercise of the court’s statutory power in ancillary relief.  Obviously that might not lead to a fair result in many cases.  On the other hand, if a transfer were to be ordered, I cannot help from asking why should the question be determined by reference to the reasonable requirements of one party as opposed to that of the other party ?  C v C did not address these issues.

77. His Lordship then pointed out how the approach of reasonable requirements could work unfairly in the context of parties who were both business and domestic partners (at page 26) : -

“Even before White v White, it was held by the English Court of Appeal in Gojkovic v Gojkovic [1990] 1 FLR 140 that in cases where the wife made exceptional contribution to the family assets, the lump sum award to her should not be confined by her reasonable requirements.  Butler-Sloss LJ said at p. 144H “Equally important as financial need is, however, the contribution made by each of the parties to the welfare of the family …… ”  Gojkovic seems to be one of the earlier English big money cases in which the court has to deal with a wife who has worked with the husband in creating the family wealth (see Russell LJ at p. 146F to G) and in that sense she was regarded as making “exceptional” contribution.  From my experience, as far as families in Hong Kong in these days are concerned, such a phenomenon is not that unusual and Hong Kong court and practitioners have applied Gojkovic in similar situaitons.

The first instance decision in White v White serves as an illustration how the approach of reasonable requirements could work unfairly in the context of parties who were both business and domestic partners.  The wife in that case held assets that exceeded her reasonable need arrived at by Duxbury calculation.  Holman J also concluded that if she had to transfer the balance to the husband, it would be a net transfer which is not necessitated simply to meet the husband’s own reasonable requirements.  The net result was that the wife got only 20% of the whole and the learned judge acknowledged that to be a low percentage having regard to the length of the marriage and her contributions.  Yet Holman J attributed that to the paradox that the longer the marriage and hence the older the wife, the less the capital sum required under the Duxbury calculation.

The end result was that the wife got less than what she would get as an outgoing partner if the partnership were to be dissolved.  Such an outcome underscores the problem with the reasonable requirements approach.  In the Court of Appeal, Thorpe LJ reiterated that the ultimate aim of a court in dealing with ancillary relief is to achieve what is fair, just and reasonable between the parties.  (see [1999] Fam 304 at 313H to 314A)

At p. 317B, His Lordship said it offended his sense of fairness that a wife who has worked for over 30 years equally in partnership should exit with anything less than her legal entitlement in the absence of extraordinary features.  Butler-Sloss LJ (as she then was) explicitly acknowledged at p. 320B that for spouses in business together, the reasonable requirements approach was not the most appropriate method to arrive at the post-divorce readjustment of the family finances”.

78. His Lordship however noted that the entitlement approach was rejected by the House of Lords in White v White where Lord Nicholls considered such approach might turn the clock back to the position prior to the Matrimonial Proceedings and Property Act 1970 as it would entail investigation of the strict property rights of the parties by the court.

79. His Lordship then asked himself the question of whether he was free to follow the approach of Lord Nicholls and decided that, as far as the rejection of reasonable requirements approach as the criterion to determine the award to the wife or the husband was concerned, he actually did not need to rely on White v White, as even before that, for cases where the spouses were also business partners, reasonable requirements could not limit the award.  However he found White v White was still important in the following context (at page 28) : -

“Although I am not dealing with a wife whose only contribution was her role as a homemaker, Lord Nicholls’ analysis of the statutory scheme could have a bearing in deciding how the award to the wife should be quantified.  At the risk of oversimplification, I would identify the overriding objective of fairness, the weighing of the factors in Section 7 (1) on a case-by-case basis, the principle of non-discrimination and the yardstick of equality as important elements in His Lordship’s approach.  I shall examine each of them in turn against C v C.

As regards the overriding objective of achieving fairness between the parties in their financial arrangements, I cannot discern any part of the judgment in C v C that is inconsistent with the view of Lord Nicholls.  The same applies as to the weighing of the factors according to the facts of each case.

The principle of non-discrimination is, however, in direct conflict with proposition (7) of Hunter JA.  Mr Mostyn contended that the non-discrimination provisions in the International Covenant on Civil and Political Rights [“ICCPR”] applied in Hong Kong by the Basic Law and the Hong Kong Bill of Rights Ordinance Cap. 383 provide the juridical basis for re-examining C v C in the light of White v White.  Mr Mostyn prayed in aid the following articles in the ICCPR,

                        (a)            Article 3 provides,

“The States Parties to the present Covenant undertake to ensure the equal right of men and women to the enjoyment of all civil and political rights set forth in the present Covenant”.

                        (b)            Article 23 (4) provides,

“States Parties to the present Covenant shall take appropriate steps to ensure [equality] of rights and responsibilities of spouses as to marriage, during marriage and at its dissolution …… ”

Mr Mostyn submitted that C v C and F v F were not Basic Law compliant and reference was made to Articles 8, 25 and 39 of the Basic Law.

There are two possible aspects in the application of the reasonable requirements approach which may be said to be discriminatory.  The first aspect is the one alluded to by Lord Nicholls at p. 605Cto E, viz. the discrimination between the different roles undertaken by husband and wife in the family.  This problem does not arise on the facts of the present case since both the wife and husband contributed to the financial wealth of the family as equal partners.

A second aspect which may arise in the application of the reasonable requirements approach is to apply it in setting the ceiling for award in favour of the wife but not when it is the husband who has claims against the wife.  In the context of the present case, it is quite obvious that the assets currently held respectively by the husband and wife exceeds their respective reasonable requirements.  If one were to apply reasonable requirements to one of them and award the balance to the other even though both of them contributed financially, that would clearly be discriminatory and unfair.  However, I do not think C v C mandated this sort of approach.  The better view is to confine C v C to cases where a party to the marriage did not take on the role as money-earner in the family”.

80. His Lordship then set out his own observations of how the court should approach the fair distribution of family wealth in particularly big money cases in view of the developments since C v C (at page 35) : -

“(a)  The overriding objective in the exercise of discretion under the MPPO is to achieve fairness;

(b)   To attain a fair result, equality of treatment seems to me to be the more universally applicable concept than equality of division;

(c)   Section 7 (1) of the MPPO does not require the court to adopt equality of division either as a cross-check or a starting point;

(d)   As pointed out by Nicholson CJ in Figgins v Figgins [2002] Fam CA 688 Para. 120, there is an inherent danger that no matter how one describes this reference to equal division (be it yardstick or cross-check or starting point), the notion might eventually be developed or extended to become the end point of any distribution;

(e)   Given the infinite varieties of factual matrix that may be presented to the court in matrimonial cases, with the greatest respect to Lord Nicholls and Lord Cooke, it might perhaps be too inflexible and a fetter on the broad judicial discretion conferred under the MPPO to require the court to consider equality of division in each and every case and give reasons for departure.  A starting point of equal division had been rejected by the High Court of Australia in Mallet (1984) 156 CLR 605, see also Nicholson CJ in Figgins v Figgins [2002] Fam CA 688 Para. 116;

(f)   Even giving due regard to gender equality, there must be cases where it can readily be appreciated that equal division may result in injustice.  To require the court to perform the cross-check against equal division in such cases and to give reasons for departure may result in lengthening of proceedings, additional legal costs and extra burden on judicial resources;

(g)   I venture to suggest that it may be better to leave it to each judge to decide for himself or herself on the facts of the particular case whether it is useful to do a cross-check by reference to equal division and to give reasons for departure therefrom;

(h)   I therefore respectfully agree with Hartmann J that as far as Hong Kong courts are concerned, there is no duty to carry out a cross-check against the yardstick of equality and to give reasons for departure from equal division in each and every case;

(i)   However, I can see the force of the argument that the reasonable requirements approach could easily lead to unfair treatment of a spouse who played the role of homemaker.  Sooner or later, C v C would have to be reviewed”.

81. That force of argument against the reasonable requirements approach mentioned in His Lordship’s last observation has since White v White been further strengthened by several English authorities on the court’s approach of the issue of contributions which warrant consideration.  The first being H – J v H – J (Financial Provision : Equality) [2002] 1 FLR 415 where Coleridge J, on hearing the cross-appeals, cited with approval of the following passages from the judgment of the District Judge (at page 420) :-

“[Counsel for the husband] says that this greater emphasis on contributions is an inevitable consequence of the decision in White v White.  I disagree.  It is a temptation but it is not a consequence and to give way to it is to commit the very error which White v White warns us not to, that is to treat some of the factors in section 25 (2), in this case contributions, as more important than the others”.

“For my part, I would find it repugnant as a judicial exercise to have, in effect, to draw up a merit table in which fine gradations of contribution give rise to a marginally increased or decreased share in the financial spoils of marriage.  By whose standards should I measure such distinctions ?”.

“In this case, it is sufficient, as I find, to record that both the husband and wife each made their full and equal contributions in their respective roles within this long marriage.  The family has been financially successful and the job of raising the children and looking after the various homes has also been successful.  The role of the husband has been predominant in the financial success and, as I find, the role of the mother and wife has been predominant in keeping house and raising the children.  Any further distinction is, in my judgment, impossible to draw on the evidence”.

82. Coleridge J then expressed his approval of the judge’s approach (at page 428) : -

“In the context of this case in relation to this question of contribution, I unhesitatingly agree with the district judge that no useful distinction can be drawn between the husband’s contribution and the wife’s contribution.  I can find nothing special, exceptionally or stellar about the husband’s contribution in this case.  He has undoubtedly worked diligently and successfully and over a long period to amass the assets that have been amassed over the duration of this marriage.  He has had some good years and some very good years, but if the facts of this case lead to a finding of a special contribution, in my judgment, it would be the thin end of a wedge being driven right into the heart of the principles underlying White v White.  So I unhesitatingly come to the view that the district judge’s findings and approach were correct even in the light of Cowan v Cowan”.

83.  His Lordship then concluded as follows (at page 430) : -

“Underlying this appeal and my decision to allow it there seems to me to be two important points : (1) The significance attaching to a particular fractional percentage is more than merely the monetary value it represents.  It goes to the core of the parties’ understanding of fairness.  So 50 / 50 resonates with fairness (as the House of Lords has identified); both parties depart with the sense of being equally valued.  There are no winners or losers.  Once there is a departure from equality, as there often has to be, however small that departure, one party (more often the wife) is left with a sense of grievance, of her efforts having been undervalued.  Understandably, at the time of divorce these considerations matter a great deal to the parties.  (2) In this case, after a marriage which lasted in excess of 25 years, net assets, after deduction of notional sale costs and capital gains tax, have been accumulated amounting to more than £2.7m.  Accordingly, there is ample to go round.  It would indeed be sad if, in this category of cases (as opposed to those cases where the overall means are less than sufficient and so the needs of children and their carers must inevitably remain predominant), the broad and sweeping reform underlying the speeches in White v White was to become bogged down in a welter of zealous, over-sophisticated and costly forensic analysis, or watered down by judicial reticence”.

84. The next case of relevancy is H v H (Financial Provision : Special Contribution) [2002] 2 FLR 1021, where the family assets amounted to £6 million.  The husband was a highly successful city solicitor who contended that for various reasons his financial contributions during the course of his professional life amounted to special contribution.  In rejecting his submission, Mr Peter Hughes QC sitting as a deputy, said (at page 1037) : -

“I have considerable sympathy for the husband, who has been highly successful and worked extremely hard over many years and no doubt feels that he has created the wealth that exists today.  I am unable to accept, though, that his contribution calls for special recognition as in the cases of Cowan v Cowan and Lambert v Lambert [2002] 1 FLR 415.

It is not easy to define what may amount to a “stellar” or really special contribution, but rather like the elephant, it is not difficult to spot when you come across it.

In Cowan v Cowan Mance LJ referred to the relevance of the expectations of the parties.  In my judgment that is an important consideration.  What did the parties anticipate when they set out on their married life together ?  To what extent have those expectations been realised or have their lives taken a course neither of them would ever have expected and led to riches they would never have contemplated ?  That was the case in Cowan v Cowan.  It was also so in Lambert v Lambert.  In both cases the success of the marriage far exceeded the parties’ joint expectations.

That cannot be said here.  The husband was already a qualified solicitor with a well-regarded City firm when the parties married.  He was set on the career that he has pursued successfully, as both he and the wife hoped for.  He has had to work hard and it has not always been easy.  The rewards have though been substantial, as no doubt they had hoped they would be, and over the years he has had the full support of the wife in her role of looking after the home and family”.

85. In another decision of Coleridge J in G v G (Financial Provision : Equal Division) [2002] 2 FLR 1143, where the family assets were in the region of £8.5m, the wife sought a half share, while the husband proposed that she should have 40% as he had built the family fortune through exceptional hard work and astute business acumen in the field of construction projects, His Lordship said (at page 1154) : -

“In a number of decisions since White v White, e.g. Cowan v Cowan and Lambert v Lambert, the court has recognised, in an appropriate case, the possibility of a (financial) contribution by one spouse or another at such an extraordinary level that it is entitled to special recognition and value.  Unfortunately, this has led to this concept becoming the centrally important issue in almost every case particularly where the assets exceed the party’s reasonable needs.  Hardly a case is heard nowadays than that one party (usually the husband) seeks to establish that he has played a markedly more valuable part in the accumulation of the wealth and the marriage partnership so that he should be specially rewarded by way of a greater share of the assets.  I wonder whether, with respect to the members of the Court of Appeal in Cowan v Cowan, they would have made the extensive remarks they did (about the possibility of a special contribution) if they had realised the forensic Pandora’s Box that would be opened in actual practice.  The effect is not at all dissimilar to the “conduct” debates of the 1970s.  In those days “conduct” was similarly raised against wives to try and limit their claims.  However, the court, recognising the undesirable consequences inherent in those arguments and further the impossibility of fairly adjudicating upon them introduced the concept of “obvious and gross” very effectively to limit their application.  It is suggested by some that these current “special contribution” debates are reintroducing conduct by the backdoor.  I would say by the front door.  For what is “contribution” but a species of conduct.  “Conduct” (subsection (2) (g)) refers to the negative behaviour of one of the spouses.  “Contribution” (subsection (2) (f)) is the positive behaviour of one or other of the parties.  Both concepts are compendious descriptions of the way in which one party conducted him / herself towards the other and / or the family during the marriage.  And both carry with them precisely the same undesirable consequences.  First, they call for a detailed retrospective at the end of a broken marriage just at a time when parties should be looking forward not back.  In part that involves a determination of factual issue (and obviously the court is equipped to undertake that).  But then, the facts having been established, they each call for a value judgment of the worth of each side’s behaviour and translation of that worth into actual money.  But by what measure and using what criteria ?  Negative “conduct” is one thing (particularly where it is recognisably “obvious and gross”) but the valuing of positive “contribution” varies from time to time.  Should a wealth creator receive more because, e.g. his talents are very unusual or merely conventional but well employed ?  Should a housewife receive less because part of her daily work over many years was mitigated by the employment of staff ?  Is there such a concept as an exceptional / special domestic contribution or can only the wealth creator earn the bonus ?  These are some of the arguments now regularly being deployed.  It is much the same as comparing apples with pears and the debate is about as sterile or useful”.

86. I turn next to the case of Lambert v Lambert [2003] 1 FLR 139, cited by Lam J in L v L as the most significant post-White authority, but which was not, as I understand it, brought to the attention of Hartmann J in F v F, which held that the nature of the contributions of breadwinner and homemaker were intrinsically different and incommensurable, and that each should be recognised as no less valuable than the other, and that the court’s duty under section 25 (2) (f) of the 1973 Act to have regard to the contributions which each of the parties had made to the welfare of the family did not require a detailed critical appraisal of the performance of each of the parties during the marriage, which would expose the parties to intrusion, indignity and embarrassment and which encouraged a vain endeavour to recreate historic situations, choices and failings which could never be recaptured fully or accurately.

87.  In that case Thorpe LJ reviewed the various authorities since White v White on the issue of contributions, including those referred to above which he cited with approval, in particularly those judgments of Coleridge J, as well as those significant developments in other jurisdictions such as Australia when he referred to the case of Figgins v Figgins [2002] Fam CA 688 which was an appeal to the Full Court in a big money case whose distinguishing features were inheritance and a relatively brief marriage, and where the court consisted of Nicholson CJ sitting with Ellis and Buckley JJ, when he said at page 116 : -

“26. …… The impact of White v White [2001] 1 AC 596 in Australia stretches beyond valuing equally the contribution of the male breadwinner and the female homemaker to challenge and seemingly to overrule the proposition that one spouse’s contribution might, in an appropriate case, be elevated to such as exceptional degree as to dictate the division of the family fortune.  Accordingly it is necessary to cite in full paragraphs 131 – 134 :

“131. In Cowan v Cowan [2002] Fam 97, 108, para 21 Thorpe LJ commented in relation to Lord Nicholls’ formulation in White v White that the ratio of the judgments in White v White is that the judge’s objective is about fairness rather than equality.  See Cordle v Cordle [2002] 1 WLR 1441.

“132. We respectfully agree.  We think that the important concept that can be said to emerge from White v White is that, in order to test whether a result is fair, or in Australian terms just and equitable, it is important to ask whether the husband and wife are being treated equally.  It states in the clearest terms the modern recognition of equality of the sexes and the need to abandon all forms of discrimination.

“133. In the present case we think that the emphasis given by White v White to gender equality is important in testing the overall result.  We think that the lesson to be learned from White v White is that it is a major error to approach these cases upon the basis that one arrives at a figure that is thought to satisfy the needs of the wife and give the balance to the husband.

“134. In some cases that may produce an appropriate result but in many others it is likely to be productive of a grave injustice.  We reject the concept that there is something special about the role of the male breadwinner that means that he should achieve such a preferred position in relation to his female partner.  To do so is to pay mere lip service to gender equality.  Marriage is and should be regarded as a genuine partnership to which each brings different gifts.  The fact that one is productive of money in large quantities is no reason to disadvantage the other.  We think that cases such as Lynch v Lynch and the minority view of Guest J in Farmer v Bramley (2002) FLC 93-060 have missed this point and have led to an imbalance of gender considerations in arriving at results that unduly favour the male partner”.

88.  His Lordship then concluded by reiterating that it was unacceptable to place greater value on the contribution of the breadwinner than that of the homemaker, and questioned the value of the exercise of marking the parties on their respective performance when he said at page 117 : -

“27. From these authorities in this and related jurisdiction two consistent themes emerge.  First it is unacceptable to place greater value on the contribution of the breadwinner than that of the homemaker as a justification for dividing the product of the breadwinner’s efforts unequally between them.  Second both the practicality and the value of the exercise of marking the parties to a failed marriage on their respective performances is questioned.  Some judges understandably regard it as a distasteful exercise.  In this jurisdiction, both in the judgment of District Judge Million and in the judgments of Coleridge J, are clear warnings that the excess commonly seen in the litigation of the issue of the applicant’s reasonable requirements has now been transposed into disputed, and often futile, evaluations of the contributions of both of the parties.  Additionally the decision of the Full Court in Figgins v Figgins clearly supports Coleridge J’s distaste for special contributions and suggests the need for this court to return to the relevance of an asserted special contribution and to reconsider its impact upon the section 25 exercise”.

89. Neither Hartmann J, nor Lam J, of course had had the benefit of being referred to another House of Lord’s decision given only in May 2006 on the combined appeal of Miller v Miller and McFarlane v McFarlane [2006] UKHL 24 when Lord Nicholls referred to some of the general principles enunciated in White v White and expended them further.  He started by reiterating the requirement of fairness : -

“4. Fairness is an elusive concept.  It is an instinctive response to a given set of facts.  Ultimately it is grounded in social and moral values.  These values, or attitudes, can be stated.  But they cannot be justified, or refuted, by any objective process of logical reasoning.  Moreover, they change from one generation to the next.  It is not surprising therefore that in the present context there can be different views on the requirements of fairness in any particular case.

5. At once there is a difficulty for the courts.  The Matrimonial Causes Act 1973 gives only limited guidance on how the courts should exercise their statutory powers.  Primary consideration must be given to the welfare of any children of the family.  The court must consider the feasibility of a “clean break”.  Beyond this the courts are largely left to get on with it for themselves.  The courts are told simply that they must have regard to all the circumstances of the case.

6. Of itself this direction leads nowhere.  Implicitly the courts must exercise their powers so as to achieve an outcome which is fair between the parties.  But an important aspect of fairness is that like cases should be treated alike.  So, perforce, if there is to be an acceptable degree of consistency of decision from one case to the next, the courts must themselves articulate, if only in the broadcast fashion, what are the applicable if unspoken principles guiding the court’s approach.

7. This is not to usurp the legislative function.  Rather, it is to perform a necessary judicial function in the absence of parliamentary guidance.  As Lord Cooke of Thorndon said in White v White [2001] 1 AC 596, 615, there is no reason to suppose that in prescribing relevant considerations the legislature had any intention of excluding the development of general judicial practice.

8. For many years one principle applied by the courts was to have regard to the reasonable requirements of the claimant, usually the wife, and treat this as determinative of the extent of the claimant’s award.  Fairness lay in enabling the wife to continue to live in the fashion to which she had become accustomed.  The glass ceiling thus put in place was shattered by the decision of your Lordships’ House in the White case.  This has accentuated the need for some further judicial enunciation of general principle.

9. The starting point is surely not controversial.  In the search for a fair outcome it is pertinent to have in mind that fairness generates obligations as well as rights.  The financial provision made on divorce by one party for the other, still typically the wife, is not in the nature of largesse.  It is not a case of “taking away” from one party and “giving” to the other property which “belongs” to the former.  The claimant is not a supplicant.  Each party to a marriage is entitled to a fair share of the available property.  The search is always for what are the requirements of fairness in the particular case.

10. What then, in principle, are these requirements ?  The statute provides the first consideration shall be given to the welfare of the children of the marriage.  In the present context nothing further need be said about this primary consideration.  Beyond this several elements, or strands, are readily discernible.  The first is financial needs.  This is one of the matters listed in section 25 (2), in paragraph (b) : “the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future”.

11. This element of fairness reflects the fact that to greater or lesser extent every relationship of marriage gives rise to a relationship of interdependence.  The parties share the role of money-earner, home-maker and child-carer.  Mutual dependence begets mutual obligations of support.  When the marriage ends fairness requires that the assets of the parties should be divided primarily so as to make provision for the parties’ housing and financial needs, taking into account a wide range of matters such as the parties’ ages, their future earning capacity, the family’s standard of living, and any disability of either party.  Most of these needs will have been generated by the marriage, but not all of them.  Needs arising from age or disability are instances of the latter.

12. In most cases the search for fairness largely begins and ends at this stage.  In most cases the available assets are insufficient to provide adequately for the needs of two homes.  The court seeks to stretch modest finite resources so far as possible to meet the parties’ needs.  Especially where children are involved it may be necessary to augment the available assets by having resource to the future earnings of the money-earner, by way of an order for periodical payments”.

90.  His Lordship then raised the principle of sharing between husband and wife : -

“16. A third strand is sharing.  This “equal sharing” principle derives from the basic concept of equality permeating a marriage as understood today.  Marriage, it is often said, is a partnership of equals.  In 1992 Lord Keith of Kinkel approved Lord Emslie’s observation that “husband and wife are now for all practical purposes equal partners in marriage” : R v R [1992] 1 AC 599, 617.  This is now recognised widely, if not universally.  The parties commit themselves to sharing their lives.  They live and work together.  When their partnership ends each is entitled to an equal share of the assets of the partnership, unless there is a good reason to the contrary.  Fairness requires no less.  But I emphasise the qualifying phrase : “unless there is good reason to the contrary”.  The yardstick of equality is to be applied as an aid, not a rule.

17. This principle is applicable as much to short marriages as to long marriages : see Foster v Foster [2003] EWCA Civ 565; [2003] 2 FLR 299, 305, para 19 per Hale LJ.  A short marriage is no less a partnership of equals than a long marriage.  The difference is that a short marriage has been less enduring.  In the nature of thins this will affect the quantum of the financial fruits of the partnership”.

91. Baroness Hale sitting in the same House agreed with Lord Nicholls about those principles and added her view on the question of contribution : -

“146. Following White v White [2001] 1 AC 596, the search was on for some reason to stop short of equal sharing, especially in “big money” cases where the capital had largely been generated by the breadwinner’s efforts and enterprise.  There were references to exceptional or “stellar” contributions : see Cowan v Cowan [2001] EWCA Civ 679; [2002] Fam 97.  These, in the words of Coleridge J in G v G (Financial Provision : Equal Division) [2002] EWHC 1339 (Fam); [2002] 2 FLR 1143, at p. 1154, opened a “forensic Pandora’s box”.  As he pointed out, at p. 1155 :

“[W]hat is “contribution” but a species of conduct ? …… Both concepts are compendious descriptions of the way in which one party conducted him / herself towards the other and / or the family during the marriage.  And both carry with them precisely the same undesirable consequences.  First, they call for a detailed retrospective at the end of a broken marriage just at a time when parties should be looking forward, not back …… But then, the facts have been established, they each call for a value judgment of the worth of each side’s behaviour and translation of that worth into actual money.  But by what measure and using what criteria ? …… Is there such a concept as an exceptional / special domestic contribution or can only the wealth creator earn the bonus ? …… It is much the same as comparing apples with pears and the debate is about as sterile or useful”.

A domestic goddess self-evidently makes a “stellar” contribution, but that was not what these debates were about.  Coleridge J’s words were rightly influential in the alter retreat from the concept of special contribution in Lambert v Lambert [2002] EWCA Civ 1685; [2003] Fam 103.  It had already been made clear in White v White [2001] 1 AC 596 that domestic and financial contributions should be treated equally.  Section 25 (2) (f) of the 1973 Act does not refer to the contributions which each has made to the parties’ accumulated wealth, but to the contributions they have made (and will continue to make) to the welfare of the family.  Each should be seen as doing their best in their own sphere.  Only if there is such a disparity in their respective contributions to the welfare of the family that it would be inequitable to disregard it should this be taken into account in determining their shares”.

92.  Her Baroness then pointed out the difficulties in distinguishing between commercial and domestic contributions : -

“150. More difficult are business or investment assets which have been generated solely or mainly by the efforts of one party.  The other party has often made more contribution to the business, at least in its early days, and has continued with her agreed contribution to the welfare of the family (as did Mrs Cowan).  But in these non-business-partnership, non-family asset cases, the bulk of the property has been generated by one party.  Does this provide a reason for departing from the yardstick of equality ?  On the one hand is the view, already expressed, that commercial and domestic contributions are intrinsically incommensurable.  It is easy to count the money or property which one has acquired.  It is impossible to count the value which the other has added to their lives together.  One is counted in money or money’s worth.  The other is counted in domestic comfort and happiness ……”

93. There should now be absolutely no doubt in my mind that the “reasonable requirements” approach with its inherent ceiling that was developed from the days of O’D v O’Dea (1976), Page v Page (1981) and Preston v Preston (1982), and so embraced by our Court of Appeal in C v C some 16 years ago, and which Ms Yip for the Wife describes as an archaic and moribund approach which strikes at the heart of equality and non-discrimination, has been firmly disapproved by White v White and disapplied by its posterior cases, as being discriminatory and inappropriate in the search for fairness between husband and wife in the division of their family wealth, not only in U.K. but also in other jurisdictions such as Northern Ireland and Australia with similar criteria as our Section 7 for applications for ancillary financial relief.

94.  Although Hartmann J in F v F found that he was bound by C v C, he also confessed that he found the philosophy underlying certain of the propositions in White v White persuasive, in line not only with modern concept of fairness but in accordance with what he believed our Legislature intended, and that increasingly the poles of the two principles between C v C and White v White must draw together when he said:

“While at this time it seems to be uncertain in England whether the principles in White v White [2001] 1 AC 596 should be restricted to “big money” cases, it is evident, I think, that the principles are most tangibly demonstrated in favour of the spouse who has not been the main breadwinner (and conversely, the principles applicable to “reasonable requirements” most tangibly demonstrated to the detriment of that spouse) when there has been a long marriage during which, for their mutual benefit, both parties – the one mainly at home, the other mainly at the office or factory – have built up a store of considerable wealth.  Increasingly, where these factors have less prominence, so, in practical terms, it seems to me that the poles of the two principles must draw together”.

95. While Lam J in L v L found that he could not discern any part of the judgment in C v C that was inconsistent with the view of Lord Nicholls in White v White as regards the overriding objective of achieving fairness between the parties in their financial arrangements, he agreed that there were two possible aspects in the application of the reasonable requirements approach which may be said to be discriminatory, and decided that he was not bound by C v C as far as the reasonable requirements approach is concerned, albeit for a different reason.

96. There is no question that at the time Hunter JA embraced the “reasonable requirements” approach in C v C, he was following what was then good guidance from the English authorities.  Those authorities have since been disapproved and disapplied.  Should our courts then still follow such an approach because of C v C, which Lam J said would have to be reviewed, but so far has not the opportunity to do so ?

97. That was in fact the very same question that Judge Saunders, an experienced Family Judge and now a Deputy in the Court of First Instance, asked in September 2001 in his article of “White v White : The Consequences for Hong Kong Matrimonial Law” when he wrote : -

“It remains to be seen whether White v White will be applied in Hong Kong.  At the present time it is the view of the Family Court Judges that it should, and they are applying it, and will continue to do so until corrected by the Court of Appeal or the Court of Final Appeal.  In so doing hey are simply applying the words of Hunter JA in C v C where he said (p. 186A) :

“ …… The history of matrimonial legislation, and more particularly of that relating to financial provision, demonstrates a legislative intent in Hong Kong to use English experience and to follow England’s example.  This has inevitably and properly led to the repeated use in Hong Kong’s courts of English authority and of English textbooks”.

It is significant that none of the cases in which the principles to be applied prior to White were developed and laid down were decisions of the House of Lords, but only decisions at Court of Appeal level.  White was the first time since 1973 that the House of Lords had the opportunity to consider broad issues as to the exercise of the discretions under the Matrimonial Causes Act.  They had considered the Act in only one case, Piglowska v Piglowska [1999] 1 WLR 1360, and there are consideration was limited to examining the proper approach for appellate courts on appeals from trial judges decisions, rather than the principles to be applied in making the decisions.

It is arguable that there is now a conflict presented to Judges in applying Hunter JA’s decision in C v C.  On the one hand we are told by Hunter JA to follow English authority, on the other the “old”, now overturned, principles are enunciated.  I suggest that Hunter JA’s statement that English authority ought to be followed in Hong Kong is the ratio decedendi of White.  His description of the principles then being applied in England is merely the application of the statement of principle.  The House of Lords has plainly overruled the earlier Court of Appeal decisions as to the interpretation of s. 25.

At the present time the Family Court is applying the principles of interpretation enunciated in White”.

98. Interestingly and perhaps even far-sightedly, Judge Saunders also addressed the long term consequences of White as well as the concept of sharing of matrimonial assets between the parties, something which was discussed by the House of Lords in more details 5 years later in Miller v Miller and McFarlane v McFarlane.  He wrote : -

“Decisions such as White, and legislation of the “defined regime” character, can have significant long term social consequences.  Social attitudes may change as a result of the change in the interpretation of the law.  If White is followed by the Court of Appeal, (as I expect it will be), the Government may consider whether the principles enunciated are appropriate for Hong Kong.

In New Zealand, matrimonial law underwent a radical change in 1976.  The legislature passed a new Matrimonial Property Act which established a principle of equal sharing of matrimonial property.  In England the legislation gave a wide discretion to the Judges.  New Zealand clearly adopted a system which prescribed in detail how property was to be divided with some limited scope for the exercise of judicial discretion.

The legislation defined concepts of “matrimonial property” and “separate property”.  It provided for circumstances in which there could be the transformation of separate property into matrimonial property.  It provided that on the breakdown of a marriage the matrimonial home and family chattels would be shared equally between the parties “unless there are extraordinary circumstances rendering equality repugnant to justice”.  Other matrimonial property is to be shared equally unless one party’s contribution to the marriage partnership has “clearly been greater” than that of the other.  It defined the concept of “contributions to the marriage partnership” and said that there was no presumption that a monetary contribution was of greater value than other contributions.  It provided special provisions for “marriages of short duration”; defined as a marriage of three years or less with a limited discretion in the judge to extend that time.

This change was greeted initially with horror by men, particularly farmers who held a farm in their own name and wished to pass it on to their son.  On the breakdown of the marriage they found that the farm had to be sold and the proceeds shared equally with their wife  The idea that a wife’s contribution in the home was as much vlaue as the earning of money was repugnant to many men.

That was 25 years ago.  Since then social attitudes have changed.  People now marry knowing that on the breakdown of the marriage it is likely that all their property will be divided equally.  Joint bank accounts are the norm for a married couple.  They order their affairs accordingly.  A wife can perform her traditional role in the marriage, that of home keeper, and still be making an equal contribution to the whole of the family wealth.  It has taken the English 25 years to catch up to the colonies.

The attitudes prevalent in New Zealand 25 years ago are still prevalent in Hong Kong.  They are taken to a further degree.  In Hong Kong it is the norm for partners in a marriage not only to keep separate bank accounts but to actively conceal those accounts from their partner.  A husband does not sit down with his wife on payday and work out with her how to apply the monthly pay.  Often she does not know how much he earns and he does all he can to conceal that from her.  He gives her what he thinks she needs and he keeps the rest.  She makes savings from the money he gives her, she asks for more, and does not tell him of the savings.  These are scenarios I see on a daily basis sitting in the Family Court.

They are scenarios which do not promote the marriage partnership in the family as the basic unit in society, and yet this is a society that places great importance on family.  I venture to predict that the application in Hong Kong of the principles of White v White will, in time begin to change social attitudes to the concept of marriage and the sharing of assets produced by the parties to a marriage partnership”.

99. These various social changes that societies have gone through over time were in fact one of the main reasons why the House of Lords in White v White found it necessary to spell out the principles which the courts should now adopt for applications for ancillary financial relief, and I find it necessary to repeat what Lord Nicholls said : -

“ …… Generally accepted standards of fairness in a field such as this change and develop, sometimes quite radically, over comparatively short periods of time.  The discretionary powers, conferred by Parliament 30 years ago, enable the courts to recognise and respond to developments of this sort.  These wide powers enable the courts to make financial provision orders in tune with current perceptions of fairness.  Today there is greater awareness of the value of non-financial contributions to the welfare of the family.  There is greater awareness of the extent to which one spouse’s business success, achieved by much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over many years.  There is increased recognition that, by being at home and having and looking after young children, a wife may lose for ever the opportunity to acquire and develop her own money-earning qualifications and skills.  In Porter v Porter [1969] 1 WLR 1155, 1159, Sachs LJ observed that discretionary powers enable the court to take into account “the human outlook of the period in which they make their decisions”.  In the exercise of these discretions “the law is a living thing moving with the times and not a creature of dead or moribund ways of thought”.

100. If indeed we are to fully embrace the principle of fairness, and it is clear that we unhesitatingly have, then it cannot be said to be fair or just to say to a home-maker and child-carer, very often a wife, that she would not be entitled to share in the surplus of the wealth accumulated in the marriage, as a result of an agreement which she made some 30 years ago with her husband that she should give up any hope or aspiration to further her education or career in order to stay home to take care of the children and look after the family, so that her husband could focus on creating the wealth which they had intended to share in later years when each had fully discharged their duty and responsibility in their respective sphere to their marriage.  The very notion that a home-maker and child-carer has to also participate actively in her husband’s business or to provide finance in order to “earn” a share in the total assets, is in my view a betrayal of fairness, it is that very thin end of a wedge, in the words of Coleridge J, being driven right into the heart of the principle underlying fairness, and is certainly not the intention of our legislature when the words “any contribution made by looking after the home or caring for the family” were specifically included in s. 7 (1) (f) on contributions, which must mean, in my mind, no more, no less, than the contributions made by the money-maker or wealth-creator.

101. As pointed out by Hartmann J in F v F, Hong Kong, as a “first world” city, has experienced many of the social changes that Lord Nicholls spoke of, the traditional division of labour within the family is no longer the norm, nor as clear as before.  With the greater awareness of the equality of gender in our society today, and the acceptance that there should be no bias in favour of the money-earner and against the home-maker and the child-carer between husband and wife in our Family Court today which judge cases on a daily basis guided by the principle of fairness from White v White, and have continued to derive guidance from English authorities, I am unable to agree with the Husband to turn a blind eye to reality or in all conscience to adopt any principle or approach which has been clearly and unequivocally disapproved as discriminatory in our society at this day and age.

102.  As Cheung JA said in HKCB Finance Ltd v Yuen Yi Wan Sandy and Wong Chiu Mui, CACV 355 / 2005, a case cited by the Husband : -

“After 1997, the English authorities are no longer binding on this jurisdiction.  They, of course, remain to be highly persuasive.  I really cannot see any objection in principle if Hong Kong adopted approaches from other common law jurisdictions particularly in areas of judge made law like equitable principles.  This can only enrich our legal system.  In fact, this has been the approach in Hong Kong in the past few years in other areas of the law as well”.

103. In considering the application now before me, I shall therefore be guided by the following principles as I have observed from the above authorities including C v C, F v F and L v L : -

(a) The overriding objective in the exercise of discretion order Section 7 of the MPPO to achieve fairness;

(b) In construing Section 7 (1) we can and should continue to derive guidance and assistance from the much wider experience of the English courts in this field;

(c) To attain a fair result, equality of treatment of husband and wife is the more universally applicable concept than equality of division;

(d) Section 7 (1) does not require our courts to adopt equality of division either as a cross-check or a starting point, or to give reasons for departure from equal division in each and every case;

(e) In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles, and whatever the division of labour chosen by them, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f), relating to the parties’ contributions, and there should be no bias in favour of the money-earner and against the home-maker and the child-carer.

(f) The Duxbury calculation is merely a guide in assessing the amount of capital required to provide for a person’s financial needs which are only one of the factors to be taken into account in arriving at the amount of an award.

76. With these principles as my guidance, I shall now turn to the Section 7 (1) exercise, and start with the consideration of the possible relevancy of conduct in this case.

Conduct

105. It is the Wife’s case that the Husband has conducted what she describes as “lurid sideshows” of negative conduct on her part so as to justify a reduction of her award, which include the following allegations :-

(a) her frequent inebriation in wild drinking parties at home as well as at clubs / karaoke, her associate behaviour such as vomiting and going out of the house half-naked, and her mixing with undesirable elements such as her hairdressers and sampooboys;

(b) her poor relationship with others such as the domestic helper, the Husband’s younger brother and cousins, the children and their spouses, including causing CL and his wife to leave and move back to U.S. after staying for just 3 months, and causing both CR and E to want to move away from her;

(c) her many suicide attempts by locking herself in a bathroom and threatening to turn on the gas, causing the Husband to have to climb through the window to rescue her or to call the police for help;

(d) that she had always been spoilt, had very violent temper, and that in any argument it was he who had had to admit fault, apologised and be punished;

(e) her financial misconduct including irresponsible excessive and extravagant spending as well as unreasonable demands of money since their separation to the financial detriment of both himself and his companies.

106. The Wife argues that except the last 2 items, none of these allegations had been pleaded in the Husband’s affirmations but instead took up the bulk of his evidence-in-chief, which she says was unfair and unreasonable, and that such conducts, even if true, are irrelevant and not the kind of conduct that the court should taken into account in considering ancillary relief applications.

107. In defence the Husband explains that he was merely responding to the Wife’s evidence which appeared to be that the marital relationship up until his departure, had been very happy, that her relationship with the children was nothing but harmonious, that, as a result of the Husband “walking out to be with a much younger lady”, her perfect marriage fell apart, she herself was desolate and had had to resort to drink and beauty therapy to console herself, and that she gave the impression that he had not only been happy for her to spend up to $1 million at her whim but appeared positively to encourage it.

108. The Husband argues that the picture so conveyed was so far from the truth that it was necessary for him to deal with it in his evidence, and to call his youngest daughter to reveal the truth – that he had for many years been telling the children that he had had enough of the Wife’s behaviour and would leave her when the children had grown up, and that there had been frequent drinking parties at home during which the Wife would exhibit her drunken misbehaviour regularly.

109.  Mr Pilbrow in his final submission has made it clear that it is not the Husband’s case that conduct is a matter of material importance to the ancillary relief application, and that the steps he has taken to rebut the evidence of the Wife has been for the purpose of dispelling any possible conclusion that the break-up of this long relationship was purely as a result of his alleged infatuation with a younger woman, as it is denied that Ms Chau was in any way influential in the Husband’s decision to separate from the Wife.

110. There is no question in my mind, having seen and heard the parties in evidence for days in court, that the Wife has a stronger and more domineering personality than the Husband who, as he has admitted, must have readily spoilt her during the best part of their long relationship.  I also believe, from the evidence before me, including those from daughter E, whom I found to be as painfully neutral and unbiased as she could in no doubt a very difficult situation for her under a writ of subpoena, that the Wife was a demanding and impulsive person with a temper, and was probably not the easiest person to live with, but it would also be wholly unfair for the Husband to paint such an unflattering picture of her with him as the long suffering victim in a mainly miserable relationship.

111. I am not suggesting that the Husband has lied in his evidence against the Wife.  I believe that most, if not all, of the incidents mentioned by him about the Wife’s behaviour probably did occur, but not as if they occurred on a daily or weekly basis, as the Husband seemed to be suggesting in his evidence, such as the Wife locking himself in the bathroom when he had to climb through the window to rescue her, or when she walked up to 44 / F of Estoril Court in her underwear, or of her calling the police when she was unable to get one of the children to open the bedroom door, which seem to be isolated incidents instead.

112.  Apart from a tendency to exaggerate the frequency of these, no doubt, unpleasant incidents, the Husband also had the inclination of being economical with the truth by focusing entirely on the negative side of the Wife, such as her terminating the employment of one of her earliest Filipino maids after only a very brief period, so as to demonstrate her alleged poor relationship with others, when he conveniently left out the fact that her present domestic helper has stayed with the Wife for many years.

113.  As argued by Ms Yip for the Wife, the fact that she might have occasional arguments with her children, her daughters-in-law and the domestic helpers does not necessarily mean that she was bad or that it was entirely her fault when, for instance, CL and his wife could not adjust living in a large household in Estoril Court and had to leave after only 3 months.  In fact, the Wife has been able to demonstrate that she was generally close to her children and grandchildren, as evidenced by the many letters and greeting cards from them.

114.  As E correctly summarised in her evidence, it was a marriage with both good times and bad times, and as Mr Pilbrow has said in his submission, as with most marriages that come to an end, fault probably lies on both sides and should not be a matter of concern to the court in this instance.

115.  On this I need not go any further than by quoting Lord Nicholls’ on the question of the parties’ conduct in the Miller case : -

“59. Next is the question of the parties’ conduct.  The relevance of the parties’ conduct in financial ancillary relief cases is still a vexed issue.  For many years now divorce has been based on the neutral fact that the marriage has broken down irretrievably.  Some elements of the old concept of fault have been retained but essentially only as evidence of irretrievable break down.  As already noted, parties are now free to end their marriage and then re-marry.

60. Despite this freedom, there remains a widespread feeling in this country that when making orders for financial ancillary relief the judge should know who was to blame for the breakdown of the marriage.  The judge should taken this into account.  If a wife walks out on her wealthy husband after a short marriage it is not “fair” this should be ignored.  Similarly if a rich husband leaves his wife for a younger woman.

61. At one level this view is readily understandable.  But the difficulties confronting judges if they week to unravel mutual recriminations about happenings within the marriage, and the undesirability of their attempting to do so, have been rehearsed many times.  In Wachtel v Wachtel [1973] Fam 72, 90, Lord Denning MR led the way by confining relevant misconduct to those cases where the conduct was “obvious and gross”.

62. The Law Commission then considered the problem.  The commission concluded that courts should be obliged to take account of conduct where to do otherwise would offend a reasonable person’s sense of justice.  To this end the court should be free to examine sufficient of the matrimonial history to enable the judge to “get a feel of the case” : see the Law Commission report on Family Law – The Financial Consequences of Divorce, (1981) Law Com no. 112, paras 36 – 39.

63. Parliament gave effect to this recommendation in paragraph (g) in the new section 25 (2) introduced by the Matrimonial and Family Proceedings Act 1984.  One of the matters to which the court should have regard is “the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it”.  It is implicit in this provision that conduct outside this description is not conduct which should be taken into account.

64. This history is well known.  I have mentioned it only because there are signs that some highly experienced judges are beginning to depart from the criterion laid down by Parliament.  In G v G (Financial Provision : Separation Agreement) [2004] 1 FLR 1011, 1017, para 34, Thorpe LJ said the judge “must be free to include within [his discretionary review of all the circumstances] the factors which compelled the wife to terminate the marriage as she did”.  This approach was followed by both courts below in the present case.  Both the judge and the Court of Appeal had regard to the husband’s conduct when, as the judge found, that conduct did not meet the statutory criterion.  The husband’s conduct did not rank as conduct it would be inequitable to disregard.

65. This approach, I have to say, is erroneous.  Parliament has drawn the line.  It is not for the courts to re-draw the line elsewhere under the guise of having regard to all the circumstances of the case.  It is not s though the statutory boundary line gives rise to injustice.  In most cases fairness does not require consideration of the parties’ conduct.  This is because in mot cases misconduct is not relevant to the bases on which financial ancillary relief is ordered today.  Where, exceptionally, the position is otherwise, so that it would be inequitable to disregard one party’s conduct, the statute permits that conduct to be taken into account”.

116. While our own Section 7 does not carry the same description as the English section 25 (2) of the 1984 Act for the type of conducts to be taken into account, I echo Lord Nicholls’ view in the last paragraph, and in view of the Husband’s submission that conduct is not a matter of material importance in this case, I shall leave it at that.

117. There is of course still the alleged financial conduct of the Wife after the separation which the Husband claims he was made into paying or spending more than $30 million on her since October 1997, which he had to resort to borrowing from his company, resulting in his present financial difficulties.

118. In support of his claim, the Husband has given a detailed account (Bundle D1) of such payments to and spending on the Wife from October 1997 to July 2006, prepared by his accountant, including cheque and cash payments to her, payments of her household utilities, her motor vehicle expenses, her nominal salary, rental for her car parking space, purchases of bird’s nest, the salary of her driver, her credit card payments and down to her mobile phone bills, totalling more than $33 million in all.

119.  In fact, according to his said Affirmation of 26^th August 2004, the Husband claims that of the $38 million which he then owed the T Group of companies, about $35 million were incurred after he left the Wife in 1997, of which $30 million were solely for the upkeep of her because he was made to pay her about $4 million per year for about 5 years, and that he also paid for the renovation of her home, purchased her furniture and 3 luxurious cars for her at the total sum of $5 million.

120.  The Wife does not, in the main, dispute the various amounts which the Husband claims to have spent on her and her household since their separation, which are all well-supported by documents, but she argues that the way he has categorised them as her financial misconduct, his claim that he was made or coerced into making such payments, and that she was mainly to blame for his present debts to his companies and his financial difficulties, are unfair and misleading.

121. I tend to agree with the Wife’s argument.  No doubt a major part of the money paid to or spent on her was to meet the normal and necessary expenses of her and her household at Estoril Court in line with the same high standard of living which the parties used to enjoy prior to the Husband’s departure, whereas the nominal monthly salary paid to her by his company was on the advice of his accountant for tax purpose / benefit, and certainly should not be blamed on the Wife.  Neither should the decoration expenses on Estoril Court when there is no evidence to suggest that they were unnecessary or unreasonable.

122. As for the purchase of the 3 luxurious cars, the evidence shows that only one, the Mercedes Benz S500L for $1.5 million was bought for the Wife, which was necessary and because he had taken away another Mercedes Benz when he left her in October 1997.  The other 2 cars, the Mercedes Benz CLK was for E, while the Ferrari, which he purchased for about $ 2 million, was for CR.  The evidence is that the Wife only asked the Husband to purchase a sport car as a replacement of the one that he had taken away, and it was the Husband who decided to purchase the Ferrari after a discussion with CR.  In fact, when asked why he decided on the Ferrari, his reply that “if I were to purchase a sport car, might as well get the most expensive one” speaks for itself, and certainly a decision for which the Wife should not be held liable.

123. There were of course some expenses of the Wife which were not part of her normal expenditure prior to the breakdown of the marriage, such as those for her cosmetic surgery including facelift and lipo-suction, and her purchases of jewellery and watches, which were neither unreasonable nor excessive, nor were they routine.  The Wife believed that the Husband left her for a much younger woman, and found it necessary to have cosmetic surgery to redeem her self-confidence.  People cope with the breakdown of their marriage differently, and I cannot say such expenses in her case were unreasonable.

124. There is no question that when a marriage breaks down and one party moves out of the matrimonial home to set up his / her own household, as the Husband did in this case, it will cost the parties a lot more to maintain 2 households instead of only one as before, which certainly cannot be blamed entirely on one party only, if indeed there is anyone to be blamed, and in this case, the Husband left, I believe, not just because he could no longer tolerate the Wife’s behaviour as he alleged, but also because of Ms Chau, as I simply find it difficult to believe that the Husband only started the affair with her after he left, and then within 2 months he would purchase a property at Sceneway Garden worth $5.5 million for her and trusted her enough to put it in her sole name.

125. For whatever reason that the Husband left the Wife, to set up his own home it was inevitable that his financial burden would increase substantially, in particularly when he wanted to maintain the same high standard of living as before, not just for the Wife, but also for himself.

126. Ms Yip for the Wife however argues that this does not mean that the Husband has, as a result, plunged into financial difficulties as alleged by him.  She relies on the following purchases by him since he left in October 1997 as evidence to refute his allegation : -

(a) Sceneway Garden Property for $5.5 million in January 1998 for Ms Chau;

(b) Hillsborough property with a down payment of $5.75 million in May 1998;

(c) House 28 with a down payment of $14.75 million in July 1999;

(d) Mercedes Benz S500L for $1.5 million in 1999 for the Wife;

(e) Ferrari for $2 million in 2000 for CR;

(f) Mercedes Benz CLK for $500,000 in 2000 for E;

(g) Mercedes Benz S600L for $1.2 million in 2000;

(h) Porsche Carrera for $1 million in 2002 for Ms Chau;

(i) Mercedes Benz SL55 for $1.68 million in 2003.

127. In addition, Ms Yip points out that the Husband arranged the mortgage for the Sceneway Garden property for a term of only 7 years, resulting in an unusually mortgage instalment of over $40,000 per month, while leaving it vacant for a long period of time without letting it out for rental income, whereas the monthly management fees for his home at House 28 were almost 4 times that of the Wife’s home at Estoril Court, she therefore asks the inevitable questions :  With these kinds of spending, did the Husband look like someone in financial difficulties, and if so, is it fair to blame it all on the Wife ?

128. To answer the second question, I can say without reservation that it is not, but the answer to the first question is not so straightforward, as it is in fact one of the most hotly disputed issues between the parties, i.e. the true financial situation of the Husband and his companies, which I shall now turn to.

The Husband’s Assets

129. The Husband’s assets, and the Wife’s for that matter, were conveniently set out in the Schedule of Assets prepared by the Husband’s accountant Mr Pun (C2 : 902) as at 25^th August 2006.  There are essentially 2 areas of the Schedule for which the Wife challenges the values assessed, which I propose to deal with separately as follows.

Properties

130. Savills were jointly appointed by he parties to value the properties and the valuations were made in November 2005.  Since then, the net values had been adjusted in the Schedule of Assets to reflect the continuing reduction in the outstanding mortgages.  In March 2006 the Husband, without informing the Wife, approached Savills to enquire whether they felt there had been any change in the value of the properties since November 2005.

131. In their reply of 7^th March 2006 (A5 : 2036) Savills were of the views that since November 2005, the general price level of the residential market had dropped by about 2% to 6%, while that of the industrial market had risen by about 3% to 6%.  They however qualified their views as indications of the general market only and that the prices of individual properties might differ from the general trend.  The Husband nevertheless unilaterally made a 5% downward adjustment for all of his properties.

132. Not surprisingly, the Wife does not accept this adjustment by the Husband, insisting that the original agreed valuation by Savills be adopted by the Court, and argues that if the valuations should be updated from November 2005, it should be done properly by Savills on each individual property instead of relying on just a comment on the general trend of the market, which she says is simply unfair, especially when no such downward adjustment was suggested by the Husband for Estoril Court which he agrees should go to her.

133. I agree with the Wife that it is not proper nor fair for the Husband to make the adjustment in such a manner, when he has also failed to explain why he chose the downward adjustment at 5%, when the range given by Savills was 2% – 6%.  It was certainly not the median figure if one were to take that approach.  Above all, as Savills have specifically pointed out, their views were merely indications of the general trend, it is entirely possible that prices of the Husband’s properties, which are more in the high end of the market, may well be different from the general trend.  Without further more specific input from the experts, I agree with the Wife that the Husband’s unilateral downward adjustment is not fair or proper, and I will adopt the original valuation by Savills for the parties’ properties.

134. The Wife also challenges the fact that the Schedule has failed to include the Husband’s full interest in House 28 which is in joint names with Ms Chau, or the Sceneway Garden property which is in Ms Chau’s sole name.

135. It is conceded by the Husband that Ms Chau had made no financial contribution to either property, but he argues that as she has been living with him since the purchase of both properties, and therefore in the same way as the Wife, who has made no financial contribution to the properties in the Husband’s name, claims to have an equitable share in these properties.  It is submitted by the Husband that Ms Chau’s contribution to the welfare of the Husband’s household deserves recognition, and that the Husband’s evidence is that he hopes and believes that his relationship with Ms Chau is ongoing and both properties have been purchased since the breakdown of the parties’ marriage, and as the legal title to the properties is vested in Ms Chau, it is submitted by the Husband that she therefore has both a vested and beneficial interest in both properties which should be recognised by the court, relying on the arguments put forward by Cheung JA in the recent appeal of HKCB Finance Ltd v Yuen Yi Wan Sandy and Wong Chiu Mui CACV 355 / 2005 as pertinent to whether Ms Chau’s beneficial interest may be upheld against the claims of other potential creditors.

136. The argument of Cheung JA, which was the minority view of the Court of Appeal in that case which also consisted of Rogers VP and Sakhrani J, was based on his findings of various contributions made by the wife referable to the former matrimonial home to give her a beneficial share or interest in that property.

137. There is however absolutely no evidence here, as pointed out by Ms Yip for the Wife, from either the Husband or Ms Chau, of any contribution by Ms Chau either referable to those properties, or to the welfare of the Husband’s household to confer or infer any beneficial interest on her in the properties.

138. On the other hand, there is evidence that the Husband has retained his absolute interest in and control of the properties in any wish by him to sell, rent or charge either on both the properties, and to utilize such proceeds for the benefit of his companies’ needs, all of which go to support the Wife’s argument that the value of the Husband’s full interest in these properties should be treated as part of his assets in the Schedule, as it is neither her intention, nor necessary in my judgment, to set aside Ms Chau’s legal title under s. 17 of MPPO for the purpose of evaluating the Husband’s assets for the application before me.

139. As Munby J pointed out in Re W (Ex parte Orders) [2000] 2 FLR 927, where the wife sought financial relief from the husband that 2 valuable residential properties, both held on complicated trusts, were in fact owned by the husband : -

“Mr Everall, referring me to Nicholas v Nicholas [1984] FLR 285, Green v Green [1993] 1 FLR 326, Purba v Purba [2000] 1 FLR 444 and Khreino v Khreino (No 2) (court’s power to grant injunctions) [2000] 1 FCR 80, submits that the court adopts a robust approach in such cases and does not allow itself to be, to use Thorpe LJ’s words in Khreino v Khreino (No 2) (court’s power to grant injunctions) [2000] 1 FCR 80, 85c, emasculated by over-refined or technical arguments based on strict principles of property law.

I readily accept that there is much force in Mr Everall’s submission.  Thus, as can be seen from Nicholas v Nicholas [1984] FLR 285, 287E, 292F, and Green v Green [1993] 1 FLR 326, 337C, 340B, where property is vested in a one-man company which is the alter ego of the husband, the Family Division will pierce the corporate veil, disregard the corporate ownership and, without requiring the company to be joined as a party, make an order which has the same effect as the order that would be made if the property were vested in the husband.  Indeed, the court can and will adopt this approach even where there are minority interests involved if they are such that they can for practical purposes be disregarded.

Moreover, as Thorpe LJ’s forthright observations in Purba v Purba [2000] 1 FLR 444, 446F-H, and Khreino v Khreino (No 2) (court’s power to grant injunctions) [2000] 1 FCR 80, 85a-e, show, the court will not allow itself to be bamboozled by husbands who put their property in the names of close relations in circumstances where, taking a realistic and fair view, it is apparent that the recipient is a bare trustee and where the answer to the real question – Whose property is it ? – is that it remains the husband’s property.  Again, in such cases there is no need for the third party to be joined.  As Purba v Purba [2000] 1 FLR 444 shows, where a transfer has been made post-separation to a close relative in order to defeat a wife’s claims, the court can and will act without going through the formality of joining the third party or making setting aside orders under s 37.  And as Khreino v Khreino (No 2) (court’s power to grant injunctions) [2000] 1 FCR 80 shows, the court can and in appropriate cases will grant Mareva injunctions against both the husband and his offshore company and the relative who holds the bearer shares in the company without requiring either the company or the relative to be joined as parties”.

140. The evidence before me clearly supports the Wife’s case that these properties belong to the Husband who paid for all the purchase money without any contribution from Ms Chau who was at all time maintained by him, and that the propinquity of time between the Husband’s association with Ms Chau and the purchase of these properties does not appear to support the Husband’s case that they were outright gifts to Ms Chau, in particularly with House 28, which was purchased only about half a year when they were together, and was on the Husband’s own admission the biggest investment he ever made in his lifetime.  All these, plus the fact as aforesaid that the Husband can make use of both properties in whatever way he wishes, show that they are part of his assets / resources and should be included for the purpose of these proceedings.

141. In conclusion, I agree with the Wife’s submission that the following amounts be added back to the value of the Husband’s properties : -

(a)	50% of House 28	$20 million
(b)	100% of Sceneway Garden	$3.3 million
(c)	5% market price of :
	House 28	$3.1 million
	Hillsborough	$0.6 million
	Convention Plaza	$0.3 million
	Total :	$27.3 million =========

The T Group

142. By agreement between the parties, Deloittes were instructed to value the Husband’s T Group of companies as at 31^st August 2005 which was for 100% of the shares in the companies and did not purport to place a value on shares held by individual shareholders, and that it was a net-asset valuation which assets included the debts of the Husband of the companies by way of director’s loan and the excess consultancy fees he has been drawing over and above those authorised by the minority shareholders until 1999.  As aforesaid the value by Deloitte of the T Group as at 31^st August 2005 was put at $99.5 million after some minor adjustment agreed between the parties.

143. However, the Husband’s accountant Mr Andy Pun, in preparing the Schedule of Assets for this application, had updated the value by Deloittes on the Group to 31^st August 2006, in so far as further depreciation had occurred by the plant and machinery, and by the increases, which have accrued to the director’s loan to the Husband and his continuing drawing of excess consultancy fees, by reducing the value of his shareholding in the companies by $5 million.

144. This unilateral reduction by the Husband’s accountant is of course not acceptable to the Wife who argues that it was inappropriate to do so in the absence of any updated figures for the assets and liabilities, in other words, without an updated balance sheet from September 2005 to August 2006.

145. This appears to have been accepted by Mr Pun as inappropriate during his cross-examination by Ms Yip for the Wife, but in re-examination by Mr Pilbrow for the Husband, Mr Pun confirmed that he had the figures at least available up to 31^st December 2005, and that from his close knowledge of the financial position of the companies since that time, he was unaware of any change in the assets or liabilities, which would affect his updated valuation.

146. This of course prompted a response from Ms Yip in her submission, and quite rightly so in my view, that it was just the bare assertion of Mr. Pun during re-examination without any documentary evidence in support, and I agree with her that such an adjustment was not in line with the way that Deloitte prepared their report, nor were they consulted about the adjustment, and on this issue I would respectfully refer to the judgment of Thorpe LJ in Parra v Parra [2003] 1 FLR 942 when His Lordship said at 949 : -

“ …… the outcome of ancillary relief cases depends on the exercise of a singularly broad judgment that obviates the need for the investigation of minute detail and equally the need to make findings on minor issues and disputes.  The judicial task is very different from the task of the judge on the civil justice system whose obligation is to make findings in all issues and dispute relevant to outcome.  The quasi-inquisitorial role of the judge in ancillary relief litigation obliges him to investigate issues he considers relevant to outcome …… But this independence must be matched by an obligation to eschew over elaboration and to endeavour to paint the canvas of his judgment with a broad brush rather than with a fine sable.  Judgments in this field need to be simple …… in structure and simply explained”.

147.For the reasons aforesaid I do not think it is proper or necessary to make any adjustment to the value adopted by Deloitte in their report, and I agree with the Wife that the sum of $5 million should be added back to the Husband’s assets in the Schedule to give the total value of his net assets at $108.5 million.

Minority Interest

148. At the earlier stage of the proceedings the Wife appeared to argue that it was inappropriate for Mr Pun to take into consideration the value of the Fong’s minority shareholder interests in the manufacturing companies TPHK and TP China as well as the holding company TPH for the purpose of his Schedule of Assets, as according to the Husband, it appeared from her evidence in chief that she was under the impression that he was under no real or moral obligation to the Fong, having virtually given their shareholding to them in exchange for 2 old and almost worthless printing machines.

149. There is no question in my mind that the investment by the Fong in the T Group was an arms-length transaction well supported by documentary evidence including the Injection of Assets Agreement dated 18^th July 1994 between the Fong’s G Electronic (H.K.) Ltd and the Husband’s TPCL and TP Holding (Exhibit P-6), that in the event of a sale of the business, the Fong would be entitled to receive their appropriate share, as submitted by the Husband, and that it is upon the basis of a sale to a willing buyer that Deloitte have based their valuation.  As such the Husband argues that it is appropriate for only his shareholding at 76.19% to be included in the Schedule of Assets instead of on the basis of 100% of the shareholding, a fact which has been accepted by the Wife in Ms Yip’s final submission in that she does not deny the existence of the minority interest.  Her contention, it must however be stated, is that the Husband is in full control of the business to the extent that he can ignore the minority interest, an issue to which I will no doubt return at a later stage when I deal with the parties’ proposals and the Husband’s ability to pay.

150. There does not appear to have been any major argument concerning a value of about $10 million being placed on the assets of the Wife, of which about $6 million were liquid assets such as cash and stocks and shares investments.  As such the total valuation of the assets of the parties should therefore be, as submitted by the Wife, $118.5 million for the purpose of this application.  I turn next to the parties’ needs and expenses, and shall start with the Wife’s.

Wife’s Expenses

151. As the Wife’s application for maintenance pending suit in September 2004, I took the broad brush / rough guess approach of her needs and expenses in view of the limited information then available before the court, as was inevitable in most cases at their early stage, and awarded her $200,000 per month.

152. The Husband says that steps have since been taken to provide all the necessary information before the court in the main contained in Bundle D1 plus further evidence in this regard adduced in the parties’ oral evidence at the trial.

153. He has also produced a schedule of payments, annexed to the back of his final submission, made to or for and on behalf of the Wife from the time of the parties’ separation in October 1997 to July 2006, which together with payments made to meet her credit card expenditure, which he says amount to a staggering $33.43 million, of which $19.6 million had been paid to her in cash, a considerable part of which he claims to have been disposed by her on items over and above her reasonable requirements, such as losses in the stock market of about $2.88 million, money given to the children for no good reason of about $3.5 million, purchasing of HSBC shares for $5.4 million and of car parks at Estoril Court for $0.58 million, totalling more than $12 million.

154. This is apart from the fact that, the Husband submits, throughout this period the Wife had been using this money to cater for her mother, CR and his wife, and E until 2002, when all of whom were residing at Estoril Court but all were over the age of 21 at the date of separation and were not a legal responsibility on him.

155.It was the Husband’s contention that the Wife in fact lived off the cash payments of $30,000 per month from his company together with his payments of her credit card expenses and the outgoings of Estoril Court, as apparent from the cross-examination of her bank statements from January 2000.

156. While accepting that their standard of living before the breakdown of the marriage was high, the Husband argues that the Wife’s description of the same is exaggerated, such as her claim that they would spend $1 million whilst on trips to Europe, when in fact that such trips were sponsored by his business clients, and that in fact his credit card expenditure (Exhibit P – 2) on the trip in 1996 only amounted to just over one-fifth of the sums alleged by the Wife.

157. The Husband asserts that although the court awarded the Wife maintenance pending suit at the rate of $200,000 per month in 2004, this sum as an assessment was may over her reasonable requirements, when a clear picture of her actual reasonable requirements has emerged as a result of the manner in which she has conducted her finances since 2004 through re-imbursement to her son CR, in accordance to a Schedule of her expenses awarded to a letter from her solicitors dated 19^th April 2006 (C2 : 494 – 506) which has incorporated all payments made by CR on behalf of the household at Estoril Court from January 2005 to February 2006, when he was residing there with his wife, including the management charges, rates, utilities, petrol, amah’s wages, driver’s wages, internet charges and charges the Wife may have incurred each month on her credit card.

158. The Husband says that the Schedule shows that the average expenditure each month came to $60,258.76 during the 12 months of 2005, and that if one were to assume that a small percentage of such expenses were attributable to CR and his wife and the Wife’s mother, this sum should in fact reduce further.

159. As to the Wife’s alleged other expenses which she said were not reflected in the Schedule, such as her wet market purchases, the evidence of which the Husband argues as unsatisfactory, while those for her beauty and facial treatments, the Husband suggests that they may be of a “one-off” nature, and that in any event he believes that her estimate of her monthly expenses set out in her affirmation (A4 : 1510) is grossly exaggerated, such as her claim of $30,000 per month for food for herself, or $12,000 per month for wine and cigarettes, and that by comparison, he says, the amounts which he spends on his everyday expenditure appear quite modest.

160. Taking into account of her non-recurring expenses such as her irregular beauty treatments, her occasional purchases of jewellery and expensive watches, as well as her credit card spending, the Husband submits that the court should not assess the Wife’s reasonable requirements in excess of $80,000 per month, which is a not insignificant amount to support a 55 years old lady with no legal responsibilities to anyone other than herself.  On this basis the Husband says that according to his Duxbury calculations, a capital sum in the region of $16 million would be appropriate for the Wife.

161.Over and above this amount required to meet her reasonable requirements, the Husband accepts that the Wife is entitled to suitable accommodation, which he says can be met by his transfer to her of the unencumbered title of the Estoril Court property, if given a period of a few months to obtain the discharge of all charges and mortgage on the properties.

162. The Husband also accepts that it cannot be reasonably argued that this property does not represent the standard of living enjoyed by the parties prior to the breakdown of the marriage, but he also feels that in the circumstances of the children having fled the nest, the property now appears to be unsuitably large and expensive to maintain for the Wife, he therefore submits that the court should recognise that the transfer of such a property will represent considerable financial security to the Wife in future years, and if she were to downsize at a later date, the balance could well contribute to the capital necessary to meet her reasonable requirements.

163. From these arguments, the Husband submits that the Wife’s appropriate entitlement could be met if she was to retain the Estoril Court property and have further liquid assets of about $16 million.  With her present assets of $10 million, a further contribution by him of $6 million would be required, but taking into account of his over payment to her of the maintenance pending suit of $200,000 per month since February 2004, and the comparatively hard times that this family is likely to meet in the forthcoming years due to the deteriorating business of his companies, he suggests that a lump sum of $5 million for the Wife would be reasonable and appropriate.

164. While accepting that C2 : 495 – 504 do give the sum of $60,000 per month as her average spending for the year 2005, which included all the items paid by cheque including her credit card bills, but not the salary for another maid or other cash items such as wet market, repairs and maintenance and other miscellaneous cash purchases, the Wife does not however agree that her 2005 average spending should be treated as the yardstick for her reasonable requirements, instead of her average expenses from separation in October 1997 to 2003 or 2004 when, according to the Husband’s own affirmation (A2 : 705), he paid about $311,000 per month on average maintaining her, which, as aforesaid, he complained as unreasonable, irrational and was her way of “punishing” him.

165. The Wife argues that such attempt by the Husband to establish the “unreasonableness” of her expenses has squarely ignored the evidence coming from his own mouth when he has said on more than one occasion at the trial that “I will try my best to satisfy her demands for as long as my ability permits”, which phrase, according to the Wife, must be taken to mean what it says, and that the monthly sum of $311,000 was in fact the reasonable yardstick as between the parties, as that was what the Husband’s ability permitted, and what the Wife demanded.  Between themselves, Ms Yip argues, the parties had agreed this amount to be reasonable, and that the court should pay due respect and regard to what the “domestic agreements” between the parties during the marriage, and more so if the agreement had regulated the order of things for more than 6 years.  In support, she refers to L v L, Parra v Parra [2003] 1 FLR 942, and Burgess v Burgess [1996] Fam Law 465.

166. In Parra v Parra, Thorpe LJ said this in para 27 – 28 about the court’s approach on property arrangements made between the parties during the marriage : -

“[27] …… As a matter of principle I am of the opinion that judges should give considerable weight to the property arrangements made during marriage and, in cases where the parties have opted for equality, reserve the exercise of the adjunctive powers to those cases where fairness obviously demands some reordering.

[28] That disposes of three of the issues in the case.  First the lump sum should be reduced to £818,641, the payment that results in an equal division of the family assets.  Second the parents should contribute equally to future education costs.  Equal division of assets should ordinarily be matched by equal division of obligation.  Third if the husband cannot or will not raise the necessary borrowing to pay the lump sum within the period agreed or ordered the business assets (i.e. the company and the land it occupies at Checkendon) must be sold and the net proceeds divided in accordance with the formula proposed by Mr Posnansky”.

167. The Wife believes that the Husband’s present stance that it was not a true arrangement between the parties, and that it was forced upon him by her, is clearly an afterthought designed to enable him to wipe out that part of “history” which is disadvantageous to his case.

168. She argues that, if this amount was indeed “unreasonable”, “penal” in nature, “beyond the Husband’s ability to afford”, why would it survive more than 6 years, i.e. from 1997 until February 2004 when he reduced her monthly maintenance to $90,000, which triggered off her maintenance pending suit application ?

169. The fact is that, she argues, the Husband was the petitioner in these proceedings and therefore had the carriage of the action.  He had the benefit of legal advice all the time.  He could have expedited the ancillary relief application, negotiate with her to reduce the amount of the maintenance, or take the matter to court.  In other words, he could have done something about it all those years, but did not until 2004.

170. Furthermore, the Wife argues, any submission of “compulsion” must be rejected, for the Husband is a mature adult person and a businessman, it therefore stretches the imagination to believe that he would be “forced” to pay $311,000 per month for more than 6 years.

171. She also cited the example of the Husband threatening on 2 occasions in 1999 and 2001 to cancel her credit cards, to force her to back down from her demand to inspect his company accounts and documents, which she says he could have done to force her to accept a lower amount of maintenance if he really found it unreasonable or if he could not afford.

172. Ms Yip for the Wife also submits that the Husband’s argument that the Wife’s average spending of $60,000 for month in 2005 is flimsy and plainly ignores the evidence which suggests that since February 2004, the Wife’s spending was restrained, controlled and a pattern imposed upon her by the following circumstances : -

(a) In February 2004 when the Husband suddenly reduced his financial provision for her to $90,000 per month, which caused her to apply to court for maintenance pending suit, but she had no idea how long it would take and how much she would get, thereby affected her spending;

(b) That she had been worried about her expensive legal costs since the re-activation of these proceedings in 2003, she therefore became cautious in her spending, and hence the purchases of expensive watches and jewelleries started to be missing from her bank statements or credit card statements;

(c) That the Husband had reduced the credit limit on all her credit cards, which no doubt had an impact on her spending.

173. I agree that with the evidence before me the Wife’s average spending of $60,000 per month in 2004 or 2005 should not be used as the yardstick for determining her reasonable expenses and requirements.  She was then right in the middle of a difficult and expensive litigation and it is only natural and normal for her, and for that matter the Husband as well, to be concerned about her legal costs and to become cautious about her spending.  $60,000 certainly was way below what the Husband used to pay or spend on her in the previous 6 years.

174. If the average monthly sum of $60,000 in 2005 should not be used as the yardstick, what then should be ?  According to the Husband’s Schedule, the total amount of $33.4 million paid to and for the Wife from October 1997 to July 2006 would give an average monthly sum of about $315,000, more or less the same figure of $311,000 referred to in his affirmation (A2 : 705), and which he says was forced upon him.  I agree with the Wife that this does stretch the imagination.

175. Having seen and heard him in evidence for days in court, I do not believe that the Husband, no doubt a very intelligent person and shrewd businessman, could be forced or coerced by the Wife to pay her, consistently and regularly, an amount which he says was so “unreasonable” and “irrational”, every month for such a long time without any complaint.  And when he decided to unilaterally reduced the amount in early 2004, he reduced it to $90,000 and continued to pay for her chauffeur and her utilities bills, arranged for his company to continue to provide and maintain 3 cars for her use, all of which he claimed in his affirmation of 26^th August 2004 (A2 : 709) to be not less than $150,000 per month, which was 2 1/2 times of what he now says should be the Wife’s reasonable expenses.

176. The Husband might have been trying all those years to please or satisfy the Wife financially, with the possibility of some element of guilt on his part for leaving her after such a long marriage, but I simply find it incredible if any of these payments were anything other than voluntary.

177. It of course does not follow that all these payments necessarily represent or reflect the Wife’s present reasonable needs and expenses.  Some of them, according to the Husband’s Schedule, were of the capital nature and non-recurring, such as the purchases of the SL500 for the Wife and the car parking space at Estoril Court, or the decoration of the Estoril Court property, while others, such as the instalments for E’s CLK230, or the remittance to CL, cannot be said to be part of the Wife’s normal needs, whereas the rental for car parking space for her is no longer necessary, while the nominal salary from the company has been stopped and was mainly for the company’s tax purpose rather than as a necessity for the Wife.

178. Taking off all such items from the Schedule, and adding up the remaining payments for the period from October 1997 to end of 2003, a total of 75 months, before the Husband unilaterally reduced the payments in 2004 which triggered off her maintenance pending suit application, thereby changing the Wife’s spending pattern, will give a rough total sum of $17.3 million including credit card payments, or an average sum of about $230,000 per month during that period.  This was the average monthly sum paid by the Husband, according to his own Schedule, for the Wife’s regular and normal uses and expenses over a period of more than 6 years up to end of 2003 which I believe more accurately represents and reflects her reasonable needs and requirements in more or less the same standard of living which the parties used to enjoy prior to the breakdown of their marriage, which was undisputedly high.

179. Apart from the substantial monthly sum spent on the household at Estoril Court, which included regular purchases of expensive food such as bird’s nest, there is no question that the Wife had always been well provided during the latter half of the marriage, with the purchases of jewelleries and expensive watches worth as much as $10 million at one time according to the Husband, who himself has been driving exclusively Mercedes Benz since 1976.  The family had been living in the most privileged area of Hong Kong since 1984.  They enjoyed the use of a driver and 2 domestic helpers, their children went to U.S. for education, and they enjoyed expensive trips to Europe.

180. The Husband has criticised the Wife for grossly exaggerating the cost of their trip to Europe at as much as $1 million.  To be fair to her, her evidence is that it was put to her by the Husband when she asked about the total costs for the trip.  Even if it was only for about $222,000 according to the Husband’s Schedule and mainly for shopping, it could still be said to be expensive in view of the fact that part of the trip was sponsored by the Husband’s clients, and as pointed out by the Wife, the record of the trip’s expenses such as the Husband’s credit card statements was far from complete.

181. The Husband has claimed in his evidence that he gave Ms Chau only $50,000 per month to spend, as if by comparison a much lower and more reasonable sum and typical of the standard of living that he and Ms Chau enjoy at present.  The Wife however argues that very little was said or documented about such a bare assertion, and that even if it is true, this sum does not include the hidden costs of her living such as her share of an expensive accommodation, utilities and all other related outgoings, her insurance needs, any extra payments during Chinese New Year or holidays, expenses on jewelleries and gifts, etc. all of which the Husband refused to be forthcoming even under cross-examination at the hearing.  The Wife therefore believes that the said sum of $50,000 for Ms Chau per month is more likely the minimum rather than the maximum.

182. I agree that if one is to make a comparison of the Wife’s expenses so as to demonstrate their reasonableness, it should be with the Husband’s rather than with what he allegedly pays Ms Chau.  According to his Financial Statement (Form E) (A1 : 69), the Husband’s own household expenses for his home at House 28 as well as his general expenses, after deducting the mortgage payments and other unrelated expenses as well as the interim maintenance of $90,000 for the Wife but adding back the $50,000 which he claims for Ms Chau, his total expenses cannot be said to be less than those of the Wife, and may in fact be much more.

183. I do accept that the Husband, being a businessman and the head of his group of companies, will of course have more expenses to pay, many of which do not even figure in the Wife’s expenditure, and that part of her household expenses since separation also included those for her mother as well as CR and his wife all of whom were, and still are living at Estoril Court, and should therefore be adjusted accordingly.  In conclusion I agree with Ms Yip that taking a broad brush approach, a monthly sum of $150,000 to $200,000 for the Wife’s reasonable needs and requirements is not unreasonable or excessive at all.

184. As for the Husband’s needs and expenses, they are mostly uncontroversial and it is his evidence that he intends to continue with his relationship with Ms Chau and hence his financial obligation towards her.  It is also his intention to retire in several years after CR is able to successfully take over his business.  With his shareholding in the T Group as well as his own assets and properties, there is no question that his future is secured.  I shall next turn to another contentious issue : the parties’ contributions.

Contributions

185. Although there were some evidence from the Wife that at the early stage of the marriage her parents might have lent $100,000 to the Husband to assist in his business, which was strenuously denied by him as never occurred and in any event the Wife’s parents did not at that time have the financial resources to lend him that kind of money, it is generally not disputed that the Wife has made no financial contribution to the assets of the marriage, nor did she in the main assist in running his printing business, other than some odd occasions in the early stage of his business when she attended at his Wanchai office to help out when one of the employees was unavailable, or when his company was rushing to meet certain delivery orders.  There were other occasions such as the Coca-Cola contract when she accompanied him to the office, but he claims that she spent most of her time merely chatting with other employees or playing with her video games.

186. It is the Wife’s case that she has made her full domestic contributions by raising the 4 children and attending to the welfare of the family, and that she did it single-handedly for a long period of time during the early stage of the marriage until 1976 when a domestic helper was hired by the Husband after she gave birth to their youngest daughter E.

187. The Husband agrees that his grandfather was only responsible for doing the shopping and cooking, but he insists that the Wife, whom he accuses of staying in bed until almost noon everyday did have help from his younger brother and cousin, as well as her own younger brother and sister, all of whom were at one time or another staying with the family whom the Husband believes did share the Wife’s workload in taking care of the children and attending to the household chores such as washing and cleaning.

188. The evidence however is that the Wife’s sister got married in about 1970 / 1971 and left the parties’ then Blue Pool Road flat, while her brother was attending full-time secondary school, and that the Husband had to attend to his business, as well as his younger brother and cousin both of whom helped out at his company.

189. It is therefore clear that all these so-called helps alleged by the Husband would at most be available only after they had returned from work or school, and that for the period from 1967 when the twins were born until 1976, the Wife would be on her own most of the time of each day with the 3 elder children, all of whom, needless to say, had to be cleaned, clothed and fed, probably at different hours and with different type of food according to the different stage of their age and development, plus the entire household and the chores that went with it such as cleaning and washing, which begs the obvious questions :  If the Wife did not attend to them by herself, who did, and if she had help during the day when everybody else was either at work or at school while the grandfather only did the shopping and cooking, who was it ?

190.The answers, in my judgment, are clear and unrefutable, and cannot be better demonstrated by E’s evidence when she was asked by the Husband who looked after her when she was young, and came the unhesitated answer : “My mom”.  Indeed the Wife’s good relationship with the children and grandchildren, who would go to her place every Friday and weekends for gathering and dinners, is self-evident of her contribution.

191. In responding to the Husband’s criticisms of her seemingly lack of contribution in the later years of the marriage, Ms Yip argues that the Wife’s contributions were front loaded, and that they cannot be quantified scientifically or arithmatically, certainly not measurable by the number of man-hours or years of work which a spouse put in.  As in this case, she submits, when other girls went to school, went to movies with popcorns and boyfriends, this Wife made home and family, and that she spent the best years of her lifetime for making the family work.  She accepts that the Husband had also duly performed his role in making financial provisions for the family, and that in the later years, the family was virtually in lack of nothing.  The Husband has chosen to carry on his business with a view to handing the same down to the next generation, Ms Yip submits, surely the Wife must also be entitled to make a life of her own, to make friends and have a more busy social life, for which surely she could not be criticized.

192. The Husband’s clear reluctance to concede that the Wife’s contribution as a mother and wife has been full is perhaps, as suggested by Mr Pilbrow, due to the fact that he has resented the somewhat dominant stance the Wife had maintained in the relationship and what he seems the endless stress that her volatile temperament has caused both to himself, the children and the relations that have come to stay.  Despite his view that her domestic efforts were minimal, however, he has conceded that the 4 children have grown up healthily and without either physical or psychological problems.

193. On the other hand, Mr Pilbrow submits that there is really one dominant feature of this marriage and that is the exceptional contribution of the Husband to the financial standing of the family, and that it is on rags to riches strong to which the Wife can claim no financial contribution ro business support, and that although it has a long relationship, it is submitted that it has not been a marriage where the Wife should claim exceptional contribution even as a wife or mother.

194. Ms Yip accepts that the Husband, as the Wife, must be regarded as having made full contributions in their respective sphere, but she disputes that his was exceptional that calls for special recognition as in the cases of Lambert v Lambert, or Charman v Charman [2006] EWHC 1079, and that for him to claim exceptional contribution is just another way of decrying the Wife’s contribution, which is unacceptable to her who has devoted her best years together with him in building up the family.

195. I have no hesitation in agreeing that the Husband has been highly successful in his business and worked extremely hard and diligently for many years who no doubt feels that he has created the wealth that exists together.  But how does the court evaluate and recognise the possibility of a contribution by one spouse or another at such an extraordinarily level that it is entitled to special recognition ?

196. In H – J v H – J (Financial Provision : Equality) where Coleridge J on appeal agreed that although the husband had been predominant in the financial success of that marriage, he found nothing special, exceptional or stellar about his contribution, and that if the facts of that case led to a finding of a special contribution, it would be the thin end of a wedge being driven right into the heart of the principles underlying White v White.

197. At the conclusion of his judgment Coleridge J said at p. 430 about the adverse costly effect on undergoing forensic analysis of the parties’ respective contributions to a lengthy marriage : -

“Underlying this appeal and my decision to allow it there seems to me to be two important points : (1) The significance attaching to a particular fractional percentage is more than merely the monetary value it represents.  It goes to the core of the parties’ understanding of fairness.  So 50 / 50 resonates with fairness (as the House of Lords has identified); both parties depart with the sense of being equally valued.  There are no winners or losers.  Once there is a departure from equality, as there often has to be, however small that departure, one party (more often the wife) is left with a sense of grievance, of her efforts having been undervalued.  Understandably, at the time of divorce these considerations matter a great deal to the parties.  (2) In this case, after a marriage which lasted in excess of 25 years, net assets, after deduction of notional sale costs and capital gains tax, have been accumulated amounting to more than £2.7m.  Accordingly, there is ample to go round.  It would indeed sad if, in this category of cases (as opposed to those cases where the overall means are less than sufficient and so the needs of children and their carers must inevitably remain predominant), the broad and sweeping reform underlying the speeches in White v White was to become bogged down in a welter of zealous, over-sophisticated and costly forensic analysis, or watered down by judicial reticence”.

198. In G v G (Financial Provision : Equal Division) [2002] 2 FLR 1143, where the case was largely fought on the issue of the husband’s contribution which included building the family fortune through exceptional hard work and astute business acumen in the field of substantial development and construction projects, Coleridge J said this at pp 1154 – 1155 about the court’s evaluation of the parties’ respective contributions in the context of section 25 : -

“34. In a number of decisions since White v White, e.g. Cowan v Cowan and Lambert v Lambert, the court has recognised, in an appropriate case, the possibility of a (financial) contribution by one spouse or another at such an extraordinary level that it is entitled to special recognition and value.  Unfortunately, this has led to this concept becoming the centrally important issue in almost every case particularly where the assets exceed the party’s reasonable needs.  Hardly a case is heard nowadays than that one party (usually the husband) seeks to establish that he has played a markedly more valuable part in the accumulation of the wealth and the marriage partnership so that he should be specially rewarded by way of a greater share of the assets.  I wonder whether, with respect to the members of the Court of Appeal in Cowan v Cowan, they would have made the extensive remarks they did (about the possibility of a special contribution) if they had realised the forensic Pandora’s Box that would be opened in actual practice.  The effect is not at all dissimilar to the “conduct” debates of the 1970s.  In those days “conduct” was similarly raised against wives to try and limit their claims.  However, the court, recognising the undesirable consequences inherent in those arguments and further the impossibility of fairly adjudicating upon them introduced the concept of “obvious and gross”) but the valuing of positive “contribution” varies from time to time.  Should a wealth creator receive more because, e.g. his talents are very unusual or merely conventional but well employed ?  Should a housewife receive less because part of her daily work over many years was mitigated by the employment of staff ?  Is there such a concept as an exceptional / special domestic contribution or can only the wealth creator earn the bonus ?  These are some of the arguments now regularly being deployed.  It is much the same as comparing apples with pears and the debate is about as sterile or useful”.

199. When His Lordship came to express his conclusions on the issue of contributions, he said at p. 1156 : -

“Does that put the husband into that narrow category of wealth creators whose special gift or talent is the foundation of great wealth ?  I cannot so find in this case.  I cannot evaluate the husband’s contribution is greater than the wife’s without discriminating against her on the grounds that the work she did over just as long a period was of less value than the husband’s.  That is precisely the approach foresworn by Lord Nicholls of Birkenhead [in White v White].  The husband in this case was a hard-working, dedicated husband, a father and provider over 32 years.  By the same token the wife was a hard-working and dedicated housewife, a mother and homemaker over the same period.  “Each in their different spheres, contributed equally to the family” per Lord Nicholls in White v White [2001] 1 AC 596, 605.  To find otherwise would, on the facts of this case in my judgment, amount to blatant discrimination.  The husband’s role was the glamorous, interesting and exciting one.  The wife’s involved the more mundane daily round of the consistent carer.  That was the way in which the parties to this marriage chose, between themselves, to organise the overall matrimonial division of labour.  How can it then be said fairly, at the end of the day, that one role was more useful or valuable (let alone special or outstanding) than the other in terms of the overall benefit to the marriage partnership or to the family” ?

200. His Lordship also noted that the case had cost the parties £400,000 and commented at p. 1160 : -

“That is not especially unusual in this class of case.  But the parties are not assisted to achieve compromise when they are encouraged by the law to indulge in a detailed and lengthy retrospective involving a general rummage through the attic of their marriage to discover relics from the past to enhance their role or diminish their spouse’s.  Perhaps “obvious would be, and over the years he has had the full support of the wife in her role of looking after the home and family”.

201. In the case of M v M (unreported) decided by McLaughlin J in the High Court of Northern Ireland and cited with approval in Lambert v Lambert, His Lordship said this about the court’s approach to the evaluation of contributions : -

“In the course of adducing evidence before me counsel sought to tempt me with a bait of this kind.  He led evidence, and relied upon it in his closing submissions, that the husband worked very long hours getting out of bed at 6:00 a.m. to be at work by 7:00 a.m.  His work did not finish until late in the evening as he carried on his working day by supervising Y Ltd and the other business premises owned by the company.  I accept all of that evidence as true, but to concentrate on that and fail to recognise that, whilst he toiled at work on company business, Mrs M from early in the morning was getting the children ready for school, taking them there, running the home during the day, collecting them after school, cooking and cleaning, nurturing them by ferrying them to social, sporting and recreational activities, supervising homework and tutoring them when required, would be to be guilty of the very kind of discrimination warned against by Lord Nicholls.  An example of the value of the life’s work of Mrs M can be seen today in the accomplishments and personalities of their children.  These are the abiding rewards of her labour of love rather than the transient rewards in the form of money produced by the labour of the husband.  In the context of this family’s life these admirable qualities of both parties are to be considered of equal value.  Indeed the words of Lord Nicholls might almost have been written to describe the respective roles of Mr Mr and Mrs M”.

202. In Lambert v Lambert, Thorpe LJ in agreeing with the views cited in H – J v H – J and M v M, considered what should be the court’s proper approach to the parties’ contributions as follows : -

“38. How then is the court to approach that duty in the light of the judicial debate revealed by recent authority ?  The language of the subsection certainly does not suggest any bias in favour of the breadwinner.  Lord Nicholls could hardly have expressed more clearly or more forcefully the need to guard against gender discrimination in this as in all areas of the trial judge’s assessment.  There must be an end to the sterile assertion that the breadwinner’s contribution weighs heavier than the homemaker’s.  It is easy to criticise with hindsight and I do not mean to do so by suggesting that even in October 2001 Mr Mostyn should have had the courage of his convictions.  Perhaps more realistically his strategy was driven by the need to respond to the husband’s special contribution riposte to the case for equal division.  Hereafter there is much to be said in favour of a straightforward presentation of the homemaker’s case on this issue unencumbered by unrealistic and strategic claims to significant contribution to the accumulation of wealth.  As Robert Walker LJ succinctly said in Cowan v Cowan [2002] Fam 97 the nature of the contributions is intrinsically different and incommensurable.  Each should be recognised as no less valuable than the other.  Whilst I accept Mr Pointer’s submission that the judge has a duty to assess each and every one of the section 25 (2) criteria that bear on outcome and equally that judges of the Family Division have great expertise in making value judgments, I do not accept that the duty requires a detailed critical appraisal of the performance of each of the parties during the marriage.  Couples who cannot agree division are entitled to seek a judicial decision without exposing themselves to the intrusion, indignity and possible embarrassment of such an appraisal.  I fully agree with Coleridge J that any other approach encourages a vain endeavour to recreate historic situations, choices and failings which in the context of a long marriage can never be recaptured fully or accurately.  I share the views of District Judge Million cited by Coleridge J in H – J v H – J [2002] 1 FLR 415, 421A.  I fully agree with the views expressed by McLaughlin J in M v M 20^th December 2001.  I do not consider that the approach which has been adopted by Coleridge J amounts to an impermissible judicial stride towards a presumption of equality.  A distinction must be drawn between an assessment of equality of contribution may be followed by an order for unequal division because of the influence of one or more of the other statutory criteria as well as the overarching search for fairness.

39. A formula for the equal division of assets on divorce is justly criticised for producing crude and unfair outcomes.  It might be unfair to the one who inherited those assets years before the marriage.  It might be unfair to the one who needs all the available assets to provide a secure home for the children.  However a formula for the equal division of whatever surplus there may be having made fair provision for the assessed needs of each of the parties before the court would produce a fair outcome in many test cases.  When chairing the Ancillary Relief Working Group charged with advising the Lord Chancellor on options for reform of section 25.  I tabled a proposal for some reduction in the width of judicial discretion by adopting a rebuttable presumption of equal division of any surplus (see appendix to the report).  The proposal met with little support at the time.  However it was subsequently reflected in the Government’s proposal contained in paragraph 4.49 of the inter-departmental White Paper Supporting Families published in October 1998 (www.homeoffice.gov.uk / acu/suppfam.htm).  The Government’s publication in June 1999 of the responses (www.homeoffice.gov.uk/ cpd/fmpu/sfamr.htm) demonstrates that, although the proposal attracted relatively few responses, the vast majority of the responses were in favour. I have since consistently argued that the reform of section 25 along the lines of the Government’s proposal would be beneficial in many respects, not least in bringing statutory provisions first enacted in 1970 more into line with contemporary social values and expectations.  In the absence of legislation and given the encouragement expressed by Lord Nicholls (and more strongly by Lord Cooke of Thorndon) in White v White, Coleridge J is, in my judgment, entitled to regard the crosscheck of equality as an important duty”.

203. His Lordship then expressed his concern over the excessive use and reliance of special contribution by practitioners in the post-White cases and suggested that it remains a legitimate possibility only in exceptional circumstances when he said at p. 121 : -

                    “Special contributions

43. The absence of any legislative review of section 25 since 1984 has undoubtedly created problems for the judiciary.  (I leave aside the somewhat enigmatic amendment to section 25 (2) (g) enacted by section 66 (1) of and paragraph 9 of Schedule 8 to the Family Law Act 1996 which is not to be brought into force).  The judgments in Cowan v Cowan [2002] Fam 97 that consider the legitimacy of a departure from equality on the basis of exceptional financial contribution must be understood in the context of that case.  First the trial had been conducted before the decision in White v White [2001] 1 AC 596 and therefore decided on the basis of reasonable requirements.  On appeal it was common ground that in principle the court was free to depart from equality if the husband’s financial contribution had been sufficiently exceptional.  Both parties submitted that that issue should be remitted for determination by the trial judge. Out of a desire to achieve finality and avoid further costs we declined and ourselves made the value judgment from the evidence and findings at trial, which were of course not specifically directed to the issue.  With the advantage of hindsight it seems regrettable, given the significance subsequently attached to our judgments, that the crucial issue was not addressed at trial nor was there any argument before this court on the validity of the principle.

44. The authority of Cowan v Cowan cannot therefore be elevated nearly as high as Mr Pointer would have it.  In my judgment I based my departure from equality on five considerations, of which the special character of the husband’s contribution was but one.  Each member of the court advanced different reasons for arriving at the same result.  Those who have subsequently attempted to argue that their breadwinning contributions were special have focussed on the judgment of Mance LJ.  In his reasoning he placed considerable reliance on the Australian authorities culminating in the decision of the Full Court in Lynch v Lynch [2000] Fam CA 1353.  But a large question mark has been placed against that line of authority by the judgment of the full court in Figgins v Figgins [2000] Fam CA 688.  In Cowan v Cowan [2002] Fam 97 I offered no new approach and certainly no new principle.  As I said, at p. 116, para 41, this court could do no more than explore the boundaries by the application of the principles to be found in White v White on a case by case basis.  I recognise that the specialist professions hope for and probably expect more.  But just as this court evolved guidelines for the application of the statutory criteria approximately 30 years ago (notably of course the concept of reasonable requirements :  see Duxbury v Duxbury (Note) [1992] Fam 62), so, it seems to me, this court must adopt the same approach now that those guidelines have to a substantial extent become outdated and then prescribed by the decision in White v White.

45. Having now heard submissions, both full and reasoned, against the concept of special contribution save in the most exceptional and limited circumstance, the danger of gender discrimination resulting from a finding of special financial contribution is plain.  If all that is regarded is the scale of the breadwinner’s success then discrimination is almost bound to follow since there is no equal opportunity for the homemaker to demonstrate the scale of her comparable success.  Examples cited of the mother who cares for a handicapped child seem to me noth theoretical and distasteful.  Such sacrifices and achievements are the product of love and commitment and are not to be counted in cash.  The more driven the breadwinner the less available will he be physically and emotionally both as a husband and a father.  There is also some justification in Mr Mostyn’s emphasis on the extent to which the homemaker frequently sacrifices her potential to generate assets by undertaking the domestic commitment to husband and children.  At the same time she risks the outcome of failure and so earns her entitlement to share in the successful outcome.

46. In sum I am much more wary of the issue of special contribution than I was in writing my judgment in Cowan v Cowan.  Perhaps Nicholson CJ, who seems poised to banish the phenomenon, may have found the better path.  The circumstances set out in paragraph 43 above allow this court to re-evaluate the whole issue.  However for the present, given the infinite variety of fact and circumstance, I propose to mark time on a cautious acknowledgement that special contribution remains a legitimate possibility but only in exceptional circumstances.  It would be both futile and dangerous even to attempt to speculate on the boundaries of the exceptional.  In the course of argument I suggested that it might more readily be found in the generating force behind the fortune rather than in the mere product itself.  A number of hypothetical examples were canvassed ranging from the creative artist via the superstar footballer to the inventive genius who not only creates but also develops some universal aid or prescription.  All that seems to me to be more safely left to future case by case exploration”.

204. Bodey J, in the same Court of Appeal, agreed with Thorpe LJ’s view on special contributions when he said at p. 127 : -

“68. The recent authorities examined by Thorpe LJ further, developing the law both here and elsewhere since the decision under appeal, which we (unlike Connell J) have had the advantage of considering, make this point not only the more forcefully but, in my view, conclusively.

69. I agree that it is not possible to define once and for all, by way of some formulaic label, the precise characteristics of the fortune-maker (or fortune-making) required in the paradigm case such as this, in order that when the proposed distribution of the resources is checked against the “yardstick of equality”, the fully contributing homemaker should receive a lesser share of the wealth than the fortune-maker.

70. However, those characteristics or circumstances clearly have to be of a wholly exceptional nature, such that it would be very obviously be inconsistent with the objective of achieving fairness (i.e. it would create an unfair outcome) for them to be ignored.

71. I do not accept Mr Pointer’s submission that to state the position in this way represents an “impermissible judicial gloss” on one of the section 25 statutory criteria (i.e. the requirements to consider the parties’ contributions).  It is rather to apply the guidance of the House of Lords in White v White [2001] 1 AC 596, recognising that where – in the paradigm case like this – the homemaker has given of her (or his) utmost, then any weighting of the impact of contributions in favour of the fortune-maker is almost always going to be unfair, since ex hypothesis the pure homemaker neither has the opportunity to create wealth, nor in the nature of things the ability to have any meaningful comparative “value” accorded to her (or his) particular contributions to the welfare of the family.

72. I conclude that, as the law has now been further developed, such wholly exceptional characteristics and circumstances as are referred to in paragraph 70 above did not exist in this case”.

205. Finally in Miller and McFarlane, Lord Nicholls found it necessary to comment again on the point of contribution, in particularly the so called “special contribution” which there seems to be a growing tendency for parties to rely on in the post-White era : -

“66. A point of a similar nature concerns the approach to be adopted when evaluating the contributions each party made to the welfare for the family.  Apparently, in this post-White era there is a growing tendency for parties and their advisers to enter into the minute detail of the parties’ married life, with a view to lauding their own contribution and denigrating that of the other party.  In the words of Thorpe LJ, the excesses formerly seen in the litigation concerning the claimant’s reasonable requirements have now been “transposed into disputed, and often futile, evaluations of the contributions of both of the parties’; Lambert v Lambert [2002] EWCA Civ 1685; [2003] Fam 103, 117, para 27.

67. On this I echo the powerful observations of Coleridge J in G v G (Financial Provision : Equal Division) [2002] EWHC 1339 (Fam); [2002] 2 FLR 1143, 1154 – 1155, paras 33 – 34.  Parties should not seek to promote a case of “special contribution”, and thus as a good reason for departing from equality of division.  The answer is that exceptional earnings are to regarded as a factor pointing away from equality of division when, but only when, it would be inequitable to proceed otherwise.  The wholly exceptional nature of the earnings must be, to borrow a phrase more familiar in a different context, obvious and gross.  Bodey J encapsulated this neatly when sitting as a judge in the Court of Appeal in Lambert v Lambert [2003] Fam 103, 127, para 70.  He described the characteristics or circumstances which would being about a departure from equality :

“ …… those characteristics or circumstances clearly have to be of wholly exceptional nature, such that it would very obviously be inconsistent with the objective of achieving fairness (i.e. it would crease an unfair outcome) for them to be ignored”.

206. In the present case as I have already said, I have absolutely no doubt that the Husband has, like the Wife, devoted the best years of his life working very hard for very long hours everyday to bring huge success, success which I believe beyond any of the parties’ expectations, to his business and financial rewards to his family, but I am unable to see any evidence to justify putting his contribution at such an exceptional or extraordinary level that it is entitled to special recognition as in the cases of Lambert v Lambert and Cowan v Cowan [2002] Fam 97.  In my judgment both parties have made their full contributions in their respective role during this “rags to riches” marriage.

207. The next major issue between the parties is the present state of the Husband’s business which he argues will have a serious impact on his ability to make financial provisions to the Wife beyond those proposed by him.  Before I do that, it would be appropriate to up-date the Husband’s income and expenditure since the filing of his first Form E in early 2004.

208. In his 2^nd Form E (A4 : 1573) filed in March 2006, the Husband put his income at more or less the same as before at about $600,000 from his companies, but a much lower sum of $55,000 from rental income, thus giving him a total sum of only $655,000 per month, some $150,000 less than before.  His monthly expenditure was stated also at a somewhat lower amount at about $734,000, but it does not appear to include his alleged monthly maintenance of $50,000 for Ms Chau.  In any event this shows a monthly deficit of at least $80,000, and much more if one is to include the maintenance for Ms Chau.  In addition he claims to have been repaying a sum of $100,000 per month to the T Group of companies since March 2004 towards his debt due to the companies which stood at $41.96 million on 31^st August 2005 according to the Deloitte Report and about $44 million at the time of the trial.  Having dealt with the Husband’s personal financial situation, I shall now turn to the state of his business.

The Husband’s Business

209. I would like first to refer to the part of the Deloitte Report which dealt with the last item of the Husband’s expenditure mentioned above, his alleged monthly repayment to the companies towards his debt owed to them under item of “Amount due from a director”.

210. The Report confirmed that the amount is the one due from the Husband to the TPCL Group, and that from the ledger account “current account with directors” various personal expenses of the Husband were paid for by the TPCL Group and were recognised as an amount due from the Husband.  It also shows that he had made various loans to the TPCL Group which have been partially settled.

211. Despite the huge amount of the debt due from the Husband, the Report noted that, not surprisingly, that Deloitte had not been provided no information has been provided which might raise concern over the recoverability of the amount, as Ms Yip for the Wife has argued, because the Husband is in full control of the companies.  The Report did also note that a buyer would, to the extent possible, seek repayment of this amount, possibly net of any amount due to the Husband, or would adjust the purchase price accordingly.  It is of course not contemplated at all by the Husband, or for that matter by the Wife as well, that the business be sold.

212. As noted earlier, the Husband has been receiving a monthly consultancy fee from TP China through R International since the expiration of the original consultancy agreement on 31^st March 1999, well in excess of the original agreed monthly sum of $155,000, i.e. at $375,000 per month plus the same bonus and housing allowance.  According to the Husband’s accountant Mr Pun, no new consultancy agreement had been entered into because of the ongoing dispute between the Husband and the minority shareholder the Fong over his huge debt due to TPCL since 1999 and the Fong’s refusal to sign the annual audited reports.

213. It is the opinion of the Deloitte Report that the Husband was nevertheless entitled to a reasonable payment for the services he provided to the T Group as no salary or director’s remuneration has been drawn by him, but given that no new consultancy agreement has been entered into between the T Group and R International, and that there has been no board resolution on any increase to the consultancy fee paid to R International, Deloitte have assumed that R International would continue to be entitled to the same amount of consultancy fee as specified in the original agreement, which amount Deloitte have noted to be consistent with the amount paid for director’s remuneration in comparable listed companies.

214. As consultancy fees have continued to be incurred by TP China for periods subsequent to the year ended 31^st March 1999, but the amount paid has been in excess of the one specified in the original agreement, Deloitte have been informed by Mr Pun that there is a possibility that R International and / or the Husband may be required to repay the excess amounts paid, calculated at $18.8 million up to 2006, which has been taken into account by Deloitte for their valuation of the companies.

215. As noted before, the Wife does not dispute the taking into account of this excessive amount of consultancy fees for the purpose of the valuation, but she believes that this $18.8 million due to TP China, the same as the Husband’s debt of $44 million due to TPCL, will never have to be repaid by the Husband as he is the sole controller of the entire T Group of companies to the exclusion of the minority interest.

216. The Husband’s case is that his continuous huge borrowing from the companies had caused severe objections from the Fong, while the monthly salary paid by TP China to the Wife had also caused much disquiet from them, so much so that the Fong have since 2003 refused to sign the companies’ audited accounts, and that with great pressure from the Fong, he has been repaying his debt due to the companies of $44 million by monthly instalment of $100,000 each.

217. The Wife however argues that the evidence that has been ventilated in fact does not support the Husband’s case but instead reinforces hers.  Firstly, the evidence-in-chief of the Husband’s accountant Mr Pun that he never heard of the Fong’s comments about the Husband’s borrowing from the companies, and that although the Fong’s accountants had asked about the salary paid to the Wife, there was no follow-up, all contradict the Husband’s case.

218. Secondly, she argues, that the evidence appears to show that the Fong had had no dealings with the companies since 1999, it is therefore hardly surprising that they refused to sign the audited accounts and withdrew their bank guarantee, given the ways the Husband has exploited and ignored them over the years.  Their official withdrawal of their guarantee in 2004 / 2005, the Wife argues, in fact marks the final step of their “withdrawal” from the business rather than an assertion of their existence or influence.  Thirdly, the Wife argues that the following factors support a strong inference that the Husband has ignored the minority interest for all intents and purposes : -

(i) that no dividend had ever been distributed during the years when the business was making a lot of profits;

(ii) the phenomenal “borrowings” by the Husband, amounting to $44 million, which have over the years hoovered the bulk of the profits of TPHK and TP China;

(iii) the phenomenal “financing” by TPHK and TP China for the Husband or his family’s sole benefit over the years such as purchasing of House 28, all the expensive cars, salary to the Wife who did not work in the business, payments for the parties’ personal expenses, excessive payment of consultancy fee, tax fee, since at least 1999, the free-rein manipulation of funds within the Group by the Husband, and his appointment of his son and son-in-law as his own successors to the business.

219. All these evidence and factors, the Wife submits, can only be consistent with the Husband being the sole controller of the entire T Group of companies to the exclusion of the minority interest, and that once the facade has been pierced, she argues, the Husband’s alleged cash flow problem and financial difficulties have all become empty rhetoric, and that his utilization of his personal overdraft to repay $100,000 each month to TPCL was simply pulling wool over the eyes.

220. I agree with the Wife that the evidence before the court supports a strong inference that the Husband has for many years used the profits generated by the T Group by means of “borrowing” from the companies to the sole use and benefits of himself and his family to the exclusion of the minority interest, which is in fact a very effective means of drawing on the profits without having to share with the minority shareholder, which is not insignificant at almost 24% over the years, if dividends were to be declared in the normal way.  This is reinforced by the apparent non-action by the Fong all these years until 2004, where these proceedings were re-activated, by a mere refusal to sign the audited accounts, while the Husband’s alleged repayment of the $44 million debt by monthly instalment of $100,000, which would take more than 36 years at this rate, and the fact that he has continued to “borrow” heavily from the companies, appear both unrealistic and nonsensical.  His argument that he will have to repay his debt of $44 million to TPCL and the excessive consultancy fees of $18.8 million to TP China is in my judgment built on sand and unsustainable.

221. Beside the requirement to repay his debt and excessive consultancy fees to the companies, the Husband has also presented a pessimistic picture of his business, claiming significant deterioration since the 1997 economic crash, which can perhaps be better gleaned from the Deloitte Report under the title of “Future prospect of the TPCL Group (p. 8 of Appendix 6)”, which I quote herein below : -

                    “Future prospect of the TPCL Group

I understand from Pun that the reason for the significant deterioration in result for 2003 and onwards was due to the decrease in the sales made to its major client, Artapower.   Pun advised me that Artapower has its own printing facilities as a result of its merger and acquisition activities.  Based on the information provided by Pun, net sales to Artapower have decreased from 55% of total net sales in 2000 to 35% of total net sales in 2003, and further decreased to 22% in 2004.  The net sales to Artapower were only around 7% of net sales in 2005.  It is expected that no further sales will be made to Artapower from 2006 onwards.

The TPCL Group was able to attract some new clients such as Hallmark, thereby mitigating the loss suffered from the decrease in sales volume to Artapower, and increase sales to existing customers, such as Mattel.  However, according to  Pun, the types of orders received from these customers have changed from the TPCL Group’s traditional business (printing services such as cards, manuals etc.) to the production of gifts / toys sets such as Monopoly.

These gifts / toys sets contain components which are non-paper products and require the TPCL Group to purchase these components from external vendors designated by the customers.  The TPCL Group receives a handling charge of around 3-5% for the sourcing of these components.  This has therefore led to a large increase in the cost of goods sold for the TPCL Group for 2005 despite a much smaller increase in the turnover.

According to the sales forecasts for 2006 to 2009 (which have been prepared for the purpose of this valuation exercise), the sales for the TPCL Group is expected to remain fairly consistent.  I was advised by Pun that the main reason for this is that many of the existing customers are large global customers who demand tight guidelines to be followed by their vendors before the placement of new orders or before the volume of existing orders with a particular vendor increases.  The difficulties faced by the TPCL Group in maintaining these existing customers or in obtaining further sales orders from them are according to Pun :

a. the factory is old and its condition did not satisfy some of the requirements during the vendor audit conducted by some of the TPCL Group’s customers, such as Hallmark, which conducts such audits twice a year.

b. the factory facilities do not satisfy the ISO14000 Environmental Management System Standard.

c. The customers demand that vendors employ new technology, and therefore place pressure on the TPCL Group to continuously invest in new machinery and equipment.  The TPCL Group’s last piece of new machinery was purchased about 3 years ago.

In order to overcome the difficulties noted above, the TPCL Group would have to incur significant capital expenditures.  However, Pun advised that there is currently a dispute between the shareholders of TPH (i.e. between the Petitioner and the minority shareholder) and that neither parties are willing to inject further capital into the business.

Based on my research on Hong Kong listed companies in the printing industry, I note that analysts’ view on the outlook of these companies is potential for growth due to (a) the outsourcing of printing orders to Hong Kong printers by multi-national companies as a result of cheap labour in the PRC, and (b) the growth in the consumption of printing products in the PRC.  However, it appears that the TPCL Group would be unable to benefit from this growth unless further capital investments are made.  In addition, I have been informed by Pun that the license currently held by TP China is for export products and therefore it is currently unable to sell its products directly to companies in the PRC.

Based on the above, it is my opinion that the TPCL Group is likely to continue to incur losses, even after taking into account the adjustments noted above in calculating the normalised earnings of the TPCL Group and that it is unlikely to achieve maintainable positive earnings in the future ……”

222. The Wife firstly does not agree that business had fallen since the 1997 economic crash as alleged by the Husband by pointing out that all his major investments and luxurious items such as House 28, the Hillsborough property and the Scenery Garden flat as well as all the expensive cars mentioned above were acquired by the Husband post – 1997, where the total cash involved for the purchase of the 3 properties alone was already some $24 million, all of which she argues certainly do not support the Husband’s gloomy view of his business, and which she says, was also not supported by the actual figures when in fact the business was going up since 1997.

223. The Wife first relies on the Husband’s letter to her dated 15^th May 1997 (A2 : 630) in which he said that business was growing fast with a volume of over $10 million per month.  The Husband agreed this was correct.

224. Secondly, the Deloitte Report shows that the business was still going up to 2002 (p. 1 para 1 and p. 7 para 25 of Appendix 6).

225. The Wife agrees that the company did begin to exhibit some difficulties since 2003 as a result of the loss of one big customer, Artapower which used to generate 50% of the sales turnover for the company, but since its acquisition by a listed company in the U.S. with an in-house printing service, their orders to the company have stopped.

226. She argues that the evidence of  Pun reveals however that the loss of Artapower was quickly replaced by new and much up-graded multi-national customers such as Mattel and Hallmark, and that within 2 years, these 2 customers have fully absorbed the previous 50% sales volume of Artapower.  Translated into actual figures, she argues, the size of business exceeded $40 million, a tremendous volume, she says, for any business, and that this has happened without the installation of the $12 million printing machine and modernization of plant and equipment that  Pun so passionately called for in his evidence.  This, the Wife says, is indeed a remarkable achievement for any business, let alone a business which is said to be going through “trying” circumstances, an indication of the ups and downs of business, and the fact that the Husband’s has survived the last 36 years is an indicator of the remarkable spryness and potential of his business.

227. Furthermore, the Wife argues, that notwithstanding the fall in the gross profit margin, fluctuations in turnover, and book deficits, the business has in fact consistently delivered net cash inflow from its operation, from $8.2 million in 2000 to $3.6 million in 2005, with a total of $46.6 million in the past 6 years.  This positive cash inflow, the Wife says, has continued to support the Husband’s property investments and expensive life style, at an average performance worth of $7.8 million, which historical trend directly contradicts the Husband’s hopeless projection of the future which delivers an annual deficit of some $10 million over the next 4 years.

228. One must not forget, the Wife says, that the net cash had continued to come in after the company had paid all the personal expenses of the Husband and his family, hire-purchase for the swish cars, huge monthly rental for House 28, and the expenses of the business, as well as the excessive consultancy fees to the Husband at $4.6 million to $5.5 million per year between 2000 and 2005.

229. Another indication that the business is under control and is actually picking up again is, according to the Wife, that the annual sales turnover has increased from the bottom in 2004 of $77.2 million to $81.59 million in 2005 (Deloitte Report p. 1 para 1 of Appendix 6).

230. It is true that the audited accounts of the group produced by the Husband recorded a loss since 2003 (Deloitte Report p. 1 para 1 of Appendix 6).  However, after adjustments have been made by Deloitte mainly in relation to the deductions from the excess consultancy fees drawn by the Husband and his personal expenses which the company was paying, the loss only began in 2005 in the amount of about $3.5 million (Deloitte Report p. 7 para 25 of Appendix 6).  The Wife believes that had the Husband been minded to slightly reduce his excessive drawings from the company, the business would in fact be churning profits.

231. This the Wife says, also begs the obvious question :  If, as the Husband said, business had started to turn down since 1997, some 9 years ago, why did he do none of the things he is now suggesting to save the business, and waited only until now, when it is time to pay her ?

232. The answer is simple, the Wife says.  The Husband has simply played up the pessimism caused by the natural flow of ups and downs in a normal business operation, and used it in his favour so as to reduce her claims.

233. I agree with the Wife that the evidence does not support the Husband’s case that business has been deteriorating since the 1997 economic crash, and that losses started only to appear from 2003, caused no doubt by the decrease in sales to Artapower, but also by the Husband’s continuous heavy drawings from the companies as well as his excessive consultancy fees.  The loss of such a major customer of Artapower, however, has been quickly and fortunately replaced by new significant customers in Mattel and Hallmark which appear to have taken over the sales volume of Artapower albeit at a larger increase in the costs of goods which contain non-paper products purchased from external vendors designated by the customers.  As pointed out by Ms Yip for the Wife, it is natural for there to be ups and downs in business, and in my judgment the Husband’s view of the future prospect of his business is indeed unreasonably pessimistic.

234. I do however accept that it is only normal and natural, and in this case may well be necessary, for T to modernize their machines, facilities of the factory and warehouse, not just to stay abreast with the changing times and possibly the challenges brought by globalisation, but also to meet the high demands of international brand names such as Mattel and Hallmark, which, according to Pun, requires as much as $10 million just for a new printing machine, and hence the Group will need significant capital spending in the foreseeable future, in addition to the requirement to acquire a licence for domestic sales in China so as to enhance business growth.  This will of course lead to the next issue : the question of cash flow of both the Husband and his companies.

235. It is Pun’s evidence that although the TPCL Group would have to incur significant capital expenditure, as there is currently a dispute between the Husband and the minority shareholder, neither parties were willing to inject further capital into the business.  It is however also in Mr Pilbrow’s opening for the Husband, as pointed out by Ms Yip, that it is the wish of the Husband that the business should survive and, if possible, he wishes to provide such capital injection, and at the same time to meet any award to the Wife by the court without “killing the golden goose”.

236. Apart from contradicting his own case, Ms Yip submits, the main theme of the Husband’s case is that he cannot pay much to the Wife or his open-offer is the maximum that he can pay because money is needed to turn the business around.  But according to Pun’s proposal (C2 / 672) which suggests an average net cash out-flow deficit of almost $10 million from the operation each year, totalling $40 million in the next 4 years, and that from his projection, notwithstanding the injection of capital, there would be sustained losses from 2007 onwards, mounting to $39.2 million in 2009.  On this basis, Ms Yip argues, the business in fact would have died by 2007, with a cash outflow of $10 million.  In which case, Ms Yip says, as Pun admitted in cross-examination that his projection envisaged the payment of Wife by the Husband involving the redemption of the Estoril Court property, but by 2007 only the Bank of China’s facility line worth of $11 million would still be available.  No bank, or any sensible commercial entity, Ms Yip argues, would still continue to lend money to the business, if Pun’s projection is to be accepted.

237. That, according to Ms Yip, was just too bleak to be true, nor was it consistent with the historical record of the business, which is that notwithstanding the “trying” circumstances, the business has never failed to generate cash to support the existence of the business as well as the luxurious living of the Husband, in particular after the injection of capital, the forecast must then factor in the favourable circumstances which a business should legitimately expect, such as increased cash flow, reduced expenses, increased sale turnover, and increase profit margin, which  Pun, Ms Yip says, has simply failed to do so.

238. One of the main difficulties the Husband claims he is facing is in raising finances to meet the Wife’s claims and at the same time for capital injection into his business.  Since there is insufficient liquid assets available, and barring the possibility of selling some of the properties, the only way, and the parties seem to be in agreement on this, is to borrow from banks by using and / or raising their facilities on the properties as collaterals.

239. With the losses recorded in the audited accounts over the last few years, however,  Mr Pun’s view is that lending banks are likely to become more cautious to requests for further finance, and as security or collaterals for the same can only come from the properties in the name of the Husband, which in turn limits his ability to realize funds to meet the claims of the Wife.  Hence Mr Pun has recommended to the board of the companies that the maximum lump sum which the Husband can safely raise to meet the claims of the Wife is $5 million if he is going to be in a position to cause the company to transfer to the Wife the unencumbered title to the Estoril Court property.  This is therefore the proposal which the Husband has put forward by open letter to the Wife (C2 : 667) which Mr Pilbrow submits as appropriate in all the circumstances

240. At present there are 2 lines of banking facilities available to the Husband’s companies : -

(i)          Bank of China                                                               

Company	Amount		Facilities
TPCL	$	500,000	OD
	$	500,000	LC
TPHK	$	2,000,000	OD
	$	500,000	LC
TP China	$	2,000,000	LC
GP	$	500,000	OD
	$	5,000,000	LC
		____________
	$	11,000,000
		===========

                                                                          

Collaterals	Value
6 Industrial units	$	8,900,000
Shiu Fai Terrace	$	7,100,000
Hillsborough	$	12,000,000
Convention Plaza	$	5,000,000
		____________
Total :	$	33,000,000
		===========

 

241. There is however an outstanding mortgage loan of $2 million on the Hillsborough property while the Convention Plaza property has been used to secure a personal overdraft line for the Husband of $6.5 million, of which about $6.3 million has already been utilized.  Taking these into account, the Wife says that there would still be as much as $24 million, or at a conservative estimation of 70% thereof, i.e. almost $17 million in net equity from these collaterals which the Husband can utilize.

(ii)  Hang Seng Bank                                                             

Company		Amount	Facilities
TP China	$	5,000,000	OD
	$	5,000,000	Term Loan
	$	10,000,000	LC
Total :	$	20,000,000 ========

242. There is only one collateral, i.e. the Estoril Court property with a market value of $24 million.  The evidence is that the facilities have been fully utilized, and in fact over drawn to $21 million.

243. Given the fact that the parties are agreed that the Estoril Court property should be transferred to the Wife free of all encumbrances, the Husband says he will have to come up with $21 million to discharge the various facilities to Hang Seng Bank, plus the lump sum of $5 million which he has offered for the Wife, a total sum of $26 million is required, which is where the Husband claims his difficulty lies, as even the Bank of China’s line of facilities is to be increased and utilized to its maximum, it would still appear to be insufficient.

244. The Wife, however, argues that the most valuable property, House 28, with a net worth of $43.5 million, being $63 million less the outstanding mortgage of $19.5 million, as well as the Sceneway Garden property at $3.3 million with no outstanding mortgage, have been conveniently left out by the Husband, and that although Pun did say that House 28 was “immovable” because of the mortgage relationship with the Bank of China and that if it were to be used as part of the finance, the bank would have to re-structure the facilities offered to the Group, the Wife argues that with a net worth of $43.5 million, it would be sophistry to suggest that House 28 should not be used.

245. The Wife therefore suggests that by putting all the available properties for re-structuring save for Estoril Court, the Husband will have a net equity of $42.5 million for his use to meet both her claims and at the same time provide proper capital injection into his business (p. 34 – 35 of Ms Yip’s Closing Submission).

246. The reality is, Ms Yip submits, there is still an outstanding equity of $42.5 million which can be used after the Estoril Court property has been transferred to the Wife free of encumbrances.  It is therefore incredible for the Husband to say he can only spare $5 million for her.

247. Any argument that banks may not be willing to lend or provide facilities anywhere close to this amount, Ms Yip submits, is equally unbelievable, as the Hang Seng line is a self-evident example since it has permitted use of facilities up to $21 million on the $24 million Estoril Court, which is as much as 87% of the value of the property, and that with the kind of collaterals provided by the Husband and the good relationship and trust he and his group of companies have enjoyed with banks such as Hang Seng Bank, I agree with Ms Yip’s argument which is indeed both logical and persuasive.

The Other Factors

248. The remaining factors such as the parties’ age, respectively at 55 and 60, or the duration of the marriage, which lasted at least 30 years and must be regarded as lengthy by any standard, are not controversial, nor am I aware of any possible physical or mental disability of the parties which should be influential upon the court.  I however have to deal with one last matter raised by the Wife before arriving at my conclusion : possible litigation misconduct on the part of the Husband in these proceedings.

Litigation Misconduct

249. Ordinarily, litigation misconduct should be more appropriately dealt with by costs, but the Wife says that its relevancy in this case is more profound as she believes that the Husband has conducted a campaign of unfairness against her and his litigation misconduct is an expression of this agenda, which includes the way he “washed the dirty linen” in the proceedings, and the way he disclosed and developed his case, so much so that she argues that if the court finds his litigation conduct so gross and inequitable to disregard, the court is entitled to exercise the discretion (see 3.61 Jackson’s Matrimonial Finance and Taxation, 7^th edition).

250. Ms Yip, however, submits that in principle the Wife does not seek to enhance her share by relying on the Husband’s litigation misconduct, if any, but seeks to argue that the exposure of litigation misconduct by the Husband serves to show that, even if any misconduct by the Wife can be established, in light of his own litigation misconduct, it would not be inequitable to disregard her alleged misconduct : one sets off against the other.  However, in view of my earlier findings on the issue of conduct, I do not think it would be necessary to deal with the issue of litigation misconduct here until the question of costs is considered, which I understand that there will be substantial argument at a later occasion.

Conclusion

251. For the reasons noted above the Husband’s proposal of a lump sum of $5 million for the Wife, in addition to the transfer of the Estoril Court property unencumbered to her will not, in my judgment, achieve a fair outcome.  In fact, it will not even be sufficient, together with the Wife’s own assets, to meet her reasonable needs or requirements under his Duxbury calculations, when he expects that her entire $10 million worth of assets to be utilized, but of which only $6 million are liquid assets for the said purpose.

252. As for the alleged over-payment of maintenance pending suit to the Wife since February 2004 which the Husband accounts for his offer of only $5 million instead of $6 million, there is no evidence to suggest that the Wife did accumulate any such over-payments, which she denies, that I can with any confidence include as part of her resources to meet her future needs and requirements, and if indeed there were any, it would have been already included in her total assets.

253. If the lump sum for the Wife should not be $5 million, or even $6 million for that matter, then how much should it be ?  I have already found that her reasonable needs and requirements to be between $150,000 and $200,000 per month.  Even taking the lower end of that range, at $150,000 per month, may require almost twice as much as the Husband’s Duxbury calculations at around $30 million in cash, which is certainly beyond the Husband’s current ability for that purpose, even with the full utilization of the net equity of his House 28 and the Sceneway Garden property.

254. Ms Yip has in her Closing Submission offered several options, 2 of which are, as she has conceded, quite extreme, including the sale of the Husband’s most valuable investment, House 28 in one option, and in the other the sale of all his properties, neither of which can be said to be practical or attractive to the Husband, and will no doubt cause too much of a tremour to the current financial structure that he and his Group of companies have with his bankers.

255. The remaining option, as suggested by Ms Yip, to swap House 28 for the Estoril Court property as a collateral to Hang Seng Bank for re-structuring of banking facilities to the Husband, will however not only enable him to get the necessary funding to allow a clean transfer of the Estoril Court property to the Wife, but also to pay her a proper lump sum, or a substantial part thereof, with the balance to be easily met from his other resources such as his cash, shares and other means.

266. It is submitted, by Ms Yip, that these are not the only options, and no doubt there are others, which will enable each of the Husband and the Wife to start their new life with what they want to achieve for the rest of the lives, but some re-structuring or re-organization of the financial state of affairs of the Husband is all that is required to achieve that end.

267. From the Husband’s point of view, the lesser the changes means lesser disturbance to the settled and regular order of his life and in particularly his business, the better.  It is for him to decide which options will be the most suitable or the least disrupting.  I accept that all these re-structuring will take time, and that they should not be all just for the purpose of meeting the Wife’s claims, but also to meet the financial demands for improving and modernizing the various aspects of the Husband’s business as suggested by his accountant Mr Pun, while at the same time will not impose too much financial strain on him and his business that may, as Mr Pilbrow has submitted, kill the golden goose.

268. In conclusion I believe that a fair result will be achieved by a lump sum of $15 million by the Husband to the Wife, in addition to the unencumbered transfer of the Estoril Court property to her, which will give her a total asset of almost $50 million including her own, which not only provide her with a suitable and comfortable home and a life style not less than the standard which she used to enjoy as well as security for her future, but also one which should be well within the Husband’s means and ability to do so if given some time to organize a re-structuring of his finance, bearing in mind of the further burden and liabilities to him as a result of having to raise not just the lump sum for the Wife but also to discharge the present outstanding facilities incurred on the Estoril Court property, as well as for the various necessary improvements and modernization of his business, which will no doubt be alleviated by the cessation of the current maintenance pending suit of $200,000 per month upon the lump sum payment to the Wife, and the fact that what remains of the assets for the Husband, a substantial part of which, i.e. his shareholdings in the T Group, is not liquid, and is not meant to become liquid, if he is to continue with his business to support himself and Ms Chau.

269. This arrangement will, as suggested by Ms Yip for the Wife, enable each party to start their new life with what they want to achieve for the rest of their lives, and at the same time achieve fairness between them on the facts, evidence and circumstances of this case.

270. Given the fact that financial re-structuring will have to be carried out between the Husband, his companies and his bankers, I do not at this stage propose to set too rigid a time table for him to carry out the terms of the financial arrangements I have concluded above, suffice it to say that it should be done as soon as reasonably possible, while the current maintenance pending suit shall of course continue until the lump sum has been paid to the Wife.

271. Lastly, as I have noted above, it would be the Wife’s intention to argue on the Husband’s litigation conduct, and from the plethora of affidavits filed by the parties concerning discovery prior to the trial, as well as the costs of the Wife’s application for maintenance pending suit which have yet to be determined but reserved to be argued after the ancillary relief hearing, I understand that the parties wish to be heard on the full spectrum of costs with substantial arguments, I shall therefore not make any order as to costs, not even order nisi at this stage and await to hear the parties at a later date.

272. My orders are therefore : -

1. The Petitioner Husband shall transfer or cause to be transferred the Estoril Court property to the Respondent Wife free of all encumbrances;

2. The Petitioner Husband shall pay to the Respondent Wife a lump sum of $15 million, whereupon the maintenance pending suit shall cease;

3. Liberty to apply.

273. I must not end without expressing my gratitude to both Counsels for the parties for their most valuable assistance throughout the hearing of what must be a very difficult case in both the amount of factual issues and in particularly the various laws and principles involved.