AB v. MA

FCMC6310/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO 6310 of 2015

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JUDGMENT
(ANCILLARY RELIEF)

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1.  This is the ancillary relief application of the Petitioner Wife, now aged 49, against the Respondent Husband now aged 50, upon the dissolution of their 20-year marriage essentially for an equal sharing of their matrimonial assets, of which she has put in excess of HK$150M before taking into account of what she believes to be very substantial unvested shares and benefits under the Husband’s employment package as CEO of A3, a multinational xxxxxxxxx company publicly listed in London, for the period of 2014 to 2016 which according to her would be worth as much as another HK$56M and would therefore bring the total assets for sharing to about HK$200M, and for monthly spousal maintenance pending full payment of her share of those benefits as and when they become vested by the end of 2019, as well as proper financial provisions for their 3 daughters now aged 18, 15 and 12 respectively.

2.  The Husband however insists that this is a needs case instead of a sharing case, with the needs of both parties to be catered for by both of their own earning capacity and their marital assets which he puts much less at just over HK$100M excluding those unvested benefits under his employment earned after their separation, according to him in January 2013, as post-separation accruals, upon which the yardstick of equality shall apply to achieve a clean break situation, and with the interests of their children as the main ongoing priority and whom he will continue to maintain generously.

3.  Clearly at the heart of the parties’ dispute is the huge gulf in their inclusion and valuation of the matrimonial assets in their respective Schedule of Assets, in particularly as noted above over the Husband’s potential remuneration and benefits under his appointment as CEO of A3 in December 2012, whether such benefits including his long term incentive plan, bonus schedule, shares options and pensions under his employment collectively called the A3 Benefits should be treated as post-separation accruals and hence according to the Husband excluded from the matrimonial assets but disputed by the Wife who insists that their marriage did not end until much later in about May 2014, or whether such benefits should all be taken into account for the purpose of sharing as proposed by the Wife, and if so in what proportion or amount and when they should be paid.

4.  There are of course also many other issues such as those over the Wife’s own earning capacity and her future inheritance from her parents of which the Husband believes to be substantial, or as to various cash transactions made by the Husband prior to and after separation including more than US$1M to his parents which the Wife argues should be added back as unjustified or unaccounted for by the Husband, or the exact date of their separation which according to the Husband will be relevant to any sharing of his post-separation accruals, as well as litigation conduct raised by both sides with the Wife accusing the Husband of failure to make full and frank disclosure as to his A3 Benefits as well as his many other dealings in various investments and trusts assets, and as a result has unnecessarily and unfairly added to their legal costs, while the Husband blames her for having “lost sight of the wood for the trees” by insisting identification, auditing and then division of almost every last cent accumulated or spent during their marriage, and for being obsessed with the minutiae and an unquenchable thirst for information however unnecessary and unproductive through the court which has been unduly difficult, prolonged and expensive.  

5.  Expensive indeed, as their combined legal costs, I am told, have exceeded HK$42M in total, a “horrendous” amount as described by the Husband, and in my view a truly mind-boggling amount incurred in just over 2 years of litigation with no other major battle ground between the parties than their financial disputes, and staggeringly disproportionate even to the highest case that can be put forward by the Wife as to their total assets, of which the parties have included in their respective Schedule of Assets of more than 140 items which were updated and valuated constantly throughout the proceedings, and the fact that the trial bundles had totalled 19 with almost 7000 pages of financial materials and information, with almost as much materials amassed in correspondence between solicitors in their own correspondence bundles, not to mention transcripts of numerous conversations between the parties taped by the Husband during the marriage, while both parties had seen fit to retain separate legal teams in London as well including senior silks, all of which had no doubt combined to bring their legal costs to such an insane amount, of which no doubt I will have more to say later in this judgment, but meanwhile it would be necessary to first set out the relevant background of the marriage which are by and large non-controversial between the parties save for the exact date of their separation and the circumstances surrounding it.  

Background

6.  Both parties were born and raised in New Zealand, with the Husband coming from a very modest background while the Wife’s family is said to own substantial assets xxxxxxxx xxxxx xxxxx xxx xxxxxxxxx in New Zealand. They met in 1992 and after dating for 2 years they married in 1994. At that time the Wife was working for a major accounting firm where she later became qualified as a Chartered Accountant, while the Husband was then with A1 Xxxxxxxx New Zealand where he later became a senior executive.

7.  After the marriage the parties purchased a four-bedroom house in Wellington New Zealand for their home and continued to work until the birth of their eldest daughter D in 1998 when it was agreed that the Wife should give up work to stay home and look after the infant.

8.  In 1999 the Husband accepted a promotion from A1 New Zealand to work in Hong Kong as Chief General Manager of Sales and Marketing of A1 Asia Pacific and accordingly moved to Hong Kong in July 1999, followed by the Wife with their daughter in September 1999 after selling their house in New Zealand.  

9.  While in Hong Kong the Wife remained as a full-time housewife and mother, and gave birth to the two younger daughters respectively in 2002 and 2005, with the family making their home in a rented 4-bedroom property in Stanley.   

10.  In 2003 the Husband was promoted as CEO of A1 China Region, and with increased wealth and income, he decided to set up 2 family trusts for the purpose of succession and tax planning for the benefit of his family, with the first one known as W Trust in 2005, and the second one as W Discretionary Trust in 2006 (Collectively known as the W Trusts), to hold assets by two BVI companies with his sister JS in New Zealand and GL being the husband of the Wife’s cousin who is a solicitor in Hong Kong, appointed as the trustees and directors of those two BVI companies, and with the parties and their children named as the beneficiaries.

11.  Initially the assets injected into the W Trusts when they were first settled were not of significant value, but the Husband had over the years injected further funds into the Trusts, with the assets now held by the W Trust include certain hedge funds, an account with BEA Hong Kong, a  Xxx Xxxxxxx Xxxxxxxx Xxxxxx Super Trust Fund and shareholding in a company known as Wxxxxx Security Group Ltd, while the W Discretionary Trust holds essentially the sale proceeds of certain Australian property and a boat. It is common ground that total value of the W Trusts now stands at more than HK$50M.   

12.  In 2007 the Husband joined A2 Xxxxxxxxx Hong Kong as Chief Operating Officer and was later promoted to Group CEO and President in 2009. However, following the global financial crisis his employment with A2 ended upon his resignation in July 2010 when he took garden leave. In January 2011 he received a total pay-out from A2 of more than US$12M (HK$93.65M) in cash and stock, putting his total remuneration for his 4 years of employment at A2 in excess of US$18.9M before tax.

13.  In April of the same year the parties incorporated a company in New Zealand known as DXX Holdings Ltd as equal shareholders to invest in xxxxxxx quota in New Zealand.   

14.  For the next 2 years the Husband remained unemployed, and in July 2012 the family downsized from their Stanley home to a serviced apartment in Parkview at Tai Tam.   

15.  In November 2012 the Husband accepted an offer from A3 in London as Xxxxxx CEO at a basic salary of £980,000 per annum plus bonuses and various other benefits including share options and participation in the A3 Deferred Bonus Plan (“ABP”) and Long Term Incentive Plan (“LTIP”) as part of his A3 Benefits, the details of all of which no doubt I will have more to say later in this judgment, as it will become apparent that they were to be right at the heart of this litigation between the parties.  

16.  In January 2013 the Husband moved to London by himself to start his new job with A3 while the Wife and children remained in Hong Kong. It is the Husband’s case that by then the parties were already experiencing serious difficulty and contemplating separation, which according to him explains the reason why he had left for London alone without the Wife and children, while the Wife insists that there was then no separation and that it was just their decision in the short term to enable the children to finish their school year in Hong Kong before joining the Husband in London in the summer, and hence a 7-months lease for a 3-bedrooms apartment in Repulse Bay was signed for their temporary stay which was subsequently extended in July 2013 for a further 12 months to allow their eldest daughter to complete her IGCSE course in Hong Kong before leaving for university either in UK or Australia, and that during which the Husband did visit from time to time and that the family had spent holidays together in Hong Kong, London and Europe as well as a trip with only the parties to Dubai in February 2014 and a family holiday in Sydney in March 2014 when according to her the decision to separate was finally made.

17.  Whatever the real reason behind the Wife remaining in Hong Kong without accompanying or joining the Husband’s move to London in January 2013 or thereafter, and it is one of many major issues between the parties as to exactly when they actually separated, of which the Wife puts at March 2014 and not January 2013 as alleged by the Husband, the upshot is that the Wife and children never moved to live with the Husband in London, remaining instead in the rented accommodation in Hong Kong, and that on 13^th May 2014 the Wife issued a petition through her former solicitors Withers for judicial separation under FCMC 6013/2014 based on the Husband’s unreasonable behaviour, in which she also sought joint custody of the children with their care and control to her and for general ancillary relief for herself and the children.

18.  That petition however became defended when the Husband filed an Answer & Cross-Petition on 8^th September 2014 denying that he had behaved as alleged by the Wife and sought dissolution of their marriage on the ground of the Wife’s own unreasonable behaviour.

19.  Eventually the parties were able to agree through mediation and by signing a mediation agreement on 29^th September 2014 for a consensus divorce by the Wife issuing a fresh petition based on one-year separation since May 2014, and for the Husband to make certain interim financial provisions for her and the children pending the conclusion of the fresh divorce proceedings, including a monthly sum of HK$130,000 as maintenance for the Wife and children, as well as directly meeting her rent and household utilities, the family’s club membership and the children’s school fees, totalling almost HK$260,000 per month.

20.  It was also provided in the mediation agreement for the Husband to place HK$1M into each of the parties’ trust account with their solicitors to meet his or her on-going legal costs in the matrimonial proceedings, and that should the account fall below HK$200,000, then he should make further payments into each account from the matrimonial capital under his control. Sadly, as noted above, such arrangements had turned out to be far from sufficient and wholly unrealistic.  

21.  Be that as it may, the judicial separation proceedings were accordingly abandoned by the Wife who on 21^st May 2015 issued the fresh petition on the ground of one-year separation since May 2014 [P11/3693.1] with the Husband’s consent in these proceedings as ratified by his subsequent Form 4 signed by both himself and his solicitors [P11/3971.3]. On 17^th June 2015 the parties were granted a consent order giving them joint custody of the children with care and control to the Wife and reasonable access to the Husband including one half of the children’s school holidays, while the decree nisi of divorce was granted on 14^th September 2015.

22.  By then it was clear that the major dispute between the parties was over their finances, in particularly as to the disclosure and discovery of the Husband’s assets and employment benefits as well as their valuations, as noted at the beginning of this judgment.  

23.  In his Form E filed on 8^th September 2014 in the previous judicial separation proceedings and used in these proceedings, the Husband disclosed an average income of about HK$1,660,000 per month and total net assets of just over HK$64M, comprising mainly of cash and stocks and shares/securities which made up of more than HK$55M of the total worth, as well as his current residence in London (“The London Property”) which he purchased in June 2014 for £2.75M funded primarily by a substantial bank mortgage and with a net worth of HK$5.5M.

24.  These were however according to the Wife other assets disclosed in the Form E of significance but which the Husband claimed to be of unknown value, such as the two family trusts created during the marriage, his entitlements under various share option and bonus schemes and incentive plan of his employment with A3, his numerous dealings and transactions in various bank and investments accounts, as well as his future inheritance prospect from his parents, all of which formed the main targets of her discovery and valuation processes for the next 2 year or so of their litigation.

25.  Such discovery processes, which have now become almost an inevitable prerequisite to either the FDR hearing or the ancillary relief trial, especially in those so-called ‘big-money cases’, and in this case they were particularly intensive and comprehensive, but according to the Husband unnecessary, excessive and disproportionate, and no doubt contributed substantially to the huge legal costs incurred between the parties, for which the Wife had put all the blames on him for failing to be transparent and forthcoming with his disclosure in which she claimed to have encountered great difficulties throughout the proceedings. Discovery of course was not confined just to the Husband’s financial affairs but also to the Wife’s, although they were clearly much smaller in terms of both size or value.

26.  These assets of the Wife as disclosed in her Form E were put at just over HK$4.4M at that time, comprising essentially of bank savings, half-share of an investment property in Kuala Lumpur (“Malaysia Property”) jointly with the Husband, and some personal items such as jewellery and watches, and with a monthly expenditure in excess of HK$414,000 for herself and the 3 children, being HK$151,000 for rent and general household, HK$138,000 for her personal expenses, and HK$124,000 for the children, which were as noted above either being met directly by the Husband such as rent and school fees, or from his interim financial provisions under their mediation agreement.

27.  By February 2015 and after further unsuccessful mediation, it was clear that the parties were too far apart in their financial dispute and that the discovery proceedings would follow fast and furious, the Wife therefore applied for further litigation funding, and as a result the Husband had since made several more payments towards her legal costs provision totalling more than HK$14M.   

28.  Eventually the parties came before me on 7^th March 2016 for the first of several PTR hearings after an unsuccessful FDR hearing that lasted two days before Judge Melloy in February 2016, and before taking their final step towards the inevitable trial, the parties made their following open proposal.   

Wife’s Open Proposal

29.  The Wife’s open proposal was first set out in her solicitors’ letter dated 10^th November 2016 [P18/6486], which is essentially for an equal share of all matrimonial assets between the parties, including those in her annexed Asset Schedule valued at HK$167,998,721 subject to updating and including the net value of the Husband’s 2014 unvested A3 share award, plus her proposed adding back of legal costs unnecessarily incurred by the Husband’s litigation conduct of between HK$6.5M and HK$20M which would bring the value of the matrimonial assets to between HK$174,498,721 and HK$187,998,360, as well as the Husband’s 2015 and 2016 unvested A3 share awards, for equal division between the parties, of which her half-share would therefore be between HK$87,249,360 and HK$93,999,360.

30.  In the said letter the Wife revealed that it is her intention to remain in Hong Kong after the divorce for the sake of the children’s schooling for the next 7 years until the youngest child completes her secondary education, during which she will continue to rent a property for herself and the children commensurate to her current accommodation at the rental level of HK$113,000 per month for which she will require an income to meet her quarter share of the rental as well her other needs and expenses.

31.  Upon the youngest child competing secondary school and going off to university either in UK or Australia, the Wife proposed to settle in Sydney where her sister’s family is, for which she would require a sum of HK$44,550,000 for the purchase of a suitable house there for her eventual accommodation which will in the interim period earn a net rental income of about 2% per annum until she takes up residency, at which time she hopes to return to work on part-time basis together with the income streams from the xxxxxxx quota lease of DXX Holdings, in which the Husband’s shareholding is to be transferred to her. 

32.  On the above basis the Wife proposed that her ancillary relief award in the sum between HK$87,249,360 and HK$93,999,360 be made up as follows:

-  HK$10,000,000 in cash within 7 days;

-  HK$44,550,000 within 28 days for her purchase of the property in Sydney, Australia;

-  HK$11,617,740 being the value of the Husband’s shareholding in DXX Holdings to be transferred to her within 14 days with all assets and cash remaining intact and any liabilities owing to him by the company shall be extinguished and unrecoverable;

-  HK$1,029,357 being her own assets;

-  HK$915,771 in cash being 50% share of the liability owed to her former solicitors Withers within 7 days;

-  HK$19,351 in cash upon transfer of her shareholding in the company holding the Kuala Lumpur Property to the Husband within 28 days;

-  Remaining Balance of between HK$19,117,141 and HK$25,867,141 to be paid within 3 years on or before 31^st December 2019, which in itself is subject to the percentage in which the 2014 A3 Shares vest.   

33.  Regarding the Husband’s unvested 2015 and 2016 A3 share awards of which she argued to have a combined 100% net value of HK$56,896,265, the Wife proposed that there be an equal Wells sharing as and when they vest and become saleable, and whilst she awaits the payment of her capital, the Husband shall pay her the necessary maintenance for a period of at least 3 years in the respective sums of HK$44,968 per month for the first year, HK$90,162 per month for the second year and HK$81,802 per month for the third year, taking into account the varying incomes she will receive from capital that she will have received, from her property and from the DXX Holdings quota income.

34.  As for the children, and whilst the eldest daughter has finished secondary school and is at present taking a gap year in London before starting university at Oxford in October 2017, the Wife proposed that her home remains with her in Hong Kong, as will the two younger daughters in their school in Hong Kong until the youngest finishes school in 2023, she therefore proposed that the Husband shall pay HK$51,980 per month as maintenance for each child for the first year and thereafter with annual indexation on such sum on the first of January each year, and also to pay all their school fees and school-related expenses up to and including university, the cost of three return flights from the country in which the children attend university as well as their medical insurance coverage and all general orthodontic and cosmetic dental expenses until completion of their first undergraduate university degree.

35.  In order to cover any outstanding liability for any outstanding capital sum and maintenance due to her as well as the children’s maintenance until the youngest child’s completion of her first undergraduate degree, the Wife further proposed that the Husband shall provide life insurance on himself for which she will pay the premium and be the beneficiary, and that there be a Mirror Order in UK or any other jurisdiction in which the Husband resides during the period when maintenance is to be paid to the Wife for herself and the children.  

36.  On the basis of the above terms being accepted by the Husband before trial, the Wife proposed that there be no order as to costs but that there should be no set-off in respect of the HK$5M earlier paid to her as costs provision under the orders dated 10^th February and 11^th June of 2016.  

Husband’s Open Proposal

37.  The Wife’s open proposal was as noted rejected by the Husband essentially due to his dispute over her calculation and valuation of the matrimonial pot and her entitlement to share in his unvested A3 shares awards which he regards as post-separation accruals, and his open proposal came about 2 weeks later in his solicitors’ letter of 28^th November 2016 just 2 days before the scheduled trial, presumably having to wait for the SJE Report on his A3 Benefits. His proposal was on the basis of the Wife having an auditing qualification with earning capacity up to HK$70,000 per month as well as substantial future inheritance from her parents, and in accordance with his own Schedule of Assets annexed to his letter where he put the capital assets for equal sharing much less at HK$103.5M and made up as follows:

Wife	HK$5.3M
Husband	HK$45.1M
Trusts	HK$48.1M
Joint Assets	HK$4.67M
Total:	HK$103.5M

38.  From these assets he proposed for the Wife to receive her half share at HK$51.7M to be derived from the following:

(a) HK$24.2M being 50% of the Trust assets;

(b) HK$18.15M from the earlier capital advancement made to her after a claw back of HK$8M for her misconduct in the proceedings;

(c) HK$4.29M(US$550,000) being add back of 50% of the Husband’s earlier payment of US$1.1M to his parents;

(d) HK$5.29M being the Wife’s own assets.   

39.  From this total sum of HK$51.7M the Husband proposed that it should be less litigation funding clawback of HK$8M being his costs incurred as a result of her litigation misconduct in the proceedings, making a net total assets for her of HK$43.7M to be paid by 30^th June 2017, whereupon the Wife shall cease to be a beneficiary of the W Trusts and all forms of the parties’ financial claims shall be dismissed.

40.  As for his future A3 LTIPs and Bonuses, the Husband’s position was that on the basis of his date of separation on January 2013, there would be no more money coming to the Wife from his LTIPs on a Wells basis or even on the Rossi principles, as the 2013 LTIPs have already been paid and included in the matrimonial assets being equally divided.

41.  Regarding maintenance for the children, the Husband’s proposal was to continue to be wholly responsible for the eldest daughter including her living costs and university fees at Oxford at HK$41,820 per month, and to pay the Wife HK$20,000 per month for each of the 2 younger daughters with her in Hong Kong to be adjusted annually for inflation in accordance with the Hong Kong CPI variation, and shall continue to be responsible for their school fees and medical insurance through his work policy, as well as their share of the rental expenses in Hong Kong should the Wife wish to stay in Hong Kong until the youngest child finishes her secondary education in 2023, with such security via his death in service provision for the children’s maintenance payable under the consent order.

42.  For the purpose of settlement before the commencement of the trial, the Husband proposed there be no order as to costs including the previous eight reserved costs orders.   

43.  Similarly this proposal of the Husband was rejected by the Wife, and as a result the trial had to run its full course for a total of 9 days during which the Wife was represented by Mr Simon Westbrook SC and Ms Mairéad Rattigan, while the Husband who travelled to Hong Kong for the trial was represented by Mr Russell Coleman SC and Mr Robin Egerton, but before proceeding to consider the parties’ evidence and their numerous issues, it would first be relevant to set out the general legal principles on division of assets.  

Applicable Principles

44.  In deciding on ancillary relief application including division of matrimonial property, the court is required by section 7(1) of Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) to have regard to the conduct of the parties and all the circumstances of the case including the following matters:

(a) the income, earning capacity, property and other financial resources which each of the parties has or is likely to have in the foreseeable future;

(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;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of the party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contribution made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefits (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.  

45.  The Court of Final Appeal has set down guidance on how this section 7 discretionary exercise should be undertaken in LKW v DD [2010] 13 HKCFAR 537 which is now familiar to all but it would be relevant to remind myself of them as set out in the judgment of Ribeiro PJ, starting with the 4 underpinning principles:

-   Objective of fairness

-   Rejection of Discrimination

-   Yardstick of Equal Division

-   Rejection of Minute Retrospective Investigation

46.  Of these principles there seems no serious dispute between the parties in respect of the first three in their application to their case, but as noted above and of particular relevancy to the numerous issues in this case is the fourth principle, of which I did specifically remind the parties at the earlier PTR hearings and at the start of the trial, and which I find necessary to stress here again that I propose to fully adopt in my approach towards many of the issues raised by the parties of what Ribeiro PJ stated as follows:

“[62] The fourth principle is that the court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tend deplete the parties’ (and the courts’) resources and to increase antagonism and discourage settlement.

[63] Such attempts have been encountered in various contexts, including disputes over the extent of a party’s assets; over the contribution made to the welfare of the family; over the parties’ conduct; over claims to be compensated for having suffered some disadvantage, and so forth.

[64] The English courts’ response to allegations of “special contributions” by parties seeking to justify departure from an equal division is instructive. Referring in 2002 to the then growing practice of examining minutely the respective contribution of the parties, Coleridge J stated:

“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.”

His Lordship added:

“ … 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 the marriage to discover relics from the past to enhance their role or diminish their spouses.”

[65] The courts’ disquiet was noted by Lord Nicholls in Miller/McFarlane:

“Apparently, in this post-White era there is a growing tendency for parties and their advisers to enter into the minute details 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 [2003] Fam 103, 117, para 27.”

[66] Heeding Coleridge J’s “powerful observations” in G v G, Lord Nicholls held that:

“Parties should not seek to promote a case of ‘special contribution’ unless contribution is so marked that to disregard it would be inequitable. A good reason for departing from equality is not to be found in the minutiae of married life.”

[67] Adopting the dictum of Bodey J in Lambert v Lambert, his Lordship explained that disregarding the contribution would not be inequitable unless the circumstances are “of a wholly exceptional nature, such that it would very obviously be inconsistent with the objective of achieving fairness (ie, it would create an unfair outcome) for them to be ignored.”

[68] Baroness Hale took the same view, holding that the question should be approached by deploying a standard equivalent to the “obvious and gross” standard applicable in “conduct” cases.

[69] The essence of this fourth principle is reflected in Thorpe LJ’s illuminating comment in Parra v Parra:

“ … the outcome of ancillary relief cases depends upon 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 in dispute. The judicial task is very different from the task of the judge in the civil justice system whose obligation is to make findings on all issues in dispute relevant to outcome. The quasi-inquisitorial role of the judge in ancillary relief litigation obliges him to investigate issues which he considers relevant to outcome even if not advanced by either party. Equally he is not bound to adopt a conclusion upon which the parties have agreed. 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 a fine sable. Judgments in this field need to be simple in structure and simply explained.”

[70] The four principles discussed above should be borne in mind when embarking on the section 7 exercise …”

47.  Ribeiro PJ then proceeded to lay down five steps in this section 7 exercise:

Step 1: Identification of the assets.

Step 2: Assessing the parties’ financial needs.

Step 3: Deciding to apply the sharing principle.

Step 4: Considering whether there are good reasons for departing from equal division.

Step 5: Deciding the outcome.  

48.  Whilst the section 7 exercise provides that the court may have regard to the conduct of the parties, which is apparently also raised by both parties in this case, Ribeiro PJ had warned against any indulgence in fault-findings by the parties against each other in ancillary relief proceedings by stating as follows:

“[99] Section 7(1) makes it the court’s duty to have regard to the conduct of the parties in exercising its discretionary jurisdiction. It is therefore in principle a factor which may, alone or in combination with others, result in a departure from an equal division.

[100] However, the courts have recoiled from permitting the parties to indulge in a post mortem of their marriage in order to find fault with each other or to air “their mutual recriminations and go into their petty squabbles for days on end”. As Sir George baker P stated in Campbell v Campbell, “… everything should be done by the court to avoid costly, indecent and time-wasting investigations” regarding conduct in relation to ancillary relief proceedings. Otherwise the court will be faced with “… a lengthy, costly and, most likely, profitless investigation stretching over days, when allegations and counter-allegations are made by the ex-spouses or spouses, one against the other.” These sentiments are just as pertinent today and are reflected in the fourth underpinning principle referred to above.

[101] In Wachtel v Wachtel, Ormrod J devised a means to counteract such objectionable practices which was endorsed by Lord Denning MR in the Court of Appeal. It was made clear that “conduct” was only relevant to financial provision if it was:

“ … both ‘obvious and gross’ so much so that to order one party to support another whose conduct falls into this category is repugnant to anyone’s sense of justice.”

His Lordship added:

“In such a case the court remains free to decline to afford financial support or to reduce the support which it would otherwise have ordered. But, short of cases falling into this category, the court should not reduce its order for financial provision merely because of what was formerly regarded as guilt or blame. To do so would be to impose a fine for supposed misbehaviour in the course of an unhappy married life.”

[102] As Sir Mark Potter P stated in Charman v Charman (No 4):

“ … the case of Wachtel was seen at the time, and is still seen to be, fundamentally important. It established, amongst other things, that the acrimonious disputes as to the causes of the breakdown of marriage, which had characterised the law of divorce prior to the 1969 Act, were not to be born again in the arena of financial disputes.”

[103] In England and Wales, section 25 was amended in 1984 so that section 25(2)(g) now states that conduct is to be taken into account only “if that conduct is such that it would in the opinion of the court be inequitable to disregard it”. It therefore differs from section 7 which does not contain that express qualification. However, in my view, that amendment makes no material difference. Section 25(2)(g) puts into statutory language what is essentially the “obvious and gross” test used before 1984. This is indicated in the passage from the learned President’s judgment cited in the preceding paragraph and made clear by Baroness Hale:

“ … once the assets are seen as a pool, and the couple as equal partners, then it is only equitable to take their conduct into account if one has been very much more to blame than the other: in the famous words of Ormrod J in Wachtel v Wachtel [1973] Fam 72, 80, the conduct had been ‘both obvious and gross’. This approach is not only just, it is also the only practicable one. It is simply not possible for any outsider to pick over the events of a marriage and decide who was the more to blame for what went wrong, save in the most obvious and gross cases.”

[104] Conduct, or more accurately, negative conduct, is therefore only to be regarded as a material factor if it is “obvious and gross” in the sense explained in Wachtel v Wachtel or, which comes to the same thing, if it is such that it would in the opinion of the court be inequitable to disregard it.”

49.  Henceforth, and with these guidance in mind, I shall embark on the first step to identify what matrimonial assets there are in this marriage for division, and it will be apparent that issues abound between the parties over their quantum as well as their value.   

Identification of Assets

50.  Before however embarking on this first step to ascertain and identify these assets and because of their numerous related issues between the parties, I find it necessary to first remind myself of what Ribeiro PJ stated in LKW about the court’s objective in undertaking this step can generally be achieved by a broad brush approach:

“71. … The object will of course be to compute the net financial resources, taking account of all material liabilities. At this stage, the court need not attempt to distinguish between matrimonial and non-matrimonial property, that being an exercise best undertaken (if necessary) when considering distribution of the assets.

72. The court should, as Sir Mark Potter P stated, carry out this first stage exercise “with whatever degree is apt to the case”. In White v White, reflecting the fourth principle discussed above, Lord Nicholls cautioned against turning the clock back to the pre-1970 position when the courts “often had to attempt to unravel years of matrimonial finances and reach firm conclusions on who owned precisely what and in what shares”. No such attempt is called for and generally, a broad brush approach will be all that is required.”

51.  Despite my warning to the parties at an earlier PTR hearing that a broad brush approach is exactly what I proposed to do for that first step, the latest Assets Schedules produced by them [C16/5573 – 5579] in such detailed spreadsheets and with such minutiae especially on the part of the Wife which comprised of more than 100 items amounting to more than HK$150M according to her final Working Asset Schedule annexed to her Closing Submission, or just over HK$100M according to the Husband based on Appendix 1 to his Closing Submission, with a huge gulf of more than HK$50M separating the parties essentially over the whereabouts of some of the marital assets and their values/valuation which require the court’s determination, and that is before taking into account the Husband’s unvested A3 Shares worth according to the Wife in excess of HK$57M but which the Husband argues are uncertain post-separation accruals which she is not entitled to share, as well as whether certain funds should be added back to the total marital pot, as highlighted in orange in the Wife’s said Working Asset Schedule, but for simplicity sake and easy reference I propose to adopt the broad summary by the Husband in Appendix 1 to his Closing Submission of the parties’ position on the matrimonial pot as follows:

Assets	Husband’s position	Wife’s position
Wife’s Assets	HK$ 2.7M	HK$345,500
Husband’s Assets	HK$40.7M	HK$72.6M
Unearned/Unvested A3 Shares	0	HK$57.8M
Trusts	HK$51.9M	HK$50.7M
Joint Assets	HK$ 4.6M	HK$11.3M
	Total :  HK$100M	HK$192M

52.  By the conclusion of the evidence it appears that the Wife has in her Closing Submission come down substantially from her previous asset valuation to about HK$135M, it still represents a big difference between the parties due mainly to their dispute over the value/add-back of the following assets summarised by Mr Coleman as follows:

Assets	Husband’s position	Wife’s position
Malaysian Property	-HK$ 920,989	HK$ 36,010
Husband’s Bank Accounts	HK$7,736,662	HK$38,270,114
Trust’s Loan to DXX	HK$4,095,072	0
Rxx Rxxx & MBS Loans	HK$1,170,000	HK$9,112,623
Husband’s Gifts to Parents	0	HK$8,580,000
DXX-Shareholder Distribution	-HK$1,647,000	-HK$823,500
Wxxxxxxx Security	HK$2,298,734	HK$3,312,622
Husband’s Pension	HK$843,639	HK$1,765,756
Add-back Husband’s Payment	0	HK$3,900,000
Wife’s Credit Cards Debts	0	-HK$896,174
Withers’ Outstanding Fees	0	-HK$1,515,985
Husband’s Unvested A3 Shares	0	HK$57,851,526

53.  Accordingly I shall proceed with my unenviable undertaking to deal with each of these disputed items, starting with what appears to me the relatively straightforward one, or so it seems, over the value of the Kuala Lumpur Property in that notwithstanding its inevitable sale at a loss to both parties but which still remained essentially a fault-finding issue at the trial which just goes to epitomize the huge contrast between the parties’ attitude and approach in the entire litigation.

Valuation of Malaysian Property

54.  This property was purchased by the parties in joint names for MYR3.2 million with a mortgage as an investment which has unfortunately turned out to be not a good one as its market value has since depreciated significantly, and with no rental income after the departure of the last tenant but with a heavy mortgage, the Husband therefore has been trying to sell it for some time to cut the loss but with no success until now allegedly due to the Wife’s difficult and unreasonable approach, as he alleged in his narrative affidavit [P18/6265]:

“60. … The Malaysian property market has not gone well and I have attempted to sell the Malaysian property for a number of years with no success. In 2015, there were two offers to purchase the Malaysian property at very reasonable prices. The Petitioner seems to be very interested in this property and refused to accept either of the two offers to purchase. I therefore proposed to sell my 50% share of the Malaysian property to the petitioner at US$1, which she also did not accept, yet she blocked the two sales for no apparent reason. Consistent with the Petitioner’s approach throughout these proceedings, she sought extraordinary disclosure by requesting the Deed of Assignment of the Malaysian property, which I did not have and is of no relevance to considering my proposal or the potential purchaser’s offer.

61. The monthly mortgage on the Malaysian property amounts to approximately US$50,000 per annum. With the further decline in the value of the Malaysian property, this property is a negative asset of approximately –US$100,000 after deducting the outstanding mortgage. As the Petitioner does not seem to agree to the sale of the Malaysian property, my offer to sell my 50% share to her at US$1 remains open for her acceptance. I believe the Petitioner should bear any inevitable future losses on the Malaysian property.”

55.  The Wife of course denies being difficult or unreasonable, and explained her concerns over the proposed sale of the property at a loss in her narrative affidavit [P16/5830]:

“105. In 2008 M (Husband) and I purchased a property in Kuala Lumpur, Malaysia, for MYR3.2M in our joint names and took out a mortgage in his sole name that was secured over the property, thereby allowing non-transparencies of the mortgage account. In August 2014, M wanted to sell the property after receiving an offer to buy the property in the sum of MYR2.3M. In the first instance, I was being asked to blindly accept the sale, which would have resulted in an apparent substantial loss, given the purchase price, without any updated valuation since we had purchased the property in 2008. As with other matters, M unreasonably frustrated my request for a valuation of the property, expecting me just to trust him and accept the apparent loss bought about by the sale. However, eventually in September 2015, M commissioned an updated valuation and a value of MYR2.4M was given to the property. However, as there was a different address in the valuation report of the actual property I, therefore sought further clarification in this regard. In the meantime, M received an offer for MYR2.2M to buy the property and pushed me to accept the offer, even though we would incur a loss on the sale. Given the different address in the valuation and potential loss on the sale, I sought through my then solicitors Withers clarification and sight of ownership, mortgage and security documents in respect of the property being the Deed of Assignment and the Mortgage Redemption Statement. Details were also requested in respect of what account the sale proceeds would be paid into. In response to my requests, M would only supply a mortgage statement that was several months old and once again obfuscated my request for clarification and other documentation in respect of the ownership, security and balance of the mortgage at the date of sale, which I have been advised are normally an absolute necessity for the sale of the property and should be readily available if a sale was indeed pending. It was never forthcoming from M and the sale fell through. M then blamed me for the sale falling through, after the purchaser bought another property he preferred.

I then spoke on the phone with the real estate agent in KL responsible for our property, who informed me that in fact there was water leakage damage to the property that had not been repaired and that this was also another reason why the sale of the property fell through. I also asked for various past correspondence documents in respect of the property from the real estate agent, between M and himself, but M forbade the agent from providing me with this documentation and from talking to me any further, even though I was the joint owner of the property. When the sale of the property fell through, M offered to transfer the property to me for US$1 along with all the attendant negative equity and for the asset to be removed from the matrimonial asset schedule which I refused to accept. I wish the Court to have regard to the inter-solicitor correspondence in this regard between August 2015 to December 2015 to see how unreasonable M’s behaviour was over all of this.”    

56.  The Wife therefore disputed that the Husband’s proposed sale is fair market value as she claimed to have never been given any opportunity to engage in the sale process despite being a 50% owner, and argues that the court should only rely on the latest valuation which shows an open market value of MYR2.4M, and hence its net value of HK$36,010.81 should be included in her Asset Schedule, and that any real loss in its eventual sale should therefore fall to the Husband.

57.  Mr Coleman however argues that this approach of the Wife in unreasonably insisting not only a formal valuation report to verify the proposed sale price but also full production of all documents by the Husband in connection with the property including the Deed of Assignment of their original purchase of the property before she was prepared to consider the offer, and having as a result blocked several sales despite the fact that the Husband had offered her the property at a nominal price of US$1, and when the sale fell away and as a result caused the family to suffer further financial loss, she then attempted to pass the blame by demanding for various past correspondence between the Husband and the estate agent, all of which Mr Coleman submits as consistent with her approach throughout the proceedings that she would invariably seek to hold onto a higher valuation even when she was involved in the sale which simply goes to support the Husband’s case about her unreasonable approach.

58.  While it is, sadly, all too common that when divorcing couple are entrenched in their financial disputes, there would as a result be little trust, if any, left between them with the tendency of all sort of allegations being levelled at each other, but surely there must be some factual or evidential basis for doing so, as otherwise the court should not allow simply a lack of trust as justification for making seemingly excessive or unreasonable demand by one party against the other, as the Wife appears to have been so in dealing with the Husband’s proposal to sell the Malaysian property with a clear intention to cut the loss.

59.  Firstly, her distrust of the Husband was apparent in the way she referred to the mortgage secured on the property at its purchase being taken out in the Husband’s sole name “thereby allowing non-transparencies of the mortgage accounts”, which begs the obvious question of what information such mortgage accounts would show that would be relevant or necessary to her decision on the sale of the property proposed by the Husband other than the latest figure of the outstanding mortgage? Looking at the matter objectively and in isolation, I am unable to think of any.

60.  Even when bearing in mind of the Wife’s persistent allegations of the Husband’s failure to make full or frank disclosure of his means throughout the proceedings as well as his certain dealings of their matrimonial assets such as his gift payments to his parents which may just further fuel her suspicions, I still have difficulty understanding why she would demand for the complete mortgage statements in the absence of any suggestion or evidence that he may have deliberately fallen behind with the mortgage payments or had increased the original mortgage loan by re-mortgaging the property without the Wife’s knowledge or consent thereby reducing her share of the net worth of the property, in which case it begs another obvious question of why would the Husband in his financial circumstances want to do something like that about an asset of such negligible or insignificant value?

61.  If the Wife’s main concern were indeed over whether the proposed sale was at fair or reasonable market price, of which I have already commented above that I am unable to see why the Husband would deliberately or intentionally sell at below market value other than to cut the loss and to avoid any further costs and expenses in keeping the property, the proper approach would be for her to simply seek advice from reputable real estate agents or other experts which could be easily and quickly obtained instead of demanding full and no doubt costly documentary disclosure or formal valuation as the Wife did over what was clearly an unsuccessful investment.        

62.  According to the Husband there should now be no issue regarding this property as the sale has finally taken place, with the agreement for sale already signed by the parties and deposit paid on 16^th February 2017, and that the net proceeds are consistent with the net value set out in his Asset Schedule and subsequently in his Reply Submission [I1:91] in the negative amount of MYR529,304 (HK$920,989) after deducting for the outstanding mortgage and management fees, legal costs and relevant government charges. In the circumstances I agree that this asset should now be written off the matrimonial pot for the present purpose.

Husband’s Bank Accounts

63.  The Wife has alleged that the total value of the Husband’s bank accounts should be in the region of HK$38M, of which HK$20M relates to his 2013 LTIP bonuses which he is allegedly required to hold and is not a liquid asset available to him. As this relates to the issue over the Wife’s entitlement to share the Husband’s A3 Benefits, I propose to deal with it under a separate topic below.

64.  As to the remaining HK$12M difference in valuation between the parties, of which the Wife alleges has disappeared mainly from the Husband’s accounts with Barclays in which there used to be HK$10.4M but has since gone down to only HK$345,000, and which he explained that the bulk had gone to pay various legal fees. The Wife however disputes this as the figures did not add up and that as much as HK$5M missing from this account were simply unaccounted for, and hence should be included, as she has, in her Asset Schedule.

65.  The Husband’s case is that he had already confirmed to the court with documentary evidence that these funds have been used to pay his legal fees and the Wife’s litigation funding and maintenance pending suit, and that all of them had previously been identified as his outstanding liabilities, and hence there has been no missing or disappearance of some HK$10M from his accounts as alleged by the Wife.

66.  Indeed at the trial the Husband did provide a breakdown as to the transfer of funds from his said bank account [Exhibit “R4”] for his own legal costs (HK$6.5M), the Wife’s maintenance (HK$1M) and her litigation funding (HK$3.5M) totalling HK$11M.  

67.  Mr Westbrook however submits that those figures referred to in Exhibit “R4” are simply not correct in that it was HK$3M and not HK$3.5M that had been paid to the Wife’s solicitors for litigation funding, that the alleged transfer of HK$1M for the Wife’s maintenance is not an agreed presentation as it is not appropriate for the Husband to ascribe payments made by him to her for her maintenance should be coming from matrimonial capital rather than out of his income, as by that methodology the Husband would be effectively requiring the Wife to pay her own maintenance while he is permitted to accumulate further capital for his account only, while there is no evidence to support his assertion to have put aside a further HK$1.5M for his own future ongoing legal costs, hence he submits that it follows that of the HK$5M originally unaccounted for there remains more than HK$3M unaccounted for which should be added back to the matrimonial assets. Whether this should be so I propose to deal with it under the topic of ‘Add-Back’ later in this judgment.

Alleged Debt/Loan of W Trust to DXX

68.  This issue arose from the fact that in 2011 W Trust made a payment of NZ$745,914.92 to DXX Holdings for the latter to purchase xxxxxxx quota in New Zealand, which payment was according to the Husband a loan by the Trust to DXX Holdings, but the Wife doubted that it was so as the financial statements of DXX Holdings for all these years consistently recorded it as “Shareholder Advance” and not as a loan.

69.  The Husband’s evidence that this was a loan can be found in his narrative affidavit when he said at p62 [P18/6265]:

“ … The main asset held by DXX Holdings is 3.5 tonnes of xxxxxx quota, which is a very profitable asset earning a profit of approximately NZ90,000/HK$504,000 each year. DXX Holdings also has debt of NZ745,915 owed to the W Trust. For some inexplicable reason, the Petitioner disputes the debt from DXX Holdings to the Trusts … of NZ745,889.92 despite her involvement in the transaction and the clear evidence confirming the debt from the Trustees in their email to both the petitioner and myself dated 15^th January 2016 …”

70.  As a result of the Wife’s dispute over whether it was a loan instead of advance payment by the Trust on their behalf to DXX Holdings, the Husband therefore requested the Trustees to update the list of Trust assets and to clarify the sum of NZ$745,889.92 was indeed a loan and not any advance given by the Trust nor given to DXX Holdings, and submits that whether the loan to DXX Holdings is regarded as an asset outside the Trust may no longer matter, but problem arises in double accounting if the Trustees say it is a loan and then the Wife wants half of the Trust assets.

71.  Furthermore, the Husband points out that although DXX Holdings had made shareholder distribution of NZ$300,000 to the parties in equal share of NZ$150,000 to each, and that it was agreed that the distribution was to be excluded from the matrimonial assets for division, however the Wife has only deducted her NZ$150,000 share but not his share on the basis he has not provided proper disclosure, and that unless she could see where the monies had gone and into which bank account, then he could not get the “benefit” of excluding it from his assets although it was previously agreed as set out in the Mediation Agreement, which is yet another example of the Wife’s need for minute disclosure, with the time and attention spent on this issue during the trial as typically disproportionate. 

72.  The Wife now seems to accept that once the Husband had conceded that the Trust is indeed a matrimonial asset this issue should no longer be significant so long as the Trust does not seek to claim any of this back from the Wife after these proceedings have concluded, she argues that it is necessary to look at the facts surrounding this issue as it is another demonstration of the Husband’s cynical manipulation of the facts in order to limit wherever possible the assets available for distribution, and that his actions in this regard have also driven up the legal costs in these proceedings.

73.  As evidence she refers to various email after the proceedings started the Husband had with one of the Trustees namely GL and the lawyer for DXX Holdings over the said payment whether as a loan or capital [C8/2995, 3015, 3028, 3039 & Trust/39, 43 – 44], which she argues clearly show that the money was not to be treated as a loan from the Trust to DXX Holdings, as otherwise it would have been documented as such at the time, and that the attempts by the Husband and the Trustees to try to change that fact some 2 years after the advance was made and after these proceedings commenced is another telling example of the Husband’s deceptive and manipulative character.

74.  Whatever the truth may be in these allegations by the parties against each other, no doubt I will have more to say when I come to consider the issue on costs and conduct raised by both parties, but for the present purpose of identifying and valuation of their matrimonial assets, I accept their latest post-trial position about this payment by W Trusts to Dxx Holdings is no longer an issue now that the parties are agreed that the Husband’s shareholding in Dxx Holdings is to all go to the Wife as part of their assets distribution and that she just wants to ensure that the Trustees would not come around to sue her over the alleged ‘loan’ upon these proceedings being concluded.  

Rxx Rxxx & MBS’s Loans

75.  The Rxx Rxxx loan was first disclosed by the Husband in his Form E of US$550,000 made to a company known as Rxx Rxxx Mineral Holdings Ltd owned by a friend SB, while the loan to MBS Software Solutions, also of SB, was according to him in fact a Call Option Fee for US$250,000, both of which he claims to have little chance of being repaid as a result of failed investment.

76.  These loan/call option are however regarded by the Wife as assets which she puts at US$1,168,285 in total including accrued interest but which the Husband now claims to be worth just US$150,000, hence a difference of over US$1M or HK$8M according to the Wife who describes SB’s business in Rxx Rxxx as some murky mining venture involving some Turkish gentlemen which has apparently turned out badly for SB, and that while the Husband claims to have never collected any interest from Rxx Rxxx, and when he tried to rely on some emails [C15/5246 & 5273] from SB to explain about the Call Option of US$250,000 as a liability to pay on demand which she argues that the emails clearly show that it has already been paid, and that it is bizarre for the Husband to then claim in his email to SB on 3^rd December 2016 [C16/5581], produced 4 days into the trial, that his “MBS obligations are extinguished and the Rxx Rxxx loan as of 1 December 2016 owing to me is US$150,000” as self-serving and contradictory. 

77.  The Wife therefore argues that the court should place no weight on this bizarre evidence of the Husband and to look at practical reality instead that there is no sensible reason as to why the money loaned to Rxx Rxxx could not be recovered and the interest collected and added to the parties’ assets, while the Husband’s evidence in respect of the MBS Call Option is also to be disbelieved. She therefore submits that these values should be maintained in her asset schedule and that the Husband should not be allowed by his wholly unsatisfactory evidence to diminish the matrimonial assets by this HK$8M.   

78.  The Husband however insists that the Rxx Rxxx loan and MBS Call Options were investments made with his close friend SB, hence it must be accepted that they, like all investments are subject to risk and may go up and down, and that he has been transparent by providing the loan agreements [P7/2437] and the call option agreements [P7/2473], that interest which might strictly have been due had not in fact been paid, and that current net value of Rxx Rxxx and MBS combined is at US$150,000, and therefore the Wife’s suspicion that he and SB may be making arrangements to hide assets is wholly unfounded and without any evidential basis, which he submits just reflects and illustrates that she guides herself by conjecture and suspicion rather than objective analysis as to whether or not in the context of this case. It is her suspicion, he submits, that has driven her insatiable demand for details, and that again the materiality is not significant but the time and attention directed at these issues have been wholly disproportionate. I agree.

79.  Whilst it seems to me that the Wife may not have full confidence in the Trustees, in the absence of any evidence to suggest that they have been in collusion with the Husband in concealing or misleading her as to their dealings of the Trusts or their assets, and I have no reason at all to doubt the integrity of either Trustees who are both reputable professionals, and bearing mind of the warning in LKW rejecting minute retrospective investigations, I agree with the Husband that the matter should and can be properly resolved, as in the case of the Cambridge Xxxxxxxx Loans below, by the Trustees confirming and verifying this account to the Wife or those representing her.    

Gifts of HK$8.55m to Husband’s Parents

80.  According to the Wife, the Husband secretly made 5 payments to his parents between March 2012 and June 2013 in the total sum of HK$8.55 million, of which he never told her at the time nor did he disclose them in his original Form E dated 1^st September 2014, and that it was not until his mother filed an affidavit on 9^th April 2015 in response to an order for disclosure of certain accounts when these payments finally came into light after her solicitors had discovered them by going through such accounts statements.   

81.  The Husband has admitted making a gift of US$1 million to his parents shortly after he received his termination pay-out from A2 Xxxxxxx of US$12 million in 2011, for which he claims was to reflect his thanks and appreciation of their support and did not prejudice the family’s standard of living, and that at that time it amounted to less than 0.5% of the family’s assets.

82.  He therefore insists that it was not a dissipation of assets as alleged by the Wife intended to defeat her ancillary relief claim, and that looking at it in broad terms the amount pales in comparison with what he has financially contributed to the Wife and children or the amount of legal costs incurred. He argues that in any event these monies are clearly not ‘parked’ with his parents, that they have been used by them, and are not funds or assets available to him.

83.  Be that as it may, neither is the sum insubstantial or insignificant and which he should have informed and discussed with the Wife before making any decision. In any event, this issue has now been resolved as noted in his Open Proposal, the Husband has offered to notionally add back this sum into the marital pool and accordingly 50% thereof being US$550,000 or HK$4.29M are to be included in the total lump sum for the Wife from the matrimonial assets. For the purpose of this exercise I propose to simply just add back the entire HK$8.58M to the matrimonial pot.   

Cambridge Xxxxxxxx Loan Issues

84.  This item concerns an investment under the M Trust with one of Husband’s friends PH which according to the Wife appears to be a bad investment, with the Class A Fund dropping in value from US$50,000 to US$8,529 and the Class B Fund losing all its US$103,056, while there were also missing two latest instalments of interest payable in April and November of US$29,932, all of which absent a proper explanation from the Husband or the Trustees she argues that their total value worth HK$1.1M should be included in the joint assets for division.

85.  I am given to understand that the Husband did on 17^th January 2017 through his solicitors provide confirmation as to the liquidation of the Cambridge Xxxxxxxx Funds (Class A & B) and the Dxxxx Mxxx Limited Class B Funds held by MWD Holdings into the BEA account held by BTS Investment Ltd, and that the bank statements for the deposited amount have also been provided to the Wife.

86.  This however remains a live issue as far as the Wife is concerned, as she has asked for a breakdown of how much relates to each fund with explanation, as items 90 – 92 of her Assets Schedule show these assets valued at a total of US$949,635.29 which is a difference of US$145,909.57 or HK$1.138M with allegedly no explanation ever given to account for this sudden loss in value, and hence she argues that unless an explanation is forthcoming, she suggests that the difference of HK$1.1M should be added back to the joint assets.

87.  In reply the Husband submits that this is yet another example of the Wife insisting every figure be audited, and has suggested for the parties to request the Trustees to provide an updated list of assets to reflect the value held in the BEA account. For the same reasons given above in the case of Rxx Rxxx Loans, and again in the absence of any evidence of wrong doing on the part of the Husband or the Trustees in relation to those accounts, I agree with this suggestion of the Husband as the appropriate way to resolve this issue.  

Payments out of First NZ Capital Account

88.  Similarly the Wife has raised issue over certain withdrawals of funds from this another account of the W Trust held by MWD after having been provided with bank statements of that account, and when she still remained dissatisfied with answers from the Trustees, in particular after being informed by one of the Trustees namely GL that the Husband had tried to prevent him from answering her questions which reveals again the Husband’s deceitful character and his failure to provide full and frank disclosure to her, as he has remained in control of a trust asset which he has actively and deliberately attempted to conceal from her.

89.  For the same reasons already given above, and bearing in mind of the guidance in LKW v DD referred to above in particularly the 4^th principle, I agree with the Husband that in the absence of any evidence of his attempts to dissipate assets to defeat the Wife’s financial claims, mere suspicion on her part or her demand for complete transparency on every details cannot justify subjecting these accounts of the Trusts to ‘minute retrospective investigations’ which the Court of Final Appeal has taken such pain to warn against the resultant depletion of marital assets and the court’s time and resources. Accordingly I refuse the Wife’s request and direct that the accounts given and to be verified by the Trustees as final.   

Wxxxxxxx Security Group Ltd

90.  As noted above this company as part of the W Trust was incorporated in 2002 by the Husband and other members of his family as the founding directors, with the Husband later resigning as a director in 2009. It was his case that the valuation of this company was NZ$175,000 at the beginning of the proceedings on the basis of the List of Trust Assets provided by the Trustees [P19/6812], and when the Wife later suggested a higher valuation of NZ$269,701 for the purpose of FDR, to which he also agreed.

91.  The issue now raised by the Wife over its true value arose from her enquiries about the transfer of certain 136,037 shares in the company that were held by MWD Holdings Ltd which is another trust asset, to one of the Trustees namely the Husband’s sister JS back in 2013 but to which the Wife claims to have never received any proper answer or explanation and hence she suspected a breach of trust, and therefore a SJE Mr Charles Purcell was appointed in late 2016 to look into the matter and to submit a valuation report on Wxxxxxxx Security in particular the valuation of the shares held by MWD Holdings in Wxxxxxxx.

92.  In his report dated 6^th December 2016 [P19/6898] which came in during the trial, Mr Purcell attached a summary of the increases in shares issued by the company and to which shareholders, and stated at para7.1.2 in respect of the said shares transfer:

“… I have been advised that 60,521 shares were transferred to P & JS upon the integration of their business into the company. A further 75,516 shares were transferred from MWD Holdings Limited so as to increase the shareholding of P & JS.

 I have been advised that the 75,516 shares held in the name of P & JS which were transferred from MWD Holdings Limited and for which either no settlement has been made or settlement has been incomplete, will revert to ownership by MWD Holdings Limited.”

93.  Mr Purcell then proceeded to arrive at a range of values of the shares held by MWD Holdings by reference to two different valuation methods, where he explained in the Valuation Summary [P19/6917 – 8]:

(a) adopting capitalization of future maintainable earnings, which for 546,132 shares gave a value range between NZ$223,914 and NZ$278,527, with a mid-point of NZ$251,220;

(b) adopting capitalization of recurring monthly revenue which for 546,132 shares gave a value range between NZ$447,828 and NZ$518,825, with a mid-point of NZ$483,000. 

94.  Mr Purcell then suggested that if a precise value per share is required, it would be appropriate to use the mid-point value of NZ$0.885 per share or approximately NZ$483,000 for the holding of 546,132 shares.

95.  The Husband notes that the mid-point of the capitalization of earnings method is less than the agreed figure adopted at the FDR, and is of the view that the lower range is likely to be more realistic to the facts of the case, but by way of compromise he would agree to the mid-point figure. It seems however that Mr Purcell prefers the valuation based on capitalization of recurring monthly revenue, and while it is accepted that the court is not bound by either approach and could take one of the other, where both approaches are shown as applicable, the Husband suggests that the court may take an average of the two, being NZ$0.67 per share, which would give a figure of NZ$367,110, and that if the total shares to be properly counted should include the 75,516 shares, he also accepts that the total valuation might be NZ$418,713.

96.  The Wife of course insists now that Mr Purcell has proposed that the mid-point value of NZ$0.885 per share be adopted, the Husband’s assertion that the shares have a different value should be rejected given that he did not challenge Mr Purcell on his valuation basis at the trial or otherwise by raising queries as invited by the court, and with the addition of the 75,516 shares to be included, the Wife insists that the correct value for the total valuation should be NZ$483,000 + NZ$66,831(75,516 x NZ$0.885) = NZ$549,831. 

97.  I agree with the Wife that in the absence of any challenge by the Husband against Mr Purcell’s valuation, I see no reason why his suggestion to adopt the mid-point value of NZ$0.885 per share should not be accepted, which thus give the total valuation for the shares of Wxxxxxx Security Group Ltd at NZ$549,831, or the equivalent of about HK$3M. 

UK Tax Provision for A3 Pension 2016

98.  This is indeed a very minor issue, as the Husband proposes to deduct the amount of HK$922,177 for the assumed tax at 47% on his pension before including the same in the Schedule of Assets.

99.  It is however not agreeable to the Wife as the tax rate by then is unknown and entirely uncertain and should therefore not be deducted from the Asset Schedule for the present purposes, which the Husband argues as another example of her approach where if the answer does not suit her including that tax is clearly applicable, then it should not apply, and is entirely consistent with her approach on LTIPs when until just before the FDR hearing she refused to accept that tax should be deducted.

100.  I agree with the Husband that, as a matter of principle, provision for UK tax on his pension which is inescapable should first be made so that only the net amount be included in the matrimonial pot for division as part of his liabilities, which is likewise what the Wife is proposing to do with her credit card debts and outstanding legal fees due to her former solicitors in the next following items.    

Wife’s Credit Cards Debt

101.  It is the Wife’s position that both parties’ credit card liabilities should be included in their asset schedule, with hers amount to HK$896,174 which she claims to have to use her credit cards to cover the shortfall in maintenance for her and the children, especially having regard to the fact that no provision was made in the interim maintenance for the children’s holidays, and that unlike the Husband she has not paid her credit cards off at the end of every month as she has been concerned about her cash flow as she has no access to other capital or the ability to obtain a loan.

102.  Furthermore, she argues that since the Husband stopped her receipt of income from the DXX Holdings distribution and therefore she was left with less income, to ensure that she has a cash reserve in the event of emergency she has therefore kept this debt on her credit cards as the interest payable is relatively low. She therefore submits that this is clearly a liability and must be counted as such in the parties’ Asset Schedule.

103.  The Husband’s stance is that the Wife should not be allowed to claim this as a liability as it was expressly stated in the Mediation Agreement that it is the Wife’s own responsibility to meet her credit card debts incurred, as his own credit cards debts have not been so included, nor in the Wife’s previous Assets Schedule but only added into her most recent one provided during the trial, which is in effect an attempt to cause him to be responsible for 50% of her debts.

104.  As admitted by the Wife, it is for her concern over her cash flow problems that has led to such credit cards debts, and I am not convinced that it has been shown to my satisfaction that her such credit cards spending were unreasonably excessive or extravagant in the circumstances, I accept that such credit cards debts should be duly taken into account as part of her liabilities.  

Husband’s Credit Card Debt

105.  The Husband’s credit card liabilities were at that time stated to be HK$99,135 which is comparatively insignificant, and given his income he will probably have paid off all his monthly credit cards expenses when they are due every month, but for the present purpose they should similarly be taken into account as part of his liabilities.

Withers’ Legal Fees

106.  As noted above the Wife used to engage Withers in these proceedings but stopped doing so in January 2016 without settling their outstanding fees of about HK$1.65m, for which Withers had instigated taxation proceedings against her with additional costs and expenses close to HK$180,000. She argues that these total outstanding legal costs of some HK$1.83m should properly be part of her liabilities to be met by the marital assets or by the Husband.

107.  For the same reasons already given, I accept these outstanding fees as part of the Wife’s liabilities and to be taken into account when I come to consider applying the sharing principle of the matrimonial property. I shall next deal with what is clearly the most controversial issue in these proceedings between the parties: The Husband’s A3 Shares and Benefits.   

Husband’s “A3 Shares & Benefits”

108.  With all the numerous issues between the parties in the proceedings, this item clearly stands at the heart of their disputes, of which the Wife has identified two fundamental issues in her Closing Submission as follows:

(a)   Should they be regarded as bonuses awarded for a year of completed performance, or as according to the Husband, an award earned over time?

(b)  Should they be treated as in the nature of post-separation accrual, and in consequence not amenable to sharing with the Wife?

109.  To answer these questions, it would be necessary to first understand the terms and conditions of these awards as set out in the Husband’s employment contract with A3 to which he is entitled or eligible to participate as part of his remuneration under Clause 4.4 [P3/1028] as follows:

“Without prejudice to the provisions of clause 4.3 above as at the date of this Agreement the two discretionary incentive plans operated by the Group in respect of your employment are the A3 Deferred Bonus Plan 2011 (“ABP”) and the A3 Long Term Incentive Plan 2011 (the “LTIP”); you will be eligible to participate in the ABP and the first opportunity at which the Remuneration Committee anticipates it will exercise its discretion to make any award under the ABP will be March 2014; you will be eligible to participate in the LTIP and the first opportunity at which the Remuneration Committee anticipates it will exercise its discretion to make any award under the LTIP will be March 2013 in exercising any discretion under the LTIP on a “Change of Control” (as defined in the LTIP) including its discretion to apply pro rating or pay in full it is agreed that the Remuneration Committee will have due regard to your performance.”   

110.  According to the Husband, when these proceedings were commenced, he had not received any of his LTIPs as they had not yet vested and hence he did not have any legal ownership over those benefits which are also subject to future performance conditions and clawback, nor is the tax due until the shares vest, which is why he stated their value as “Unknown” in his Form E, but which he had subsequently produced information and documents through letters from both A3 and Deloitte, the accountants for the company, in respect of these benefits as listed in his narrative affidavit [P18/6254]. In any event he claims that all his pay, contracts and conditions are all publicly disclosed information including the A3 Annual Reports, the details of which he had already explained to the Wife.

111.  The Wife however called these letters from A3 unreliable, inaccurate and self-serving which were commissioned by the Husband for the purpose of these proceedings and an attempt to play down A3’s past and future performance and hence the value of his remuneration and especially his deferred compensation, of which she has produced her own Schedule of what she believes to be his compensation from A3 for 2013 to 2016 [P17/6049], and summarised as follows:

2013	£5,555,000 (HK$56,216,600)
2014	£5,682,000 (HK$57,501,840)
2015	£5,528,000 (HK$55,943,360)
2016	£4,125,446 (HK$41,667,005) + 2016 Annual Bonus TBC in March 2017

112.  While she accepts that all these figures are gross amounts subject to UK tax as high as 47%, and that all his share awards are also subject to performance conditions which will determine how many of the actual number of shares that he has been awarded he will receive upon vesting, she concludes that their value would still be in excess of HK$56M in total of those years.   

113.  The Husband of course disputes these figures, pointing out that his net total earnings after tax for the tax years ending 5 April 2013 to 5 April 2016 was £4,398,224.47 (HK$44,861,889), of which £1,177,612.85 relate to his 2013 LTIPs which he cannot sell due to the dealing restrictions that apply, while their total legal costs incurred by then were in excess of HK$30 million, and on top of which he had paid almost HK$20 million for her maintenance and the children’s during that period, as well as his own living expenses and the mortgages of the UK and Malaysian properties.

114.  He further argues that it was not until the trial that the Wife had conceded that the LTIPs should not be valued on the basis of 100% vesting, and that her insistence on putting a dollar figure on the LTIPs has been the fundamental obstacle to settlement and a key driver of their huge legal costs, in particular when the figure she assessed was on occasions in excess of 50% of the suggested asset pool, whilst unreasonably refusing his proposal of a SJE to conduct an assessment of his A3 remuneration as early as July 2015 before the FDR hearing.  

115.  Inevitably a SJE report was obtained, and these benefits were further clarified by the SJE Mr Andy Goodman in his report dated 22^nd November 2016 [P19/6625] as to how the ABP and LTIP operate, which can be summarised as follows:

(a) Each year up to two thirds of the Husband’s annual cash bonus is received in the form of either a “Conditional Share Award which is a conditional right to acquire shares in the future, or an Option which is a right to acquire shares in the future, or a combination of both as a Deferred Share Award or Bonus Plan Award;

(b) Performance conditions do not apply to Bonus Plan Awards, and when such an award vests, the Husband is entitled to the shares transferred or issued to him, and the date when it will vest will be notified to him at the date of grant of the award, and he will also be entitled to receive a dividend equivalent as soon as practicable following vesting;

(c) Subject to the approval of the directors, the Bonus Plan Award may be satisfied in cash rather than shares, although there is a clear understanding and expectation amongst A3, the shareholders and participants that it is highly unlikely that they would be so satisfied;

(d) LTIPs are however subject to performance condition which is measured over a performance period of 3 financial years, and hence it can be said that they are earned roughly one-third per year;

(e) The vesting of LTIPs are based on the extent to which the performance conditions are achieved, which are set out in the Report;

(f) Unvested LTIPs will cease to be capable of vesting if the Husband ceases employment with A3 unless he is a good leaver;

(g) The Husband’s 2013 LTIPs were vested on 4^th April 2016 at 53% vesting and not subject to any claw-back requirements, but he is required to accumulate and hold the shares in A3 equivalent to 300% of his salary;

(h) At the end of the performance period, the directors may adjust downwards including to nil the number of shares in respect of which an award vests;

(i) Shares awarded after 2015 are subject to a clawback period of 2 years after the three year vesting period;

(j) Up to a maximum of income tax at 45% and an employee’s national insurance at 2% giving a 47% total rate may be chargeable on the market value of the shares vested to the Husband, and that the tax is assessed on three separate equal tranches in each of the three years following the grant consistent with the period the LTIPs are earned;

(k) The potential range of awards to the Husband based upon the various future performance factors that may affect the number of shares that will vest makes it difficult if not impossible to predict with certainty, but the final vested outcome and plan rules concerning his awards are publically available, and that he only acquire legal ownership of the shares once they have vested.     

116.  The Report went on to confirm that there is no details of the LTIP Award granted to the Husband on 4^th April 2013 due to the fact that this LTIP Award vested on 4^th April 2016 such that the LTIP Award no longer subsists and he has taken full ownership of the shares previously subject to the LTIP Award, and that this LTIP Award was granted in respect of 983,277 shares and 91,175 Dividend Equivalent shares, performance of A3 against the Performance Condition gave rise to 53% vesting, as disclosed in the A3 2015 report and accounts, or 569,459 shares which are not subject to any clawback requirements, but 300,000 or so of which are subject to tax.

117.  As noted from the beginning of this judgment, it is the Husband’s case that those A3 income and benefits from 2014 onwards are to be categorised as post-separation accrual, as he submits that the date of separation clearly relates to his earnings as to whether they are attributable as matrimonial assets, as it would neither be fair nor in accordance with the legal principle for the Wife to receive a substantial part of the post-separation accrual no matter when it is actually earned, which thus brings me to the next major issue between the parties: When exactly did they separate?

Date of Separation

118.  Clearly this is relevant not for the purpose of computing the length of the parties’ marriage which both parties have accepted as one of substantive, but rather to the Husband’s case as to whether his A3 income and benefits are indeed accrual after their separation, of which he says was January 2013 when he moved to London for the A3’s appointment without the Wife, while she says it was only in May 2014 when they actually separated as she had so pleaded in her petition for judicial separation.

119.  The Husband’s case can be found in his narrative (8^th) affidavit of 27^th September 2016 [P18/6251] under the subtotal of “Separation and move to London” [P18/6266] where he asserted that the marriage started to break down in the latter part of 2010, that he and the Wife had grown apart but for the sake of their children that they attempted reconciliation and remained living together until December 2012 when he finally decided to separate from the Wife, as he explained as follows:

“[76] I told the Petitioner that I intended to accept the offer with A3 in London and she knew that I went to London to accept the contract of employment. I thought that the offer to become CEO of A3 was a wonderful opportunity for the family as a whole. I also thought that it might rescue the marriage. The Petitioner’s assertion in her Petition for Judicial Separation that I did not consult with her before accepting the job in London was untrue. D was only 14 years old at the time and a family move was entirely feasible and normal for my career as an international CEO as we had already moved from New Zealand to Hong Kong in 1999.

[77] The Petitioner disputes this separation date and claims that the separation date is 13 May 2014, the exact date she filed her petition for Judicial Separation. However, the Petitioner states as one of her grounds of her original petition for Judicial Separation the ground that I had accepted the A3’s job offer in London 2013 without inviting or making plans for the petitioner and the Children to move with me as a family [P1/2]. This is to my mind a clear statement of separation in January 2013. It is my view that when there is a distinct physical and emotional separation and the Petitioner and I are no longer living in the same household or country, we are clearly separated.

…

[79] In 2012, the Petitioner wrote a handwritten letter to me asking for a temporary separation, as she believed that we needed time apart until we were certain about what we wanted for the future. The Petitioner expressed that she was unhappy with our marriage and that our expectations in our marriage were fundamentally different. The Petitioner asked me to move out of the matrimonial home and she stated that if there was to be any involvement with a third party during the temporary separation period then the separation would become permanent for her. There is now produced and shown to me … a copy of the Petitioner’s handwritten letter to me.

[80] On 22 June 2012, the Petitioner wrote to me about her unhappiness with the state of our marriage and intentions for a separation … On 27 June 2012, the Petitioner also expressed to me her unhappiness as to the marriage.

[81] In hindsight, my acceptance of the employment offer from A3 in November 2012 only served to exacerbate these underlying tensions between us and my move to London served to crystallize the conclusion of our marriage. I was disappointed that, after many discussions, the Petitioner stuck with her decision and refused to move to London with me on the basis that I was not willing to split the family assets, much of which had by then been settled into the Trusts.

[82] I barely saw the Petitioner over my last four weeks in Hong Kong at the end of 2012. I had been working very hard and travelling a great deal with the new job. We had begun living separate lives at that time with minimal communication. In this period the petitioner accused me of making her feel like she was “the last person on my priority list” and “not bothering to communicate with her” and that “I spent my time doing my own thing”. All the while, I felt that she was unsupportive in my working life and I felt abandoned.

[83] The resentment between us was compounded by a lack of effort or interest in communicating on both our parts. The mutual distance between us is evidenced by her email of 14 December 2012 … By an email dated 15 December 2012, the petitioner wrote to me “you have already made me adjust to not having much of a relationship/marriage with you for a long time.” …

[84] By Christmas 2012 our relationship became so strained the Petitioner suggested by email … that we spend the Christmas apart and see the Children separately. I was taken back by the suggestion because of its impact on the Children’s feelings. Much of those Christmas holidays were spent apart and we would each spend separate weeks with the children.

[85] All in all my decision to move to London and the petitioner’s decision to remain and not move with us marks the point of no return for our relationship. I can still vividly recall my feelings when I said goodbye to the Petitioner and the Children in the lift lobby of the Hong Kong apartment en route to London. That moment marked the formal separation with the Petitioner as our marriage was ended and the family unit was broken … “

…

[87] When I visited the Petitioner and the Children in Hong Kong, I usually stayed in hotel. On some occasions, when I stayed with the petitioner and the Children in the former matrimonial home, I usually slept on the sofa or in a spare bed. On those occasions that we did meet the Petitioner would often become angry with me, and tell me again that our marriage was over.

[88] My visits (which were made to see the Children) did not alter the fact that we were living separate lives, in separate households, in different countries and had been since January 2013. We were no longer living as a family. The mutual support and feeling between us was no longer there and she certainly was not contributing to my career in any positive way.

[89] Following my move to London and our separation, our relationship further deteriorated to the point that we could not even discuss logistical matters concerning the Children. At the Petitioner’s request, the petitioner and I had one weekend alone together in Dubai in February 2014, which did not change my view that the petitioner and I were separated since my move to London. The holidays together with the Children since January 2013 were solely for the benefit of the Children and once the holidays were over we went back to living separate lives … The Petitioner has suggested to me recently that we should consider spending the Christmas holidays together with the Children even upon the conclusion of these proceedings, which I agree. I respect the Petitioner for suggesting as this is in the best interest of the Children despite our separation and divorce.”

120.  The Husband further pointed out in the same affidavit that by the time of their meeting in February 2014 in Dubai, the Wife was already dating other people, and that when he stated in his Form E of the date of their separation in March 2014, it was a mistake on his part due to the huge time commitment of his new job and the physical distance and time difference from his lawyers, as well as his lack of full understanding what separation date actually meant.

121.  Mr Coleman submits that one of the very first primary statement of relevance in fact flowed voluntarily from the Wife when she stated in her petition for judicial separation [P1/2]:

“8.2 In December 2012, the Respondent accepted a job in London without informing the Petitioner and moved to London on his own in January 2013 without inviting or making any plans for the Petitioner and the children to move to London with him as a family.”

122.  This statement, Mr Coleman submits, reflects the conversations appearing on the tape transcripts prior to December 2012 which give the flavour that shows there is no surprise at the separation when the Husband moved to take up the A3 job in London, as in Tape 30/10/11 [C13/4468] when he said it is like her pulling a handbrake on him at work all the time, or [C13/4472-3] when she referred to CEO’s failed marriages when taking another CEO job was just what he did; or in Tape 26/6/12 [C13/4570] when she said they should separate referring to her letter [P18/6315] or email [P15/5704], or when she said she had taken legal advice [C13/4670].

123.  Indeed, Mr Coleman submits, it is of note that the tape transcript of 1/10/12 [C13/4672], a conversation most contemporaneously close to the Husband’s move to London, which records his invitation to the Wife to join him in London and her rejection of such proposal that is an obvious sign of separation.  

124.  The Wife disagrees with the Husband that they separated when he left Hong Kong in January 2013, and her version of their separation can be found in her 6^th Affidavit of 24^th April 2015 [P10/3643] in which she said:

“6. Many married couples live in different countries because of work opportunities and because of their children’s schooling requirements and choices. The Respondent had been unemployed for two years and could not find suitable work during this time in Hong Kong and decided himself that he wanted to take a position he was offered in late November 2012 with the xxxxxxxxx company A3 based in London. He moved to London in January 2013 to start his new position with A3.

7. Throughout 2013 and early 2014 the Respondent commuted to Hong Kong on a regular basis to stay and spend time with the children and me in our apartment when he was in Hong Kong.

8. We were still known at this time and throughout 2013 and early 2014 to be a married couple to our children, extended family and friends. We also still continued to travel extensively during 2013 and early 2014 on holidays as a family to the Maldives, New Zealand, Corsica, Monaco, USA, Australia and Koh Samui. We had problems in our marriage as many married couples do and were struggling how to resolve those problems on our own. But we were still emotionally very close to each other and were also having a physical relationship throughout 2013 and early 2014.

9. The records of conversations and email correspondence between us in 2013 and 2014 highlight the problems we were facing as a couple but also the emotional closeness we still had for each other. Throughout that email correspondence we are continuingly telling each other how much we loved each other. Those emails show that we discussed moving to London, as well as the fact that I was fighting to make our marriage work and went as far as organising further marriage counselling for us between March to June 2013 to help us resolve our problems.

10. In February 2014 we spent valuable time together by ourselves on holiday in Dubai to discuss how we could resolve our marriage problems and also make plans for what was needed to organise a move for myself and the children to be with the Respondent in London at the end of the school year in 2014. There is now produced … a copy of a number of personal emails sent concerning that trip. It was a happy time with difficult issues we still had to resolve nonetheless. And I thought during that holiday we were getting somewhere: the Respondent said for example in his email sent on 16 February 2014 at 4:40pm (which also refers to our physical relationship, “I do love you so much at these times. I also love the little things you have started to do such as the notes and the touches on my hand. It really makes me miss you.” This is in stark contrast to the Respondent’s case in his Affidavit where he states unequivocally at paragraph 16, “The sad truth is that once I had left Hong Kong, I felt completely distant from the petitioner both physically and emotionally. My feeling towards her had changed. By March 2013, I was no longer wearing my wedding ring because, as I told the Petitioner by email, I simply did not feel close enough to the petitioner to do so.” The picture he has painted in his Affidavit about our emotional and physical ties is clearly inaccurate.

11. After this Dubai trip, the Respondent started contacting London real estate agents for family homes for sale in London and an education consultant for children’s schools in London (see paragraph 22 below and exhibit …”)

12. Also in February 2014, the Respondent advised me that he was also planning a holiday for just us to celebrate our 20^th wedding anniversary in late March 2014 … also includes a copy of that email dated 9^th March 2014: the respondent says :”I have been thinking that we should celebrate our 20^th properly. Perhaps a weekend in Paris Venice. What do you think? xx” and my emailed response is included, too, where I say, ”Yes that sounds like a really nice idea”.

…

14. In early March 2014, I attended with the Respondent and our children celebrations with his extended family for his parents’ 50^th wedding anniversary, which were held in Sydney, Australia … unfortunately, as a result of this trip and due to the lack of commitment being shown and the lack of priority being given by the Respondent since our Dubai trip to resolving our problems, I realised that I had done everything I could to try make our marriage to work and that I could not make it work on my own. Consequently I started at this time seriously to consider the option properly separating and decided to discuss in person with the Respondent at the end of our trip to Sydney. I knew that I was still not ready to end our marriage and had hoped that the respondent might not want us to separate.

15. Unfortunately, on 24 March 2014, the Respondent emailed me two days before our 20^th wedding anniversary that he wanted a separation. As a result, I filed for Judicial Separation in May 2014, which was when we first informed our children, family and friends that we had separated. I appreciate that Judicial Separation proceedings are unusual, but in my case I wanted only to file for Judicial Separation because I wanted to keep the possibility of a reconciliation open.”     

125.  In her 12^th Affidavit the Wife further elaborated on the Husband’s move to London in January 2013 at para7 [P16/5794 - 5]:

“ … In October and November 2012, M undertook interviews for the position of Xxxxx CEO of A3 based in London, and in November 2012, M was offered and accepted this position with A3.

It was decided in the short term that the children and I should stay in Hong Kong to allow the children to finish the school year, as places in our preferred schools in London could not be secured. Our oldest daughter had also started her two year IGCSE course.

M signed a seven month lease for a bigger three-bedroom apartment in Repulse Bay for the family and we all moved into the apartment in December 2012.

In December 2012, and through to the first week of January 2013, we were away for the Christmas holidays as a family to the Maldives.

After the holiday in January 2013, M moved to London to start his new job with A3. Through 2013 and 2014, M commuted to Hong Kong on a regular basis to visit and stay with the children and me.

In July and August 2013, the children and I visited and stayed with M in his rented apartment in London. We also took a holiday at this time aas a family with friends on a large private motorboat cruising around Corsica and then we spent some time in the South of France.

In July 2013, M extended the lease on our apartment in Hong Kong for another 12 months, after we made the decision that D (eldest daughter) would complete her IGCSE course in Hong Kong. A move to London for the children and I was planned at the end of the school year in 2014.

In May 2014, I issued Judicial Separation proceedings in Hong Kong after receiving an email from M about wanting to separate in March 2014.”

126.  Mr Westbrook submits therefore that even on the Husband’s case the parties had holidays together in 2013 including sharing a hotel room, but that he tries to describe those times which they spent together as reconciliations rather than a substantial period in a marriage, during which the Wife describes how she remained in Hong Kong with the husband’s agreement for the daughters’ schooling, particularly given that their eldest daughter was then completing her 2-years IGCSE course for the examination in June 2015.  

127.  Mr Westbrook further submits that the parties were still planning to reunite as a family as late as February 2014 is obvious from the emails between them which the Wife has produced, and which also show that Education consultants were engaged to advice on suitable schools and estate agents were looking for a suitable family home where they could all live [P10/3670 – 3678], and that these emails are wholly inconsistent with the story the Husband has advanced that the parties separated at end of 2012 or January 2013.

128.  Other inconsistencies can be found, Mr Westbrook argues, in particular the fact that the parties went on a romantic holiday to Dubai in February 2014 from which it was clear that intimate physical relations were still continuing between them, as evidenced in particular the covering email from the Husband dated 16 February 2014 in which he also suggested how to resolve the issues they had [P10/3655 – 3656] and the email on 9 March 2014 where he suggested they spend their 20^th wedding anniversary in romantic destinations such as Paris or Venice [P10/3658]. 

129.  It also seems quite clear, Mr Westbrook submits, that matters actually came to a head only afterwards when the parties went to Sydney to celebrate the 50^th wedding anniversary of the Husband’s parents, when the Husband wrote in his email dated 24 March 2014 [P10/3660] with the following salient parts:

“It is difficult to write this so close to our 20^th wedding anniversary but given our discussion at the coffee bar where you made it clear you wanted to separate there wasn’t any other choice…

Although we still love each other deeply it is clear that we can’t give each other what we need. You told me in Australia that you wanted to split up and I agree this is the only thing we can do. This undoubtedly will be painful but less painful than staying together.

I don’t think we should tell the kids until after D has finished her exams as this may impact her results.”

130.  The contents of this email, Mr Westbrook submits, are inconsistent with the Husband’s story that the parties had already separated almost a year and a quarter earlier, and that to the contrary it makes it crystal clear that the decision to separate was only made in late March 2014, which is further reinforced by the many WhatsApp messages exchanged between the parties in May and June 2014 where they discussed at length when and how to tell the children they were separating, something that was never mentioned before to them and which distressed the Husband [P16/5873 – 5900].

131.  Mr Westbrook further submits that it does the Husband little credit to seek to blithely dismiss all this evidence as attempts at reconciliation, as he is simply trying to cynically manipulating events after the proceedings began for his own selfish advantage to support his case that his A3 income and in particular his bonus shares and LTIPs can then be classified as post-separation accruals and hence not to be included in their marital assets for equal division with the Wife.

132.  In my view there is certainly evidence to suggest that that was indeed the Husband’s motive to argue January 2013 as their separation date in his attempt to exclude his A3 shares benefits from the marital assets for division, when he remarked in his same narrative affidavit at para102 of why he is so adamant that the Wife should have no right to make any claim against those benefits [P18/6974]:

“My A3 income and future earnings have entirely been created by virtue of my own hard work and efforts. None of my A3 earnings have been generated by use of any asset created during the marriage, of which the Petitioner can validly assert an unascertained share nor has my A3 income been generated as a result of economic growth on matrimonial property arising after our separation.”

133.  Putting aside that as a matter of general principle on sharing of marital acquest, the rationale of the Husband as to the right to share his A3 income is clearly flawed, and of which I will no doubt come back to elaborate further later in this judgment, that statement of his does in my view go to strongly support the possibility of his motive, but equally it could be argued that that was the same motive for the Wife to put their separation at a later date to 2014, as pointed out by the Husband in his preceding paragraph101 [P18/6273]:

“My long term incentive payments and bonuses I receive from A3 have been highly disputed in these proceedings, both as to the quantum and whether it forms part of the marital assets. When these proceedings were commenced by the Petitioner, I had not received any of the LTIPs as they had not vested. I suspect that this is one reason for the Petitioner’s continual attempts to delay these proceedings. For the avoidance of doubt, it is my case that my A3 income is to be categorized as post-separation accrual.”

134.  However, in my view if indeed it was the motive of the Wife to delay these proceedings so as to lay her claim against the Husband’s unvested LTIPs shares, then I wonder why would she choose to institute proceedings in May 2014 instead of further delaying her proceedings until at least some of those shares have become vested?     

135.  Whilst it cannot be disputed that the Husband did leave the Wife and children behind in Hong Kong in January 2013 to move to London by himself and that he has since never resided with them either in London or Hong Kong save on holidays, that however does not necessarily constitute the fact that the parties were living apart so long as they bona fide recognised the marriage relationship as continuing, as so stated in Rayden & Jackson on Divorce and Family Matters, 18^th edition, Chap 9.57, that “relationship does not end by reason of a separation brought about by the presence of external circumstances such as absence on professional or business pursuits, or in search of health, or, it may, even of pleasure.”   

136.  The external circumstance in this case which brought about the parties’ separation in January 2013 is undoubtedly the Husband’s decision to accept A3’s offer of employment in late November 2012 which required him to take up his position in London by January 2013 after spending Christmas in Hong Kong, in which case it would indeed have given the parties very little time to uproot the entire family from Hong Kong where they have established their home and connections over the previous 14 years, therefore as far as timing is concerned it does go to support the Wife’s case that it was the parties’ decision that she should stay in Hong Kong for the time being to allow the children to finish their school year as places in their preferred schools in London could not be secured, while their eldest daughter had also started her IGCSE course.   

137.  Furthermore, the fact that the Husband initially signed a short lease for a new apartment in Repulse Bay for the Wife and the children for 7 months only up to July 2013 in my view is also consistent with the Wife’s case that the parties’ original intention was for her and children to move to London in that summer upon the children finishing their school year in June 2013, as otherwise if the parties had decided to live apart in January 2013 with the Wife to remain living in Hong Kong with the children, it makes no sense for the Husband to sign and the Wife to accept such a short lease for her accommodation and the children.  

138.  Then of course when July 2013 came and the Wife and children still had not left Hong Kong but instead had the lease of their apartment extended by the Husband for a further 12 months, which is also onsistent with the Wife’s case that it was again the parties’ further decision to postpone the family’s move to London for a year so that their eldest daughter could complete her IGCSE course in Hong Kong, but she and the children did visit the Husband in London in that summer during which they took holiday trips to Corsica and south of France, followed by a romantic trip to Dubai in February 2014 just for the two of them, and then a trip down to Australia in March 2014 for his parents’ anniversary where the parties finally realised that they wanted to separate and live apart.

139.  The Husband does not dispute any of these trips and the time spent with the Wife after January 2013 but put all of them down as their attempts for reconciliation, and relies on his taped conversations in particularly in 2012 to show that all was not well with their marriage which eventually led to their separation when he moved to London by himself in January 2013.

140.  While those taped conversations do indeed reveal the Wife’s complaints about feeling neglected by the Husband for being too busy with his job, while he was also unhappy about her lack of support for his career, and that there appeared to be some reservation on her part at that time to join him in London, and while it is accepted that a decision to live apart need not be communicated to the other party as submitted by Mr Coleman for the Husband, if indeed he had made such a decision in 2013, the fact that it was not recorded anywhere in any of his numerous communications with the Wife whether by Emails, WhatsApp or otherwise seems to me inconsistent with the submissions of the Husband being ‘highly proactive, focused and organised’ that it seems to me ‘unthinkable that he would not have explored education and housing for the family in London in 2013 or that he would not have put those plans in place by 2014’ which he otherwise would have produced as evidence, and that the Wife who is also an ‘extraordinary detailed person who plans to minute details and to consider every option and factor from every angle that it is inconceivable that if there were plans to move the children in 2013 that she would not have put those plans in place’, as one would have expected the parties or at least the Husband to inform and discuss about his future plans for the Wife and the children arising from or as a result of their separation or his decision to separate.   

141.  In my judgment the fact there was no plan exploring education and housing for the family in London at that time is more consistent with the Wife’s case that the parties had initially agreed for the children to first finish their school term before moving in the summer of 2013, which explains the Husband signing the lease for their apartment until July 2013, followed by their subsequent decision to defer the move for another year to enable the eldest daughter to complete her IGCSE course in Hong Kong, which again explains why he then accordingly extended the lease for the Wife’s apartment for a further 12 months.

142.  In the premises I am satisfied that the facts and evidence before me are more consistent with the Wife’s case that there was no separation between the parties until at least after the family gathering in Sydney in March 2014 when they decided to separate as evidenced by the Husband’s email of 24^th March 2014 above, and confirmed by the Wife’s subsequent judicial separation proceedings taken out 2 months later in May 2014, and more significantly her subsequent divorce petition in these proceedings one year later in May 2015 based on the parties’ separation for one year since May 2014 to which the Husband gave his consent in his Form 4 through his solicitors.

143.  It also seems more likely to be the case that he was stating the truth in his Form E when he put the date of separation as March 2014, rather than his subsequent explanation that it was a mistake on his part due to huge time commitment of his new job, his physical distance and time difference from his Hong Kong lawyers and his lack of full understanding of what separation meant and the significance of the correct date of separation, all of which sound to me more of an afterthought and damage-control due to his desire to raise the issue of his A3 income and benefits as post-separation accruals so as to keep them from the Wife’s claims.     

Are A3 Remunerations/Benefits Non-Matrimonial?

144.  Now that I have come to the conclusion that the parties separated no earlier than in March 2014 instead of January 2013, it is worthy to note that the Husband has included his 2013 LTIPs which vested in April 2016 in his Schedule of Assets as reflected in his bank accounts for division, and hence by his open proposal the Wife would be entitled to 50% thereof, which the Husband now submits to be actually more than she is entitled even based on her own date of separation, and that for his LTIPs earned thereafter and to be vested even much later, not to mention all those conditions and uncertainty upon which they are to be vested, of which he argues that it cannot be fair that the Wife shall be entitled to have any further claim to those shares.

145.  To drive home his points, the Husband has produced a schedule prepared by Deloitte on his instruction to demonstrate vesting assumptions of his LTIPs and bonuses at 0%, 20% and 100% based on the SJE Report.

146.  The particular relevance of the Deloitte Schedule [C16/5466], Mr Coleman submits for the Husband, is that it simply illustrates the Wife’s percentage entitlement to deferred A3 income using the SJE findings with an overlay of the respective separation dates claimed by the parties, and which shows the dollar value using the SJE’s opinion to pay out the Husband’s unvested awards and the percentage of LTIPs the Wife might be due under the various separation dates.

147.  Given my findings of the date of separation in or about March 2014, and therefore ignoring those figures relate to the Husband’s date of separation, the Deloitte Schedule shows that the Wife’s entitlement to the 2014 LTIPs would be negligible, and none at all thereafter:

Year Grant	Earning Period for LTIPs	May 2014	+ 1 Year
2013	01/01/2013 – 31/12/2015	38%	71%
W’s entitlement		19%	35.5%
2014	01/01/2014 – 31/12/2016	4%	38%
W’s entitlement		2%	19%
2015	01/01/2015 – 31/12/2017	0	0
W’s entitlement		0	0
2016	01/01/2016 – 31/12/2018	0	0
W’s entitlement		0	0

148.  Mr Westbrook however submits that firstly, it is trite law that the resources of the parties must be taken at the date of the trial and not some earlier date, and secondly, that the Husband’s argument that his A3 remunerations and benefits are post-accruals and hence non-matrimonial should not be allowed as the financial nexus between the parties has not been severed at the date of the trial.

149.  Secondly, Mr Westbrook submits, it has recently become fashionable for parties in the position of the Husband to attempt to reduce their liability by arguing that certain of the assets are non-matrimonial, and whilst this may have a validity where there are inherited assets that have been kept segregated, as was recognised in White v White [2001] AC 596; Miller & McFarlane [2006] AC 618, and in LKW v DD [2010] 13 HKCFAR, this does not however apply in respect of income arising during the marriage, and where, as in the present case, the financial nexus between the parties has not been severed at the date of trial.

150.  Of particular relevance to that submission of the Wife, Mr Westbrook refers to the case of Cowan v Cowan [2001] 3 WLR 684, where the parties married in 1959 and had two children. In 1965 they began selling polythene for damp courses in the building trade. The husband subsequently started a business manufacturing polythene bags which prospered and as a result the parties amassed substantial assets included properties. Difficulties in the marriage developed and in 1992 the wife filed a divorce petition which was however not served until 1998. The parties separated in March 1994 and the husband subsequently sold the business but retained shares in the purchasing company, eventually selling them for some £6.8M. On the wife’s application for ancillary relief, the judge made the award on the criterion of reasonable requirements, and the wife appealed following the House of Lords’ decision on White v White. In allowing the appeal and rejecting the husband’s argument, inter alia, that in the 6 years of separation from the wife, he had enhanced the value of his business, and for which he should be given sole credit. In rejecting the husband’s argument, the English Court of Appeal held that the assessment of assets must be at the date of trial, and that the husband had simply been managing and investing the wife’s undivided share of their matrimonial assets in those 6 year post-separation, when Thorpe LJ stated at p708D:

“ … The assessment of assets must be at the date of trial or appeal. The language of the statue requires that. Exceptions to that rule are rare and probably confined to cases where one party has deliberately or recklessly wasted assets in anticipation of trial. In this case the reality is that the husband traded his wife’s unascertained share as well as his own between separation and trial, particularly committing those undivided shares to the investment in Baco. The wife’s share went on risk and she is plainly entitled to what in the event has proved to be a substantial profit. If this factor has any relevance it is within the evaluation of the husband’s exceptional contribution.”

151.  Mance LJ, as he then was, sitting in the same Court of Appeal agreed and further explained the proper approach towards any post-separation increase in assets as a factor for consideration as to their division at 725B:

“130. Mr Pointer submits that the court should look at the nature and extent of the assets in 1994 when the parties finally separated, or should at least take account of that separation and of the substantial subsequent increase in assets due, in particular, to the takeover of HD by Baco in 1997 and Baco’s subsequent disposal in 2000. This increase was also, he submits, a result of Mr Cowan’s business acuity. He further submits that at trial it was irrelevant and unnecessary to go into this aspect; Mr Cowan and his advisers were, on the then state of the law, justified in assuming that Mrs Cowan’s claim could be effectively restricted by reference to her (reasonable) requirements. Only since White v White has the relevance of extra assets emerged, and the court should allow investigation of the time at which and reasons for which they emerged, by directing a further hearing.

131. I start with Mr Pointer’s basic submission that the date of separation represents a cut-off date. I am unable to agree with it. I note that section 25(2)(a) itself requires the court, when exercising its power to make among other things a property adjustment order, to have regard to, inter alia, “the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future”. (Emphasis added.)

132. Further, the date of the exercise of the court’s power is not only accepted to be the traditional date but is, as it seems to me, also the natural date in a case such as the present. Here the parties have lived apart, either content or obliged to wait before any divorce. The bulk of the assets was in the meantime the husband’s and under his control. He could do with it as he wished. She had no opportunity to use the assets or to increase them in the meanwhile. If the husband lost the moneys, the wife would suffer. If he added to them, one might expect the wife to benefit.

133. We were referred to reasoning of Coleridge J in N v N (unreported) 28 January 2001, where he thought that there was “intrinsically some merit … in this particular case” in an argument that he should “take into account the huge increase in the value of the X group since the separation”. But Coleridge J went on to say that he was quite sure that even now in most cases the date of the hearing was the correct date of valuation. It was only “where there has been a very significant change accounted for by more than just inflation or deflation” that he thought that “the court must have an eye to the valuation at the date of separation”. The crux of his thinking appears in the next paragraph, where he said:

“In this case the increase in value is attributable to extra investment of time, effort and money by the husband since separation and I do take into account the exceptionally steep increase in the turnover figures since the date of separation.”

134. What Coleridge J was doing was not undertaking the whole valuation exercise at a different date from that prescribed, as I see it, by the statute as well as by tradition, but taking into account, as a potentially relevant factor, that it was only by virtue of the husband’s extra work and money that the “huge increase” in value between separation and hearing had occurred. That links with the issue to which I have to return, to what extent, if any, is it now relevant to seek to evaluate the contribution made by either party to the overall wealth as at the date of the hearing. If this is relevant at all, then it may be that one party’s special skill in accumulating assets will achieve some added weight as a factor if it occurs after separation, but before any divorce or financial hearing. This may be so, despite the countervailing consideration to which I have already adverted, which applies where such a party is in effect trading with and risking the wife’s as yet unascertained part of the overall assets existing at separation.”

152.  Lord Mance of course went on to approbate further the principle that endeavour by one party after separation which is productive of money or property and independent of any contribution of the other party should be reflected in the division of assets in the House of Lords in Mill v Miller/McFarlane v McFarlane [2006] 1 FLR 1186 when he stated at 1230:

“[174] Sixthly, if account is taken of the increase in the value of the parties’ assets during the marriage (the matrimonial acquest), a question may arise about the date up to which one should measure it. Should this be up to date when the parties ceased effectively to live as married partners (here April 2003), as Mr Mostyn considered in his judicial capacity in GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), [2003] 2 FLR 108 at para 34? Or should it be up to a later date such as the date of trial, or even, in a case where an appellate court thinks it right to re-exercise the discretion, up to the date of the appellate decision? Reference was made by Mr Mostyn to my remarks in Cowan v Cowan [2002] Fam 97, [2001] 2 FLR 192, paras 130-135. The matters to which the court must have regard under s 25 include several which exist or appear likely as at the date the court has regard to them (cf s 25(2)(a), (b), (f) and (h)). Others of the listed matters require the court to look back at the past (eg s 25(2)(c), (f) and (g)). To the extent that the focus is on the matrimonial acquest, the period during the parties were making their different mutual contributions to the marriage has obvious relevance. The present may be viewed as a case (paralleling the then unreported decision of Coleridge J in N v N (Financial Provision: Sale of Company) [2001] 2 FLR 69 to which I referred in Cowan v Cowan) where the increase in value of the New Star shares between separation in April 2003 and trial in October 2004 or judgment in April 2005 was contributed to by the husband’s further investment of time and effort, independently on its face of any contribution by the wife. Further, Mrs Miller had here no right to, and could not have been given, any part of Mr Miller’s New Star shareholding in relation to which Mr Miller carried the risk. Mrs Miller has at all times been living in the house, which has now been formally transferred to her. Her only further claim was to a sum of money, assessed by the judge at £2.7m (which Mr Miller paid in two instalments in May and June 2005). Mr Miller cannot easily be said in this case to have been holding on to any asset which should have been Mrs Miller’s, or to owe anything other than money. Assuming that the focus is on assets acquired during the marriage, rather than on the husband’s overall means, it seems to me therefore natural in this case to look at the period until separation.”

153.  These principles on assessment of values of matrimonial assets and in relation to post-separation accruals were then usefully summarised by Deputy Judge Mostyn QC (as he then was) in Rossi v Rossi [2007] 1 FLR 790 at para24:

“24.1 The statute requires all the assets to be valued at the date of trial.

24.2 For the purposes of establishing the matrimonial property in respect of which the yardstick of equality will ‘forcefully’ apply the value of assets brought into the marriage by gift and inheritance (other than the former matrimonial home), together with passive economic growth on those assets, should be excluded as non-matrimonial property.

24.3 Assets acquired or created by one party after (or during a period of) separation may qualify as non-matrimonial property if it can be said that the property in question was acquired or created by a party by virtue of his personal industry and not by use (other than incidental use) of an assets which has been created during the marriage and in respect of which the other party can validly assert an unascertained share. Obviously, passive economic growth on matrimonial property that arises after separation will not qualify as non-matrimonial property.

24.4 If the post-separation asset is a bonus or other earned income then it is obvious that if the payment relates to a period when the parties were cohabiting then the earner cannot claim it to be non-matrimonial. Even if the payment relates to a period immediately following separation I would myself say that it is too close to the marriage to justify categorisation as non-matrimonial. Moreover, I entirely agree with Coleridge J when he points out that during the period of separation the domestic party carries on making her non-financial contribution but cannot attribute a value thereto which justify adjustment in her favour. Although there is an element of arbitrariness here, I myself would not allow a post-separation bonus to be classed as non-matrimonial unless it related to a period which commenced at least 12 months after the separation.

24.5 By this process the court should, without great difficulty, be able to separate the matrimonial and non-matrimonial property. The matrimonial property will in all likelihood be divided equally although there may be deviation from equal division: (a) if the marriage is short; and (b) part of the matrimonial property is ‘non-business partnership, non-family assets’ (or if the matrimonial property is represented by autonomous funds accumulated by dual earners).

24.6 The non-matrimonial property is not quarantined and excluded from the court’s dispositive powers. It represents an unmatched contribution by the party who brings it to the marriage. The court will decide whether it should be shared and, if so, in what proportions. In so deciding it will have regard to the reality that the longer the marriage the more likely non-matrimonial property will become merged or entangled with matrimonial property. By contrast, in a short marriage case non-matrimonial assets are not likely to be shared unless needs require this.

24.7 In deciding whether a non-matrimonial post-separation accrual should be shared and, if so, in what proportions, the court will consider, amongst other things, whether the applicant has proceeded diligently with her claim; whether the party who has the benefit of the accrual has treated the other party fairly during the period of separation; and whether the money-making party has the prospect of making further gains or earnings after the division of the assets and, if so, whether the other party will be sharing in such future income or gains and if so in what proportions, for what period, and by what means.” 

154.  These principles summarised in Rossi v Rossi were subsequently adopted and applied by the Court of Final Appeal in Kan Lai Kwan v Poon Lok To Otto [2014] 17 HKCFAR 415, where it held that the profits accruing to the husband’s company during the post-separation period were to be shared equally between the parties, as they arose out of the business which had been built up in the course of the marriage in respect of which the wife can legitimately assert an unascertained share on the principles laid down by LKW v DD supra, as Ribeiro PJ explained why the approach summarised by Mostyn QC in Rossi is preferred to that of Thorpe LJ in Cowan at p459:

“128. When considering ancillary relief, the financial position is generally approached on the basis of the values existing at the date when the hearing takes place.

129. Where, however, there has been a substantial period of separation prior to the hearing and where during that period, there has been a steep increase in the value of the matrimonial assets attributable to the independent business or professional efforts by one spouse, unmatched by any contribution from the other spouse, grounds may exist for departing from equality. In some such cases, fairness may dictate that the non-contributing spouse has no claim to share equally in the post-separation accrual to the matrimonial assets.

130. There are opposing arguments as to whether a spouse should be excluded in such cases. As Nicholas Mostyn QC explained in Rossi v Rossi …

131. In Cowan v Cowan, Thorpe LJ favoured the former approach and visualised only rare and exceptional departure from equality by reason of post-separation accruals …

132. His Lordship’s reference to “exceptional contribution” was a reference to cases where it can be established that the increase is only attributable to what has been called one spouse’s “stellar” contribution. As discussed in LKW v DD cases in that class are necessarily rare and exceptional. H makes no claim to “stellar contribution“ in respect of the increased profits of the business in the present case.

133. The summary of the principles provided in Rossi v Rossi is broader than Thorpe LJ’s stricter approach and is, in my view, preferable. It points to various factors relevant to deciding whether a post-separation accrual justifies departure from equality, including the length of the marriage and separation, the nature of the property accruing and the means or efforts by which it was acquired, and so forth...” 

155.  Applying the preferred principles summarised in Rossi, Ribeiro PJ proceeded to explain why the increased post-separation profits did not justify departing from equal sharing of the matrimonial property in view of the relatively insignificant period of post-separation in that case:

“134. In my view, the increased Analogue Group profits do not provide a ground for departure from the equal sharing principle in the present case. The parties married in January 1968 and separated in mid-2008, over 40 years later. The period of separation prior to the hearing date was relatively insignificant. The profits accruing to the Analogue Group during the post-separation period arose out of the business which had been built up in the course of the marriage in respect of which W can legitimately assert an unascertained share on the principles accepted in LKW v DD.”

156.  It is on the same principles that the Wife submits in the present case that the Husband’s 2015 and 2016 A3 share awards as and when they vest and become saleable whereupon she shall receive a reducing percentage over the next 3 years of 50%, 40% and 30% respectively in line with the arrangement as in Wells v Wells [2002] EWCA Civ 476 where the Court of Appeal allowed an order for division between the parties of any surplus or deficit of the future sale of the husband’s shareholding in his company. 

157.  That case was of course about sharing of capital albeit in the event of a future sale, whereas in the present case it is about sharing of future income provision to achieve a clean-break situation, and it would be relevant to remind myself of what Baroness Hale said in Miller/McFarlane about the relationship between capital sharing and future income provision where the main family asset was similarly the husband’s very substantial earning and earning power:

“[154] There is obviously a relationship between capital sharing and future income provision. If capital has been equally shared and is enough to provide for need and compensate for disadvantage, then there should be no continuing financial provision. In the McFarlane case, there has been an equal division of property, but this largely consisted of homes which can be characterised family assets. This was not enough to provide for needs or compensate for disadvantage. The main family asset is the husband’s very substantial earning power, generated over a lengthy marriage in which the couple deliberately chose that the wife should devote herself to home and family and the husband to work and career. The wife is undoubtedly entitled to generous income provision for herself and for the sake of the children, including sums which will enable her to provide for her own old age and insure the husband’s life. She is also entitled to a share in the very large surplus, on the principles both of sharing the fruits of the matrimonial partnership and of compensation for the comparable position which she might have been in had she not compromised her own career for the sake of them all. The fact that she might have wanted to do this is neither here nor there. Most breadwinners want to go on breadwinning. The fact that they enjoy their work does not disentitle them to a proper share in the fruits of their labours.”

158.  The argument that a party’s future earning and earning capacity can be regarded as an asset and hence subject to the sharing principle was noted by the English Court of Appeal in Charman v Charman (No 4) [2007] 1 FLR 1246 as too wide as a general application as Sir M Potter P explained at 1276:

“[66] To what property does the sharing principle apply? The answer might well have been that it applies only to matrimonial property, namely the property of the parties generated during the marriage otherwise than by external donation; and the consequence would have been that non-matrimonial property would have fallen for redistribution by reference only to one of the two other principles of need and compensation to which we refer in para [68] below. Such an answer might better have reflected the origins of the principle in the parties’ contributions to the welfare of the family; and it would have been more consonant with the references of Baroness Hale of Richmond in Miller at para [141] and [143] to ‘sharing … the fruits of the matrimonial partnership’ and to ‘the approach of roughly equal sharing of partnership assets’. We consider, however, the answer to be that, subject to the exceptions identified in Miller to which we turn in paras [83] – [86], below, the principle applies to all the parties’ property but, to the extent that their property is non-matrimonial, there is likely to be better reason for departure from equality. It is clear that both in White, at 605F-G and 989 respectively, and in Miller, at paras [24] and [26], Lord Nicholls of Birkenhead approached the matter in that way; and there was no express suggestion in Miller, even on the part of Baroness Hale of Richmond, that in White the House had set too widely the general application of what was then a yardstick.

[67] Even if, however, a court elects to adopt the sharing principle as its ‘starting point’, it is important to put that phrase in context. For it cannot, strictly, be its starting point at all. As Coleridge J himself stated in the passage cited in para [59], above, the starting point of every inquiry in an application of ancillary relief is the financial position of the parties. The inquiry is always in two stages, namely computation and distribution; logically the former precedes the latter. Although it may well be convenient for the court to consider some of the matters set out in s 25(2) other than in the order there set out, a court should first consider, with whatever degree of detail is apt to the case, the matters set out in s 25(2)(a), namely the property, income (including earning capacity) and other financial resources which the parties have and are likely to have in the foreseeable future. Irrespective of whether the assets are substantial, likely future income must always be appraised for, even in a clean break case, such appraisal may well be relevant to the division property which best achieves the fair overall outcome. We appreciate that remarks of Baroness Hale of Richmond in Miller, at para [154], are also said to permit argument that a party’s earning capacity is itself an asset to which the other has contributed and which might to some extent be subject to the sharing principle; this seems to us an area of complexity and potential confusion which in this case it is unnecessary for us to visit.”     

159.  Mr Westbrook submits that a better view is exemplified by the decision of Coleridge J in B v B [2013] EWHC 1232 (Fam), where the wife was a solicitor until the birth of the first of her two children when she became a full-time mother, and the husband was a fund manager and a partner of a prominent private equity investment house. At the end of their 20-years marriage of admittedly very high standard of living especially during the latter years generated from the husband’s very high remuneration from his position as a senior member of MaisonBlau Capital Partners, a prominent private equity investment house where he had worked for almost 30 years since before the marriage, with the then available assets, excluding the husband’s anticipated future remuneration receipts, amounted to £40M, and if including those anticipated future receipts to which a value could be ascertained, the total was about £52M.

160.  While the parties agreed in principle that those available £40M assets should be divided equally between them, at major issue was over those “co-investment” and “carried interest” elements of the husband’s interests in three private equity funds in which he was heavily involved, in that whether the wife should be entitled to share in those investments made after their separation, and if so how, of which His Lordship stated in §53 of his judgment as follows:

i) Fairness is what I am trying to achieve and both sides make sound points, Fairness (the somewhat diluted offspring of justice) is not just about arithmetic and precision of calculation but a broad recognition by the court, after considering all the factors, of the value of the claimant’s (in this case the wife’s role) in the whole marital partnership;

ii) The industry standard/general rule that the date of trial is the date when both the categorisation of the pot and its value is assessed, should not easily be circumvented. The proposition that merely because an asset comes into existence after the date of separation it should be excluded is far too simplistic and is not appropriate when, as here, a respondent’s efforts are merely a seamless continuum of similar pre-separation activity and there is no obvious delay in the proceedings. It is as if the husband is banking his surplus income during the time between separation and trial.

iii) There is no absolutely right or wrong answer or methodology to be applied in this situation. To achieve fairness it is necessary to recognise fully the tension between the fact that the wealth was in part generated by the use of expertise built up during the marriage and in part by the expenditure of effort after the separation. Both elements are important. I do not think this part of the case can be analysed precisely either by reference to the time involved in each phase of the process and/or its relative importance. It is a product of both to some extent. But I make the general observation that the further into the future, post separation, the asset is created or achieves ascertainable value the less, it seems to me, it can be sensibly categorised as “matrimonial”. Beyond that drilling down into the deepest subterranean springs of the arguments adds nothing to the achievement of fairness…”

161.  Coleridge J then proceeded to find a distinction between the co-investment funds and the carried interests, and upon weighing all the arguments as well as the disparity in the parties’ earning capacity, and concluded that the fair outcome was for the wife to have 50% of all the co-investments including cash and the undistributed escrow funds in all three funds as at the date of trial, as well as 50% of the carry in Fund A as at the date of trial, and 20% in Fund B as and when it is received, but not in Fund C as the carry may not be established or ascertained ever or at least for many years and so the wife’s entitlement to share in it was considered as miniscule and had been taken into account in her shares in the other two funds.    

162.  This approach, Mr Westbrook submits would lead to the Wife fully sharing in all assets including accumulated income accrued to date, thus achieving a fair overall outcome. I agree, but also for the following reasons.

163.  Firstly, as I have found above, the parties did not separate until March 2014 which would therefore extend the Husband’s alleged post-separation accruals to then and not end of 2012 or January 2013 as he originally contended.

164.  Secondly, and more importantly, as I pointed out earlier that the Husband’s argument in his narrative affidavit that his ‘A3 income and future earnings have entirely by virtue of (his) own hard work and efforts’ and that ‘none of his A3 earnings have been generated by use of any asset created during the marriage of which (the Wife) can validly assert an unascertained share nor has his A3 income been generated as a result of economic growth on matrimonial property arising after our separation’, therefore the Wife should not be entitled to any claim thereof is both flawed in fact and in principles.

165.  Whilst it is factually true that the Husband has since January 2013 earned all his A3 income and benefits in London and hence away from the company or presence of the Wife which is different from the case when he was in all of his previous employments during the marriage, but the decision for the Wife not to join him in London when he took up the job with A3 was, as I have found above, a joint family decision and no doubt made in the best interests of their children to remain for the time being in Hong Kong, and hence it cannot be fair or appropriate for him to now use this to justify his argument against the Wife sharing such income, no more so, for instance, for the Wife to similarly use the fact that she was left all by herself in Hong Kong to care for the children in the absence of the Husband in order to enhance her claim to share his A3 income and benefits. In my view this is clearly a case of both parties have equally and properly discharged their duty and contribution in their respective roles to the welfare of the family and the marriage under the particular facts and circumstances of their case, nothing more, nothing less.

166.  Furthermore and no less significant, whatever the wealth or value earned by the Husband from those unvested A3 shares and benefits, and echoing the observation of Coleridge J in B v B, while it was no doubt generated in part by the expenditure of the Husband’s hard work and efforts after the separation, it cannot be denied that it was also generated by the use of his expertise built up throughout the entire marriage when he was exclusively engaged in the same business and profession up to the presence no doubt with support of the Wife, as the Learned Judge succinctly observed in his judgment in B v B and cited in paragraph 161 above, that it must be a product of both to some extent.   

167.  As also stated by Ribeiro PJ in LKW v DD supra, the parties’ contributions are generally factored in as an intrinsic part of the sharing principle, and the yardstick which favours equal division unless some good reason exists to the contrary implicitly gives equal recognition to the parties’ respective contributions, though different in kind, as His Lordship referred to what Coleridge J said in RP v RP [2007] 1 FLR 2105, worth citing here as follows:

“[63] … the parties made a life-choice early on in their marriage; that they would have children and so the wife would cease to work. That was a life-choice made by them both with all its pros and cons. From then on her contribution has been just as full as the husband’s but different. At the end both are entitled to a full share of the fruits of their combined and equal contribution; she to ensure that she has a secure future both with and later without the children and the husband so that he can re-establish himself. She has earned it (as Lord Nicholls of Birkenhead stressed in Miller), and so has he. This is not largesse by the husband, it is her entitlement deriving from her valuable contribution.”

168.  The contributions of the Wife in her role as the sole or primary carer of the two younger children until at least 2022 when the youngest one finishes her secondary school in Hong Kong, while the Husband’s contributions will no doubt also continue as the sole financial provider for all three children for years to come. It is from such valuable contributions of both parties that entitle both of them to a fair share of their matrimonial property, but while each will continue to make such contributions after the divorce for the next 5 years or so until they are unburdened by their responsibility towards their children, it cannot be disputed that the Husband will continue to be able to build and accumulate very substantial wealth and assets from his large remunerations from A3 or whatever employer he may end up in for those years to come no matter how uncertain the career of a CEO he may have submitted, while the Wife’s future income during the same period would pale by any comparison, as will be readily apparent when I come to discuss about their respective earnings and earning capacity.

169.  It is therefore my judgment that for the court to achieve the underpinning objective of fairness between the parties in the circumstances require that the Husband’s A3 earnings and benefits earned up to the time of the trial in 2016 be included in the marital assets for sharing as in the Wells case, although not necessarily in the percentage as proposed by the Wife, for which I shall further elaborate later at the conclusion of my decision.   

Add-Back

170.  Apart from his gift of HK$8.55M to his parents of which the Husband has agreed to add back into the marital assets for the purpose of division thereof between the parties, the Wife also insists that the HK$3.9M which she argues still missing and remains unaccounted for by the Husband and hence fairness demands it be added back as well. 

171.  The Husband argues that it is the Wife’s case that unless she “can see precisely where the dollar has gone, she wants it to be added back to the pot” even though she does not believe any money has been hidden by the Husband, as she has raised queries on a number of transactions amounting to more than HK$31 million by him from 2011 to 2015, of which he claims to have answered HK$27.35 million of them immediately including HK$4.3 million were payment to the IRD when he had already provided his tax returns as evidence, and US$114,000 were for the purchase of a 4.0 carat diamond for her [C8/2805], leaving about HK$3.9 million according to the Wife as outstanding pending confirmation from the relevant banks at that time, and which he subsequently also satisfactorily answered as either transfer between his own accounts, payments for xxxxxxx quota in DXX Holdings, and payment to Hong Kong IRD for his Hong Kong tax [C8/3072, C9/3140].

172.  All of these, the Husband argues, just show that the Wife does not properly read documents provided by him and is instead seeking to ‘add back’ as much as she can to maximize her claims.

173.  Mr Westbrook submits that that is not the Wife’s case, as she explained under cross-examination at the trial, that “unless there is a reasonable explanation where the money has gone” and “when there are substantial funds that can’t be accounted for”, then the court can only be driven to the conclusion that fairness demands it be added back.

174.  However, in the absence of any evidence that the Husband has hidden, concealed or disposed of this HK$3.9M with the intention to defeat or obstruct the Wife’s financial claims, and having heard him for days in evidence in court, and whilst he may be guilty, as conceded by his counsel, of too eagerly “sparring” with the Wife’s leading counsel during his cross-examination, as most CEOs may be so equally guilty in similar circumstances but more likely due to his clear frustration at the proceedings and more particularly the Wife’s approach, I have no hesitation to find that he had been truthful and forthcoming about all his financial resources, and hence the only proper basis for this alleged missing sum, which was essentially the accumulated total amount of various bank withdrawals from his many bank accounts over a period of time, to be properly added back into the marital pool would be that they were the result of his conduct that is inequitable to disregard, such as overspending on his part with an element of “wantonness”, “reckless frittering” or “extravagance” as was held in Norris v Norris [2003] 1 FLR 1142 or Vaughan v Vaughan [2008] 1 FLR 1108, or that it is “obvious and gross” as in LKW v DD above.

175.  There is however no such allegation that these “missing” funds were caused by any such conduct of the Husband, and that even if they were said to be non-marital expenditure which formed the basis of the wife’s appeal in the case of MKKWH v RKSH [2013] HKFLR 540 for unequal distribution of the marital assets as a result of the husband’s payments to his mistresses constituting in excess of HK$62M in non-marital expenditure, it was held that justification for adding back is facts-specific and ultimately an issue of fairness for the court’s consideration, as Cheung JA explained in the Court of Appeal the principles in which the court should approach non-marital expenditure:

“[61] The facts of each case are different. The wife in the Court below and here is not asking the Court to examine the history of the husband’s philandering as a cause of the breakdown of the marriage. She simply invited this Court to look at the husband’s own evidence which disclosed these expenditures. Hence it is not strictly a situation envisaged and disproved by LKW. The real issue is whether, first, as a matter of principles the non-marital expenditure should be added back and second, on the existing evidence an adding back of the non-marital expenditure is justified. In Norris the husband’s gift of jewellery to his mistress valued at £30,000 was ordered to be added back to the husband’s assets. The issue of fairness was considered…

…

[64] In H-J v H-J (Financial Provision: Equality) [2002] 1 FLR 415, the parties were married for 25 years. The husband had association with another woman and a son Samuel was born of that relationship. Coleridge J refused to make allowance for the provision of Samuel in the financial provision of the wife. He also refused to add back the money spent by the husband on Samuel. He held at 428 that:

‘In cases where every pound has to be considered and weighed in the division between the parties, of course, by necessity and in the real world, it is necessary to ensure that there is enough money to go round for all. But where, as here, there are sufficient resources whether you split them 45/55 or 50/50, it is not, in my judgment, necessary to make allowance in the calculation for the figures that the husband contends for in relation to Samuel. The assumption of this liability is entirely the husband’s choice, and, in my judgment, principally his sole responsibility. To ask the wife, in effect, to take less and/or share in the cost of supporting this further child cannot, I say straight away, in my judgment, be fair. In cases of this kind I think it would normally be wrong in principle to include in calculations liabilities to children from further relationships. I am not prepared to take those into account here.

However, by the same token, nor am I prepared to add back the costs that have already been expended by Mr H-J. I see the force of the argument, but at the time they were incurred, in my judgment, they were reasonably and honestly incurred; and again chaos will reign in these cases if adding back generally is allowed as part of the mechanism except in exceptionally circumstances.’ (emphasis added)

[65] It is not necessary to come to a view on whether Coleridge J was correct or not on his refusal to add back. Cases like this depend very much on their facts. It is, after all, an exercise of discretion. The point to make is that Coleridge J recognised the issues of fairness and adding back in exceptional cases.

[66] The Court is of course not a court of morals. If the husband chose to be a philanderer and have mistresses and children born from these relationships, it is not for the Court to condemn his behaviour as being immoral. But when these activities caused funds (which should be in the matrimonial pot) to be depleted, then clearly the Court is entitled to ask whether unfairness has been caused to the other spouse because of the non-marital expenditure. If this matter is considered under the ambit of conduct, then one has to examine whether the financial misconduct by way of depletion of the matrimonial funds (and not the husband’s moral conduct in respect of his association with other women) is obvious and gross or inequitable to disregard. The amount, the duration and the number of non-marital relationships involved are some of the relevant considerations. The distinction may be a fine one but nonetheless a real one. The reliance by the husband of comments in Roberts v Roberts [1970] P1 that ‘…. No hard and fast line can be drawn between “legal” and “moral” obligations …’ is not helpful and does not advance his case. When the Court referred to ‘wanton’, ‘reckless’ or ‘extravagant’ financial conduct or ‘wastage’ of matrimonial assets, they are merely descriptions or illustrations of conduct which fulfilled the threshold requirement. These terms do not constitute separate categories of misconduct. This does not require elaboration.”

176.  In that case in the wife’s subsequent application for leave to appeal to the Court of Final Appeal in Mimi Kar Kee Wong Hung v Raymond Kin Sang Hung [2014] 17 HKCFAR 585 against the Court of Appeal’s decision refusing to add back the husband’s non-marital expenditure into the matrimonial pot for division, in rejecting her argument that it was sufficient justification for adding back to show that there had been non-marital expenditure which diminishes the matrimonial pot even if such expenditure could not be said to be reckless, wanton or extravagant, as this is what fairness to the wife required, and refusing leave, Ribeiro PJ explained at 591:

“[15] We were unable to accept that submission, first because it is unworkably broad and vague. Mr Fung accepted that obviously not every expenditure incurred by H which diminished the corpus of matrimonial assets would justify adding back the amount spent, but he had the greatest difficulty in identifying any principled criteria for ascertaining which heads of expenditure which would have that result.

[16] Moreover, as the Court in LKW v DD stated:

It is worth reiterating that, having gone through the process I have compendiously called “Step 4”, the court is not bound to depart from equality in the division of the parties’ assets even if one or more of the factors considered are engaged on the facts. The weight to be given to such considerations is a matter of discretion for the court. Stepping back and looking at the overall impact of the factors found to be relevant, the court may decide that certain factors carry such weight that a departure from equality is called for. The decision is fact-specific and discretionary. But where there is a departure, the court should explain its basis since the articulation of reasons provides a useful check on the fairness of the outcome.”

177.  In the present case there is no evidence either to suggest that the Husband had committed similar non-marital expenditure, let alone to describe it as “wanton”, “reckless” or “extravagant”, as the Wife’s main complaint is simply his failure to be transparent or to clearly account for each and every withdrawal that eventually made up the total amount of HK$3.9M with any supporting documentation, which were as the Husband has explained to be simply impossible for him to trace given the passage of time, and which is in those circumstances disapproved by Ribeiro PJ in LKW v DD as above as wholly disproportionate. Accordingly and in my judgment there is simply no justification in the Wife’s request to add back this sum to the matrimonial pot for division. 

Total Marital Assets

178.  Accordingly and for the reasons already elaborated above, I do not agree with the Wife’s figure as to the matrimonial assets as adjusted in her Closing Submission at HK$154M where she has included the value of the Husband’s unvested 2014 A3 shares which are as yet unascertained and unconfirmed, but by allowing to be taken into account of the parties’ respective liabilities including credit cards debts and the Wife’s Withers’ outstanding fees and by adding back the Husband’s cash gifts to his parents, and by using a broad brush I have come to a firm conclusion that the total matrimonial assets of the parties can be broadly summarised as follows:

Wife’s Assets (Less Liabilities)	HK$ 345,500
Husband’s Assets (Less Liabilities + Add-Back)	HK$49M
Trusts	HK$51.9M
Joint Assets	HK$4.6M
Total :	HK106M
Unvested A3 Shares	Unknown

179.  Having so identified the matrimonial assets, I shall next consider the parties’ respective income and earning capacity which are relatively more straight forward and less controversial.

Wife’s Income & Earning Capacity

180.  The Wife does not work at present, nor has she worked as an accountant for some 18 years during the marriage since the birth of the eldest daughter in 1998. While she has maintained her professional membership with the NZ Institute of Chartered Accountants, she claims to have taken a “retired” status and cannot resume practising as a chartered accountant until she completes the necessary continuing education requirements imposed by the Institute.

181.  The Husband however believes that she has been actively looking for employments since 2014 and did in fact receive an offer of employment with a PR firm, and that she has been sharpening up her audit skills during these proceedings, hence with her very substantial earning capacity he expects her to be able to earn at least HK$50,000 to HK$70,000 per month upon her returning to work based on the Finance & Accounting 2016 Salary Guide by Morgan McKinley [P18/6319] which show the average salary in 2016 for an internal audit accountant at a junior level with little experience was HK$25,000 to HK$35,000 per month, whilst a middle level auditor would earn HK$35,000 to HK$45,000 per month, and with the Wife’s intellect and experience he believes she would be easily promoted to a senior or managerial level and hence a higher salary from HK$50,000 to HK$70,000 per month.  

182.  She argues that it is wholly unrealistic to expect her to find full-time employed position, let alone with that kind of income after having been out of work for 18 years, and while she does not rule out returning to the workforce at some time in the future, she fails to see how she can do so at the present time on a full-time basis since she is effectively a solo parent to her 2 younger daughters in Hong Kong, as otherwise they would be deprived of the benefit that the parties clearly wished their children to have, i.e. of a full-time stay at home mother, a benefit which their eldest daughter has had in full and which, the Wife submits, has clearly paid off in light of her excellent results at school and the offer from Oxford University.    

183.  Furthermore, the Wife submits that at her present age her job prospects are already limited and her earning capacity difficult to ascertain, let alone 6 years later in 2023 when the youngest daughter finishes secondary school and when she will be 55, but despite this uncertainty, she is prepared to ascribe a limited earning capacity of HK$13,450 per month to herself on a net part-time basis as explained in her Narrative Affidavit [P16/5824], but certainly not at HK$70,000 per month as attributed to her by the Husband in his Open Offer which she argues is not supported by the evidence, nor is it in keeping with her current situation in the care of the younger daughters.

184.  While the court is of course required to have regard to the earning capacity of both parties, but of a wife who may not have worked during the marriage, as was the Wife in this case, Rayden & Jackson on Divorce and Family Matters, 18^th edition, has this to say at Chap 16.42:

“ … In deciding whether and, if so, to what extent the court should take into account the earning capacity of a wife, the court will have regard to the facts of the particular case, including the wife’s age, qualifications and role in the marriage, whether or not she is caring for children, any recent work experience and the availability of suitable jobs. It is often said that the cost of a child care makes employment uneconomical for some mothers. Where a wife has not been gainfully employed during the marriage and has no particular skill, the court has generally regarded it as unjust to expect her to go out to work in order to reduce the former husband’s liability to maintain her…”

185.  In the case of A v A (Financial Provision) [1998], 2 FLR 180, where the husband and wife had been married for 13 years and had one son then aged 8, while the husband was 64 and the wife 40. The husband was a multi-millionaire worth over £200m, and had an income of about £1m pa. The wife had an engineering degree but no work experience. She sought, in addition to a fair share of the capital assets, a lump sum to provide an annual income of about £195,000 to meet her reasonable needs, but that the husband contended that she should in part provide for her own expenditure by her own earnings, of which Singer J said, at p191A:

“What is suggested by the husband is that the wife should take steps to be in a position in 5 years’ time, when J will be about 13, to earn whatever will then be the equivalent of £20,000 net (at present rates representing about £28,000 gross), and should continue for the next 20 years until she is 65 to earn at the same real rate, allowing for inflationary increases. The husband points to the indications, already mentioned, that the wife contemplated some business activity during the marriage. He refers to the intelligence and to the attractive personality of the wife, and to her linguistic abilities. But the inescapable fact is that the wife would be entering the labour market or, more likely, seeking to establish herself in some business, at the age of 45 with no practical experience whatever in any capacity other than the valuable but not very marketable ones of wife and mother. It is true that she considered at one stage studying nutrition over a 3-year period with a view to embarking upon some research, but at present what she has in mind is to undertake charitable work to assist families in need.

My conclusion on this issue is that whether the wife would succeed in establishing and maintaining such an income for herself over a 20-year period is extremely speculative. Looking at the Duxbury calculations with which I have been provided, the introduction of this assumed future income might lead to reduction in the capital sum required of between £100,000 and £150,000. Whether or not it would be reasonable to expect the wife to seek and if found to maintain such employment, I regard the risk that she might fail to do so as too high. Conversely I regard the potential saving to the husband if I were to apply the Duxbury calculations without this adjustment as relatively negligible in the overall context of the case and well within his capacity to bear.

But as it happens I am not persuaded that it would in this case be reasonable to expect this wife in the context of this marriage at her present age to embark upon what to produce such a sum would most likely have to be either full-time employment in some modest capacity having regard to her lack of specific skills, or the risk of a small business of her own or in partnership with others the like of which she has had no experience of running. If I prove to be wrong about this, and if the wife does develop a significant earning capacity, then in my view that should in the context of this case be the result of her choice, and not of imposed economic necessity.”    

186.  With the two younger daughters now aged 12 and 15 still to be cared for practically all by herself most of the time, I agree with the Wife that it would not be fair in the context of this marriage to require her to look for full-time employment at this stage of her life and age, nor would it be realistic to expect her to be able to do so with any certainty at her present age, let alone in 5 years when she will be 55, notwithstanding her professional qualification and her obvious intelligence and ability as clearly shown in these proceedings and her evidence in court. 

187.  She does however accept, and I agree, that in the event of the Husband transferring his shares in DXX Holdings to her as part of his Open Offer in these proceedings, a company with substantial xxxxxx quota which has produced a steady income stream, she agrees that she will stand to receive about HK$600,000 per annum which will go to meet part of her maintenance needs.

188.  In addition, she also projects, as set out in her Open Proposal, to receive an income of 3% initially from her lump sum award, and then thereafter upon the purchase of her Sydney property a net rental income of 2% per annum until when she eventually takes up residence in that property.

189.  On the basis of her lump sum award at not less than HK$50M and upon her own projection of its annual return which together with the income from her part-time job and from DXX Holdings, it is clear that the Wife will stand to receive a total income of about HK$2.2 – 2.3M per annum, or an average of more than HK$180,000 per month after divorce. According to the Husband, however, there may yet be further resources available to the Wife in the foreseeable future.     

Wife’s Future Inheritance

190.  The Husband believes that the Wife stands to receive significant inheritance from her parents who own substantial assets including significant xxxxxx quotas and several properties in New Zealand from which they derive an income, and that according to a comprehensive valuation report provided in November 2015, the total value of their xxxxxxx quota was then worth in excess of NZ$10m which is the equivalence of more than HK$60m, and which he believes to have increased significantly since 2015.

191.  In support of his case the Husband relies on the fact that the Wife had confirmed in her evidence that during the marriage she had told him that she ”may own some quota in the future and that is why I needed to understand how it worked” and that there was a real possibility that her parents “may decide to transfer quota to me as part of inheritance” although she did not know when and she had not seen her parents’ wills, and that it was also apparent from the transcripts of their taped conversation [C13/4460 – 3, 4655] when she said that “It’s an asset I should start getting accustomed to”, that “I need … to become involved in it, understand the mechanics of … how it works” and that “I will get quota … definitely … I will get quota”.    

192.  Mr Westbrook therefore submits for the Husband that clearly the quota the Wife is likely to inherit will impact on the Duxbury calculation, which is based on her lifetime needs but excludes receipt of the quota.

193.  The Wife however insists that the Husband is incorrect in his assertions in respect of her parents’ assets in particularly the xxxxxx quota by wrongly including those of her brother, as she explained in her narrative affidavit [P18/6342]:

“6. My parents have explained to me that they now only own one property, which is the family home that they currently reside in and not several properties as claimed by (Husband). I am informed that my parents are not receiving an income from property as claimed by (Husband).

7. In respect of the xxxxxxx quota that (Husband) claims that my parents own in New Zealand, his assertions are incorrect and misleading in that he has included in the total sum of NZ10.8 million/HK$60.36M for xxxxxxx quota that he has claimed my parents own, NZ$6.1M/HK$34.15M of xxxxxx quota owned by my brother. My brother’s quota is held in a trust called the SI Trust (with New Zealand Government FishServe client number XXXXXXX) and my mother … and Mr PFS are trustees of that Trust. There is now shown to me marked “ABW13-1” an email confirmation obtained from the New Zealand government regulatory body Xxxxxxxx for xxxxxx quota, which confirms that the client number attached to the quota listing provided by Xxxxxxxx Quota Brokers by (Husband) in his 8^th Affidavit, belongs to the SI Trust. There is also now shown to me marked “ABW13-2” an email dated 5^th October 2016 from Mr PFS that confirms that he and my mother … act in the capacity of trustees for my brother’s Trust, the SI Trust and in which my mother has no beneficial interest …”

194.  The Wife further argues that as she has never been shown her parents’ wills, she cannot say to whom their assets will be left amongst their 3 children including herself and 11 grandchildren, and that since her parents are still relatively young in their 70s and in excellent health, and still with many years to live, she questions why her possible inheritance decades into the future should be brought into account or even considered, that there is simply no legal basis to do so especially in view of the vagueness of the evidence, and suggests that the court should accordingly ignore the possible future inheritance of not just her but also of the Husband their respective parents’ assets, as he was said to have indicated at an earlier hearing through his counsel that this issue would not be pursued.

195.  That hearing was on 22^nd September 2014 before Judge Melloy concerning the Husband’s request to serve a questionnaire on the Wife’s Form E including for details as to her potential inheritance from her parents, but having perused the transcripts of that hearing [P18/6354], I am unable to say with certainty whether or not the Husband did so indicate.

196.  If indeed the Husband is still pursuing that issue, it is the Wife’s case that the court shall also have regard to his inheritance prospects of his parents’ assets, of which she claims to be also considerable including but not limited to “a large firm, a commercial building and a beach front holiday home in New Zealand, all of substantial value”, and that he had informed her numerous times throughout the marriage that he intended to inherit his parents’ beachfront holiday home, and that she is therefore surprised that he claimed in his narrative affidavit no longer to be a beneficiary in any of his parents’ trusts holding their assets, especially as his parents have received US$1.1 million from him in 2012 and 2013.

197.  While it is true that the section 7 exercise requires the court to have regard to not just the income and property already vested in the parties but also those likely to have in the foreseeable future, there must be clear evidence that they will in the circumstances likely be so, and in any event it can be argued that such inheritance prospects post separation will be of less significance, as it is said in Rayden and Jackson on Divorce & Family Matters, 18^th edition, at Chap 16.52:

“The court is primarily concerned with property in which the parties have vested or contingent interests but it is not exclusively so concerned. In Michael v Michael Nourse LJ considered that the broad and somewhat informal language of s 25(2)(a) demonstrates that it was intended to operate at large and not in some straitjacket tailored to the sober uniforms of property law. Thus it could in certain circumstances extend to something which in the language of the law is a mere expectancy or spes successionis, for example, an interest which might be taken under the will of a living person in circumstances when there was clear evidence that firstly, the testator was suffering from a terminal illness, secondly, the will left substantial property but of uncertain value to a spouse, and thirdly it was highly improbable that the testator could or would revoke his will. However, for all these facts to arise would be extremely special, so the occasions when the fact of inheritance is found to be a resource in the foreseeable future will be rare. It will no doubt be argued with some force that, with White v White emphasising entitlement to assets generated through joint effort and contribution during the marriage, inheritance prospects post separation are of even less significance than in the limited circumstances identified in Michael v Michael.”

198.  In the case which was referred there in, Michael v Michael, [1986] 2 FLR 389, the wife and the two children of the marriage continued to live in the former matrimonial home after the divorce which was owned by her mother for which she paid her mother a weekly rent. The husband then applied for financial provision in the divorce proceedings for lump sum and property adjustment orders. The wife resisted his claim in relation to the former matrimonial home on the ground that although she had an expectation of inheriting an interest in the property under her mother’s will, her prospects of inheriting an absolute interest in the property were uncertain and subject to the interests of other likely beneficiaries such as her father, her brothers and children and that she was vulnerable to her mother changing her will at a later stage.

199.  In the ancillary proceedings the registrar dismissed the husband’s application. The judge allowed the husband’s appeal and adjourned the application generally on the ground that he was satisfied that the wife had a reasonable prospect of inheriting a valuable interest in the property under her mother’s will in the near future. The wife appealed contending that the judge had been wrong to regard the house as ‘property which she was likely to have in the foreseeable future’ within the meaning of s 25(2)(a) of the Matrimonial Causes Act 1973 as amended.

200.  In allowing the appeal, the Court of Appeal found that there were considerable uncertainties as to the time of the occurrence of the inheritance, the likelihood of the wife receiving an interest, if any, in the property under the mother’s will and the possibility of the mother changing her will in favour of other beneficiaries in order to defeat any court order in favour of the husband, it was impossible to conclude that there was any real possibility of the wife inheriting an absolute interest in the property to enable her to make a financial provision for the husband or that the property could be regarded as a property she was likely to have in the foreseeable future within the meaning of s 25(2)(a) of the Matrimonial Causes Act of 1973 as amended, as Nourse LJ explained at p396F:

“ … I find it impossible to hold that … is property which the wife is likely to inherit from her mother. There seems to be considerable uncertainty as to whether she will take any interest, even a life interest in the property. Here it is worth stating the obvious, namely that anything less than an absolute interest would not in practice enable the wife to make a lump sum provision for the husband. Moreover, it is worth stating another fact of life which is this. Suppose that the judge’s order were to stand. In the absence of evidence to the contrary it is natural to assume that the wife’s mother would not wish to do anything which could endanger the continued occupation of the property by her daughter and granddaughters. It would be a simple matter for her, on being informed of the fact and purpose of the adjournment, to provide by will either that the wife should take no more than a life interest in the property or that it should be left to trustees for the benefit of the two daughters subject to the wife’s protected tenancy. Indeed, it seems to me that in the normal case an adjournment of the application is often likely, for reasons such as these, to be a self-defeating exercise.

       Even if I had found it possible to hold that the property was property which the wife was likely to inherit from her mother, I would still find it impossible to hold that she was likely to inherit it in the foreseeable future. Counsel for the husband placed some reliance on the fact that the mother suffers from high blood pressure and was apparently unable on that account to attend the hearing before the judge. I do not think that that can assist him. The world is full of women in their eighties who had high blood pressure in their sixties. I appreciate that in some of the cases the foreseeable future has been held to extend for a good number of years. In Milne v Milne (1981) 2 FLR 286, for example, it was 10 or 11. But I do not think the foreseeable future is necessarily the same thing as the near future. If, as in Milne v Milne, it can be foreseen that the interest will vest on a certain future date, albeit a somewhat remote one, I can understand that the court might think that it will vest in the foreseeable future. In saying that, I do not overlook the fact that in Priest v Priest (1980) 1 FLR 189 Coming-Bruce LJ thought that an interest which was likely to vest in 1993 was only dimly in the foreseeable future in 1978; see (1980) 1 FLR at p.192(vi). In that case the court was able to proceed on the footing that an interest would in fact vest in 1983. In the present case it cannot be foreseen that the wife will inherit the property within 5, 10 or even 20 years.”     

201.  In the present case, given that the Wife’s parents are only in their 70s and are said to be in good health, and with the relatively large number of possible beneficiaries who can feature in her parents’ wills which the Wife has not seen, and notwithstanding what she may have said about her inheritance prospects during the marriage, it simply cannot be foreseen when and what she will inherit from her parents. The same can in fact be said about the Husband’s inheritance prospects, and I believe that in the circumstances it will be both fair and appropriate not to have any regard for such prospects for either of them.

Husband’s Income and Earning Capacity

202.  In his Form E the Husband put his average income from A3 at HK$1,664,284 per month excluding his deferred shares and before tax [P2/331]. He updated his net total earnings after tax in his narrative affidavit for the tax years ending April 2013 to April 2016 at £4,398,224.47 or HK$44,861,889, of which £1,177,612.85 relate to his 2013 LTIPs which he claims he cannot sell due to the dealing restrictions that apply. [P18/6264].

203.  The Wife however argues that his income as drawn from A3’s Annual Reports [P17/6049] shows a total income comprised of various components averaging over £5.5M or HK$55M per year, hence when his solicitors in their letter dated 6^th December 2016 [C16/5622] referred to his net monthly salary at HK$500,000, barely one-tenth of his Annual Report earnings, she submits that the court would want to know how this huge disparity arises.

204.  The salient features, the Wife submits, are that only one third of the Husband’s annual bonus varied between £1.1 – 1.78M each year is paid in cash with the rest in deferred shares, that the LTIPs valued at £2.5 – 3M are deferred for 3 years and the vesting percentage is also deferred with the only one known so far for 2013 vested at 53%, and that the annual pension and executive benefits running at £350,000 per annum is paid in cash, with the practical result of all this is best seen from the Husband’s P60 tax certificate for the year 2016 [P18/6313] which shows taxable pay that year of £4,374,953 and tax deducted of £1,954,670 which leaves a net pay of £2.42M including the net LTIPs awarded, which leaves a net cash income after tax at £1.06M or about HK$900,000 per month, and adding to this the dividend income on the A3 shares currently held by him which will produce an additional annual income of £100,000, thus rounding up his total net cash income to about HK$1M per month.

205.  Mr Coleman for the Husband submits that it is telling that the Wife still puts the Husband’s income at £5.5M per annum which fails to take into account of the tax and national insurance contributions, that it includes ‘executive benefits’ and pension contributions, and that it is wrong for her to adopt as true income the LTIPs at nominal ‘face value’ of between HK$28M to HK$29.7M.

206.  In the context where the Wife has at last accepted the LTIPs should not be valued at face value and that tax is payable, Mr Coleman submits that it is simply a figment of her ‘opportunist imagination’ to quantify the Husband’s income as she has done, and that her figures are simply unreal, and whilst his figures are backed up by the SJE Report and supporting documents from the A3 letters, the Deloitte reports and the publicly available information, he submits that she as usual ignores any evidence that supports her contrary position.

207.  Indeed, as pointed out by Mr Coleman, the Husband’s P60 Tax Certificate for 2016 referred to by the Wife shows that his net income for 2014 and 2015 were much lower at £915,986 and £935,556 respectively, certainly nothing like her suggested amount of £5.5M. In fact, those figures appear far more consistent with what the Husband had put in his Form E at £81,667 per month or £980,000 per annum for his salary before tax at that time.

208.  There also seems to me validity in Mr Coleman’s submission that the Wife is in effect inviting the court to assess the Husband’s income at the highest year and including pensions, benefits and LTIPs, while ignoring tax and other deductions, and that when she suggests that the court should assess the Husband’s net cash income of HK$1M per month which is to be applied to the reasonable needs of herself and the children, she seems to be suggesting that such income is also to be applied as part of the division of capital, which is certainly not the case when she also accepts that there be a clean break to her financial claims, albeit at a much later date as stated in her Open Proposal.   

209.  The Husband further submits that as he has been CEO of A3 for three and a half years since January 2013, and that the average duration of such a CEO position in the UK is approximately 4 to 5 years, as such his future earning potential as a CEO is uncertain, and unlike a self-employed entrepreneur he cannot expect to be in continuous employment with regular income. He therefore argues that he would anticipate that the maximum time he would remain at his current position as CEO would be another 2 to 3 years at which time he would need to consider his options, but he cannot be certain that he would be able to obtain employment quickly and at a comparable salary, as evidenced by his unemployment for 2 years after he left A2, during which I should however point out that he did as a result receive a pay-out of more than HK$93M.

210.  For the present purpose and on the evidence before the court, I am satisfied that the Husband has truthful disclosed his income and earnings from A3, and given the nature of the Wife’s financial claim which is essentially equal sharing of the marital assets rather than any long term on-going maintenance to be derived from the Husband’s future income save for his unvested A3 shares benefits for 2014 – 2016, and that realistically his only future financial obligations are confined just to his 3 children, for which even on the Wife’s highest case will no doubt be well within his abilities.

211.  As to the Husband’s tenure as CEO of A3, and generally his longevity as a high-income earner, I agree with the Wife that given his track-records for the past 20 years or so, and that at the age of 50 he is still at the prime of his professional career, I have absolutely no doubt of his ability to continue to earn a very substantive income for years to come and at least to see his youngest daughter through university without any difficulty. The fact that he saw fit to gift his parents more than US$1M in 2012 after he became unemployed upon his resignation from A2 Xxxxxxx is testament to his confidence in his ability to find other high-earning employments, as he subsequently did with A3. 

212.  I shall now proceed to the next step of the section 7 exercise to assess the parties’ financial needs and those of the children, but before doing so it would be relevant to first consider the standard of living which this family was able to enjoy prior to the breakdown of the marriage, and against which their future needs may be based.

Standard of Living

213.  There is no dispute that when the parties married, and as contended by the Husband, neither of them brought any assets of any substance into their marriage, and that it was a modest and average lifestyle during the time when they were in New Zealand that they supported themselves from their employment with little money left for saving or investment, other than their small house jointly purchased in Wellington which they subsequently sold in 1999 for a net profit of about NZ$200,000.

214.  According to the Husband, and again it is not in dispute, that it was only subsequent to his employment as CEO of A2 Xxxxxxxx in Hong Kong that assets of substance began to accumulate and their standard of living risen, with enjoyment by the family of membership in the Aberdeen Marina Club and the American Club as part of his employment package with A2.

215.  It is therefore in Hong Kong when the family started to enjoy what the Wife has described a “very high standard of living” as she elaborated in her narrative affidavit:

“28. We always enjoyed a very high standard of living in Hong Kong. We have always lived on the Southside of Hong Kong Island in a decent size ¾ bedroom apartment or house either in repulse Bay or Stanley. The family has always had two good cars. M had driven a BMW 4 wheel drive and before this a Jaguar X16, whilst he was living in Hong Kong. In November 2013, we bought a brand new Range Rover Evoque car in Hong Kong for me to drive. For most of the time while the children were young, we had two domestic helpers. We had memberships at various clubs in Hong Kong, such as the Aberdeen Marina Club, the American Club, Aberdeen Boat Club and now the Hong Kong Cricket Club. In early 2009, M arranged for the purchase of a new large 42-foot Princess motor boat for the recreational use of the family and we enjoyed a full-time boat skipper to drive our boat for us. We also travelled extensively as a family, mostly during the children’s school holidays. On many occasions we stayed in luxury 5 star accommodation such as the Four Season Hotels. By way of example, in the years from December 2011 to August 2014, the family (but not always M due to his work commitments) visited 22 destinations such as Monaco, Sardinia, London, Corsica, Maldives, Koh Samui, Deer Valley Utah, Hawaii, Bali, Vietnam. A full list of the holidays is provided in my 3^rd Affidavit. We all enjoyed an active social life and ate out at restaurants frequently and enjoyed going out to theatre shows, concerts and movies whenever possible.”

216.  The Husband does not dispute that the family did enjoy a high standard of living, as he so stated in his Form E [P2/336], but he also qualified it by claiming that the parties later decided that it was unnecessary to keep the boat, while their club memberships were paid by his employer at A2, and that their holiday expenses over the past 2 years when he was not living in Hong Kong were disproportionately expensive to compensate for his absence from the children.

217.  It is against this standard of living that I shall now consider the needs of the parties, starting with the Wife’s.   

Wife’s Needs

218.  The Wife’s needs are evidenced in her Form E where she gave a monthly total of just over HK$414,000 per month, being HK$151,000 for rent and household expenses, HK$138,000 for her personal expenses, and HK$124,000 for the children [P1/52-53]. For her own future needs, she has since updated her figures in a schedule attached to her Open Proposal [P18/6497 – 6499] as follows:

General Household Expenses	HK$
Rent (her share at 25%)	28,250
Utilities (her share 25%)	1,248
Food (her share at 25%)	2,805
Household Expenses (her share at 50%)	4,537
Car Expenses (her share at 50%)	3,047
Domestic helper (her share at 50%)	3,270
Others – Mobile	2,022
	Sub-total: 45,179
Personal
Meals out of home	5,742
Transport	4,320
Clothing/Shoes	22,329
Personal Grooming	9,773
Entertainment/Presents	6,531
Holidays	22,971
Dental	485
Counselling	10,729
Optician	563
Sport	4,653
Christmas Tree	180
Boat (her share at 25%)	11,522
Credit Card/Financial Charges	4,268
Subscription to Prof Ass.	145
	Sub-total: 104,211
Additional/Anticipated Expenses
HK Cricket Club Membership	8,800
Household Contents Insurance	1,580
Pet Insurance	702
Rolex Watch Servicing	625
Medical Insurance	7,007
Car Replacement Fund	12,166
Professional Fees (Tax, financial planners, accountants, lawyer)	15,000
Sub-total: 45,880
Grand Total: 195,270

219.  In support of her such future needs the Wife has produced a Duxbury calculation of her needs based on her said expenditure attached to her Open Proposal [P18/6495] which puts the capital required to meet her total needs up to the age of 85 in excess of HK$37M. However, as pointed out by the Husband, this was done without a proper report or even identifying the author, and that it is not reliable as it includes expenditure which is inapt or no longer relevant, such as her rental cost or the expenses of the eldest daughter who was then taking a gap year after secondary school staying with the Husband in London before starting university in Oxford.    

220.  Be that as it may, there is no question that the Wife has, as stated in her Open Proposal, a long term need for housing, and while she may remain in Hong Kong for the next 7 years as proposed until the youngest daughter goes off to university either in UK or Australia, she will need to be housed in Hong Kong during that period, and thereafter she intends to relocate to the Eastern suburbs of Sydney to be close to her sister.

221.  She therefore requires funds to purchase a suitable property there for which she seeks a sum of AUD$6.5M (HK$38.6M), plus additional funds for the legal and conveyancing costs and expenses as well as furnishing, decoration and relocation costs, all of which she claims would round up the total sum for her housing needs to HK$44.5M.

222.  In addition, she claims to require a further lump sum of HK$10M, of which she will keep HK$3M for cash flow purposes and seeks an annual return of 3% on the remaining HK$7M and the property lump sum, which together with the income arising from DXX Holdings as well as her own part-time employment will generate some income streams, and whilst she remains in Hong Kong for the next 7 years, she proposes to rent out her property in Sydney in the interim, thereby also creating an income from this asset to meet her one-quarter share of the monthly rental of HK$113,000 for her accommodation in Hong Kong which is commensurate to her present apartment in Repulse Bay.

223.  During her remaining time in Hong Kong, and whilst she awaits full payment of her ancillary relief award, the Wife suggests that she will require appropriate level of maintenance to settle her living expenses and her share of the ongoing rent in Hong Kong, which can be reduced in stages as and when the Husband makes capital transfer to her, and she proposes that her following monthly deficits to be met by a monthly sum from the Husband for the next 3 years up to 31^st December 2019 after taking into account of her own income streams referred to above but which she claims would not be sufficient to meet all her expenses [P18/6489 - 6490]:

Year	Annual Expenses	Monthly Expenses	Monthly Income	Required Maintenance
2017	HK$2,650,116	HK$220,843	HK$175,875	HK$44,968
2018	HK$2,696,091	HK$224,674	HK$134,512	HK$90,162
2019	HK$2,743,103	HK$228,592	HK$146,790	HK$81,802

224.  Thereafter she suggests that the Husband shall pay her nominal maintenance until the youngest child has completed her undergraduate university degree, which means it can be up to the year of 2027 or even later.

225.  Dealing with that last point first, which is certainly not agreeable to the Husband as it has all along been his case that there should be an immediate clean break between the parties upon the Wife obtaining her half share of their marital assets, but whether or not that would achieve fairness between the parties at the end, I am unable to see how the completion of the youngest child’s university education could be a relevant factor or would have any bearing on that decision given the fact that the Husband has already proposed to be wholly responsible for all the needs and expenses of their children up to their completion of university education, and that an order will likely to be made by this court accordingly.   

226.  As regard the Wife’s claim that she now needs almost HK$200,000 per month for her share of the living expenses while in Hong Kong, the Husband submits that it is clear from her evidence that she first took legal advice about divorce as early as 2011 from Withers, and that it is his case that after seeking legal advice she boosted her expenditure from the monthly allowance of HK$30,000 which he used to pay her plus limited use of a credit card during the marriage up to 2012 to substantially increase her ancillary relief claims.

227.  In terms of her itemised expenses, the Husband argues that the Wife has included items that are no longer relevant, unnecessary or will not be there in future after the proceedings, such as for the boat which was owned by the Trust, or her credit card/financial charges which would be paid off upon her receipt of the lump sum award, if not sooner, thereby bringing her alleged monthly expenses down by HK$15,790.

228.  Furthermore, the Husband argues, it is wrong for her to include their eldest daughter’s share in her general household expenses as she is clearly spending most of her time studying in UK as well as a good part of her non-study time with him or with neither parents, hence her time spending with the Wife in Hong Kong would be very limited.  

229.  It is of course also the Husband’s case that many of the Wife’s claimed expenses were simply excessive, such as HK$22,971 for her holidays, while other items are of such minutia as HK$180 for the Christmas tree, HK$145 for her current subscription to professional services, and HK$625 for her Rolex watch servicing, and even expecting him to finance a ‘car replacement fund’ of HK$12,166 per month, all of which he argues show that she was not just padding her expenses but adding to them as though they were like a bottomless pit or landfill.

230.  It is also to be noted, the Husband submits, that her previous expenses were in reference to his higher net income than he now receives, and hence the appropriate figure for her realistic and historical expenditure should be HK$70,000 per month which is in line with the maintenance he has been paying since the said consent order dated 14^th October 2014 of HK$130,000 per month excluding rent and after deducting the sum of HK$60,000 being HK$20,000 per month for each of the 3 children of the family.

231.  As for her accommodation needs, the Husband points out that whilst the family were living in Hong Kong, he received a housing allowance from A2 Xxxxxxxxx to pay for the rented accommodation in Stanley, and it is that allowance which permitted the standard of housing then enjoyed, but he now no longer receives such allowance. It therefore makes sense, he submits, particularly with the devastating impact of costs on the family finance, for the Wife to purchase a property as opposed to continue pay rent which will be ‘wasting’ on the current lease of HK$94,000 per month, such as those which he has made enquires as to potential suitable and affordable as set out in Exhibit R1, in particular the one located at Grand Garden for sale at an asking price of HK$28M, for which he suggests, as in his Open Proposal, that she should use a proportion of her lump sum award to pay for the down payment say HK$20M and that he would fund the mortgage of up to HK$10M for a maximum of 7 years at approximately HK$55,000 per month at current interest rate. 

232.  Once the youngest daughter completes her secondary education in Hong Kong and the Wife leaves Hong Kong for Sydney, the Husband proposes that she can then sell the property and use the sale proceeds, of which he believes will make a substantive gain, to finance the purchase of her accommodation in Sydney.

233.  Whether to rent or buy, there is no question that the Wife and the 2 younger children will require suitable accommodation in Hong Kong for the next 7 years until the youngest one leaves for university elsewhere. From strict economic sense, it would be hard to argue with the Husband that the Wife should purchase her own accommodation with a mortgage while she remains in Hong Kong instead of paying rent even without taking into account of possible increase in value in that property by the time she leaves for Sydney.

234.  The Wife however argues that that she should not be forced to submit to the fluctuations and vagaries of the Hong Kong property market, when Hong Kong is not intended to be her long term home, and when the properties the Husband suggested he could finance were not comparable to her current standard of living. She submits that she should be entitled to take a long-term view of her own financial needs, and to plan accordingly, and hence the court should structure its award to take this consideration into account. I agree, but more so for another reason.

235.  It is common ground that the Wife should receive her equal share of the marital assets to meet all her present and future needs, it is therefore in my view not for anyone else, including this court, to dictate to her how best she should utilise them, including whether to rent or to buy her accommodation whilst in Hong Kong, essentially a property of similar standard as before but not necessarily of the same size given the fact that the eldest child now spends most of her time in UK, with the middle one also likely to follow by 2020. I do however agree that some of the Husband’s criticisms of her items of expenses are valid, such as her credit cards/financial charges which should no longer be relevant after the proceedings, or necessary as to her counselling expenses or some of her anticipated professional fees such as lawyers, while her claim for a car replacing fund which is clearly a capital expense and may not occur in future and hence should not be proffered as an item of her monthly expenditure.

236.  As for the boat expenses, since the use of a boat was part of the privileges which she and the children, and for that matter the Husband as well, used to be able to enjoy during the marriage, there is no reason why the Wife should not be entitled to similar enjoyment, albeit with another boat of similar standard after the divorce, but her claimed amount at more than HK$46,000 per month for herself and the children seems to me both unrealistic and excessive even in the high standard of living of this family, and even if it is to be generously interpreted, in particularly when it may not an activity regularly enjoyed by them throughout the winter season.

237.  I also agree with the Husband that it is inappropriate for the Wife to include their eldest daughter’s expenses in her general household as if she were a regular member of her household in Hong Kong given the fact that she goes to university in Oxford and is wholly dependent on her father, and hence whatever monthly maintenance he has been paying her can be used by her towards her own expenses during whatever limited time she may be spending with her mother in Hong Kong. Henceforth some of the general expenses included for her share such as food and household should come down accordingly. 

238.  In the premises and by using a broad brush, and by deleting or adjusting some of those expenses referred to above, I would adjust the Wife’s share of the general household expenses down to about HK$40,000, her personal expenses to about HK$80,000, and her additional/anticipated expenses to HK$25,000, bringing her total needs to no more than HK$150,000 per month, generously interpreted and rounded up in her favour. At this amount, and at her projected future income discussed above of more than HK$180,000 per month, it is clear that the Wife should be able to meet her own needs and expenses in future. In fact, even if her claimed expenditure were to be allowed in full without any deduction or adjustment, of which I have already disagreed, the resulting monthly deficit that she might have would be so insignificant that any argument that she may require additional periodical payments albeit just for a limited period would in my judgment be futile.   

Children’s Needs

239.  This issue is by far the least controversial amongst the numerous issues between the parties, in particularly with their eldest daughter who is in Oxford and wholly supported by her father save for the relatively short periods of her stay with her mother during her term breaks and holidays.

240.  There are however still serious disputes, albeit relatively straight forward, over what should be the Husband’s maintenance for the two younger children for the time being residing with the Wife in Hong Kong until they enter university. The Wife has estimated it to be a sum of HK$51,980 per child per month in addition to their 2/3 share of the rent while she lives in Hong Kong as set out in the schedule attached to her Open Proposal [P18/6500] apportioned for each year until the youngest child finishes her university on top of their school fees and related expenses which are to be met directly by the Husband.

241.  It is also her case that the maintenance provided by the Husband under the MPS application has been insufficient to meet hers and the children’s needs and hence she has had to utilise her credit cards and savings as well as income from DXX to meet the short fall and to reduce some expenses from the standard enjoyed during the marriage but which she believes that the Husband continues to enjoy.

242.  Likewise she finds the Husband’s offer of HK$20,000 per month for each of the two younger children completely inadequate and well below what their actual expenses are, as demonstrated by her calculations and evidence of her actual spending which she argues were never challenged at the trial, nor did he produce any evidence in support of his assertion that their needs only amount to HK$20,000 per month.

243.  The Wife further argues that the offer does not even include any amount for the children’s holidays, but at the same time he put in his own Form E such expenses for the children at HK$57,608 per month [P2/334] which equates to HK$19,203 per child which is almost as much as his offer of HK$20,000 for their maintenance which she submits as wholly illogical.

244.  The Husband did explain that the holidays expenses for the children at the time were unusually high as he was not working and the family therefore did take more and long holidays and hence much more costly than otherwise when he was working, and hence he submits that that figure was not and should not be treated as the typical costs for the children’s holidays, or for that matter for the Wife’s either.   

245.  By putting the children’s total expenses at HK$155,940 per month plus further sum of HK$70,500 for their shares of the rent and HK$29,426 for their school fees, the Wife has clearly included those for their eldest daughter of which I have already found as inappropriate for the reasons explained above, while the school fees of all three children have all along been met directly by the Husband who has given his undertaking, and accepted by the Wife, to continue to do so including their share of their accommodation in Hong Kong until each completes their full time education including university.

246.  Hence only those needs of the two younger children while residing with the Wife and under her care in Hong Kong that require the court’s consideration. To start with, and for the reasons already explained above, the eldest daughter’s share should first be excluded from the equation, but in the absence of any clarification from the Wife as to how much was her share of the expenses which obviously could not be the same as the two younger siblings, the best that one can do so is to just broadly reduce the total amount by one-third, thus bringing the total monthly personal and general expenses for the 2 younger children, which are otherwise generally not challenged by the Husband save for the holidays and boat expenses, roughly down to about HK$44,000 and hence HK$22,000 for each child.

247.  Regarding their holidays and boat expenses, for the same reasons as discussed above as in the Wife’s case, I agree with the Husband that the Wife’s figures for the two items combined at more than HK$30,000 per month for each child seem to me both wholly unrealistic and excessive. Accordingly and again by taking a broad brush, I propose to adopt a more realistic sum of HK$8,000 per month for holidays for each child which would come to HK$96,000 per annum, sufficient for at least two long-haul flights and one short-flight on business class as well as for sharing their hotel room, while a monthly sum of HK$3,000 per month reserved all year round for using a boat essentially during warm seasons seems to me more than adequate for each child.   

248.  In the premises I agree with the Wife that the Husband’s offer of HK$20,000 per month for each of the two younger children is far from sufficient in the circumstances, and accordingly I would allow a more realistic sum of HK$33,000 per month for each of the two younger children for their respective share of the Wife’s general household and their personal expenses on the Husband’s undertaking to continue to pay directly for their school fees and for their share of rental expenses if the Wife chooses to rent her accommodation in Hong Kong after the proceedings.    

Husband’s Needs

249.  In his Form E the Husband put his total monthly expenditure at just over HK$1.8M, being almost HK$230,000 for general household with the bulk for the mortgage of his London property at HK$148,000 and HK$31,200 for the Malaysian Property, more than HK$1.5M for personal expenses with almost half of it for his UK tax and HK$400,000 for his legal fees, and about HK$100,000 for the children’s expenses mainly for their school fees, and for their holidays incidentally at the same amount claimed by the Wife [P2/333].

250.  The sale of the Malaysian Property and the conclusion of the proceedings should render his mortgage payment of the former and the legal fees of the latter no longer relevant, while a clean break order should also bring an end to his maintenance for the Wife, thereby bringing his total expenditure down substantially to just over HK$1.2M per month.    

251.  While it is the Wife’s submission that such expenditure, which is still very substantial by any standard, suggests an extravagant lifestyle of the Husband in London, I agree with the Husband that many of his expenses are related to his employment and position in A3 or otherwise business-related, and that a comparison of many of his personal expenses with those of the Wife show a similar lifestyle and standard. In any event it is not his case that he cannot meet whatever maintenance that the court may find reasonable for him to pay for the children, and at the monthly rate of HK$33,000 for each of the two younger children as I have assessed above will still keep his total expenditure to just about HK$1.3M and well within his financial means. 

Conduct/Impact on Costs

252.  The last major issue raised by both parties against each other, first by the Wife in her 12^th and main narrative affidavit where she devoted some 20 pages [P16/5835-5855] setting out what she claims to be reprehensible conduct of the Husband both generally and especially litigation conduct which she submits must be taken into account by the court in these proceedings and when dealing with the matter of costs. With the combined costs in excess of HK$42M, there is no question that something had gone very wrong with these proceedings, and both parties have pointed fingers at each other. 

253.  While the Wife has put the blame on the Husband as to his conduct in 4 categories, namely non-disclosure, litigation funding, general conduct and satellite litigation, clearly the one of non-disclosure has been at the front and centre of her biggest complaint against him, of which she blames his failure to be transparent about his finances from the outset as one of the main reasons for the breakdown of their marriage, and which she claims to have continued throughout these proceedings, as she explained in her affidavit at para117:

“I have already set out above that one of the primary reasons our marriage failed, was because of M’s unwillingness throughout our marriage to be transparent about our finances. Unfortunately, this attitude has prevailed throughout these proceedings. M’s failure to provide full and frank disclosure from the very start of these proceedings in his Form E, when he should have, has meant that one of the greatest difficulties in this case for me has been the ability to determine what the matrimonial assets are and what their true value is. Throughout the proceedings, M has wilfully chosen to either obfuscate his disclosure, provide it on a piecemeal basis or insist that he has made full disclosure or state that no further disclosure is required, when in fact he has not provided what he has been required to and he has forced me to go to the time and expense in order to prove so. It has made it impossible for me, to ever have a full and clear picture of the value of the matrimonial assets.”

254.  She then set out in her Chronology of Disclosure [Exhibit P4] in details the difficulties encountered by her and her lawyers in trying to establish the extent of the matrimonial assets pool, and argues that in circumstances where the Husband‘s transparency over finances was an issue, instead of being as open and transparent as possible about the assets from the outset of these proceedings, the Husband was just the opposite, as demonstrated by his first Form E dated 8^th September 2014 which she claims was an entirely deficient and positively misleading document and apparently intentionally so, as can be seen from the following matters:

- The W Trusts, the value of which he stated as unknown but was later shown to be worth at least HK$49M;

- His A3 LTIP and ABP share awards received in 2013 and 2014 the value of which he again stated as unknown but in fact had a total face value of HK$66M;

- Severance payments he received from A2 Xxxxxxxxx in 2012 and 2013 totalling US$5.3M (HK$41.3M) but which he failed to fully disclose;

-The transfer of US$1.1M (HK$8.5M) of matrimonial funds to his parents in 2012 and 2013 but which he failed to disclose.

255.  The Wife then submits that after his Form E the Husband continued to act in an obstructive and obfuscating manner in relation to his assets and disclosure, leaving her and her legal advisors unable to determine the extent of the asset pool with any level of accuracy, even on a broad brush basis.

256.  As illustrations, the Wife argues that in his Answer dated 28^th October 2014 to her Questionnaire of 23^rd September 2014, the Husband still failed to disclose details of his A3 LTIPs and ABPs granted to him in 2013 and 2014 respectively, nor did he produce any bank statements showing into which account his A2 remuneration had been paid into, nor of his payments of the US$1.1M to his parents.

257.  Furthermore, the Wife argues, the Husband also failed to produce documents in support of his said Answers such as mortgage statements, bank and credit card statements, property valuation, company accounts, insurance policies or tax returns, and notwithstanding being given further opportunities to come clean with such defaults, he still failed to do so in his subsequent answers, and instead continued to hide his payments to his parents until they were eventually discovered by her solicitors after they questioned certain payments made out of his trust account with his solicitors.

258.  As regard the Husband’s A3 Benefits, the Wife argues that notwithstanding the fact that 521,276 of LTIP shares were already granted to him in March 2015, yet it was never disclosed either in his 5^th Affidavit of 29^th June 2015 nor at a subsequent meeting between the parties and their legal representatives on 9^th July 2015, and that his Supplemental Answers dated 27^th July 2015 to her further questionnaire also failed to disclose the Dividend Equivalent shares that had been awarded to him in May 2014, November 2014, and May 2015 for the 2013 – 2015 ABP share awards.

259.  For the Husband’s remuneration and severance payments received from A2 Xxxxxxxx, the Wife submits that despite efforts by BDO commissioned by her to review and analyse deposits and withdrawals from his bank accounts records, she was still unable to account for a difference as much as HK$13.9M nor identify other bank accounts if the difference had been transferred to those other accounts, resulting in the necessity for her to obtain orders from the FDR Judge for the Husband to provide those  disclosures with supporting documentation, and despite that she submits that there were still HK$3.9M unaccounted for.

260.  The Wife therefore submits that she had continued to encounter such difficulties with the Husband’s disclosure right up to the trial as set out in details in her Chronology of Disclosure [Exhibit P4], which demonstrate such tactics of the Husband from the outset to present her and her legal advisors with a schedule of what he says the assets were but without all the underlying documents by which her advisors could verify his figures which kept changing and invariably differ substantially from the previous ones, again without explanation of the difference, as evidenced by no less than three different asset schedules produced by him up to the trial.

261.  This is therefore, submitted by Mr Westbrook, not a case of an overzealous wife requiring unsanctioned disclosure of an immaterial or trivial nature, but rather a case where a husband had consistently and deliberately failed to provide full and proper disclosure to allow an accurate picture of the finance to be presented, as evidenced by the numerous requests from the Wife’s solicitors in the voluminous correspondence bundles of the parties and produced in court during the trial, and highlighted in the Wife’s Closing Submission.   

262.  The Husband of course denies that he has been guilty of any such conduct as alleged by the Wife, and instead refers to the ways she has approached these proceedings as such conduct that the court should take into account, and which he identified as one of the major issues in his 8^th and main narrative affidavit [P18/6255] as follows:

“What is the effect of the disproportionate disclosure sought by the Petitioner, as a result of the Petitioner’s conduct of this case and her frequent changes of mind, causing unnecessary costs to be incurred, and delay?”

263.  The Husband then elaborated about such conduct in the same affidavit under the subtitle “Legal costs in these proceedings” [P18/6276]:

“109. It became apparent to me since the commencement of these proceedings in an unreasonable and aggressive and disproportionate manner. These proceedings started off badly, and have continued in the same vein. The Petitioner attempted to serve the Judicial Separation upon me in London in May 2014 when Messrs. Withers, the Petitioner’s former solicitors, had already served this upon my solicitors in Hong Kong who were on record as acting and my solicitors had already filed a Notice to Act and accepted service of the Petition on my behalf. The Petitioner also tried to serve this upon me at my work place just prior to the announcement of my company’s results. I can only regard this as a deliberate attempt to harass and antagonize me without consideration of the effects.

110. I consider that the wholly disproportionate costs associated with the financial relief proceedings result from the Petitioner simply being unable or unwilling to accept the terms of my employment and disclosure, the key parts of which are publicly available.

111. For instance, during the course of these proceedings the Petitioner has expended an astronomical figure of costs in seeking disclosure. The vast sums expended have failed to identify any additional assets, and having reduced the assets of both of us.

112. The Petitioner has complained throughout these proceedings that I have incurred higher legal costs than her. Undoubtedly, I have had to incur higher legal costs because of her requests for continual requests for disclosures. I have filed a total of 9 Answers in these proceedings as a result of the Petitioner’s requests and applications including a ‘banker books’ application, where she sought detailed information from me when it was clear she already had the information and/or the information she sought was immaterial. In comparison, the petitioner has field only 1 Answer as I have only filed one Questionnaire.

…

114. It is difficult to see the Petitioner’s refusal to proceed in a constructive and timely manner as other than her apparent view of gaining strategic advantage in delaying these proceedings as long as possible so that my future benefits may vest and the assets available for distribution may thereby be enhanced.

115. I believe it is the Petitioner ‘s obsession with seeking as much money from me as possible rather than to trying to reach an amicable and equitable settlement that has caused the excessive level of legal costs spent in these proceedings.”   

264.  Notwithstanding her disproportionate approach to disclosure, Mr Coleman submits that the Wife accepted in cross-examination that the Husband was not hiding assets, nor had he dissipated assets to prejudice her claim for ancillary relief. Indeed, he submits, there would be no substance to any idea that the Husband would behave dishonestly on disclosure, and that instead his commercial altruism and selfless business work is to be emphasized.

265.  Mr Coleman further submits that though accepting no hiding of assets, yet the Wife still required “confirmation” and “authentication” of his asset position, which has highlighted that she has constantly confused disclosure with valuation, or disclosure with audit verification, with the bitter irony that her audit has not added dollars of substance to the bottom line, but the costs she has wilfully and wantonly caused to be incurred equate to around 40% of the asset pool available for distribution, which has in effect dissipated the assets and has prejudiced her own claim for ancillary relief.

266.  The problem in this case, Mr Coleman argues, is that the Wife has been prepared to spend money which ultimately generates no value, due to her need to “research all my options before making a decision”, hence most of the time and significant expenses of the proceedings has been caused by her overzealous demand for wholly disproportionate disclosure, as the costs incurred as a result can only be described as horrendous, not only in terms of quantum but also in terms of how they have reduced the assets available for distribution and the time that the Husband has spent, to the detriment of his employment with dealing with such disproportionate evidence.   

267.  Mr Westbrook for the Wife however disagrees and insists that it is incorrect that she has not added substantial figures to the bottom line, as she has identified the HK$8.5M paid to the parents which should be added back to the asset pool, the HK$3.9M paid out of the A2 remuneration which is unaccounted for, the inclusion of additional trust assets of HK$2.1M, as well as the identification for inclusion of the Husband’s non-disclosed A3 bonus payments, dividend shares and LTIP awards worth millions of dollars.

268.  In any event, Mr Westbrook argues, no matter whether any substantial sums are uncovered, the Husband is not allowed to play “hide and seek” and that he should be held responsible for the majority of the costs generated by his obstinate refusal to acknowledge and comply with his disclosure obligations, and submits that his suggestion that the difference between the parties on asset values is attributable to valuation rather than disclosure is simply unsupported by the facts and just an attempt to obfuscate the issue further. With respect, I find that the evidence before the court tend to show a different picture. 

269.  It seems clear to me that from the very outset of the proceedings, the Wife had expected a full, transparent and detailed disclosure by the Husband of each and every aspect of his financial resources in his Form E, as she herself had done with her own Form E, and when she found his Form E not reciprocating with the same transparency and details, the entire proceedings began to descend into open season for discovery of everything about the Husband’s finances in minute details on the justification that having failed to do so in his Form E, he must have something to hide from the Wife.

270.  This attitude and approach of the Wife is amply evidenced in many of her affidavits, such as her main narrative 12^th Affidavit when she explained how she prepared her Form E at para30 [P16/5806]:

“For the avoidance of doubt I meticulously recorded my expenses, which in the first instance I set out as accurately as possible in my Form E. There is now shown to me marked “ABW12-3” a true copy of Attachment 5 to my PTR Note for the 20^th May 2016 hearing, which shows the detail into which I went when preparing my Form E and recording my expenses. In my Form E, I provided all the necessary information on both mine and the children’s expenses for at least 18 months, of which at least 16 months related to the period of time before I filed for Judicial Separation in May 2014. The majority of those expenses are supported by worksheets and the underlying bank/credit card statements and receipts, which I am happy to produce to the Court in the event that M still insists on questioning the same.”

271.  With that kind of meticulous preparation and details that had gone into her Form E, and her demand for full and complete transparency from the very outset, it is indeed small wonder that the Wife found it unacceptable when the Husband stated in his Form E the value of certain items such as the Trusts or his unvested A3 Benefits as ‘Unknown’, but is it fair therefore to accuse him of ‘failure to provide full and frank disclosure from the very start of these proceedings in his Form E’?

272.  There are indeed many examples of such rigid and dogmatic approach of the Wife, such as her insistence in coming to court on 16^th July 2016 despite the Husband having earlier already consented to her application and requested to vacate the hearing to save time and costs. which led to my decision to order her to pay his costs in any event. Or as already noted in her approach towards the Husband’s various proposals regarding their Malaysian property. Equally telling is her insistence in the production of certain documents such as mortgage statements, company accounts or insurance policies by the Husband when there was simply no justification to do so other than for the sake of full transparency. 

273.  Another example, according to the Husband, can be found in her approach towards the valuation of his London Property when notwithstanding he had already provided an independent valuation from Sevills UK Ltd whose independence or professionalism should not be questioned, yet the Wife refused to accept the valuation because she had done her own research based on incomplete information, and notwithstanding the Husband’s further proposal to split their respective valuation and settle on a middle figure, she still declined to accept that figure, which eventually led to further costs to be incurred for a SJE Report which did not assist her case at all as it gave a lower value than the one proposed by the Husband.

274.  A further example, as pointed out by Mr Coleman for the Husband, was the unnecessary side-trip to the Court of Appeal caused by the Wife when she wrongly insisted that Judge Melloy to deal with several reserved costs orders after their failed FDR hearing despite being pointed out that the Learned Judge as FDR Judge would have been barred by the rules to do so, which inevitably led to the intervention by the Court of Appeal and as a result further legal costs had been wasted.    

275.  One of the persistent complaints of the Wife was that the Husband had failed to provide the information as to the Trusts and his A3 Benefits, but the fact is that he did at the earliest opportunity disclose both of them in his Form E under Item 2.11 on p 8 [P2/327], and although he put their value as unknown, for the Trusts he did explain that the information as to their value was in the possession of the trustees, while for his A3 Benefits, he also referred to them again under Item 5.5 on p19 [P2/336] as follows:

“5.5(1): … My Long Term Incentives are deferred and cannot be monetized until employment ceases. The majority of my bonuses are deferred, consistent with evolving UK regulation. Contractually the Long Term Incentives and bonuses may never vest and are subject to the discretion of the Board. As a result of the recent income regulations in the UK, the length of the deferral of the bonuses is also likely to be extended. There is no real possibility of giving any cash benefit from the long term incentive plan in the next 5 years.

(2): The likely amount of the annual bonus this year is likely to be less than last year, as a contractual bonus for achieving ALL targets is 35% less than the actual 2013 payment. As a matter of public record, there is sensitivity in the UK as to the amount of remuneration paid to CEOs of public companies.”   

276.  As regard the two Trusts, the Husband also provided the following information under the same Item 5.5:

“(7) The Petitioner had made an application to vary the discretionary trusts which I understand the trustees oppose. The trusts were settled by me in 2005 and 2006 as generational succession planning and asset protection for the benefit for myself, the Petitioner and the children.

(8) The Petitioner was fully aware of the establishment of the trusts although she now denies it. The Petitioner knew she was a beneficiary and she made a joint decision with me as to the appointment of the trustees. One of the trustees was actually introduced to me by the Petitioner and is her cousin’s husband.”

277.  In addition the Husband had also attached numerous documents to his Form E including 12 months of bank statements of all of his disclosed bank accounts, as well as his insurance policies, pension, employment contract and tax return totalling in excess of 700 pages and comprising 2 trial bundles. As far as disclosure is concerned as required by Form E, I do not think the Wife’s statement that the Husband’s was ‘entirely deficient” is fair.

278.  Nor does it seem fair for her to say that the Husband was ‘positively misleading’ by putting the value of the W Trusts and his A3 LTIP and ABP shares awards as ‘Unknown’ when they were later shown to be worth HK$49M and HK$66M respectively, as there is no evidence to suggest that those information were at that time already available to the Husband or within his knowledge, when the fact is that even up to the trial those figures could not be ascertained in particularly as to the Husband’s A3 unvested shares and deferred bonuses which is the reason why the Wife has proposed that her claim be satisfied by means of the Wells sharing.

279.  Of course as the saying goes that it takes two to tango, and the Husband in these proceedings cannot be said to be entirely blameless, with the most obviously glaring one being his gift payments of more than US$1M to his parents during the marriage without any previous consultation or discussion with the Wife, and which she only found out later in these proceedings, which probably triggered off her suspicion or distrust over everything concerning his finances.

280.  It also did not help when the Husband recorded various losses in some his investments which involved his friends for whom the Wife apparently did not hold much regard, and which just further fuelled her suspicions.  

281.  The disclosure process was likely also compounded by the fact that the Husband was living thousands of miles away from Hong Kong in London with a significant time difference and was obviously totally immersed in an extremely busy and demanding job, all of which no doubt conspired to complicate and delay his instructions to his lawyers in Hong Kong and in his retrieving, collecting and collating the numerous and voluminous financial documents and materials sought by the Wife, thus further fuelling her suspicion and determination to get to the bottom of almost everything apparently oblivious to the resultant legal costs and expenses.

282.  This should also in my view explain why the Husband has as a result incurred more legal costs in these proceedings, as it is obvious that the receiving party to a substantive questionnaire over various transactions or activities in his bank statements or records would need to do a lot more work and hence incur more costs to explain and clarify them with supporting documentations than the party simply raising the enquires, and in this case the majority of the questionnaires and requests for further particulars was almost all directed from the Wife to the Husband, coupled with the fact that the latter was having an extremely busy career and had therefore to rely more on his lawyers both in London and in Hong Kong to handle the litigation, it is hardly surprising that there is such disparate level between the parties as to their costs, rather than due to any impropriety or indiscretion on his part as alleged by the Wife. Clearly his situation is different and can be distinguished from those as in RH v RH [2008] 2 FLR 2142, LS v JS [2012] EWCH 2960 or J v J [2014] EWHC 3654 referred to by the Wife, and with due respect, I certainly have difficulty agreeing with Mr Westbrook that the Wife is the more economic litigator in the proceedings. In terms of the total amount incurred, her costs by comparison may be so, but certainly not reflected by her approach as demonstrated throughout the proceedings which has, as I have already said above, no doubt impacted on the Husband’s higher costs.   

Conclusion

283.  As proposed by both parties, in applying the equal sharing principle on those marital assets identified and broadly valued at about HK$106M excluding the unvested A3 shares, the Wife shall be entitled to HK$53M being her half share, and after setting off her own assets and her half share of the joint assets, the balance shall as agreed between the parties be made up by the Husband transferring to her his share in DXX Holding and by the Trusts transferring their assets to her or by liquidating them into cash for her upon accepting her undertaking already given in court that she will not take any action whether in Hong Kong or elsewhere by herself or any third party against the W Trusts or any trustee, with any balance to be met by the Husband by way of a lump sum.

284.  As for the Husband’s unvested A3 shares, as already discussed above, I agree that fairness requires that the Wife should be entitled to a Wells sharing of the 2014, 2015 and 2016 Shares as and when they vest and become saleable in a reducing percentage as conceded by her but in my assessment instead at 50%, 25% and 12.5% respectively over the next 3 years, as the further into the future either post-separation or divorce, the value so created or achieved by the Husband the less ascertainable or justifiable to the Wife’s entitlement, and it is clear to me that her share in such reducing percentage will in the circumstances of this case meet the underpinning objective of fairness between the parties, and also properly reflect the court’s disapproval of her excessive approach to disclosure and discovery of the matrimonial assets or the Husband’s finances as explained above.

285.  As for the Husband’s proposal to make provision of accommodation for the Wife whilst the two younger children being educated in Hong Kong until the youngest child completes her secondary education in Hong Kong as set out in his Closing Submission, I shall leave it to the Wife to decide for herself whether she should rent or to purchase her accommodation in Hong Kong with a mortgage as proposed by the Husband, but either way I agree that the Husband shall contribute towards the respective share of the accommodation costs of the two younger children in Hong Kong, but otherwise the above terms shall be in full and final settlement of the parties’ claims for ancillary relief against each other as a clean break between them.

286.  Regarding maintenance for the children, I accept the Husband’s undertaking and proposal to be solely responsible for all the needs and expenses of the eldest child D until she completes her university education, and that he shall pay HK$33,000 per month for each of the two younger children plus their school fees and expenses in addition to their respective one-third share of the Wife’s accommodation expenses until each completes her secondary education in Hong Kong whereupon the Husband shall similarly be wholly responsible for all their needs and expenses at university.    

My Order

287.  Given that some of the assets such as those under the Trusts need to be updated and verified by the Trustees, I propose that the parties shall jointly work out the finalised details of the draft order and to submit them for my approval on the basis of my above decision summarised as follows:

Upon the Wife undertaking not to bring any action whether in Hong Kong or elsewhere by herself or any third party against the W Trusts and or any trustee from time to time, and Upon the Husband undertaking to indemnify the Wife against any claim against her made by the W Trusts or its trustees: 

(a) The Wife is to receive her share of the matrimonial property of HK$53 million as assessed and to include the transfer of the Husband’s shares in DXX Holdings to her and whereupon she shall cease to be a beneficiary of the W Trusts;

(b) The Wife shall also receive her Wells sharing of the Husband’s unvested A3 Shares for 2014, 2015 and 2016 in reducing percentage at 50%, 25% and 12.5% respectively as and when they vest and become saleable;

(c) Upon payment under (a) above to the Wife the interim maintenance for her shall cease and that there be an immediate clean break between the parties;

(d) The Husband shall continue to be wholly responsible for all the expenses of the eldest child D until she completes her university education;

(e) The Husband shall continue to be wholly responsible for the school fees and expenses of the two younger children and to pay the Wife HK$33,000 per month for each of their maintenance plus their respective share of her accommodation costs in Hong Kong until they complete secondary education in Hong Kong and leave for university when the Husband shall become wholly responsible for their expenses until completion of their university education.  

288.  Of course there shall be liberty to apply in view of the complicity of the terms of my order.

Costs

289.  I have been asked by both parties, for reasons apparent above, to reserve my decision on the costs of the ancillary relief proceedings so that they can run argument for costs against the other at some other date upon the delivery of this judgment, which I shall do but nevertheless propose to give some preliminary view on that issue in the hope of saving the parties further time and costs, which is that it would seem to me not unfair or inappropriate that there be no order as to costs including those reserved as a result of my findings and overall decision, so as to enable the parties to finally bring closure to their sad saga and financial disaster and to let go of no doubt the greatest regret in each of them of what they have lost in this litigation which is not just those HK$42M in costs, and so that they may now move on with their new life and more importantly the future upbringing and education of their three children.   

290.  And last but certainly not least, I wish to express my gratitude to counsel of both sides for their most valuable assistance provided to this court throughout the hearing.