W v. H AND ANOTHER

HCMC 1/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 1 OF 2006

(transferred from FCMC 4816 of 2005)

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J U D G M E N T

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Background:

1.  In these matrimonial proceedings the net assets of the wife amount to some $50 million.  The assets of the husband arguably amount to some $300 million.  The extent of the husband’s assets will depend upon the outcome of an application by the wife under s 17 Matrimonial Proceedings and Property Ordinance, Cap 192, (MPPO), to be dealt with later in this judgment.

2.  In this judgment, except where indicated, all figures are in Hong Kong dollars.  Unless it is particularly relevant, I have rounded all figures to the nearest $100,000.

3.  Mr Pilbrow, for the wife argues that the concept of the entitlement of a wife, in ancillary relief proceedings, being limited to her reasonable requirements, is no longer the law in Hong Kong.  Consequently, he says that of the total assets owned by the parties, the wife should receive 45%.  Mr Coleman, for the husband says that the notion of reasonable requirements was established in Hong Kong in C v C [1990] 2 HKLR 183, CA, and still remains the law. 

4.  The case for the husband is that I am bound by that decision, it being a decision of the Court of Appeal.  Mr Coleman says, as to the wife’s reasonable requirements, simply that no order need be made, as the assets in her name are sufficient to meet her reasonable requirements.

5.  It is now clearly established, sensibly so, that the starting point of an inquiry in an application for ancillary relief is the financial position of the parties, an exercise that requires first, the computation of the assets, and then the distribution of the assets in accordance with the law: see Charman v Charman [2007] 1 FLR 1246.  There is no dispute between the parties of this proposition.

6.  Because in this case there is a direct challenge by the wife as to the legal principles to be applied, and upon which the distribution should be undertaken, it seems to me sensible to first consider the submissions on the relevant law.  Following my determination of the relevant law to be applied, I shall determine the extent of the assets, and then turn to the distribution of those assets in accordance with the law.

The Relevant Legislation:

7.  The starting point for a consideration of the law in relation to ancillary relief must be the relevant legislation, the MPPO.  Two provisions of the Ordinance are relevant.  They are ss 4 and 7.  I set out below the relevant provisions of each, indicating where I have omitted matters irrelevant to the present proceedings. 

8.  The first, s 4, gives power to the court to make orders for the financial provision for a party to a marriage in the case of divorce.

“s. 4(1) On granting a decree of divorce…., the court may, …., make any one or more of the following orders, that is to say-

(a) an order that either party to the marriage shall make to the other such periodical payments and for such term as may be specified in the order;

(b) an order that either party to the marriage shall secure to the other to the satisfaction of the court, such periodical payments and for such term as may be so specified;

(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified.”

9.  The second, s 7, sets out certain matters to which the court is to have regard in deciding what orders to make under s 4.

“s. 7 (1)    It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-

(a) 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;

(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 each 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 contributions 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….., the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution…. of the marriage, that party will lose the chance of acquiring.

10.  The most striking feature of this legislation is that, whilst setting out matters to which the court is obliged to have regard, no guidance at all is given to the court as to the way in which, having regard to those relevant matters, the court should then approach the making of an order for financial provision.

11.  The provisions in Hong Kong are to all intents and purposes identical to those contained in the Matrimonial Causes Act 1973, (UK).  For convenience I shall refer to the English legislation by the use of the section numbers in the Hong Kong legislation.

The interpretation of the English legislation prior to 2000:

12.  In a series of decisions of the Court of Appeal in England, beginning with O’D v O’D [1977] 2 WLR 308, [1976] Fam 83, followed by Page v Page (1981) 2 FLR 198, and finally in Preston v Preston [1982] Fam 17, the court established a principle whereby, (usually), a wife’s entitlement to ancillary relief was determined by ascertaining, having regard to all of the matters set out in s 7, a sum that constituted her reasonable requirements, and, assuming there were sufficient assets, awarding her that sum. 

13.  In Duxbury v Duxbury (1987) 1 FLR 7, the court used a calculation, based upon the statistical anticipated duration of the life of the wife, to determine a lump sum which, if invested at an appropriate rate of interest, and from which both capital and income withdrawn annually, would provide her with an appropriate sum upon which to maintain her standard of living.  This calculation, which became known as a Duxbury calculation, afforded a starting point upon which the court could assess the reasonable requirements of a wife. 

14.  The effect of this interpretation of the legislation was that in the usual case, where after a reasonably long marriage, the bulk of the assets were in the name of the husband, he would be required to pay to the wife a lump sum for her reasonable requirements, he retaining the remaining assets.  Significantly, if the assets in the hands of the husband, following the assessment of the wife’s reasonable requirements and payment to her of that sum, exceeded the amount due to the wife, then usually the husband would retain the whole of that sum.  Thus, if, from assets of $30 million in total, it were determined that the wife was entitled to $10 million to meet her reasonable requirements, then she would receive that sum, and the husband would retain $20 million.

The interpretation of the Hong Kong legislation:

15.  In Hong Kong, in C v C [1990] 2 HKLR 183, the Court of Appeal ruled that in ancillary relief proceedings the approach that had been adopted in England was to apply.  In determining what was the proper lump sum to award, Hunter JA said that what was required was :

“…a quantification of needs, of reasonable requirements in the broadest sense of that phrase, of the claims of both parties to these assets in the light of all the circumstances and of the considerations specifically named in s 7(1).”

16.  Since that decision, ancillary relief proceedings in Hong Kong have been determined by the assessment of the reasonable requirements of the wife.  In “big-money” cases a Duxbury calculation would usually be used to determine the entitlement of the wife.  Just as in England, in Hong Kong if after paying to the wife the sum assessed by the court, the assets remaining in the hands of the husband exceeded the sum paid to the wife, he was entitled to keep the whole of that sum.

The English law after 2000:

17.  In October 2000, for the first time ever, the provisions of the Matrimonial Causes Act 1973, (UK), came before the House of Lords for consideration in White v White [2001] AC 596, [2000] 2 FLR 981.  There, the House of Lords determined that the concept of ‘reasonable requirements’ that had been in use since 1976, did not properly reflect the law.

18.  Instead, the court identified the objective implicit in the provisions of the Matrimonial Causes Act 1973, as being to achieve a fair outcome in the financial arrangements on or after divorce, giving first consideration, where relevant, to the welfare of children.  The following passage from the headnote to the report of the decision in [2000] 2 FLR 981,  accurately reflects the principles enunciated by the leading speech given by Lord Nicholls of Birkenhead:

“Fairness required the court to take into account all the circumstances of the case.  In seeking to achieve a fair outcome, there was no place for discrimination between husband and wife and their respective roles.  Fairness required that the division of labour should not prejudice or advantage either party when considering their contributions under [HK s 7(1)(f)].  If each in their different spheres contributed equally to the family, then in principle it mattered not which earned money and built up the assets.  Before making an order for division of assets, a judge should check his tentative views against the yardstick of equal division.  As a general guide, equality should be departed from only if, and to the extent that, there was good reason for doing so.  The need to consider and articulate reasons for so doing would help the parties and the court to focus on the need to ensure the absence of discrimination.”

19.  In his speech, Lord Nicholls, at p 992F, reflected upon the consequence noted at paragraph 14 above in the following terms:

“But I can see nothing, either in the statutory provisions or in the underlying objective of securing fair financial arrangements, to lead me to suppose that the available assets of the (husband) become immaterial once the claimant wife’s financial needs are satisfied.  Why ever should they?  If a husband and wife by the joint efforts of many years, his directly in his business and hers in directly at home, have built up a valuable business from scratch, why should the claimant wife be confined to the court’s assessment of her reasonable requirements, and the husband left with a much larger share?  Or, to put the question differently, in such a case, where the assets exceeded the financial needs of both parties, why should the surplus solely belong to the husband?”

20.  Following White, a number of other decisions involving substantial sums came before the courts.  These included, at first instance Rossi v Rossi [2007] 1 FLR 790, in the Court of Appeal, Lambert v Lambert [2003] 1 FLR 942, Foster v Foster [2003] 2 FLR 299, and Charman v Charman [2007] 1 FLR 1246; and in the House of Lords, Miller v Miller; McFarlane v MacFarlane [2006] 1 FLR 1186.

The present state of English matrimonial law:

21.  The seminal decision remains that of White.  Subsequent decisions have explained and developed the law as stated in White.

22.  The stage at which the law has reached in England may be seen clearly from the following passages from the judgement of Thorpe LJ in Lambert, at para 27, and 38:

“27    First it is unacceptable to place greater value on the contribution of the breadwinner than that of the homemaker as a justification for dividing the product of the breadwinner’s efforts unequally between them.”

And:

“38    There must be an end to the sterile assertion that the breadwinner’s contribution weighs heavier than the homemaker’s.”

23.  Mr Pilbrow referred me also to the following passage from the headnote in Foster:

“Just as there should be no discrimination between spouses on the basis that one was a breadwinner and the other a homemaker, there was no justification for discrimination between spouses on the basis of differences in income.”

24.  Mr Pilbrow submits that from Charman, further principles emerge, clarifying White.  These may be summarised as follows:

(1) There are three main distributive principles: need (generously interpreted), compensation and sharing;

(2) The ‘yardstick of equality’ has now developed into the ‘equal sharing principle’;

(3) Under the sharing principle, property should be shared in equal proportions unless there was good reason to depart from such proportions;

(4) Consequently, departure from equality was not departure from the principle but took place within the principle;

(5) The starting point of every enquiry in an application for ancillary relief is the financial position of the parties, and was always in two stages: first computation and then distribution;

(6) The sharing principle applies to all the parties’ property, but to the extent that property was non-matrimonial property, there was likely to be better reason for departure from equality;

(7) Any irreconcilable conflict between the results suggested by one of the three principles, need, sharing and compensation, and that suggested by any other of those three principles, must be answered by the application of the criteria of fairness;

(8) In cases of very substantial matrimonial property it might be immediately apparent that the result of applying the sharing principle would immediately subsume the result of applying the principles of need and of compensation;

(9) A person may make a special contribution to the welfare of the family but the situations in which it would be appropriate to find a special contribution were heavily circumscribed.

(10)   The utility of the Duxbury calculation is limited to the capitalisation of an income requirement in the assessment of financial needs.

25.  The distinction between matrimonial and non-matrimonial property may be found in the judgement of Lord Nicholls in Miller, at para 22, where he defined matrimonial assets as being “all property acquired during the marriage otherwise than by inheritance or gift”.  Such property, acquired by inheritance or gift is non-matrimonial property.  Lord Nicholls noted that matrimonial property was the financial product of the parties’ common endeavour.

26.  I am satisfied that the matters set out in paragraphs 22-24 above reflect the law as to entitlement in ancillary relief as it presently stands in England.

Is C v C still binding in Hong Kong:

27.  It will be seen immediately that the law as it now stands in England is far removed from the limiting strictures of reasonable requirements as enunciated in C v C.  Now  Mr Pilbrow specifically invites me to find that the concept of “reasonable requirements” is no longer the law in Hong Kong.  That submission raises directly the issue as to whether, in 2008, I am bound by C v C.  Neither party suggests that the circumstances of this case are not a proper case in which the issue is raised.  Mr Coleman says the wife should have her reasonable requirements.  Mr Pilbrow says that in order to meet the claim of the wife I should apply the law as it now stands in England.

28.  The starting point for this question must be that in normal circumstances a decision of the Court of Appeal is binding upon the Court of First Instance.

29.  Mr Coleman says that consequently, I am bound by C v C.  He says that even the Court of Appeal recognizes that C v C is presently the law.  He refers to the judgement of Stock JA in Z v Z (unreported CACV 169 & 181 of 2006, 25 May 2007), and in particular the following paragraphs, (the emphasis in both extracts is Mr Coleman’s.):

“107    The law at present is governed by the 1990 decision of the Court of Appeal in C v C by reason of which there is a valuation of the wife’s reasonable requirements, the quantification of needs, rather than the approach adopted in England by the House of Lords in the landmark cases White v White and Miller v Miller, that sets its face against gender discrimination, against favouring the money earner over the homemaker and child carer and, while purportedly eschewing a presumption of equal division, departs from equal division only if good reason is shown for so doing.”

and also:

“108    I well understand the profession’s frustration at the present state of the law, for C v C is no longer a satisfactory approach.”

30.  It is important to note however, that it was simply not open to the Court of Appeal to deal with the issues raised by the conflict between C v C and the more recent English authority, because, as Stock JA also said at para 107:

“Mr Mostyn’s recognition that this was not the case for such an exercise was realistic, for this case does not begin to raise the issues raised by C v C and White and the Australian cases; and that is because it was common ground in this case that the parties intended an equal division of assets,..”

31.  Before I consider whether or not I am bound by C v C it is appropriate that I should acknowledge the decision of Hartmann J. in F v F [2003] 1 HKLRD 836 where the judge found, at para 66, that he was bound by C v C.   Hartmann J said:

“In the circumstances, I am satisfied that this court is bound by C v C [1990] 2 HKLR 183, and that White v White [2001] AC 596, while it may offer valuable guidance, may only do so within permissible limits.

I note however that the learned judge went on to say, at para 68:

“Even though a host of arguments were advanced to the contrary, in my view the present case falls far short of what may be described as a classic White case.”

I am of course not bound by that decision, but must regard the decision with great respect, it being a decision by a judge very experienced in family court matters.

32.  The issue of the conflict between the law in Hong Kong and England arose also at first instance in Z v Z [2006] HKFLR 121.  Like Hartmann J, Lam J found in Z v Z  that he did not need to decide whether equality of division, be it a cross-check or starting point, was part of the law of Hong Kong.  He so found because both sides in the case had embraced equal division as the fair distribution of the family wealth.  Consequently the appropriateness of the approach in C v C simply did not arise, see para 92.

The argument that C v C is not binding:

33.  Mr Pilbrow properly acknowledges that the argument he makes to me, is that made to Lam J by Mr Mostyn QC.  The basis for a juridical re-examination of  C v C arises from legislation coming into force in Hong Kong subsequent to the decision in C v C.  It must be that I am required to have regard to, and if appropriate, apply that subsequent legislation in reaching my decision.  If it can be demonstrated that that legislation would have resulted in the Court of Appeal reaching a different decision in C v C, then I am free to depart from C v C.

34.  At the time of the decision in C v C, (9 May 1990), there was no human rights legislation in force in Hong Kong.  Subsequently, two pieces of legislation have come into existence which have a direct impact on the basis upon which the court reached its decision in C v C. 

35.  They are first, (in time), the Hong Kong Bill of Right Ordinance Cap 383, which became law on 8 June 1991, and, second, the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China, adopted by the Third Session of the Seventh National People’s Congress on 4 April 1990, and promulgated by Order No.  26 of the President of the People’s Republic of China on 4 April 1990, effective as of 1 July 1997, (the Basic Law).

36.  The relevant provisions are as follows.  Article 8  of the Basic Law provides:

“The law previously in force in Hong Kong, that is, the common law, rules of equity, ordinances, subordinate legislation and customary law shall be maintained, except for any that contravene this Law, and subject to any amendment by the legislature of the Hong Kong Special administrative Region.”

37.  Article 25 of the Basic Law provides:

“All Hong Kong residents shall be equal before the law.”

38.  Article 39 of the Basic Law, where relevant, provides:

“The provisions of the International Covenant on Civil and Political Rights…. as applied to Hong Kong shall remain in force and shall be implemented through the laws of the Hong Kong Special Administrative Region”

39.  Article 10 of the Bill of Rights, entitled “Equality before courts and right to fair and public hearing”, provides:

“All persons shall be equal before the courts and tribunals.”

40.  Article 19 of the Bill of Rights, entitled: “Rights in respect of marriage and family”, provides:

“(1)   The family is the natural and fundamental group unit of society and is entitled to protection by society and the State.

(2) The right of men and women of marriageable age to marry and to found a family shall be recognized.

(3) No marriage shall be entered into without the free and full consent of the intending spouses.

(4) Spouses shall have equal rights and responsibilities as to marriage, during marriage and at its dissolution. In the case of dissolution, provision shall be made for the necessary protection of any children.”

41.  Article 22 of the Bill of Rights, entitled: “Equality before and equal protection of law”, provides:

“All persons are equal before the law and are entitled without any discrimination to the equal protection of the law. In this respect, the law shall prohibit any discrimination and guarantee to all persons equal and effective protection against discrimination on any ground such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.”

42.  Finally, it is appropriate to note the following Articles from the International Covenant on Civil and Political Rights, (ICCPR), applied in Hong Kong by virtue of the Basic Law:

“Article 3:

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

“Article 23(4):

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

43.  None of these principles formed part of the law of Hong Kong in May 1990, when the Court of Appeal decided C v C.  The Court of Appeal were simply not required to consider whether or not the result of the application of the principle of reasonable requirements might be discriminatory against a wife.  This court is however obliged to have regard to the principles set out above, in relation to equality and the avoidance of discrimination, in the interpretation and application of s 7(1) of MPPO.

44.  It is not at all difficult to see how these principles, now part of the law of Hong Kong, ensuring equality between the sexes, and the avoidance of discrimination between the sexes, conflict with the approach to the division of property between a husband and a wife on the reasonable requirements basis adopted in C v C. 

45.  It is plain from the judgement of Lord Nicholls in White, that prior to that decision, the traditional roles adopted by a husband and wife in a family, that of a husband as a breadwinner or wealth creator, and wife as a homemaker, were viewed by the courts as having quite different consequences when assessing the contribution made by each to the welfare of the family under s 7(1)(f).  There is no doubt that the traditional view has been to value the contribution of a homemaker wife at a much lower level than that of a wealth creator husband.

46.  Such a discriminatory approach is plainly unacceptable in the light of the legislation now in force.  The citations set out in paragraphs 22-23 simply demonstrate how the traditional view was discriminatory.

47.  Second, the submission is that the effect of the application of the reasonable requirements approach has been to set a ceiling on an award in favour of a wife, that ceiling being the amount of the Duxbury calculation.  That is correct, but the problem does not end there. 

48.  Although rare, today one can contemplate easily a situation in which a husband has adopted the role of homemaker, and the wife that of wealth creator.  Under the law as it is declared in C v C, it would not be a difficult argument for the wife to make, that in those circumstances there ought simply to be a Duxbury calculation in order to determine the entitlement of the husband.  After such a calculation and payment to the husband of the sum so determined, the wife, as the wealth creator, would be entitled to all that is left, even if the sum she consequently kept exceeded the amount payable to the husband.

49.  The crucial point is, that whichever way the rule is applied, it is discriminatory against the homemaker.  It is plain from Lord Nicholls’ speech in White that discrimination is the inevitable consequence of the application of reasonable requirements. 

50.  In Z v Z, at para 79, Lam J said that in his view, C v C should be confined to cases where a party to the marriage did not take on the role of money earner in the family.  With the greatest respect to the learned judge, that approach does not save the application of the reasonable requirements principle from the conclusion that its application will invariably be discriminatory against the homemaker.  To the contrary, even if C v C is so confined, the application of reasonable requirements remains discriminatory, because it inevitably values the role of the homemaker lower than the value of the role of a money earner.  It is now abundantly clear that such a view is discriminatory.

51.  Although he was at pains not to downgrade the value of the contribution of a wife homemaker, it inevitably follows from the leading judgement of Hunter J. A. in C v C, that the approach adopted to the contribution of wife, in conjunction with the reasonable requirements principle, is discriminatory.  The learned judge summarised the principles to be extracted from the authorities including the following:

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

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

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

52.  This approach allows the contribution of the homemaker to approach that of equality with the contribution of the money earner only in circumstances where the homemaker has, as well as being the homemaker, plated an active role as a money earner.  Again, the propositions from the decisions subsequent to White, set out in para 22 & 23 above, simply demonstrate the inevitably discriminatory nature of that view of the value of the contribution of a wife and mother. 

53.  In a decision of the Full Court of the Family Court of Australia, Lynch v Fitzpatrick [2000] FamCA 1353 sub nom JEL and DDF [2001] FLC 93-075, dealing with the impact of White in Australia, and in particular in formulating and expressing guidance on the assessment of what constitutes an exceptional contribution by the family money maker, the court said:

“We reject the concept that there is something special about the role of the male breadwinner that means he should achieve such a preferred position in relation to his female partner.  To do so is to pay mere lip service to gender equality.  Marriage is and should be regarded as a genuine partnership to which each brings different gifts.  The fact that one is productive of money in large quantities is no reason to disadvantage the other.”

This decision was cited with approval in Lambert immediately prior to the passage cited at para 23 above.  In Lambert, Thorpe LJ, at para 38, cited the following passage from Cowan v Cowan [2002] Fam 97, [2001 3 WLR 684 with approval:

“As Robert Walker LJ succinctly said in Cowan v Cowan, the nature of the contributions is intrinsically different and incommensurable.  Each should be recognized as no less valuable than the other.”

54.  The consequence of a husband and wife adopting the traditional roles in a marriage was referred to by Lord Nicholls in his speech in Miller, at para 13, in these terms:

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

55.  A starting point of the treatment of the role of the homemaker wife as being of equal value to that of a breadwinner husband acknowledges “the widespread perception that marriage is a partnership of equals”, see Baroness Hale in Miller, at para 141, and enables the redress of a relationship-generated disadvantage.  As noted by Baroness Hale in Miller, at para 140:

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

56.  I have referred extensively to these propositions in order to demonstrate just how strongly the view is now held of the role of a wife in a marriage.  It seems to me plain that this view is a direct consequence of the application of the constitutional principles set out in paragraphs 37-43 above.  These constitutional principles are principles which must be applied by the courts in Hong Kong.  I see no reason to depart from them, nor any other way in which I may apply them, other than by applying the full force of the propositions enunciated in the English courts.

57.  Mr Coleman sought to argue that the specific problem of discrimination was recognised by the Court of Appeal in C v C.  He noted that that was the view of Hartmann J. in F v F, at para 52.  It is right that Hartmann J referred to the passage cited from Hunter JA at para 50 above.  What Hartmann J said, at para 52, in reference to that passage was:

“While, with respect, this does not appear to me to squarely answer the criticism that the contribution of a mother and homemaker is equal to that of a breadwinner, nevertheless the matter of discrimination was raised and dealt with.”

58.  In my view it is not enough to say that as Hunter JA recognised an element of discrimination, then it is not open to me to fully apply the constitutional requirements now imposed upon me by the subsequent changes in the law.  It is right to say that the constitutional arguments made to me, in reliance upon specific human rights considerations directly raising obligations of the courts to deal with a husband and wife equally in the dissolution of a marriage, were not before Hartmann J.

59.  It is right too, as Mr Coleman points out, that Lord Nicholls in White did not go so far as applying provisions such as Article 23 ICCPR.  But the fact that he did not need to do so is not an answer to the requirement that I must apply those provisions. 

60.  In Cowan, Lord Mance rejected an argument that article 5 of Protocol 7 to the European Convention for the Protection of Human Rights and Fundamental Freedoms, essentially the same provisions Article 23(4) ICCPR, could not be relied upon to justify equality in the division of property in divorce.  That is plainly right. 

61.  But in the present case Mr Pilbrow does not rely upon the constitutional provisions simply to justify equality in the division of property in divorce.  He relies upon those provision to assert that the principle of reasonable requirements enunciated in C v C is no longer binding upon this court.  In this respect it is important to remember that the law in England does not require equality in the division of property in divorce, but instead, a principal of sharing of property on a fair basis.  There will be many occasions in which a fair basis will result in equality.  But the yardstick of the quality has been discarded in favour of a principle of sharing.  Had the argument in Cowan been presented to Lord Mance to support the sharing of property on a fair basis, rather than to justify equality in division, the result may well have been different.

62.  What the Hong Kong government has done in the adoption of the constitutional provisions set out above is to accept and require that in the treatment of a husband and wife in the dissolution of a marriage there should be equality.  That equality can be achieved only by the sharing of property on a fair basis.  It plainly cannot be achieved by limiting the entitlement of the wife to what is perceived to be her reasonable requirements.

63.  I accordingly reject Mr Coleman’s submission that the constitutional provisions, described by him as “general social legislation seeking to remove discrimination”, do not provide a basis for this court not to follow C v C.  To the contrary, they not only open the door to that course, they require that I should reject the concept of reasonable requirements.

64.  I am satisfied that the application of these principles, not part of the law in Hong Kong in 1990, entitles me to say that the principle of reasonable requirements enunciated in C v C is no longer the law in Hong Kong.

The alternative argument:

65.  There is an alternative basis upon which the principle of reasonable requirements being the law in Hong Kong may be rejected.  Mr Pilbrow submits that the true ratio of C v C is the notion that the Hong Kong courts should follow the guidance of the English courts.  Consequently, he says, White and the subsequent cases, being the current state of English law, should be applied in Hong Kong.

66.  In C v C, the argument for the appellant husband, made by Mr Ching QC, relied upon a number of decisions of the Court of Appeal in England, which counsel invited the Hong Kong Court of Appeal to follow.

67.  In response, Mr Singer QC, (as he then was) made two submissions.  First, he invited the court to ignore English authority and to construe s 7 in the light of the court’s perception of Hong Kong’s need.  Second, he subjected the English authority to a critical analysis with a view to persuading the court that it was erroneous.  Although not fully set out in the judgment, that critical analysis closely paralleled the argument which ultimately found success in White.

68.  Thus, the case was put to the court on the basis of whether or not English authority should be followed.  And that was the way in which Hunter JA dealt with the competing submissions. 

69.  He said that Mr Singer’s first submission ignored history.  He concluded:

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

70.  Next, the judge said:

“….in order to consider Mr Singer’s second submission, it is necessary to put into context the guideline advice which emerges from the English authorities….”

This he proceeded to do, first listing six English cases, then summarising the guideline advice he derived from those cases, by the extraction of 9 principles, set out in the judgement.

71.  Hunter JA then went on to say:

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

72.  Thus, it can be seen that Hunter JA’s summary of the principles to be extracted from the English cases, including that of reasonable requirements, is arguably nothing more than an analysis designed to determine what the English law was, which law would be applied in Hong Kong, consequent upon his conclusion that the legislative intention in Hong Kong was to use English experience and to follow English example.

73.  On this basis it is contended that the true ratio of C v C is not merely that reasonable requirements is the law in Hong Kong, but that whatever the English law was, would also be the law in Hong Kong.  I find considerable strength in this argument, particularly having regard to the progression through the argument made by Hunter JA in his judgement.

74.  Consequently, even if I am wrong as to the significance of the constitutional provisions relied upon by Mr Pilbrow is justifying a departure from C v C, I am satisfied that in applying C v C, I must follow English law as it is presently stated.  The end result is the same.

75.  In paragraph 24 I have set out 10 principles which I have derived from White and the cases subsequent to that decision.  Those principles are general principles, applicable in most ancillary relief situations.  They reflect the law in relation to ancillary relief in England at the present time.  I am satisfied that those principles also reflect the law as it should be applied to ancillary relief proceedings in Hong Kong.

76.  The cases reflect certain other matters to which the court should pay regard in the distribution of property between the parties in particular circumstances.  I shall deal with those matters in the course of dealing with the issue of distribution later in this judgement.

The circumstances of the marriage:

77.  The wife and the husband met in 1981.  They married on 12 August 1982, in Hong Kong, and both are now aged 54.  A fact of significance is that the wife, although Hong Kong born, and whose parents both still live in Hong Kong, is a US citizen, and as such is required to pay US tax on her international income and investments, which includes a potential liability for capital gains tax on any Hong Kong real estate which she may own and subsequently sell.

78.  In June 1982, two months prior to their marriage, a residential apartment in Hong Kong, C Mansions, was purchased.  The purchase price was $1.75 million.  A 10% deposit was provided by the husband’s father, and a mortgage, at an advantageous interest rate, was provided by the wife’s employer, an international merchant bank.  It is the evidence of the wife that the amount saved by the parties as a result of the favourable interest rate, over the years that the mortgage was in existence, amounts to as much as $900,000.

The children:

79.  There are two children of the marriage, a daughter now aged 23, and a son, now aged 19.  The daughter has graduated from a university in the USA and is presently seeking a job, she hopes in the USA.  At the time of the trial she was living with the wife in Hong Kong.  Being of full age, and having completed her education, no issue arises in respect of her future as far as these proceedings are concerned.  Notwithstanding that he has no legal responsibility towards the daughter, the husband has, to assist the daughter in establishing herself, transferred US$200,000 to her personal bank account.  She may draw upon these funds as she wishes.

80.  The son has learning difficulties, a matter which received the attention of both husband and wife during the marriage, although they differ as to the extent of the assistance each gave to him.  The son is now in a specialised program for students with learning difficulties at a college in the USA.  The father has made provision for the son’s education and accommodation by transferring to the son’s personal bank account a sum of US$200,000, from which the son will draw such funds as he needs from time to time.  There is a difference between the parties on this issue and I will deal with that later.

The move to London:

81.  At the time of the marriage, and until 1985, the husband also worked with an international merchant bank in Hong Kong.  In 1985, he says in order to advance his career, he arranged to transfer with his employer to London.  The wife and daughter moved with him to London, where the wife had been able to arrange a transfer to the London office of her employer merchant bank.  There is no doubt that while in employment, both in Hong Kong and in London, the husband performed exceptionally.  While in London the couple had the advantage of being able to live in a residential apartment owned by the husband’s parents.  The son was born in London.

82.  There is a difference between the husband and wife as to whether or not transferring to London was discussed between them, prior to the move.  The husband says it was, the wife says it was not. There is nothing in the evidence to support either assertion.  Nothing turns on the difference and it is not necessary to resolve it, as it simply does not matter now.

83.  While the couple lived in London, on 25 October 1990, a BVI company, B Ltd was established with one bearer share.  The evidence is that the share was at that time held by the husband’s father.  Although the holder of that one bearer share has changed from time to time the wife now accepts that that company is beneficially owned by the husband’s father.  He is elderly, in his 90s, and lives in Vancouver.

The husband establishes his own business, the wife moves to New York:

84.  It is the evidence of the husband that as early as 1985, he wished to start his own business as a fund manager.  The wife says that that intention did not arise until later. 

85.  In the middle of 1991, the husband decided to leave the security of employment and to return to Hong Kong to start his own fund management business.  The husband says that this was not a good time to start a fund management business, and that he would have been better starting earlier, in 1985.  That may be so, but at the end of the day I am satisfied that the time at which he was to start his own business is of little significance.  It may well have been better for him to start his own business earlier.  There is nothing in the evidence to support the assertions of either husband or wife in this respect.  What is important is that, as will be seen, he was very successful in that business.

86.  The wife did not return to Hong Kong with the husband.  Instead she moved to a new employer, another international investment bank, based in New York, at about the same time as the husband returned to Hong Kong.  She moved to New York, with the children, then aged about 7 and 3, where she cared for them with the assistance of employed domestic help.  From the wife’s career point of view this was a sensible move as she was going to the head office of her employer bank.  The husband however. says that the move made the establishment of his own business more difficult.

87.  As well as that difference, there is a difference between the parties in respect of the care of the children.  I accept that there were problems with the domestic help.  The husband visited the wife and the children in New York from time to time, although there is a dispute about how often he visited.

88.  At the end of the day I do not think those differences matter.  The parties chose to arrange their affairs in this way, at that time, and there is nothing to gainsay the assertions either now makes about the other’s role at that time.  There is nothing in the evidence to support the husband’s assertion that the wife’s move to New York was “sudden and unilateral”.  Equally, other than speculation, there is nothing to substantiate the assertion by the husband that it would have been better for him to have started his own business earlier.  Whether that is right or wrong must necessarily be purely speculative.

89.  I have no doubt at all that it was not easy for the husband to have to establish his own business, and at the same time take a role in the life of his new young children, and spend time with his wife in New York.  Equally, I have no doubt at all that it was not easy for the wife, having to care for young children in a strange city, and at the same time give proper attention to an important job.  But it appears that that is the way the parties chose to arrange their affairs at that time.

90.  On 13 August 1991, the husband set up C Ltd, incorporated in Hong Kong.  This company was to be the investment company which held the funds under management by the husband.  Over the years a number of different funds have been established, under various names. On 2 September 1991 the husband set up D Ltd, incorporated in the British Virgin Islands, (BVI).  D Ltd is owned as to 96% by the husband, and the balance by one of his brothers.  I do not understand that brother to take any particular role in the company.  E Management manages the funds held by C Ltd.

91.  C Ltd receives advisory fees from D Ltd, and management fees from a charitable foundation, (which I will call the Charitable Foundation), to which reference will be made later. D Ltd receives management fees, based on 1% of the various funds’ net asset valuation, (NAV), and performance fees, based on a 15% increase in the funds’ NAV, from clients in respect of the funds it manages.

92.  On its establishment, the husband offered the wife a 30% share in D Ltd in return for a payment by her to him of the sum of US$200,000.  She rejected that offer and took no share in the company, neither did she offer any reduced amount for a smaller stake.  The rationale given by the wife for this decision was that it would have been wrong for her to risk her funds in an untested venture when, if that venture failed, her funds would have to be relied upon to support the family.

93.  The husband was fortunate in being able to arrange, virtually immediately, a total of US$16 million in funds to manage: US$5 million from his father, US$10 million from a friend of his mother, and a further US$1 million which he raised himself.  The success of the fund, which must be attributed to his skills as a fund manager, is demonstrated by the fact that by 1993, only two years after the commencement of the business, he had made US$2 million in profit.

94.  The wife asserts that by going to New York, and being able to earn the sum that she was able to earn with an international investment bank, the husband had financial support available, in the event that there might be financial difficulties at the beginning of his own business.  The husband points to the profit made by 1993, and says that he did not need that support.  Both assertions have validity.  While it is right that he may not have called on that support, there can be no doubt that it was there and available for him had he required further assistance during the establishment period.

The wife returns to Hong Kong:

95.  In September 1992, the wife and the children moved back to Hong Kong.  The property at C Mansions had been let when they moved to London and it remained let.  The family moved into a flat in B Mansions, then owned by the husband’s mother, and they have lived there, rent-free, although taking all responsibility for the maintenance and outgoings on the flat, since that time.  Since the time of their physical separation on 16 October 2003, when the husband moved out, the wife has remained in B Mansions.

96.  On 11 May 1993, A Ltd, was incorporated in the BVI, and ownership of the flat in B Mansions was transferred to that company on 19 July 1993.  The husband is a director and agent of A Ltd.  Beneficial ownership in A Ltd appears to lie with the husband’s father.

97.  In 1994, the wife, from funds accumulated by her from her employment through the course of the marriage prior to that time, discharged the mortgage to her employer on C Mansions, by repaying the balance then due, a total sum of $770,000.  It is common ground that although they jointly owned the property at that time, she did not tell the husband that she had paid off the mortgage.

The wife’s sabbatical:

98.  Between August 1995 and March 1997, the wife ceased employment, taking what she describes as a sabbatical leave.  The husband says that she wished to have a break from her job, due to internal politics in the bank, which had made it unpleasant for her.  The wife asserted that the decision was because of the husband’s wish that she should be a “stay-at-home” wife, and that by staying at home, she would be able to assist the son with his learning difficulties.

99.  From the start of the sabbatical the husband paid the wife $45,000 per month, the payments continuing until a few months after she joined her current employer.  He says this was for her personal expenses, she says that it was to meet household expenses.

100.  Again, the reasons for the sabbatical or the purpose for the payments are matters which need not be resolved in these proceedings.  They have little impact at all on the appropriately broad view to be taken of a marriage of 20 years.

101.  In March 1997, the wife resumed employment, again with an international bank, in Hong Kong.  She continues to hold a significant post in the organisation, and earns a salary and bonus appropriate to such a post.

C Mansions is transferred out of the parties hands:

102.  In mid-1997, it was the view of the husband that the former matrimonial home at C Mansions should be sold to take advantage of the fast rising property market at the time, and of the fact that they did not need the property to live there, as they had the use of the flat at B Mansions.  The wife took quite the contrary view, considering that the property was an exceptional advantage and an investment that should be kept.  She insisted on retaining the property, he wished to sell it. 

103.  At the end of the day it was agreed that the property would be transferred to a company established by the wife, Z A Ltd.  That company, a BVI company, is overtly owned by the wife’s brother-in-law, who is also the sole director of the company.  The wife acknowledges that she is beneficially entitled to the company.

104.   The husband and wife each transferred their 50% share in C Mansions to Z A Ltd for HK$4.5 million.  The evidence of the wife, which I accept, was that it was necessary for a third-party to purchase the property in order that the capital gain thereby arising would be crystallised, and that in the event of any further capital increase in the property she would not, as a US citizen, be liable for capital gains tax.  The evidence, which I accept, is that she undertook this exercise on the basis of professional advice that such a scheme would enable her to lawfully avoid capital gains tax in the future.

105.  The wife made arrangements to pay to the husband his half share of that purchase price.  This was undertaken through intermediaries.  Plainly that was necessary in order to disguise the fact that in reality it was the wife who was acquiring the husband’s share in the property, and that it was not an arMs Zength transaction with a totally unrelated company.

106.  The wife now acknowledges that Z A Ltd is beneficially owned by her.  The wife accepts that the current value of this property falls on her side of the matrimonial balance sheet. 

107.  As part of the transaction the wife insisted that the husband should pay to her $385,000, being half of the mortgage to her former employer that had been paid off by her, 3 years earlier, in 1994.  The husband agreed to this and made the payment. 

108.  The wife asserts that the husband received $500,000 more than his share in C Mansions was worth.  There is a valuation report prepared in 1997, putting the value of C Mansions at $8 million.  The transaction between them was undertaken at $4.5 million.  Rather than the husband receiving more than he was entitled to, he received less.  In any event this is not a matter which might now be brought into the matrimonial balance sheet, the parties having been happy to deal between themselves on that basis, at that time.

The husband employs Ms Z:

109.  In December 2002, the husband, through C Ltd, made an offer of employment to the second respondent (Ms Z).  She joined the company as an investment analyst in January 2003.  As part of her employment package Ms Z has joined a retirement scheme operated by C Ltd.  In his oral evidence the husband accepted that a relationship had begun between himself and Ms Z during 2002.  That relationship continues today.

The breakdown of the marriage:

110.  The case for the husband is that the marriage had began to deteriorate as long ago as 1985, but certainly, by the summer of 2002, the stage had been reached where he had suggested divorce.  The case for the wife is that it was in early 2003, that the relationship between them began to deteriorate, and on 21 March 2003, the husband proposed to the wife that they should enter into a post-nuptial agreement.

111.  On 10 April 2003, C Ltd wrote a letter to Ms Z proposing a fee sharing arrangement as part of her employment package.  The proposal, which was accepted, is a very generous package.  During 2003, the husband’s business, through C Ltd and D Ltd made exceptional profits.

112.  In July 2003, the wife sought counselling from a marriage counsellor and a psychiatrist.  On 20 September 2003, the husband proposed that they should divorce.  On 16 October 2003, the husband moved out of the matrimonial home at B Mansions, without notice to the wife. 

The husband establishes the Charitable Foundation and the Family Trust:

113.  On 23 November 2003, the husband set up the Charitable Foundation, in Hong Kong, and on 5 December 2003, set up a family trust, (the Family Trust), in the Cayman Islands.

114.  On 16 January 2004, the wife was informed by the husband’s former solicitors that the Charitable Foundation and the Family Trust had been set up, and that assets amounting to approximately US$20 million had been settled into those entities.  The source of the assets so settled was C Ltd and D Ltd.  The wife, through her solicitors, immediately protested.

115.  On 28 February 2004, C Ltd transferred nearly US$2.5 million by way of an additional contribution to Ms Z’s account in the C Ltd retirement scheme.  The justification for this payment is said to be the exceptional performance of the funds managed during the year 2003.

116.  Between March and September 2004, a further US$5 million in fund units, and cash of some $3.5 million was transferred into the Charitable Foundation.  Of this sum, fund units to the value of $2.2 million and $3.5 million came from the husband, and $2.8 million in fund units from A Ltd.

117.  During 2004, the husband’s business, operated through C Ltd and D Ltd, did not make a profit.

118.  On 28 February 2005, C Ltd made a further contribution to Ms Z’s account in the retirement scheme in the sum of US$162,000.

119.  On 13 May 2005, the wife filed a divorce petition based upon adultery and unreasonable behaviour.  The husband contested the fact of unreasonable behaviour, but on June 2005, signed a confession statement in relation to the adultery.  The petition was subsequently amended and on 2 September 2005, a decree nisi was made.

120.  On the 28th of February 2006, C Ltd made a further contribution to Ms Z’s account in the retirement scheme in the sum of some $96,500.

Potential inheritance and nondisclosure by the wife:

121.  Before I pass to the consideration of the value of the parties’ assets, it is convenient here to deal with the question of any potential inheritance to which either may look forward.  By virtue of the provisions of s 7(1)(a) and (g), such potential inheritance is relevant, either as a financial resource which a party of the marriage is likely to have in the  foreseeable future: s 7(1)(a); or a benefit, (the opportunity to share in the inheritance), which by reason of the dissolution of the marriage a party will lose the chance of acquiring: s 7(1)(g).

122.  The husband frankly conceded that his parents were wealthy and that there was no reason why he should not, in due course, receive a substantial inheritance.  He did not know the precise extent of his parents’ estates, but it is clear that they are wealthy people.

123.  It was, initially, a significant part of the wife’s case against the husband, that in due course his inheritance would be substantial, and she said, that inheritance should be taken into account.  At the same time the wife was not willing to disclose any information as to any inheritance she might receive, asserting that she did not expect anything at all upon her parents death.  She consistently asserted that she knew nothing of her parents affairs. The best the wife was prepared to say, and only in the course of oral evidence during the trial, was that her father had a comfortable lifestyle, but could not be said to be wealthy.

124.  Mr Coleman established from the wife in cross-examination that her father owned the whole of a residential building in a well-established, upper middle class, area of Hong Kong Island, comprising three floors, each with 7000 ft.² per floor.  The wife accepted that on a conservative value of $12,000 per square foot, the building would be worth approximately $250 million, (US$32 million).  When being pressed about this matter in cross-examination, and when it was pointed out to her that this property had been originally purchased for $50,000, she immediately replied that that was in 1951, plainly demonstrating a greater knowledge of her parents affairs than she was prepared to concede.

125.  She was obliged to accept, acknowledging that these were matters of public record, that her father and mother were, either individually or together, major shareholders of four companies, including one which held some 30 or 40 properties in Hong Kong.

126.  There is nothing in the evidence to indicate that the wife had anything other than a perfectly normal and good relationship with her parents.  That they have trusted her with substantial funds on their behalf speaks volumes for their confidence in her.  Quite plainly the wife, like the husband, may look forward to a substantial inheritance in due course.

127.  At the end of the day it is not necessary to pursue this matter further as the parties agreed that inheritance was not an issue between them, on the basis that I may take it that each will receive substantial inheritance in due course.  But the wife’s approach to this aspect of the evidence is relevant as to her credibility.  Her unwillingness to disclose information, or to diminish the value of property on her side of the balance sheet, is a matter that I have taken into account when assessing the credibility of each of the parties.  It is a matter which counts against the wife.

The B Bank Funds:

128.  There are funds held in a B Bank account, aggregating some US$866,000, (over $6,800,000).  There is no doubt that the company which holds those funds, established in 1999, is owned and controlled by the wife.  She asserted however that the funds in the account were held on behalf of her parents, explaining that her parents had not been in good health in recent years, and that the sums had been transferred by them to the account, in case of any unexpected needs.

129.  The wife produced a declaration of trust in relation to these funds, made after the relevant deposits were made, and then backdated.  There is no evidence from the wife’s parents in respect of these funds.

130.  The explanation given by the wife in relation to the funds is inconsistent with the usual manner in which she handled her finances and tax affairs.  In her evidence she said that she kept her funds quite separate from her husband’s to ensure that there would be no difficulties with the US tax authorities.  While that is a perfectly understandable explanation it is not consistent that she should have substantial funds belonging to her parents, in an account under her apparent beneficial ownership.  Such an arrangement might easily lead to the imposition of a US tax liability on her.  I have little doubt that she would have real difficulty with the US tax authorities in relying upon a backdated deed of trust to justify an assertion that the funds belonged not to her, but to her parents.

131.  I accept Mr Coleman’s submission that she could simply have been given signing authority on funds in accounts in the name of her parents, so that in the event of anything untoward she could meet unexpected needs on their behalf.

132.  I found her explanation of these funds unsatisfactory.  However in the light of the ultimate agreement by the wife not to pursue a sum repaid by the husband to his father, on the basis that the husband did not pursue these funds, I need not take the matter no further other than to say that the wife’s unsatisfactory explanation did not assist her credibility.

The wife’s claim to B Mansions:

133.  It is convenient now also to deal with the wife’s position in respect of B Mansions.  This property has been the matrimonial home since September 1992, when the wife returned to Hong Kong from New York.

134.  B Mansions is owned by A Ltd, a BVI company owned by the husband’s father.  The wife’s position is that she should be able to continue living in that property.  I accept that that property has been the home that the children have known most recently, but I am satisfied that that matter is no longer relevant.  The daughter seeks to return to the USA to work.  The son is in the USA in education and will soon be at full legal  maturity.  Desirable though it may be for them to be able to return to the home they knew most recently as children, their situation is no longer relevant.

135.  The wife was obliged to acknowledge that the husband’s father wished her to vacate the property now that the marriage is at an end.  Unlikely though it may seem, now that they are in their 90’s, the husband, says that his parents may wish to live in the property should they return to live in Hong Kong.  The husband says this in an attempt to justify his father’s attitude to the occupation of B Mansions by the wife.  There is no evidence from the parents that they hold any wish at all to return to Hong Kong to live.

136.  But no justification is required to deprive the husband’s parents of the right to use a property they own as they wish.  In any event, there is simply no jurisdiction in the court to make any order which might permit the wife to remain in the property.  It is right that the husband has been paying the maintenance and the outgoings in respect of the property while the family occupied it, but that does not provide any basis upon which it might be asserted that in reality the property belongs to the husband.  It belongs to the husband’s parents and I have no option but to respect the husband’s father’s wishes in respect of the property.

137.  The wife must accept that she must vacate B Mansions.  I am satisfied that, whatever the outcome of the case might be, she will have more than sufficient funds to be able to acquire an appropriately equivalent residential property for herself, and still have more than adequate funds to maintain her standard of living.

The wife’s assets:

138.  At the commencement of the trial, the wife valued her assets at $48,900,000, including C Mansions at $11,700,000. The wife later said she would accept a valuation of the property at $17 million.  The husband disputes only the value of C Mansions, which he says should be valued at $21 million.

The value of C Mansions:

139.  In the course of the interlocutory proceedings the wife put in a valuation report putting the value at the $11,700,000.  That report is dated 22 September 2006, and was well out of date by the time of the trial.  The report contained the following paragraph:

“At the time of our inspection, we noted that noticeable obvious patches of water stain appeared on the partition wall of the master bedroom and the servant’s room respectively.  However in the course of our valuation, we have not taken into account the remedial costs regarding the defect.”

Despite the presence of that paragraph the maintenance condition of the internal areas of the property were described in the report as “reasonable”.  Photographs attached to the report illustrate the defect.

140.  Notwithstanding the presence of that paragraph, up to the time of trial there was no further documentary evidence in relation to the water staining.  At trial, Mr Pilbrow said that the wife had asked a structural engineer to survey the structure of the building as she believed that there was serious water seepage and cracks appearing in the walls, which were evidence of potential structural damage.  At the end of the day no report was put in.

141.  The husband has put in two valuation reports, both prepared in November 2007, and both assessing the value of the property as at 30 September 2007.  Both reports put the value of C Mansions at $21 million.  Neither of the valuers were able to inspect the interior of the property, and neither has commented on the likelihood of the need for structural repairs arising from the leaks.

142.  When faced with these reports the wife initially asserted that she was unaware of any increase in the value of C Mansions since that shown in her September 2006, valuation report.  That assertion was made despite the fact that she was well aware of, and had produced evidence in relation to, the increase in value over the relevant period of the husband’s parents’ property at B Mansions which is generally in the same area as C Mansions.  I reject the notion that she was unaware of any increase in value of C Mansions. 

143.  There is no evidential basis upon which I can find that there is any need for structural repairs.  The reduced value sought by the wife, based on a valuer’s comment in a report which, at the time of trial, was plainly out of date, and was unsupported by other evidence, was entirely consistent with her practice throughout the trial of greatly diminishing the value of any asset in her name and at the same time seeking to enhance the value of any asset in her husband’s name.

144.  Weighing the whole of the evidence I assess the value of C Mansions at $21 million. 

145.  I accordingly find the assets held by the wife to have a total value of $57,500,000.

The husband’s assets:

146.  Mr Pilbrow has put before me a schedule of the husband’s assets, in which he asserts that the net assets of the husband amount $201,800,000.  In the same schedule he records the husband’s assertion as to the extent of his assets, this amounting to $193,200,000.

147.  The schedule demonstrates two areas of dispute in the gross assets.  They are first, the value of a property owned by a company, owned by the husband, in Vancouver, and second the taxation issue in relation to the Family Trust.  There is one area of dispute in the liabilities, that being related to the taxation liability of D Ltd and C Ltd.

148.  The value of the husband’s assets principally depends upon the outcome of the s 17 MPPO application in respect to three items, totalling $76,500,000, and to a claim by the husband to be able to deduct a liability for penalty tax, on the part of D Ltd in the sum of $6 million, and himself personally in the sum of $1.8 million.  Collectively, these sums amount to $90,100,000, arguably to be added to the husband’s assets.

The tax liability:

149.  As to the tax liabilities I am in no doubt.  As to liability of D Ltd and C Ltd, it is quite plain that the taxation liability is a legitimate liability, and there is simply no basis for the view held by the wife that this is a liability, artificially or deliberately “created” by the husband in order to reduce the funds available for distribution in these proceedings. 

150.  The tax liability arose, I am satisfied, from a mistaken approach on the part of the husband as to how profits from his funds management business ought to be taxed, that mistaken approach arising from the involvement in the administration of the business of offshore companies.  It is not necessary for me to determine whether the situation arose from a mere mistake or a deliberate attempt by the husband to evade tax.  The simple situation is that the liability is genuine and has been assessed.  The liability for penalty tax is no less a genuine liability and there is no basis why it should not be deducted from the husband’s gross assets.

151.  Equally, the husband’s personal tax liability is a sum that he must pay, and which he is entitled to deduct from his gross assets in the matrimonial balance sheet.  The same applies to the costs involved in having that liability determined.

The overseas property in city X:

152.  In March 2005, the husband acquired a property in X.  Unfortunately, this acquisition was not disclosed until 26 October 2007, shortly before the trial began.  He made the acquisition initially by way of D Ltd, but subsequently by a Canadian company, established for the purpose, E Ltd. 

153.  A draft balance sheet for this company shows the company to have a negative equity as at 18 September 2007.  It appears that the husband took the view that as there was no equity in this asset, it need not be disclosed.

154.  Mr Pilbrow says that if up to date exchange rates are applied to the conversion of Canadian dollars to Hong Kong dollars, rather than the exchange rate used, the balance sheet may be said to produce the wrong impression.  The balance sheet produced has real difficulties as it uses different exchange rates at different points.  By the application of a current exchange rate, that as at 28 December 2007, consistently throughout the document, the equity in the company, instead of being a deficit of $19,500, becomes a credit of $1,300,000.

155.  Because of the late disclosure of this item there was a paucity of information available to the wife as to its circumstances.  Not surprisingly, having regard to the bitter manner in which this litigation has been conducted, this late disclosure has engendered substantial suspicion on the part of the wife as to the true circumstances of the property.  Subsequent to the trial, with the agreement of both parties, I received correspondence that had passed between the parties in which the wife’s solicitors asserted that this property had been sold.  The husband’s solicitors asserted that it had not been sold.

156.  I am satisfied from the correspondence between the parties, produced subsequent to the trial, that the husband, through E Ltd, purchased a suite in a condominium development in X, originally categorised as “Suite x203”.  Subsequently the developer was granted an additional floor and the development moved one floor higher, this having the effect of changing the number of the apartment purchased by the husband to “Suite x303”.  These circumstances unfortunately led the wife’s solicitors to believe that he had purchased a duplex.  It is clear that it is not so.  Quite simply, apartment 3 on the x2nd floor became apartment 3 on the x3rd floor. 

157.  The purchase price of the property was C$4,535,000 in March 2005.  The evidence is that consequent upon the US sub-prime crisis, there have been no sales of units in the development in the four months prior to January 2008.  On the basis of the present average listing price in the development it appears that the market value of the property is now in the order of C$4,400,000.  The building is not yet completed, and is estimated to be completed sometime during 2008.  An extract from Wikipedia, put in by the wife in relation to the development, indicates that a W Complex will open in the building in September 2008.  The extract does not indicate the completion time for the apartments.

158.  As I understand the evidence, to date, the husband has only paid a deposit in respect of this property and will in due course be required to provide funds, either from his own resources or borrowed, to complete the purchase.  The funds required to meet the deposit came from C Ltd, and are reflected in the balance sheets of that company, the deposit is shown as an asset in the balance sheet of K Investment BC Ltd

159.  In these circumstances, I am satisfied that no additional equity has accrued to the husband from this property that needs to be taken into account in a matrimonial balance sheet between the parties.  The appropriate amount to be included in the matrimonial balance sheet, on the husband’s side is an asset of $1,300,000, not a negative sum.

The s 17 Applications:

160.  In July 2005, the wife made applications under s 17 MPPO in relation to certain dispositions made by the husband to the Charitable Foundation, the Family Trust, and the retirement scheme administered by C Ltd.  The husband resists these applications, and denies that the subject dispositions were made with the intention of defeating any financial provision claim on the part of the wife.

161.  By the time of the trial, the husband conceded that a sum of $181,200,000, in the Family Trust, and subject to a s 17 application should be treated as his property.  The wife sought a higher sum, rejecting a claim by the husband for a tax liability.  The tax liability is genuine, and I accept the husband’s figure.

162.  But the wife pursued six further items, set out in Mr Pilbrow’s schedule as “Items Under Discussion”.  These comprise first, two donations to the Charitable Foundation, one by the husband of $25,600,000, the other purportedly by B Ltd in the sum of $27,100,000.  Second, there was a challenge to two payments to Ms Z’s account with the D Ltd retirement scheme.  All of these items were subject to challenge under s 17 MPPO.

163.  Third, there was a tax penalty payable by D Ltd in the sum of $6 million, and a provisional tax liability on the part of the husband in the sum of $1.8 million.  The wife contended that neither of these tax payments should be deducted from the husband’s assets.  I can deal with these shortly.  I am satisfied that they are genuine liabilities, properly due, and ought to be deducted in the matrimonial balance sheet.

164.  I turn now to consider the s 17 MPPO applications.

165.  The relevant parts of s 17 MPPO provides.

“s 17  Avoidance of transactions intended to defeat certain claims

(1) Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as “financial provision”) are brought by a person (hereafter in this section referred to as “the applicant”) against any other person (hereafter in this section referred to as “the other party”), the court may, on an application by the applicant-

(a)   if it is satisfied that the other party is, with the intention of defeating the claim for financial provision, ……

(b)   if it is satisfied that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payment or the disposal of any property);

(c)   ….

and an application for the purposes of paragraph (b) shall be made in the proceedings for the financial provision in question.

(2) Paragraphs (b) and (c) of subsection (1) apply respectively to any disposition made by the other party (whether before or after the commencement of the proceedings for financial provision), not being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such intention as aforesaid on the part of the other party.

(3) Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application or to a disposition or other dealing with property which is about to take place and the court is satisfied-

(a)   in a case falling within subsection (1)(a) or (b), that the disposition or other dealing would (apart from this section) have the consequence, or

(b)   in a case falling within subsection (1)(c), that the disposition has had the consequence,

of defeating the applicant's claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property.”

166.  Thus, to succeed in having a transaction set aside, the wife must satisfy the court (a) that the husband made the disposition with the intention of defeating her claim to financial provision, and (b) that if the disposition were set aside, in this case, a different financial provision would be granted to her.

167.  The effect of s 17(3) is to create a rebuttable presumption against a person making a disposition, that the disposition was made with the intention of defeating a claim for financial provision, if the disposition takes place less than three years before the date of the application.  In this case all the dispositions under challenge were made within the three-year limitation period.

168.  The wife relies both upon this presumption, and upon the evidence to establish the relevant intention on the part of the husband.

169.  In dealing with the s 17 applications, Mr Pilbrow reminds me of the suitably robust approach that should be taken by a court in matrimonial proceedings.  He cites the judgement of Mumby J Re W (Ex Parte Orders [2000] 2 FLR 927 at 937E-938F, where the Judge reminds himself that in matrimonial cases the court does not allow itself to be emasculated by over-refined or technical arguments based on strict principles of property law.  In matrimonial proceedings the court will not hesitate to pierce the corporate veil, and, where property is vested in a one-man company which is the alter ego of the husband, disregard corporate ownership and, without requiring a company to be joined at a party make an order which has the same effect as the order that would be made if corporate property were vested in the husband.  The court may do this even where there are minority interests involved, if they are such that they can for practical purposes be disregarded.

170.  These are important principles in matrimonial proceedings, and are too often ignored by those advising matrimonial clients, resulting in technical legal arguments based upon principles of company law or property law being relied upon, usually to exclude assets from the matrimonial balance sheet.  Those advising matrimonial clients should remember the power of the court in a matrimonial case to go to the reality of the situation and to ignore fine legal structures.

171.  The husband accepted that the dispositions to the Family Trust may be regarded as having come from him, notwithstanding that the payments were made from companies in which he was interested.  He sensibly accepts the companies as being his alter ego.  He contended however, that as the Charitable Foundation was a genuine entity, and recognized to be so under s 88 Inland Revenue Ordinance, his disposition to the Charitable Foundation, of $25.6 million, could not be found to be a disposition designed to defeat the wife’s claim.

The dispositions to the Charitable Foundation and the Family Trust:

172.  Although the husband concedes the dispositions to the Family Trust, it is appropriate when considering the evidence to look at the circumstances of the establishment of both the Charitable Foundation and the Family Trust, and the dispositions made to each.  Only after having regard to the whole of the evidence surrounding both the establishment of the entities, and the dispositions to them, can a proper conclusion be reached on the matter.

173.  In my view it cannot be argued to the contrary, in this case, that if the dispositions were set aside, different financial provision would be granted to the wife.  In cross-examination the husband conceded that the dispositions at issue, (including those to the Family Trust which he conceded), amounted to approximately 95% of his assets existing at the time.  Such a reduction in the assets available for distribution must inevitably result in different provision for the wife on distribution.

174.  On the basis of the husband’s case, (after his concession as to the Family Trust), his total assets were $193 million.  The sums finally at issue under s 17 amount to $52,700,000, which would bring his total assets to $245,700,000, and the total assets of the parties to $303,200,000.  The sums at  issue represents approximately 21.5 % of the husband’s assets, or approximately 17.4% of the total assets.  But it is important that, prior to the concession in relation to the Family Trust, the dispositions originally challenged under s 17 amounted to 95% of the husband’s assets.

175.  There may be circumstances where the issue, as to whether the second limb of the requirements of s 17(1)(b) has been met, is delicately poised.  But it simply cannot be so, except perhaps in the exceptional circumstances of a short marriage, or a husband very much more wealthy than this husband, when the dispositions amount to 95% of the assets of the husband.  When the assets in dispute represent as much as 17% of the total assets, I am unable to say that there would not be different financial provision granted to the applicant, should the dispositions at issue not be set aside.

176.  I am satisfied that if the dispositions under challenge were set aside there would be different financial provision for the wife.

177.  It would have been more difficult to meet this test under the “reasonable requirements” regime, because it may well have been that a Duxbury calculation would have been satisfied from the husband’s available assets, without the need to set aside any disposition.  But where the law requires the court to apply the sharing, compensation and needs  principles to the whole of the parties matrimonial property, invariably, the consequence of setting aside substantial dispositions will result in different financial provision being granted to the applicant.

178.  At the outset it must be said that I acknowledge that the Charitable Foundation is a genuine Charitable Foundation, and that the donations that it has made to various charities are legitimate donations.  It cannot be said that the donations made by the Charitable Foundation, utilising funds provided to the Charitable Foundation by the husband, were made by the husband to defeat or reduce the wife’s claim.  However, it is open to the wife to contend that the dispositions made by the husband to the Charitable Foundation, to put it in funds, are open to challenge under s 17 as having been designed to defeat or reduce the wife’s claim.

179.  There is no argument made by Mr Coleman that the transactions which the wife seeks to set aside were made for valuable consideration to a person who has acted in good faith and without notice of the intention.  Consequently, s 17(2) is not a bar to an order being made.

180.  The primary position taken by Mr Coleman was that the dispositions at issue were genuine transactions, made by the husband solely for the purpose of fulfilling, in so far as the Charitable Foundation is concerned, a long held intention on his part to do beneficial works and that it was quite unrelated to the matrimonial proceedings.  As far as the Family Trust was concerned the husband’s case was that it was a dynastic trust designed to benefit his children and future grandchildren. 

181.  In respect of both the Family Trust and the Charitable Foundation, the husband says first that he did not believe his wife would make a claim against him, and second, that in any event, he did not, in making the dispositions, intend to defeat her claim.  As to the retirement fund payments in favour of Ms Z, he says further that these were perfectly justifiable in terms of her employment, and quite unrelated to any potential matrimonial claim. 

182.  I am satisfied that in the present case the dispositions to the Charitable Foundation and the Family Trust were made by the husband with the intention of defeating a potential claim by the wife. 

183.  While he plainly holds a genuine desire to undertake, through the Charitable Foundation, charitable work, and a genuine intention to protect his children’s future by way of the Family Trust, I am satisfied that at the same time it was also his intention to ensure that his wife did not share in the assets the subject of the dispositions to the two entities.  That he should hold the legitimate intentions of undertaking charitable work and protecting his children, at the same time as intending to defeat the claim of his wife, does not protect him from the consequences of the latter intention.

184.  Papers were put before me in relation to the advice given to the husband from the solicitors who prepared both the Charitable Foundation and the Family Trust documents.  There is no indication in the solicitor’s notes that the husband told the solicitor of his matrimonial situation at the time.  I confess that I am somewhat surprised, having regard to the existence in the law of Hong Kong of a provision such as that in s 17 MPPO, that the solicitor did not appear to seek relevant information as to the state of the husband’s marriage, and give appropriate advice in that respect.  For my part, having regard to the potential consequences of s 17 MPPO, I would have thought such a factor to be an important matter to be considered in advising anyone setting up such entities, in order that they may be fully aware of the situation.  Having regard to the powers available to the court in s 17 MPPO it would not be in any way intrusive or offensive for a solicitor to make appropriate enquiries.  Quite simply, someone establishing a family trust or making other substantial dispositions of property ought to be made aware of provisions of the law which may potentially affect the steps that are being taken.

185.  As it transpired, nothing was mentioned, either by the husband to his solicitor as to his domestic circumstances, nor there was any enquiry by the solicitor.  Neither of these facts, contrary to Mr Coleman’s submission, persuade me that the husband believed that the wife would have no claim against him, and that consequently he could not, in establishing the Charitable Foundation and the Family Trust, have had any intention to defeat a potential claim.

186.  I found a passage in the oral evidence in chief of the husband to be particularly telling in relation to his intention and the establishment of the Family Trust.  He was being examined as to why a sum of US$20 million was transferred to the Family Trust.  He gave several reasons, including that a substantial sum was required, because the trust may last 100 years and future contingencies were difficult to predict.  Consequently, it was, he said, that during extremely adverse conditions the trust would be needed by the children.  By settling such a substantial sum in the trust, it reduced the probability that the trust would not be able to fulfil its intentions in extremely adverse conditions to the point where he was comfortable.  But he went on to say, when asked if there were other reasons:

“Because at the time the (wife) was saying I am going to take the family assets and run away and abandon the family.  I just want to show and I think it’s also fair that I give all my assets to my children.  And in fact, I mean the way I think, is if she hadn’t had so much assets I would probably have included her.”

187.  I am satisfied that that is a clear statement by the husband that, as his wife had assets of her own, he was entitled to deliberately exclude her from access to his assets in the matrimonial proceedings.  It needs to be remembered that at the time the Charitable Foundation and the Family Trust were established, the husband, on his own evidence, did not know fully the extent of the wife’s assets, and by the dispositions he made, he disposed of some 95% of his own assets.

188.  Mr Coleman said the use of the term “family assets” should not be taken to mean that the husband regarded his assets as belonging to the “family” in the sense that the wife should have a share.  That may be right, but it is not important.  Whatever view the husband may have had of the entitlement of his wife to share in his assets, it is quite clear that they constitute matrimonial property as distinct from non-matrimonial property, (see para 25 above), and that consequently those assets are part of the funds that are available for redistribution.

189.  In cross-examination the husband said that had the wife not been so wealthy herself, he “would have given her something”.  That he held that attitude is a clear expression of a conclusion he had reached that he could ensure that she did not have any part of the funds, the subject of the dispositions.

190.  It needs to be borne in mind that by September 2003, the husband had on one occasion suggested divorce, on another suggested a post-nuptial agreement, and on another occasion again proposed divorce.  In October 2003, he had moved out of the matrimonial home.  It is plain from the husband’s evidence that he knew well the very great importance the wife placed upon money.  It must have been plain to him that at some time in the near future there would be divorce and ancillary relief proceedings between the parties.  There is simply no basis upon which, in those circumstances, it can be argued that the husband might have believed there would have been no claim by the wife.  That he sought a post-nuptial agreement is, by itself, clear and unequivocal evidence that he anticipated a claim by the wife against the assets he then held in his name.  If he did not anticipate a claim, then there would have been no need to ask for a post-nuptial agreement.

191.  Mr Pilbrow additionally points to a number of matters in the evidence upon which he relies to found submission that I have accepted in paragraph 182.

192.  First, it is clear from the way in which the Family Trust documents are prepared that the wife should not benefit from those funds.  She is clearly stated to be “an excluded beneficiary”.  That provision, which must have been consequent upon specific instructions by the husband, demonstrates a clear intention on his part to exclude her from his assets.  It is no answer the husband to say that he himself is excluded as a beneficiary from the trust.  For a disposition to be challenged under s 17, it need only be established that the intention is to deprive the other party of the benefit of the dispositions, it is not necessary to establish that the maker of the dispositions intended to benefit himself directly.

193.  Next, it is clear from the husband’s oral evidence that his relationship with Ms Z had begun by the middle of 2002.  His response to the wife’s evidence that in March 2003, he sought a post-nuptial agreement from her, was to say that he had noticed that she had begun to take an increased interest in the business and that he had asked whether such increased interest was to prepare a financial claim for divorce.  His mention of the post-nuptial agreement was in response to her interest in the business.  Plainly, by March 2003, he was aware of the possibility of a claim by the wife to his assets.

194.  It is clear that the husband did not wish the wife to know about the disposal of 95% of his assets until after the dispositions were complete.  If, as he asserts, it was his intention to benefit the children by way of the provision in the Family Trust, and that he had no intention to defeat any claim by the wife, one would have expected him to have discussed the provision he intended to make for the children with their mother.  Instead he remained silent, consulting solicitors, establishing the Charitable Foundation and the Family Trust, completing the dispositions, and only later, through matrimonial solicitors, informing the wife of what had taken place.

195.  It is right that the parties did not have the practice of consulting each other regarding their financial decisions and the husband regarded the wife as financially independent.  But this was a very significant matter, affecting their children, and taking place at a time and in circumstances where divorce proceedings were virtually inevitable.  If, as he says, he believed that she would not complain or make any claim against him, there was no reason for him not to tell her of his generosity towards their children, and that his long-held wish to carry out charitable works had been able to be fulfilled.

196.  As will be seen when the question of the donations purportedly from B Ltd are discussed, documents relating to the waiver of performance fee use are said to have come into existence in December 2001, created by the husband, with the intention of making donations to charity with the waived sums.  Although these documents, and the available funds were then in existence, no steps at all were taken, either to establish the Charitable Foundation, or to make any donations to charity.  The husband offered no explanation, (other than that set out in the next paragraph), as to why he did not establish the Charitable Foundation at that time, or why he should have waited, until the time at which it was clear that the marriage was as at an end, to establish the Charitable Foundation.

197.  The husband contended that the reason that it was not until 2003, that the Charitable Foundation and the Family Trust were set up was that it was not until then that he had sufficient funds for the purpose.  That is plainly not right.  He had made exceptional profits in his business in 1993, and could have established both then.  As far as the Charitable Foundation was concerned, he had available the performance fees that had been waived by B Ltd.

198.  But in any event, and notwithstanding his explanation in evidence for the amount required for the Family Trust, it is not necessary to have substantial funds to set up either entity.  I accept that it is true that both trusts may serve their purpose better with substantial funds, but it is not necessary to have substantial funds to start both going.  That is particularly so in the case of the Charitable Trust where there were actual funds available.  If the husband’s sole purpose was to benefit charity and his children these two entities could have been set up much earlier, even in quite modest circumstances.

199.  In reaching my conclusion I have due regard to the fact, to be discussed in more detail later, that the husband and the wife kept their finances quite separate.  That they did so does not entitle either to deal as they wish with their property without regard to the potential matrimonial consequences of s 17.  In my view the real relevance of the maintenance of separate finances will be when I come to consider questions of distribution.

200.  In the present case I do not find it necessary to rely upon the presumption contained in s 17(3) to be satisfied that the necessary intention was present.  The evidence overwhelmingly establishes not only that the husband intended to exclude the wife from his assets, but that he intended to do so in order that she may not succeed in any matrimonial claim against him.  The existence of the presumption merely adds force to the conclusion that I have reached.

Donations to the Charitable Foundation by B Ltd:

201.  It is necessary to deal separately with donations made to the Charitable Foundation, apparently by B Ltd. 

202.  It will be remembered that an investor in the funds managed by the husband was his father.  This investment was undertaken by way of B Ltd.  As part of the terms of the investment performance fees were payable on the performance of the fund.  These fees were payable from profits earned by the fund, and accordingly profits in the hands of B Ltd.  Once paid to either D Ltd or C Ltd the performance fees would amount to taxable income in the hands of those two companies. 

203.  These donations, amounting to US$2.8 million, were, the husband argues, made by B Ltd, in the form of waived performance fees, originally payable by B Ltd to D Ltd.

204.  A Memoranda of Understanding, (MoU), dated 31 December 2001 was produced.  This was made between the husband for D Ltd, and the husband’s sister acting on behalf of  B Ltd.  In terms of the investment arrangement D Ltd was entitled to performance funds in relation to funds managed for E Capital Management Ltd.  By the MoU, D Ltd waived its entitlement to performance fees.  Rather than leaving the performance fees waived in the hands of B Ltd, the MoU provides that “to simplify administration”, the performance fees will continue to be collected, but “will be fully donated to charity organisations on behalf of B Ltd within a reasonable period of time”.

205.  The case for the wife is that the MoU is not a genuine document, and that the reality of the situation is that the husband, by D Ltd, received the performance fees and made the donation.  There is considerable support for this submission, in the fact that it has been determined by the Inland Revenue Department that, notwithstanding the MoU, the sum of $2.8 million has been derived by D Ltd for tax purposes, and that company has been obliged to pay tax on the sum.

206.  I view the MoU with considerable doubt.  No documents were produced  to substantiate the authority of the husband’s sister, in December 2001, to give such a waiver on behalf of B Ltd, other than a bare assertion that at that time she held the bearer share in B Ltd.  No explanation is offered as to why, in December 2001, the husband’s sister, on behalf of their father’s company, should agree to waive the performance fees and make a charitable donation. 

207.  No explanation is offered as to why, if these funds were to be donated to charity, they were not then donated to charity.  The husband asserted that it was his accountant, at the time, who suggested that the MoU should be signed “for proper record”.  There was no evidence from the accountant.  There are no board minutes from D Ltd approving the waiver.  It is difficult to believe, in the absence of evidence from him, that the accountant would suggest the MoU, “for proper record”, without at the same time ensuring that the obvious corollary documents approving the waiver of what might be substantial fees, were completed by the board of D Ltd.

208.  There was no evidence from the father on this matter.  The wife was perfectly right to accept in cross-examination that there is nothing wrong with an agreement between a father and son to waive performance fees especially in the light of the assistance given by the father to his son.  But that concession does nothing to justify the circumstances which give rise to my doubts as to the genuineness of the MoU, and the waiver arrangement upon which the husband relies.

209.  Mr Coleman submits that the fact that Ms Z was offered a 30% share of the waived performance fees by D Ltd and C Ltd on 10 April 2003, must necessarily indicate that the agreement to waive fees from B Ltd was made prior to that date.  But the document relied upon does not offer a share of any waived fees.  In its terms it offers a share of “the fees that it receives from the designated funds, either in the form of cash or units of the designated funds”, (the emphasis is mine).

210.  If the MoU is a genuine document, and the waived performance fees were collected by D Ltd for donation on behalf of B Ltd, then they were not received by D Ltd in its own right at all, but only as a trustee for B Ltd.  They would simply not be funds belonging to D Ltd.  It would have been necessary, in the books of D Ltd, to record the waived fees being received in such a way to make it plain that they were not the income of D Ltd.  Probably, a temporary suspense account would have to be created in order to keep the funds plainly separate from the income of D Ltd. 

211.  The document on which Mr Coleman relies does not indicate that Ms Z would be entitled to a share of performance fees waived, and thus not received by D Ltd.  In the absence of such a provision in the document, there is no basis upon which Ms Z might argue that waived fees, collected on behalf of B Ltd, should be brought into account in determining her entitlement.  The simple answer by D Ltd to such a claim would be that any such sum was held as a trustee on behalf of B Ltd.

212.  It is right that the D Ltd accounts that were ultimately prepared and submitted to the Inland Revenue Department show that the waived fees were not treated as income.  But no contemporaneous accounting records justifying the position were produced.  Further, the clear result of the decision by the Inland Revenue Department to treat the sum of having been derived for tax purposes by D Ltd, is that those subsequent accounts were not accepted.  It equally follows that the effect of the decision of the Inland Revenue Department is to reject the authenticity of the MoU.

213.  I am satisfied that the reality of the situation was that the donation was from the husband, and that the MoU, and the accounting treatment of the waived fees, was a device on the part of the husband, not only to avoid tax on the sum, but also to ensure that that sum was not part of his assets that could be considered in the matrimonial issues.

214.  I am accordingly satisfied that the purported donation by B Ltd to the Charitable Foundation  must be brought back into the matrimonial balance sheet.

215.  For the foregoing reasons I am satisfied that the necessary preconditions to the making of an order under s 17(1)(b) are established by the wife, and that she is entitled to an order setting aside the dispositions made by the husband and B Ltd to the Charitable Foundation.  It follows that I reject Mr Coleman’s submission that the assets of the Family Trust should be treated as non-matrimonial assets to which the wife has no legitimate entitlement. 

216.  For reasons which follow, a formal s 17 order will not be made at the present time.

The dispositions to Ms Z’s retirement account:

217.  The wife challenges dispositions made in February 2003 and February 2006, to Ms Z’s retirement account with C Ltd.  These sums total $5,700,000.

218.  It is quite clear that the retirement scheme is a genuine scheme, established in February 1996, for the benefit of C Ltd’s employees. 

219.  The structure of the scheme makes it plain that it is designed, by its advantageous terms, to attract candidates of appropriate calibre.  This is achieved by aligning an employee’s interest with that of the employer by providing that contributions to the scheme are sourced from the units in the fund, and thus ensuring that a good performance in the fund will improve the fund in the retirement scheme.  By providing that full vesting will not occur until after 13 years service with the company, the scheme ensures that it is likely that employees will remain with the company to achieve full benefit.

220.  It is plain on the evidence that the contributions in Ms Z’s favour, made to the scheme, about which the wife complains, were calculated in accordance with the provisions of the scheme documents.  The very substantial contribution made in 2003, worth in excess of US$3 million by September 2007, plainly arises as a result of the quite exceptional performance of the funds under management in the 2003 year.  Mr Coleman was right to point out to me that the wife does not complain about payments to the retirement scheme for Ms Z, for 2004 and 2005, because those sums were not large.  If any complaint about the payments would be made it could only succeed if all payments were challenged.

221.  The evidence establishes that Ms Z has appropriate experience in the securities and fund management industry.  I do not need evidence to know that this is a field in which not only substantial salaries are paid, but also there are substantial bonuses.  Mr Coleman has put before me information from the Alpha Hedge Fund Compensation Report which demonstrates that Ms Z’s remuneration, including the profit-sharing aspect, is well within the normal range of income for fund managers.  The package she has is commensurate with that in her previous employment.  Mr Pilbrow was unable to challenge that evidence.

222.  Nothing that the wife has been able to put before me, in my view, detracts from the legitimacy of those payments.  While I understand her distress that her husband’s mistress should receive such payments, I am satisfied that the argument arises not out of a proper legal basis, but from that distress. 

223.  I note the comments by Mr John Lees, a chartered accountant retained as an expert forensic accountant by the wife, where he criticises both the propriety and the commerciality of these payments.  While I have the greatest respect for Mr Lees’ skills as a forensic accountant, his evidence did not establish the necessary expertise in the area of retirement funds, to enable me to place any weight on his view.

224.  I am satisfied that there is no basis upon which the payments to the retirement fund for Ms Z may be said to have been made with the intention of defeating a claim on the part of the wife.  They cannot be  challenged under s 17MPPO.  The application by the wife under s 17 MPPO, in this respect, fails.

Should s 17 orders now be made:

225.  The initial position of the wife was that, should her applications succeed, the dispositions to the Charitable Foundation and the Family Trust should be set aside.  As the trial progressed however it became apparent that the wife was content that the Charitable Foundation and the Family Trust should not be dismantled if her entitlement as determined in the proceedings, could be met by the husband from his own resources. 

226.  Mr Coleman is of course quite correct when he says that there is no jurisdiction in the court to “notionally” add back the amount of the dispositions, and make orders accordingly.  But it is clear from the evidence that there may well be an adverse taxation consequences should the Charitable Foundation or the Family Trust be dismantled.  Further, it appears to me that the husband wishes to be in a situation whereby, if he can meet any order that may be made, without the dismantlement of the Charitable Foundation and the Family Trust, then he would prefer to keep them intact.  I have to confess that I found Mr Coleman’s final submissions in this respect to lack clarity as to the precise position he sought.  But it does appear that the husband would prefer not to dismantle the Charitable Foundation or the Family Trust.

227.  I am sympathetic to that view.  Accordingly I propose to reserve the position in respect of any orders to be made consequent upon my conclusion that the wife has established an entitlement for orders under s 17 in relation to both the Charitable Foundation and the Family Trust, to enable the parties to discuss the matter.  Leave is reserved to apply.

The valuation of the husband’s assets:

228.  Applying the foregoing conclusions to Mr Pilbrow’s schedule, I now assess the value of the husband’s assets, prior to adjustment for liabilities and the “Items In Dispute”:

Bank balances:	$6,900,000	(agreed)
Beneficial interest in companies	$26,700,000	(see below)
Investments	$3,500,000	(agreed)
Pension Scheme	$1,500,000	(agreed)
Personal items	$500,000	(agreed)
Family Trust	$181,200,000	(see below)
Net assets prior to adjustment	$220,300,000

As to the beneficial interest in companies, I accept the wife’s figure, which takes into account the positive value of the interest in E Ltd, arrived at following the application of up-to-date, consistent, exchange rates.  As to the Family Trust I accept the husband’s figure, the difference constituting a tax provision to which he is entitled to adjustment.

229.  The only dispute in respect of liabilities amounted to a provision for tax by D Ltd and C Ltd.  For the reasons I have given I accept that the husband is entitled to claim tax as assessed and in the figures produced by him.  On this basis the total liabilities amount to $25,800,000.

230.  Consequently, prior to consideration of the “items under discussion”, the net assets of the husband, (after deducting the liabilities, but prior to adjustment for Items in Dispute), amount to $194,500,000.

231.  The claims under the heading Items In Dispute, all items which the wife says should be added to the husband’s assets, may be dealt with, in accordance with the findings made about, as follows:

Charitable Foundation, husband’s contribution	$25,600,000	allowed
Charitable Foundation F Holdings Ltd contribution	$27,100,000	allowed
Ms Z’s retirement scheme contribution	$29,500,000	disallowed
D Ltd tax penalty	$6 million	disallowed
Husband’s 2007/2000 provisional tax	$1,800,000	disallowed

The net effect of these conclusions is to add to the husband’s assets a further sum of $52,700,000, bringing his total assets to $247,200,000.

232.  The total matrimonial property of the husband, ($247,200,000), and the wife, ($57,500,000), accordingly amounts to $304,700,000.

Distribution:

233.  Mr Coleman, for the husband says that there should not be equal sharing.  The principle position of the husband is that the wife should not be entitled to any share of his assets.  However, the husband says, in his open proposal, that if any award is made to the wife, she should keep the assets that she has, and that he should pay her a sum of US$2.8 million, or $21,735,000.  On the basis of the findings in this judgement she would then have assets totalling $79,235,000.  Mr Coleman says that in those circumstances she would have ample resources from which to purchase appropriate accommodation and enjoy the lifestyle she has in the past.  On the basis of the total value of the matrimonial assets, as I have assessed them, this would give the wife 26% of the matrimonial assets.

234.  Mr Pilbrow, for the wife, accepts that there should not be equal sharing, and says that the husband should be required to pay her a lump sum calculated so that, together with her own assets, she received 45% of the matrimonial assets. 

235.  On the basis of the total value of the matrimonial assets as I have assessed them this would give the wife a total $137,115,000, and would require a payment by her husband in the sum of $79,615,000.

Conduct:

236.  Mr Pilbrow, referring to s 7(1) MPPO, relied upon the conduct of the husband in the marriage and in the litigation as justification for the position taken by the wife.  The conduct in the marriage he said was conduct in respect of both the relationship, and financial conduct.

237.  Mr Coleman for his part was critical of the conduct of the wife in the litigation.

238.  I am quite satisfied that this is not a case in which the conduct has been such that it should be taken into account. 

239.  As far as the relationship itself is concerned, whilst it is sad and unfortunate that the husband, having encountered real financial success has left his wife in favour of life with a younger woman, that is not a matter which can weigh with any great extent at all in the distribution of property.  There is nothing particular in his conduct prior to meeting Ms Z that ought to be taken into account.

240.  Neither may be criticised, in the sense that “conduct” is used in s 7(1) for the move to London or the move to New York.  At that time each chose to accept the decision of the other party.  They chose to live their lives that way, and cannot complain about it now nearly 20 years later.

241.  As to financial conduct, any steps taken by the husband which might be subject to criticism have been adequately remedied by his concession as to the Family Trust, and conclusions made against him on the s 17 MPPO applications.  Mr Pilbrow sensibly saw that that may be so.  The wife has complained about the level of the husband’s expenditure with Ms Z, following separation.  She may feel greatly hurt by the way in which he now lives and spends on her.  I respect that feeling, but do not consider that this is a matter of conduct, or a matter which is relevant to distribution.

242.  With some justification in my view, the wife criticises the payment of US$200,000 to each of the children by the husband.  She is particularly of the view that with the son’s learning difficulties such a payment is inappropriate.  I tend to agree with her, and feel that the husband could have approached his responsibilities to the children in a more balanced way.  It cannot be sensible to give, even to a 23-year-old, US$200,000 and a carte blanch.  It seems even more foolish to give such a sum to a son with learning difficulties.  It is no answer to say, in respect of the son, that the funds are in an account in Hong Kong, and he does not know how to transfer them to the USA.  The assertion itself indicates the foolishness of the step taken.

243.  There are many other ways in which this generosity could have been extended, and both the son and daughter been appropriately provided for.  Some other way of dealing with these finds would be more likely to enable  the daughter to developed a proper sense as to the use of such sums, and give the son greater assistance, having regard to his learning difficulties, in learning to deal with money, particularly substantial sums. 

244.  But that said, it is for the husband to discharge his obligations to his children as he best thinks.  Sympathetic though I am to the wife’s criticism, I cannot say that the husband is not lawfully discharging his obligations to his children, nor can I say that the method he chose is in any way relevant to the issue of distribution between the parties.

245.  Both complain of the conduct of the other in the litigation.  This litigation has been hard fought.  Extracting information from both parties has been difficult.  The wife particularly has sought to diminish the value of any assets in her name, and to emphasise the value of any asset in the husband’s name.  The husband, although I have no doubt he  will reject the criticism, has been able to rely on the complexity of his financial affairs to effectively make it more difficult for the wife to ascertain just what his assets are. 

246.  Legitimate criticism to be extended to both parties in the way in which they have conducted the litigation.  Each has, in their different way, conducted the litigation so as to quite unnecessarily extended the time it took and the costs.  The argument cuts both ways, and is not a matter that is relevant to distribution.

247.  For these reasons, in respect of both parties, I disregard all issues of conduct when considering distribution.

The principles of need and compensation:

248.  There really is no issue of either need or compensation in this case.  It is plainly a case where, to use the words of Sir Mark Potter P in Charman, at para 76, the result of applying the sharing principle subsumes the result of applying the principles of need and compensation.  Even before any application of the sharing principle, both of these parties are extremely wealthy.   Neither is in need.  Any compensation that might arguably be due to the wife is ore than adequately meet by her retention of her own property and any payment the husband might have to make.

Reasons to depart from the equal sharing principle:

249.  At Paragraph 24 I have identified the basic principles to be applied in the distribution exercise under s 7 MPPO.  Under the sharing principle, property should be shared in equal proportions unless there is good reason to depart from such proportions.  This is a case where it is necessary to consider whether there are good reasons to depart from equal sharing.

250.  The factors relied upon here, which have been identified in the English cases as being a reason to depart from equal sharing include, special contributions in wholly exceptional circumstances which it would be inequitable to disregard, (see Miller paras 66-68, 146, and Charman paras 79, 80, 81), and the parties arrangements during the marriage, (see Miller paras 153 and 170).  When determining whether to distribute the property, in having regard to sharing, by applying the equal sharing principle, the court may look to these factors, to depart from equal sharing.

Contributions:

251.  Here, in the usual way of ancillary relief claims, each of the parties has sought to denigrate the contribution of the other and to enhance their own contribution to the level that it may be determined a special contribution.

252.  It is not helpful at all in the circumstances such as this, to finely examine particular acts or omissions, it is better to take a broad view of the family circumstances.  For this reason I do not deal, in terms, with the many points of evidence and submissions made in relation to the various circumstances that occurred during the time of the marriage.  I look at the matter in broad overview.

253.  The parties began their marriage with virtually nothing, other than that each were well-educated and had considerable natural ability.  They had the advantage of wealthy families behind them.  This gave them the ability to acquire a matrimonial home immediately upon marriage, a home that many young couples, even today, would find extremely desirable.  The husband was able to contribute through the assistance of his father in providing the deposit, the wife was able to contribute through the reduced interest rates mortgage she could provide.  Both had good jobs, with what might be regarded as better than average incomes, and excellent future prospects.  They have, financially, each fulfilled those prospect. 

254.  When they moved to London they had the advantage of a family apartment to live in.  Both worked throughout the marriage, with the brief exception of the wife’s sabbatical, and both have provided as much as they were able by way of income.  In normal circumstances the mere fact of a differential in income will not result in the higher income earner being said to have made a greater contribution.  That said, it must be recognised that the husband’s ability as a fund manager has enabled very substantial assets to be accumulated, certainly assets well beyond those which might normally be accumulated, even by a high earning professional.

255.  I am left in no doubt at all that the wife has carried a greater burden of managing the household and bringing up the children and caring for them.  However I  accept the husband’s evidence as to the assistance he gave in respect of the children, and particularly in respect of his son and dealing with the learning difficulties.  Undoubtedly the burden of the wife throughout the marriage in relation to domestic matters has been eased by their ability to employ domestic help.

256.  What stands out in this case is the very substantial assets that had been accumulated through the husband’s application of his financial skills.  I am driven to the conclusion that the extent of these assets, deriving as they do from the husband’s effort, so exceed that which might normally be considered mere income, and are such that it would be inequitable to disregard them, and not treat his skills as a special contribution.

257.  The wife has attempted to demonstrate that she has made a special contribution to the husband’s business.  Notwithstanding her presence from time to time at the husband’s place of business, and any thing that she might have done whilst there, evidence falls far short of establishing any contribution which has had any effect on the value of the husband’s business.  There is no basis to attribute a contribution to the wife in this respect.

The parties arrangements during marriage:

258.  Mr Coleman relies strongly upon the following passages from Miller; first Lord Mance at 170:

“If one partner (and it might, with increasing likelihood I hope, be the wife) were more successful financially than the other, and questions of needs and compensation had been addressed, one might ask why a court should impose at the end of their marriage a sharing of all assets acquired during matrimony which the parties had never envisaged during matrimony.  Once need and compensation had been addressed, the misfortune of divorce would not of itself, as it seems to me, the justification for the court to disturb principles by which the parties had chosen to live their lives while married.”

And Baroness Hale at para 153:

“The nature and the source of the property and the way the couple have run their lives may be taken into account in deciding how it should be shared.  There may be other examples.  Take, for example, a genuine dual career family where each party has worked throughout the marriage and certain assets had been pooled for the benefit of the family but others have not.  There may be no relationship-generated needs or other disadvantages for which compensation is warranted.  We can assume that the family assets, in the sense discussed earlier, should be divided equally.  But it might well be fair to leave undisturbed whatever an additional surplus each has accumulated during his or her working life.”

259.  The case for the wife throughout has been that she kept her finances quite separate from her husband solely because of her tax position and her liability for US tax.  But I am satisfied that her desire to keep her finances quite separate goes beyond mere convenience for tax purposes.  The wife in this case is a person who clearly viewed her income, assets and money as her own property, not to be shared with her husband.  Her insistence upon separate financial affairs extends well beyond US tax convenience.

260.  It is clear that, at the commencement of the marriage, the husband and the wife did not sit down and discuss how they were to arrange their financial affairs.  At the time of marriage, both were 28 years old, both in significant employment, both earning a good sums.  By that time each would have established their own bank accounts and each was used to arranging their own financial affairs.  Plainly, they simply continued in that way.  At the time of a marriage neither even knew how much the other earned.  It appears that they continued in this way, not disclosing to each other their earnings.

261.  If it merely were that, subsequently, each knowing the others earnings, the husband gave the wife a sum on a regular basis towards housekeeping, and they continued to maintain their separate accounts, no particular conclusion might be able to be drawn from their conduct.  In those circumstances it may well be found that separate accounts were kept for mere convenience, and were not intended to indicate any particular view taken by the parties as to their financial arrangements.

262.  But in this case the evidence is consistent with the submission made by Mr Coleman that they have deliberately chosen to keep their financial affairs rigidly separate.  The clear inference that arises from that deliberate choice is that they did not intend their shares in the property to be held equally.

263.  There are a number of factors which indicate this.  The first, and most obvious, is the decision made in 1997, that the wife would acquire the husband’s interest in C Mansions in her own right, and that she should pay cash to him for that interest.  Where a husband and wife have decided, deliberately or impliedly by conduct, to share fully in their respective financial matters, there would simply be no need for the wife to make any payment at all to the husband, consequent upon such a decision in respect of a property, otherwise jointly owned. The fact that the wife saw it necessary to make a payment to her husband for his share demonstrates an implied understanding between them that they did not share in each others property.

264.  This conclusion is greatly reinforced by the wife’s insistence upon that transaction taking place, that the husband should pay to her one half of the mortgage debt that she had repaid three years earlier.  It may well be thought to be remarkable that she did not tell her husband that she had paid off the mortgage until such time as she acquired the whole of the property, when she then demanded a half share from him.

265.  Throughout the marriage there has been a rigid separation of finances.  Had the husband truly believed they shared their property, he would not have required a payment from wife for a share in the new business venture he established.  Equally, notwithstanding the reason given by the wife for not investing in her husband’s new business, the fact that the wife wished to keep her funds out of the business indicates that she did not see all of their property is being shared.

266.  Unlike the example given by Baroness Hale, (see para 258 above), in the present case none of the assets have been pooled for the benefit of the family; there is not even a jointly owned matrimonial home.  In the present case each has kept their own assets to themselves.

267.  In the whole of the circumstances I am satisfied that in the present case the arrangements made by the party during the marriage in keeping their financial affairs entirely separate is a matter which may be relied upon by the husband in contending that the equal sharing principle ought not to rigorously applied. 

268.  However, it does not follow that, just because they kept their financial affairs separate, that the sharing principle ought to be wholly disregarded to the extent that they should not share in the whole of the matrimonial property.  It is simply a matter to be weighed in the balance in determining the level of sharing.

Determination of adjustment:

269.  It is simply not possible to be precise in the allocation of percentages to either an exceptional contribution or the consequences of the parties decision to conduct their financial affairs totally separately during the marriage.  It will always to be a matter of broad impression and reflection upon the various elements established in a particular matrimonial situation.  As well as recognising those elements the court must properly recognise the extent to which, in society, marriage is regarded as a partnership of equals.

270.  In this case the husband has made an exceptional contribution in the extent of the monetary assets that he has produced in the course of the marriage.  At the same time, proper recognition must be given to the fact that the parties chose to conduct their affairs separately and to keep them rigorously apart.

271.  Weighing all matters broadly, I am satisfied that I would be properly discharging my duty under s 7 MMPO, if the husband were required to pay the wife of such sum as is required to give her 35% of the whole of the parties assets, that is a total of 106,600,000. 

272.  The wife has assets of her own totalling $57,500,000.  To achieve the required adjustment order that the husband must pay to the wife the sum of $49,100,000, within 42 days of the date of this judgement.

273.  Following that payment, the wife will have assets totalling $106,600,000.  I am satisfied that that sum will properly meet the three distributive principles of need, generously interpreted, compensation and sharing.  From that sum she will be able to acquire a residential property at least equivalent to that of B Mansions, and she will still have a very substantial capital sum, and her own income for so long as she should choose to continue to work.

274.  As a result of the concession made by the husband at trial that the dispositions to the Family Trust, totalling $181,200,000, should be treated as his own, and part of the matrimonial property, and the wife’s success in the recovery under s 17, the assets of the husband have been increased by $233,900,000.  35% of that sum is $81,900,000.  Disregarding the concession, the wife recovered $52,700,000 to the husband’s assets in the s 17 application.  35% of that sum is $18,400,000.

275.  The effect of the s 17 application, even disregarding the concession, has been to increase the financial provision for the wife by $18,400,000.  On any terms such a sum constitutes a “different financial provision”, as that term is used in s 17(1)(b).  The end result serves to confirm my conclusion that the second pre-requisite in s 17(1)(b) to an order was in existence; (see paras 173-177 above).

Costs:

276.  The sum that I have awarded to the wife on her claim exceeds that offered by the husband in his open offer.  It does not reach the sum the wife was prepared to accept on her open offer, either on the basis of percentage or in pure dollar terms.  In those circumstances there will be an order nisi that each party must bear their own costs of the proceedings. 

277.  In reaching that conclusion I have had regard to the fact that the wife was successful, in part, in the s 17 applications.  She has succeeded in including a further $52,700,000 in the husband’s assets.  However I must also have regard to the fact that the husband has successfully resisted s 17 applications totalling $29,500,000, and the wife’s demand that he not be able to deduct tax liabilities of $14,900,000.  Thus the husband has successfully defended a total of $44,400,000.

278.  Leave is reserved to apply.

Publication of the judgment:

279.  As this judgment deals with significant legal issues, I have used representative names in relation to the various companies, in order to protect the privacy of the parties, in order that the judgment may be distributed to the legal profession and the public.  In those circumstances I propose to give leave for the publication of this judgment.  If either party objects to leave being given, they may do so within 21 days of the date of the judgment.

280.  Annexed to the judgment, not for publication, is a schedule identifying for the assistance of the parties those representative names.

281.  It remains only for me to express my gratitude to counsel for their invaluable assistance, particularly on the difficult questions of law raised by this matter.