CML v. CYC

FCMC15553 /2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 15553 OF 2007

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J U D G M E N T

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1.  This is the parties’ contested application for ancillary relief upon the dissolution of their marriage, with the dispute mainly over the distribution of their matrimonial assets, which the Husband says consist only of the former matrimonial home now worth about $1.8 million, but the Wife says should also include what is left of the compensation of $9.1 million paid to the Husband as a result of his severe traffic accident in 2001, which he says have since all been utilized on his living and medical expenses as well as on the family. He is now aged 55 years while she is a lot younger at 38.

2.  The trial was therefore essentially over how that compensation was spent and what is left of it if any, some of which were in fact not in dispute, such as those that had gone into the purchase of the said matrimonial home and its decoration and furnishing. However, the Husband’s account of the others such as those over a sum of $1.4 million allegedly spent on medical expenses in China but unsupported by any documents were unsurprisingly not acceptable to the Wife, while his various payments made to friends and relatives of almost $3 million for previous borrowings and for further loans to them were equally unconvincing to the Wife, and only fuelled her suspicion that he may have been involved in some money-lending business, which he denies and therefore forms the other major issue between the parties.

3.  The remaining issue is over the financial provisions for their only child of the family, a son now almost 9 years old whose care and control has been granted to the Wife. While she may have accepted that the Husband’s ability to work as a decoration worker has all but virtually gone as a result of the said accident, given her suspicion that he may be using his compensation to fund his money-lending business, the Wife insists that he should still be able to provide some reasonable monthly maintenance for their son as well as for her.   

Background

4.  The parties were married on 23^rd September 1998 in Hong Kong when the Husband was then a 44 year old construction/decorator residing in Hong Kong, while the Wife, who was born and raised in China, was 27 then and working in a sauna house in Guangzhou where they first met in the previous year.

5.   After the marriage the Wife stopped working and relied on the Husband’s monthly maintenance of RMB2,000 to RMB3,000 while he continued to work in Hong Kong earning an average of about $18,000 per month, and visiting her in China mostly on weekends.

6.  In 1999 the parties purchased a flat in Guangzhou (“The Guangzhou Property”) in the Wife’s sole name for RMB420,000 of which the Husband paid RMB130,000 for the down payment, with the balance secured by means of a bank mortgage. Thereafter he allegedly paid the Wife $7,000 to $10,000 per month for her living expenses as well as the monthly mortgage instalments, which is however disputed by her who claims that he never paid the mortgage instalments and that she had had to borrow from her family members to meet the said payments.

7.  On 13^th November 2000 the Wife gave birth to the child in China. Sadly, shortly thereafter on 23^rd March 2001 the Husband met his accident in Hong Kong while travelling on a vehicle as a passenger, fracturing his right humerus and first lumbar vertebra and kept him in the hospital for almost 7 months. As a result he has suffered from various problems and disabilities including stiff and painful right shoulder, bladder and bowel incontinences, poor motor power in his lower limbs and barely able to walk a few steps at a time with the aid of a walking frame and wearing foot orthosis.

8.  Upon discharge from hospital in October 2001 the Husband was given regular outpatient follow-ups and physiotherapy, and was assessed by 2 doctors to have a combined permanent impairment of 52% – 55% of the whole person, and that it is not disputed that he has since the accident not been able to return to his former work. He was first given an emergency payment of $40,000 by the Social Welfare Department followed by a monthly assistance of $1,600 until he received his first payment of compensation in March 2003.

9.  Meanwhile in May 2002 the Wife allegedly borrowed RMB200,000 from her aunt to pay off the outstanding mortgage of the Guangzhou Property without informing the Husband according to him but which is denied by the Wife that he was all along well aware of both the loan and the discharge of the mortgage.

10.  In December 2002 the Husband launched his said proceedings in the High Court for damages for the accident against the driver and on 29^th March 2003 he received an interim payment of $1 million, and in May 2005 he accepted a further sum of $8.1 million as compensation in final settlement of his claims, making a total amount of compensation received by him of $9.1 million, which as noted above form the subject of the major dispute now before me.

11.  In or about the same year of 2002 the child of the family was allowed to come to settle in Hong Kong and reside with the Husband, while the Wife followed 2 years later in December 2004 to join them in Hong Kong, although meanwhile she would visit and stay here from time to time on temporary permit. At some time her mother was also allowed to come to Hong Kong to be with the Wife where they were initially put up by the Husband in one of his friends’ place.

12.  Upon receipt of the said sum of $8.1 million in 2005, the Husband gave the Wife $800,000, the purpose of which is in dispute between the parties, and then in August 2005 he purchased a property at Ho Fu Court, Kowloon (“The Matrimonial Home”) for $1,841,500 in his sole name as the home for the family. Sadly shortly thereafter the parties started to live separately from each other albeit under the same roof in the matrimonial home.

13.  In June 2007 the Wife sold the Guangzhou Property for RMB380,000 without the Husband’s prior knowledge and allegedly used all the sale proceeds to repay her aunt for the said loan and other relatives for money which she claimed to have borrowed from them for living expenses after the Husband’s accident. 

14.  On 20^th December 2007 with the assistance of legal aid she filed for divorce in these proceedings based on the said separation, the decree nisi of which has since been granted unopposed, and the parties were also able to agree to have joint custody of their son with care and control to the Wife and reasonable access to the Husband, but as noted above, the question of ancillary relief remained unresolved despite a FDR hearing and accordingly proceeded to trial.

15.  In her open proposal of 16^th July 2009 made shortly before the trial the Wife stated that she does not accept that the Husband had made full and frank disclosure of his financial circumstances in particularly as to his account of his compensation and his money-landing business as well as running certain mahjong parlour from which she believes he is able to derive a good income to support himself, hence she sought a transfer of the matrimonial home to her sole name free of encumbrances, and secured monthly maintenance of $4,600 per month for their son, and $5,000 for herself for 6 months until she completes her training as a health worker, as well as their arrears since the commencement of the proceedings in the total sum of $186,000, and her legal costs.   

16.   The Husband insists that he has lost all his earning capacity due to the accident, has never been involved in any money-lending business or running any mahjong parlour, and has fully and truthfully accounted for all his compensation. He initially counter-proposed that the only remaining asset, i.e. the matrimonial home should be sold and from the net sale proceeds, a sum of $840,000 to be set aside to meet the son’s future living expenses, and the remaining balance to be shared between the parties with 60% to the Wife and 40% to him.

17.  However he apparently changed his mind during the trial and made a second proposal to transfer the property to the Wife for her and the son but in return she should pay him a lump sum of $400,000, and insisted that he is in no position to pay any maintenance for them.  

18.  While that proposal was still not acceptable to the Wife, she did not take any further issue at the trial over the allegation of his running any mahjong parlour, but maintained her case of his money-lending business and that he has not fully or frankly disclosed the whereabouts of his compensation. As the gulf between the parties was clearly still too wide for them to reach any agreement, and as their factual disputes over what has happened to the Husband’s compensation can only be resolved via cross-examination at the ancillary relief proceedings, of which I now propose to go straight to the heart of the issue : the Husband’s account thereof.

The Husband’s Account of the Compensation

19.  The Husband’s account is first set out in details in his 3^rd Affirmation of 6^th January 2009 (Trial Bundle B : 413 – 425). In gist his account can be summarised chronologically as follows :

(i) May 2005 Payment to the Wife	$ 800,000
(ii) May 2005 Payment to his younger brother	$ 200,000
(iii) From May 2005 Repayment of loans to a Mr. Ng	$ 800,000
(iv) From May 2005 Repayment of loans to a Mr. Shum	$ 300,000
(v) August 2005 Purchase of the matrimonial home	$ 1,850,000
(vi) August 2005 Renovation, furnishing and costs	$ 500,000
(vii) 2005 – 2006 His father’s medical and funeral expenses	$ 300,000
(viii) 2005 – 2006 For the Wife’s living expenses	$ 360,000
(ix) 2007 For the Wife’s living expenses	$ 144,000
(x) 2005 – 2008 Utilities, management fees, etc	$ 108,000
(xi) May 2005 Loans to the said Mr. Ng	$ 1,500,000
(xii) July 2005 Loans to the said Mr. Shum	$ 300,000
(xiii) Since 2005 His own living and medical expenses	$ 2,000,000
Total :	$ 9,160,200

20.  As aforesaid there is basically no serious dispute to some of the account including items (i), (ii), (v), (vi), (vii), (viii), (ix) and (x) as either factually correct (the purchase of the matrimonial home and its related expenses), or as of necessity (the Wife’s living and household expenses as well as the utilities), while others are relatively insignificant in amounts or unsuspicious that the Wife does not wish to take any real issue with : the payments to the brother who is blind and handicapped or for the father’s medical and funeral expenses, although she does challenge the amount allegedly spent on some of these items such as the decoration of the matrimonial home or the Husband’s own living expenses as exaggerated, albeit a relatively minor issue.

21.  This means that the remaining 5 items, totalling more than $5 million and all heatedly disputed, and which were further grouped by the Husband at the trial into 2 main heads : Yunan medical expenses of $1.4 million, and living expenses over the past 8 years of $3.8 million (“R-1”), would call for forensic analysis. However, it would be relevant to first resolve the other major issue over the allegation of the Husband’s money-lending business, as the Wife’s case is that many of these cash transactions between the Husband and his friends including Ng and Sham were in fact money-lending activities and not the kind of loans claimed by him.

Money-Lending Business

22.  Apart from the many cash transactions in the Husband’s bank accounts that have aroused her suspicion, the only basis of the Wife’s allegation is that on one occasion during the marriage she heard the Husband mentioning that if he were to lend out a million dollars for 3 months, he could earn as much as $400,000 in interests which if true would mean at an annual interest rate of 160%, way over the legal limit under the current law. 

23.  The Husband of course denies ever saying such thing or ever been involved in such business, but admits that some of the transactions seen in his bank accounts were indeed money lent between him and his said friends but without charging interests and certainly not the kind of money-lending business as alleged by the Wife.

24.  I accept that there is no evidence to indicate that the Husband had the capital or other resources to operate such a business prior to his accident or until his receipt of his compensation, as common sense suggests that it would require some capital to provide the necessary cash flow for the business, and on the basis of the Wife’s evidence, it would have been quite substantial which the Husband clearly did not have at the time.   

25.  That situation certainly changed after he started to receive his compensation in particularly after 2005 with the $8.1 million, certainly sufficient enough to enable him to launch such a business even after discounting his spending on the purchase and setting up of the matrimonial home and other necessary expenses.

26.  However, the kind of money-lending business inferred from the Wife’s evidence, that is the illegal type, and even ignoring the argument of whether the court should make any award in ancillary relief from an illegal or unlawful source, would invariably require or involve the ability to ensure and enforce repayments. In other words, it would be necessary to have the “muscle” such as usually some connection with the triad society, if not being a member thereof, to make sure that the customers would not disappear without repaying the loans.

27.  There is however simply no evidence before me to suggest that the Husband has such a background or connection, and Mr Egerton for the Wife has rightly conceded in his closing submission that her case does not go that far, but given the many loans the Husband has admittedly made over that period from his compensation, he argues that he must have been able to make a good profit from charging interests even at a more normal, and legal, rate. This is again denied by the Husband for charging any interests from his friends on those loans, which takes us to the next issue between the parties : The Husband’s alleged money-dealings with his friends, and I shall start with those with Ng and Sham as they allegedly involved the most substantial amounts.

Husband’s Dealings with Ng and Sham

28.  The Husband’s case is that after the accident, as he had not much savings and with no other financial resources, and not being able to work, he had had to rely on borrowing regularly from his close friends Ng YW (“Ng”) and Shum T (“Shum”), as well as smaller sums from other friends, to meet his own living and medical expenses in Hong Kong and the living expenses of the Wife and child in China as well as the mortgage payments of the Guangzhou Property totalling some $30,000 - $40,000 per month, which is how he ended up owing inter alia Ng $800,000 and Shum $300,000 over that period, and hence he repaid them right after he received the balance of his compensation in May 2005. 

29.  In his said 3^rd affirmation he gave a breakdown of such monthly expenses as follows :

Money to the Wife and son	$ 10,000
Mortgage payments for Guangzhou Property	$  5,000
Personal expenses	$ 10,000
Medical expenses	$ 10,000
Miscellaneous expenses	$  5,000
Total :	$ 40,000

30.  To meet these expenses, the Husband gave further details in his affirmation that he would borrow $25,000 to $30,000 in cash from Ng and similarly between $7,000 and $10,000 from Shum each month, but given that he had known them for more than 30 years and had enjoyed a trusted relationship with both of them, it was therefore not necessary to have any written agreement or documentary records for these loans, nor was he required to pay any interest on them. His however admits that he did keep a simple record of the borrowings on some papers which he then discarded after they had all been repaid. 

31.  He has also arranged for both Ng and Shum to file affirmation in his support, 2 in fact by the former, to substantiate the alleged loans and, as one will see, their own borrowings from him later (A : 305 – 311, B : 677 - 682), and had identified 4 other friends from whom he had also allegedly borrowed smaller sums of money, the amounts or details of which he however can no longer recall.

32.  His evidence is that he had actually borrowed a total sum of $1,300,000 from Ng accumulated over that period of time, but when he received the 1^st instalment of his compensation of $1 million in 2003, he repaid $500,000 to Ng, leaving a balance of $800,000 as aforesaid which he subsequently paid off after he had received the rest of his compensation in 2005.

33.  This was confirmed by Ng at the trial who was the only witness of the Husband required by the Wife to attend for cross-examination. His evidence is that he was involved in his family’s business making bathroom equipments at the material time earning for his share $80,000 - $100,000 per month, and hence he was ready and able to help the Husband, whom he had dealt with closely for more than 30 years in both private and on business, by lending him so much money after his accident, all in cash averaging $20,000 - $30,000 per month, of which he did not keep any record himself and that he just relied on the Husband’s own record of the loans and his promise to repay him once he received his compensation.

34.  The evidence of the other friend Shum in his affirmation is similar in that he had also been a close friend of the Husband for more than 30 years, that he had a business manufacturing stainless steel kitchen and bathroom utensils in China earning average $35,000 per month, and that he did lend $7,000 - $10,000 per month in cash to the Husband between 2001 and 2004 to assist him with his living expenses without making any IOU or charging any interest, and that in May 2005 the Husband repaid $300,000 to him after he received his compensation. As noted above he was not called by the Wife for cross-examination at the trial.

35.  While the Wife does not dispute that the Husband would have no income after the incident and might well have to resort to borrowing from his said friends from time to time to meet his various expenses, she however took issue with the alleged amount of his borrowings as highly exaggerated, as she did not agree that he had regularly sent her as much as $15,000 per month to meet her expenses and the mortgage payments in China, nor did she accept that he would require as much as $25,000 per month to meet his own expenses in Hong Kong, and that in any event with the social welfare assistance that he was receiving each month after the accident as well as the $1 million paid to him in March 2003, she argued that it is simply incredible that he would still find it necessary to borrow more than $2 million over that period of time.

36.  For the Wife’s living expenses and mortgage payments, the Husband claimed that he would arrange for money to be brought by his friends to her in China from time to time in the amount of $5,000 to $10,000 each, the evidence of which are set out in their supportive affirmations (A : 289, 294 and 319), none of whom as aforesaid were cross-examined by the Wife at the trial, and when she visited him in Hong Kong on various occasions, he would also give her similar sums of money for her expenses.

37.  While the Wife accepted that the Husband did provide her with money when she visited Hong Kong, she was not sure of the amount or whether it was as many as 15 times during that period, she however insisted that her costs of living in China then were only about $8,000 – $9,000 per month including the mortgage payments, and not $15,000 as alleged by the Husband which she said was grossly exaggerated.

38.  The evidence of both the Husband and Ng confirmed that after the formed received the $1 million he would immediately repay $500,000 to the latter, as well as other friends of smaller sums, and taking into account of the unchallenged evidence of the Husband’s other witnesses of their bringing money to the Wife in China, bearing in mind that we are dealing with the parties’ memories of things going back quite a number of years, in particularly about figures and numbers which must be based on the rough average, the Husband’s case of borrowing a total sum of more than $1,600,000 from March 2001 to December 2004 does seem to roughly dovetail with his alleged average monthly needs of $40,000 over the same period of 46 months.

39.  Whether or not the Husband indeed spent or needed as much as $40,000 per month on average during that time, there is no question in my mind that he did borrow substantial sums from his friends including both Ng and Shum, the former I have heard and seen during the hearing and have no reason to doubt his evidence, while the affirmation of the latter was as noted above never challenged at the trial. Both have known the Husband for more than 30 years, were engaged in similar type of business and appeared at that time to have the means to lend him the kind of money as alleged by him. 

40. That being the situation then, and so when the Husband received the balance of his compensation of $8.1 million in May 2005, it would only be natural for him to repay his loans to his friends, and such repayments surely should not be looked at suspiciously as part of any money-lending activities. 

41.   However, the Husband also admittedly that at around the same time he started to lend large sums of money from the compensation to both Ng and Shum respectively of $1,500,000 and $300,000 allegedly to reciprocate by helping out with their own business problems. If so, would he then not be expected to charge interests on those loans which could form part of his income?

42.   The Wife in particularly took great issue with the manner in which the Husband allegedly lent the money to Ng in April 2005 by having his lawyers representing him in his compensation claims issued a cheque for $1.1 million in the name of a Madam Lau who happened to be his ex-girlfriend to bring the money to Ng in China. The Husband’s explanation was that Madam Lau had been helping him running errands after the accident and before the Wife came to Hong Kong, and she had agreed to go to his lawyer’s office to get the money for Ng, but the lawyer mistakenly issued the cheque in the name of Madam Lau. To save time it was decided that Madam Lau should just bank in the cheque and bring the cash to Ng in China.

43. While this may not be the most straightforward way to lend the money to Ng who did confirm in his evidence to have his own bank account, I am unable to say that the Husband’s explanation as entirely nonsensical or illogical, and ultimately I do not find anything suspicious about the involvement of Madam Lau, about whom the Wife seemed to have made a lot of noise. Is she suggesting that Madam Lau is still the Husband’s girlfriend, or that she is somehow financially connected with him or is hiding the money for him? Her case on this matter is simply unclear, but it is Ng’s firm evidence that he did receive the loan from the Husband through Madam Lau, and as noted above I find his evidence generally credible as firm, straightforward and generally credible.

44.Ng has also denied paying any interests on the said loan, a fact maintained by the Husband for the same reason that he was never charged any interests on his previous loans from Ng or Shum. Whatever the truth, and whatever rate of interests that he may have charged on the loans, surely 2 transactions do not make a money-lending business, which is all the Husband has referred to in details in his affirmations other than those he made to his family members such as his elder brother.

45. However, his bank records may tell different story. His main working savings account held with Hang Seng Bank with which he routinely dealt with his compensation show that between January 2006 and January 2008, do show quite a number of deposits over that period of 2 years (A : 144 – 145), 8 of which the Husband admitted to be repayments of loans from his friends in one of his affirmations of 18^th July 2008 in answer to the Wife’s request for further particulars but for some reason unknown not included in the trial bundle, totalling $234,700, but with some $100,000 still outstanding and unlikely to be recovered due to the debtor’s financial difficulty. While the number of loans and the amounts involved over that period may not mean much in a money-lending business, they certainly appear more significant than merely just lending to Ng and Shum as alleged by the Husband.

46. Furthermore, regardless of whether these transactions could actually sustain a regular business, the fact that the Husband would lend out so much of his compensation which he well knew he would require to meet his future needs as well as his family’s, and given his case that he had lost his earning capacity, it would not be so difficult to imagine that some interests would be charged on some of these loans, if not those to Ng and Shum, at least to the others, so as to supplement his income, as it would appear only natural and normal to do so. In other words, while there may not be much of a business, I agree with Mr Egerton for the Wife that there would be some interests charged on some of those loans which the Husband was prepared to lend out at that time.

47. As noted above, other than the Wife’s words, there is no evidence as to the rate of interests which the Husband would have charged, and I have already rejected the notion of a rate outside the legal limit given the Husband’s conditions, from which one may assess the derivable income. Whatever the rate should be, the ultimate question for now must be : How much is left, if any, of the Husband’s compensation with which he may make further loans, which then takes me to the next issue : His alleged medical expenses incurred in Yunan.

Yunan Medical Expenses

48. The Husband’s case is that in June/July 2005 he travelled with 2 friends namely Chiu WH and Shi B to Yunan to seek medical treatments from a Chinese herbalist doctor, during which they stayed for 10 days which cost him total $300,000 for medical expenses as well as air fares, hotel charges, daily meals and other expenses for the 3 of them.

49.   After the 1^st treatment he claimed to find marked improvements to his conditions and mobility, and therefore returned for further treatments on 3 or 4 other occasions between 2006 and 2007 with his said friends, and in all incurred a total sum of $1.4 million for these trips. He claims that he has since been able to leave his wheel chair from time to time to walk around with the aid of his walking stick, albeit for short distance each time. He explained that he did not ask for any receipts for his medical expenses, or keep any receipts for the air fares and hotel expenses because it never occurred to him at that time that they would be necessary for these proceedings

50. The Wife not surprisingly found this account of the Husband highly suspicious and ultimately incredulous that he would spend such a large sum of money without any documentary proof, in particularly when he was invited to produce his travel record as evidence of at least the trips to Yunan which could have been easily obtained from the Immigration Department but which he refused without any valid reasons.

51. I agree that $1.4 million is indeed a lot of money for the purpose of medical treatments even at some of the well known private hospitals in Hong Kong, let alone for some unknown herbalist doctor in some remote area of China who would just apply herbal medicine on the Husband’s affected areas, massaging the same and using “Qigong” to improve his circulatory system, but having heard the Husband in evidence during which he remarked that with the money available from the compensation at that time, he was prepared to do anything and to pay anything to get back his health, I can understand why someone in his predicament would be desperate enough to spend that kind of money for further and/or alternative treatments to improve on his medical condition given the severity of his injuries and the resultant impairment and disability to his body, and that it is in fact quite common for Hong Kong residents, in particularly of the older generation, to seek out traditional Chinese medicine and treatments in China when they are not entirely satisfied with the western medical treatments that they have received in Hong Kong.

52. Not all the money, of course, were for the medical expenses, and when one takes into account of the travelling, the hotel and the daily meals for 3 persons for a not-inconsiderable period of time spread over 2 years, and given the then circumstances of the Husband, it no longer sounds to me as incredulous as at first hearing, and while it was still a lot of money for some unknown herbalist treatments, I cannot entirely or safely exclude the possibility that the Husband did spend that kind of money for that purpose under the circumstances, notwithstanding the absence of any documentary evidence. I shall next consider the remaining items of his account that were at issue.

Living Expenses for the past 8 years

53. As discussed above, the Husband arrived at this figure of $3.8 million by claiming to spend an average sum of $40,000 per month over the past 8 years or so on himself, his family and the mortgage payments of the Guangzhou Property, the evidence of which from the time of his accident in 2001 to the time of his receipt of the balance of his compensation in 2005 have already been dealt with and discussed above, and I do not propose to repeat them here, suffice it to say that I am satisfied that that average monthly spending does not appear to me excessive or unreasonable given his circumstances at that time and with 2 households and a mortgage to support.

54. However, by 2005 the Wife would have joined the Husband in Hong Kong and hence only one household to maintain, and in particularly after the subsequent sale of the Guangzhou Property, the question must be whether the Husband would still need as much as $40,000 per month for his living and family expenses?   .  

55. In his same 3^rd Affirmation the Husband claimed to have paid the Wife $20,000 per month for the household expenses between April 2005 and December 2006, which sum was then reduced to $12,000 per month for the year of 2007, while his own personal and medical expenses would amount to about $26,000 per month on average, bringing his total monthly expenses to roughly about the same rate as before, and in fact slightly higher in 2006.

56. The Wife however disputed the amount of household money paid by the Husband, insisting that she received only $3,000 per month for her own expenses, while her mother would get another several thousand dollars for the monthly household expenses as well as the son’s. Be that as it may, by March 2008, according to the Husband all the compensation had been used up and that he has since been borrowing from his friends again to meet his living expenses which he put at about $15,000 per month currently, of which about $5,000 are for his medical expenses including catheters, medicine and dressing, medical fees, Chinese medicine and taking taxi for out-patient consultations (B : 424).  

57. Whatever the truth of these spending of the Husband over the years, and I note that not a lot of cross-examination were taken by the Wife over them at the trial, the disclosed bank statements/records of his said Hang Seng Bank account, as well as a lesser Bank of China account, the only accounts that he claims to have possessed all these years, indeed reveal very little money left by the time of early 2008.

58. These bank statements of the 2 accounts (B : 429 – 577, 584 – 590), which in fact went back to December 2001 and March 2003 respectively, also show all the transactions in respect of the compensations upon which the Wife had sought and obtained extensive further and better discoveries prior to the hearing. Generally they appear to be consistent with the Husband’s case about his spending as well as his many lending and borrowing with his friends, and I am unable to find anything suspicious that may lead to any hidden or undisclosed capital or savings. Neither do I find it necessary to go into further details of the Husband’s loans to Ng and Shum, as both of which had eventually been repaid to him in full. What remains at issue over the Husband’s account is the relatively minor one concerning the decoration and other expenses of the matrimonial home.

Decoration and Other Expenses of the Matrimonial Home

59. The Husband has put the total amount at about $500,000 including the legal costs, stamp duty and estate agent fees for the purchase, as well as the decoration, furnishing and setting up of the matrimonial home. The former items were clearly normal and necessary and in the main not challenged, but the Wife believed that the latter items were again exaggerated.

60. The Husband however explained that at the time of its purchase, the matrimonial home was virtually empty with barely any fitting and absolutely no furnishing which had to be carried out in full for all the bedrooms, bathroom and kitchen as well as re-painting of all the walls and laying of new flooring, and since it was decided that everything was to be purchased brand new for their new home, from pillows, blankets and linens for the bedrooms down to the basic kitchen utensil such as bowls and plates and chopsticks, as well as all the usual and necessary electrical appliances such as air-conditioners, TV, refrigerator, washing machine, he insisted that they simply added up to that amount.

61. While again there is no documentary evidence in support of the Husband’s figures with the same explanation that he had no reason to keep them with him, I agree that since substantial works had to be carried out in the matrimonial home, and while his estimation for those expenses might not have been entirely accurate, any discrepancies would not in my view have been significant under the circumstances.

62. In conclusion, I am satisfied that the Husband has in the main truthfully accounted for how his compensation has been spent. For such a large amount to be utilized almost routinely and regularly to meet general living expenses of a family over a long period of time by simply withdrawing from the bank accounts without keeping any proper record or account, and there was no reason for any ordinary family to keep such a record at that time, in particularly so for the Husband in his medical condition, and that there are bound to be some discrepancies or inaccuracies based almost entirely on human memories, ultimately I am unable to find anything glaringly suspicious about them, not even the Yunan medical expenses for the reasons already given above.

63. On the other hand, given the many transactions I have seen from the Husband’s bank records, I have to admit that I am unable to exclude entirely the possibility that there may be some loans still outstanding from some debtors or not yet due to be repaid to him, but whatever they may be, I do not believe they would be substantial or significant. I shall next consider the parties’ current financial situation and needs, starting with the Wife’s.

The Wife’s Financial Situation

64. As noted above, the Wife is still residing with her mother and the child as well as the Husband in the former matrimonial home under separate household. Since the Husband has ceased his maintenance for them in around mid-2008, she claimed to have been working part-time as a saleslady at a friend’s shop in Shenzhen, China earning about RMB1,300 per month, and also as a cashier on casual basis earning an additional income of RMB500 per month. She however hopes to find a job in Hong Kong as a health carer in some elderly homes earning a higher income at about $6,000 per month after a 6-months training program organised by the government. I accept that will be just about the kind of income she would be able to earn.

65. In her Financial Statement the Wife disclosed no assets or properties with very little savings, the latter of which was however disputed by the Husband and which leads to another major issue between the parties over her account of the sale proceeds of the Guangzhou Property and the $800,000 given to her in 2005 from the compensation.

66. Her case is that after the Husband’s accident, she was thrown into financial difficulty as his maintenance for her became irregular and insufficient, and that she had to resort to borrowing from her family in particularly her aunt Madam Chan CF who had lent her about RMB100,000 between 2001 and 2002 to meet her living expenses, and in May 2002 a further sum of RMB200,000 to enable her to pay off the outstanding mortgage of the Guangzhou Property.

67. The Wife said that this was well known to the Husband, of which he was reminded by the aunt herself on one occasion in 2004 when she visited in Hong Kong. However, despite repeated requests in particularly after his receipt of his compensation, the Husband still failed to repay the aunt, and so the Wife decided to sell the Guangzhou Property which she did in June 2007 for RMB380,000 and repaid RMB300,000 to her aunt, which the aunt did verify first in her affirmation filed in these proceedings (B : 607 – 612), and subsequently at the trial in her oral testimony.

68. While the Husband insisted that he had never been told of the loans from the aunt, and even questioned her at the trial of her ability to lend that kind of money to the Wife as a non-earning housewife living in China, he also conceded that when the mortgage of RMB199,215 was paid off on 13 May 2002 (C : 54), neither he nor the Wife had had any means of their own to do so, which bags the obvious question that if the money had not come from the aunt’s loans, where would it come from? Having heard the aunt in evidence, I accept that it must have come from her savings provided to her by her businessman husband, and that she must have been repaid by the Wife later on after the sale of the Guangzhou Property.

69. The repayment could, of course, have also come earlier from the $800,000 remitted by the Husband to the Wife in China in 2005 from his compensation, but the Wife’s case is that of this sum, only $400,000 were meant for her own use, while the other $400,000 were in fact to repay a creditor of the Husband known only to her as “Ah Loong” in China, a fact disputed by the Husband as purely her own fabrication.

70. “Ah Loong” was of course never called to give evidence, if he indeed exists, as the Wife claimed not to know anything about him, and with just her words against his in the absence of any independent witness or documentary evidence from either side, it is one issue that cannot easily be resolved, but given the fact that the Husband had at that time borrowed so much money from so many friends of his, some of whom also resided in China, but all of whom he would repay directly without going through the Wife, one cannot help but wonder why in this particular case that he would do so, and if it were entirely for convenience reason as “Ah Loong” was living close to the Wife in China at that time, which was not her evidence but for argument sake, why was “Ah Loong” never asked to sign any acknowledgement of receipt of the money so that the Wife could later produce to the Husband as proof of such payment?

71. Furthermore, this payment of $800,000 to the Wife was first mentioned by the Husband as early as in his Financial Statement of 3^rd March 2008 (A : 019), well before the issue of how he spent his compensation became apparent, when he would thereafter in his account readily disclose in details of all his money dealings with his many friends and creditors, yet no “Ah Loong” was ever mentioned by him. In other words, if he had indeed borrowed from this “Ah Loong” of $400,000, and subsequently repaid him, I am unable to see any reason why he chose not to mention it at all when he referred to his many other dealings with his many friends in any of his affirmations.

72. I accept that there is no one single piece of evidence that I can point to with confidence that would allow me to conclude on this issue one way or the other, but on the balance of probability, and for the reasons aforesaid, I am inclined to prefer the Husband’s evidence that the $800,000 given to the Wife were indeed all for her own use without any provision for repayment of any debts of his. That was then what the Wife had, but 4 years have since passed and given the fact that the Husband has stopped paying maintenance for her since 2008, I accept that the Wife must have spent some of the money, but the fact that she might not have been entirely forthcoming over the issue of “Ah Loong” and had chosen not to disclose the true balance of her savings no doubt allows the Husband to argue that the amount may well be significant. 

73. A lot of time had also been spent during the trial over whether the Wife did also borrow from time to time from her mother and brother in China after the Husband’s accident and before his compensation, both of whom were called to give evidence and questions were raised on their ability to lend such sums of money to the Wife. There is no question in my mind that in the aftermath of a serious accident when the only breadwinner of the family has been rendered disable without any income and when there is no family savings, it is only normal and in fact inevitable for the dependants to seek financial assistance from friends and relatives, as was clearly the case here, and I accept that she must have repaid them with the money given to her from the Husband’s compensation and from the sale proceeds of the Guangzhou Property.

74. As Ms Lam for the Husband has rightly accepted, whatever savings that the Wife may have failed to disclose, the remaining amount cannot be easily quantified. While it may no longer be substantial, it would not in my view be insignificant either.

75. The Wife updated her needs at the trial to $12,388 per month, of which $6,487 are for her general household expenses, $2,000 for her personal expenses and $3,851 for the child (“P – 1”), which were never challenged by the Husband at the trial and appear normal to me. They are of course based on the premise that she, her mother and the child will continue to reside free of charge in the matrimonial home, otherwise there will of course be rental expenses, of which unfortunately no details have been provided, but irregardless of her undisclosed savings, she may well require periodical financial assistance at least for the child, if not for herself too, and she says it should come from the Husband, whose situation I shall now turn to.

Husband’s Financial Situation

76. First it is necessary to update the Husband’s medical conditions. While his physical condition appears to have improved to the extent that he can now walk for a short distance with the help of a walking stick, he is still described as a paraplegic and requires constant medical treatments and attention. He also has bladder and bowel incontinence and needs self catheterization to empty his bladder from time to time. His 2^nd Affirmation (A : 337 – 409) shows that in 2008 he attended at Yau Ma Tei Jockey Club Outpatient Clinic almost every day, and has produced various receipts as evidence. His case is that these attendances will likely have to continue into the foreseeable future.

77. For obvious reasons the Wife does not dispute that the Husband will not be able to return to his former work as a decorator, but suggests that he can work sitting down as a telephone operator or jobs of similar nature which is physically undemanding of him. At his age and condition the Husband believes that the more likely scenario is that he will be living off social welfare and the disability allowance of $1,100 per month which he has been receiving since his accident, and to rely on the care of his own family such as his elder brother after the divorce.   

78. In his Financial Statement the Husband put his monthly needs at $15,750 per month, of which the biggest item being his medical expenses at $5,000 with the breakdown given in his 3^rd Affirmation (B : 424), most of which were not challenged at the hearing. Even if he is to cut down substantially on his other expenses such as food at home and outside meals, it would not be difficult to imagine that even if some one is willing to hire him in his current conditions to do the type of jobs as suggested by the Wife, he would not be able to earn enough to maintain himself given his medical expenses, let alone to contribute towards the maintenance of the Wife or the child, which leads me to the final issue between the parties : how to distribute what seems to be the only remaining valuable asset that can be properly identified and quantified : the matrimonial home. Before I do that, however, it would be relevant to say something about the parties’ contribution made to the marriage and the family.

Contribution

79. While the Wife may have accused the Husband of failing to provide sufficient maintenance for her after the accident, I believe, as I have found above, that the Husband had done his best no doubt in my view under very difficult circumstances, particularly during the first year when he was most of the time being confined in hospital and could only rely on the helps and charities of his friends to bring money to the Wife in China as often as he could, and I do not think that her complaints can be justified under the circumstances.

80. I also accept from the evidence before the court, and as rightly conceded by Mr Egerton in the final submission, both parties have properly contributed to the marriage, generally with the Husband financially and the Wife caring for the child and on-going in the future during his minority.   

Conclusion

81. I have come to the conclusion that the matrimonial home is the only remaining asset of substantial value, which is agreed between the parties to be worth about $1,800,000 in the market and is free of any mortgage or encumbrances. The Wife seeks its transfer to her so that the child can have a roof over his head after the divorce, and given my findings above of virtually nil prospect of any other financial assistance from the Husband, the Wife will no doubt need the sense of financial security in the form of a home when she shoulders up the sole responsibility of raising and supporting the son all by herself in the future.

82. However, given the Husband’s age and his current medical conditions with indeed dire prospect of any future improvement to either his health or earnings, when the reverse is in fact the reality, and the fact that the property was purchased with the compensation meant to provide for his future needs, I do not think it would be right or just to allow an outright transfer of the property to the Wife and ignore the Husband’s fair share therein. Given my findings that the Wife may still have retained some of the moneys from the said sum of $800,000 or the sale proceeds of the Guangzhou Property, I am of the view that a lump sum of $400,000 for the Husband in consideration of the transfer should be within her means and ability to do so, and would at the same time achieve fairness between the parties under the principles enunciated by the Court of Appeal in DD v LKW [2008] 2 HKLRD 523 and apparently accepted by both parties in this case.

83. I believe that these arrangements will not only provide both the Wife and the son with a roof over their head and a comfortable home with all the furniture and fittings which no doubt will also go to the Wife with the transfer, but also financial security to her who will have the right to deal with a valuable property in anyway she wishes or necessary, and at the same time provide the Husband with what he has proposed, some capital to meet his own future needs. These terms shall be in full and final settlement of the parties’ claims for ancillary relief against each other.

84. Lastly, on the question of costs, while it seems that the Husband can be said to be the successful party given the outcome of this my decision which is in line with his proposal, it is also true that the majority of the trial was spent on his account of how he spent his compensation, which the Wife could rightfully argue as necessary or inevitable given the large amount involved and the lack of documentary proof from the Husband in most of his alleged spending. It would therefore be correct in my view in the circumstances for the parties to be each responsible for their own costs.

85. My order is therefore as follows :

(a) The Respondent Husband shall within 3 months of the decree absolute of divorce, or at such later time as may be agreed between the parties, transfer all his share and interest in the former matrimonial home at Hoi Fu Court, Kowloon to the Petitioner Wife absolutely whereupon he shall forthwith vacate the said property.

(b)    The Petitioner shall forthwith upon the transfer pay a lump sum of $400,000 to the Respondent.

(c)    These terms shall be in full and final settlement of the parties’ claims for ancillary relief against each other, which claims shall stand dismissed.

(d)    There be no order as to costs save that the Petitioner’s own costs to be taxed in accordance with the Legal Aid Regulations. This is an order nisi to be made absolute at the expiration of 14 days.

(e) Section 18 Declaration.

(f)  Liberty to apply.