C v. T AND OTHERS

   FCMC 12488 / 2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 12488 OF 2003

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J U D G M E N T

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Introduction

1. This is an application by a wife for ancillary relief generally and for an order to set aside dispositions made by the husband to his cohabitee. The husband for his part has also issued an application to set aside transfers of properties made by the wife to the children of the family. He also seeks to set aside subsequent transfers made to a company called APL.

2. This case centres on a long, but not a particularly happy marriage spanning a period of some 39 years. In essence it is the husband’s case that the wife conspired with at least two, if not more of the five children of the family, in order to retain control of the family assets. The husband maintains that she did this out of revenge, given that he had sought solace with a third party. It is the husband’s case that the wife transferred certain family properties to the children and then a number of those on again, with the intent of ensuring that they remained out of his reach.

3. The wife maintains that certain properties were transferred to the children at the specific request of the husband, as a precursor to a marital reconciliation. She maintains that she now holds no assets and has no income.

4. The crux of the matter is whether or not properties now held in the names of children or APL, are really family properties, belonging beneficially to the husband and/or the wife. And in the event that they are family properties whether or not they are capable of being redistributed by the court? If not how else might the court properly regard these properties?

5. The wife claims that she now owns nothing and therefore she seeks half of the value of the Broadcast Drive Property - the one property that is still held in the sole name of the husband. She also seeks half of his monthly pension.

6. The husband for his part seeks a distribution of the family assets, which acknowledges that the children hold certain properties for and on behalf of the wife. He argues that these properties are a financial resource that the wife continues to control and to receive the benefit of.

7. There are two opposing camps. On the one side you have the petitioner wife, now aged 69 years old who is supported by 4 of the 5 children. They are joined in these proceedings as interveners. On the other, you have the husband, now aged 72, who is supported by his cohabitee, who is also joined in as an intervener to the proceedings.

The issues

8. It seems to me that the following issues need to be determined by this court: 

Is it possible for the court to set aside the transfer of the 2C property, the 13D property and the San Francisco property (referred to below)?

Should the husband’s application dated the 2 November 2006, to set aside other dispositions made by the wife to the children, succeed?

Are these properties matrimonial assets in any event? 

Should the wife’s application dated the 17 September 2007 to set aside certain dispositions made by the husband to his cohabitee succeed? 

What are the matrimonial assets and other financial resources owned legally and/or beneficially by the parties?  

How then should those assets be divided, bearing in mind the principles of need, compensation and sharing and the s.7 factors?

Should the husband pay the wife maintenance? If so, how much?

The applications

9. There are three substantive applications before the court as follows:

(a)  an application by the wife dated the 8 January 2004, for ancillary relief in general terms, including an order for the transfer/settlement and/or sale of Flat XX, X/F, Block X, Lung Cheung Court, 25 Broadcast Drive, Kowloon, Hong Kong (the Broadcast Drive Property). 

(b) an application by the husband dated the 2 November 2006, to set aside a number of dispositions made by the wife to the parties grown up children as follows :

“1.1  Flat X, X Floor, HD Court, Hong Kong (the 2C property)  to TKLP (“P”) by way of gift on or about 12th March 2003; and

1.2  the subsequent purported sale by P to APL on 18th June 2003.

2.1  Flat X, X Floor, HD Court, Hong Kong (the 13D property) to TKHJ (“J”) by way of gift on or about 18th March 2003; and

2.2  The subsequent purported sale by J to APL on 16th June 2003.

3.1  Flat X, X Floor, Po Ming Building (the Po Ming property) to TPPY (“PY”) by way of gift on or about 5th April 2003;

4.1  XXXX, XX Avenue, San Francisco, CAXXXXX, USA (XX Avenue property) to 

(i) J;

(ii)   P;

(iii) PY; and

(iv) TPM JA (“JA”)

by way of gifts on or about 22nd April 2003; and

4.2  the subsequent transfer by J, P, PY and JA to J on 23rd February 2005.

5.  X Floor, No. XXX Jaffe Road, Hong Kong（the Jaffe Road property）to JA; J; and P;

by way of gifts on or about 15th October 2003; and

6.  Flat X, X Floor, Hankow Centre, No. 47 Peking Road, Kowloon （Hankow Centre property） to JA by way of gift on or about 20th November 2003 in respect of the Petitioner’s ¼ share in the same.

(c)  an application by the wife to set aside dispositions made by the husband to his cohabitee in her amended notice dated the 17 September 2007 as follows:

(a)  transfers made by the Respondent and/or his nominee servant or agent of all his share interest and rights in the following properties and/or bank accounts to the following persons:-

(1)   The undisclosed property in the People’s Republic of China held in the joint name of the Respondent and STYY (“said ST”) which was purchased on 11th July 2002;

(2)   The following bank accounts held by the Respondent and said ST jointly:-

(a) HSBC Consolidated/Investment A/C No. XXX-XXXXXX-XXX;

(b) Bank of China (Hong Kong) Ltd. Savings A/C No. XXX-XXX-X-XXXXXX-X;

(c)  Bank of East Asia. Ltd Savings A/C No. XXX-XXX-XX-XXXXX-X;

(3)   The following bank accounts held by said ST:-

(a) HSBC A/C No. XXX-XXXXXX-XXX;

(b) Bank of China (PRC) Account No. XXXXXXX-XXXX-XXXXX-X.

Background

10. The parties married on the 25 November 1963 and separated in or about September 2002. This is then a marriage of some considerable length. The husband was a civil servant and the wife a homemaker. She also worked in a paid capacity from time to time. The husband worked throughout the marriage until his retirement from the civil service in March 1997. He received a lump sum gratuity of approximately HK$5 million and a monthly pension of c. HK$33,000 per month.

11. The parties have five children as follows:

(i)   D, born on the XX.XX.65 (43 years old)

(ii) JA, born on the XX.XX.67 (42 years old)

(iii)   PY, born on the XX.XX.69 (40 years old)

(iv)   J, born on the XX.XX.71 (38 years old)

(v) P, born on the XX.XX.72 (36 years old)

12. There was a falling out with D some years ago. He is believed to be living and working in the United States, with his wife and family. D has a doctorate in science but his present occupation is unknown. He is not one of the intervener’s.

13. All of the other four children are interveners, together with a BVI company called APL, which is owned by J and P. J, PY and P have all filed affirmations in these proceedings. PY is a medical doctor who lives and works in the United States with her husband. J, who has various academic qualifications, is presently living in Boston, where he is a student in a health care programme. P is said to be both a qualified lawyer and an accountant. He is not working in either profession at present. His place of work was handed up to me during the course of these proceedings. His present occupation is unknown. JA is joined as an intervener, but she has chosen not to file any affirmations or to appear in court. She is said to work in marketing. J, P and JA are all unmarried. P and JA live in two of the disputed properties. P is said to be engaged.

14. Lawyers for the wife helpfully prepared a very detailed chronology of the marriage running to some 18 pages in length. From this it is clear that throughout the marriage the parties invested in real estate, with properties frequently being bought and sold.

15. Mr. Pilbrow S.C for the wife summarizes the wife’s position in his opening as follows:

 One issue between the parties is the effect on its beneficial ownership of the transfer by H by deed of gift dated 21.1.92 (C1/292) to J of the property, which H received from his parents and was known as X/F, Block X, Ritz Garden, 915, King’s Road. With the profits from the sale of the Ritz property, 3 further properties were purchased in W’s name. W claims she held those properties in trust for J. H claims she held them in trust for him. Those 3 properties have now been transferred into the names of the children or thereafter to APL and are part of the subject matter of H’s sec. 17 application.

A further issue arises concerning the property known as Flat X, X/F, HD Court (13D Property). W asserts that the property has been beneficially owned by J despite being registered in her name from the date of its purchase until transfer to J in March 2003. This arises from the fact that the 13D Property was almost entirely paid for from the proceeds of sale of the flat at Flat X, X/F HD Court (7C Property), which had been originally purchased in W’s name but with funds from W’s mother. W’s mother expressed the wish that the 7C Property should be given to J for the love and affection he had shown his grandmother and thus beneficially the 13D Property has been owned by J. H disputes this alleging that at least a proportion of the cost of the 13D Property was met from his gratuity and challenges that the money for the 7C Property originated from W’s mother.

16. The husband, for his part, maintains that the buying and selling of real estate was a family interest and to a large extent that this was funded by his parent’s estate, his gratuity and other earnings and from the business itself. The husband states that from time to time, properties were held by different family members for a variety of different reasons.

17. Immediately after the parties’ marriage and for the next 14 years, they lived at the Broadcast Drive property with the husband’s mother. It seems that the wife was bitterly unhappy during this period. The fact that the wife had a poor relationship with her mother in law, has been repeatedly referred to during these proceedings. It appears to have been a bone of contention throughout the marriage. The husband alleges that the wife did not treat his mother well.

18. Another source of family discord was the husband’s alleged affair with a domestic helper in or about 1990. The husband denies this, notwithstanding the production of a letter apparently written by the domestic helper to the husband in very affectionate terms. The wife has on occasion referred to the husband raping the domestic helper. In any event it seems to have been accepted within the family that the husband had an affair.

19. In March 1997 the husband retired. He appears to have lived separately from the wife on and off and he eventually formed a relationship with a Ms ST. He says he first met her in 2001. In April 2002 he opened a joint account with Ms ST. They purchased a property together in July 2002. In September 2002, the day following the mid autumn festival he left the matrimonial home for good. Shortly thereafter he began cohabiting with Ms ST in China. Both Ms ST and the husband deny having a sexual relationship.

20. On the 17 December 2002 the husband issued divorce proceedings in California. On the 3 January 2003 these were served on the wife. Four days later on the 7 January 2003 the husband sent an e-mail to his US attorney asking him to “shelf off the case for the time being”.

21. It is the wife’s case that shortly after being served with the US divorce proceedings J spoke with the husband and that the husband told J that he would return to her if a) properties held in her sole name were transferred to the children and if b) she renovated the Broadcast Drive property. This she says was reiterated further in February 2003 when a meeting took place between the husband and J in California.

22. Beginning in March 2003 properties were assigned from the wife to the children. P as the solicitor in the family confirmed during his cross-examination that he was responsible for the conveyancing transactions. The 2C property and 13D property were transferred from the wife to P and J six days apart on the 12 and 18 March 2003 respectively. Three months later they were again transferred from the names of J and P to APL. Those transactions were only two days apart, taking place on the 18 and 16 June respectively. The Po Ming property was transferred from the wife to PY on the 5 April 2003. It was not transferred on. The San Francisco property was transferred to the four children on the 22 April 2003 and then onto J in his sole name sometime later on the 23 February 2005. Jaffe Road was transferred from the wife to JA, J and P on the 15 October 2003. The wife’s ¼ share in the Hankow Centre property was transferred to JA in November. In less than 9 months the wife had divested herself of all her real assets. The husband maintains that these properties are family assets.

23. On the 28 April 2003 a default judgment entered against the wife in the United States was set aside. 

24. On the 16 October 2003 the wife issued divorce proceedings in Hong Kong. On the 22 October 2003, prior to serving the petition on the husband, she issued an ex parte injunction against the husband restraining him from disposing of assets. She accuses him in that application of disposing of assets, of not supporting her or the children financially and of being less than frank in his disclosure. This is denied by the husband. In January 2004 the US Proceedings were withdrawn.

25. On the 6 November 2003 the husband applied to discharge the injunction. He was only successful in part. Since then numerous orders have been granted, by consent, allowing the husband to draw on funds for his own needs and those of the family as a whole. He is allowed to draw HK$10,000 per month to cover his own expenses. In addition he has drawn other sums to pay inter alia for tax and legal costs. Funds were also used to cover auto pay expenses for the family.

26. The husband presently lives on the Mainland. The wife maintains that she splits her time between the Broadcast Drive property, the 2C property, which is allegedly where JA lives and the 13D property, which is allegedly where P lives. It is unclear how the wife is maintained, save that the children cover some of her expenses, including payment of the maid’s salary.

The open proposals

27. Each party put forward open proposals for settlement shortly before the commencement of the trial. These are as follows:

The wife’s open proposals

28. (1)    Petitioner’s application for ancillary relief

(a)    The property known as Flat X, X/F, Block X together with car parking space, Lung Cheung Court, 25 Broadcast Drive, Kowloon be sold within 4 months at the best market price and, after deduction of legal expenses, estate agent’s commission, duty or premium and any other expenses of sale, the net proceeds of sale be divided equally between the petitioner and the Respondent.

(b)   The Respondent do pay to the Petitioner periodical payments at the rate of HK$15,000 per month commencing as the 1st day of December 2008 during the joint lives or until further order.

(c)    Save as otherwise ordered the parties retain assets/chattels in their name, possession or custody.

(d)   The Respondent do pay to the Petitioner her costs incidental to her application for ancillary relief (to include costs reserved to the ancillary relief hearing (if any)), to be taxed on a party and party basis in default of agreement.

(e)    There be liberty to the parties to apply in regard to the implementation of the terms of this order.

(2)  The respondent’s application under Section 17M.P.P.O

(a)    The Respondent’s application be dismissed.

(b)   The Respondent do pay the Petitioner’s costs of and incidental to such application to be taxed on a party and party basis in default of agreement.

29. In his closing Mr Pilbrow added that the wife has borrowed HK$1,430,000 from friends, relatives and the children and that this will need to be repaid. The Legal Aid department also have a lien over anything that the wife may recover to the tune of HK$553,496 and c HK$76,433 is due and owing to the husband. On the basis of these debts and the fact that on the wife’s case the husband has other cash assets, the wife seeks an additional lump sum payment of HK$500,000.

30. In addition the wife seeks 50% of the value of the Widow and Orphans Pension.

31. In so far as the net proceeds of sale of the 1/4 share of the Hankow Centre property is concerned, it is the wife’s case that these funds belong to JA.

The husband’s open proposals

32. The husband’s solicitors put their client’s proposal thus:

We are instructed to make the following offer to all your clients, i.e. the Petitioner and the Interveners (in respect of our client’s Application for Avoidance of Disposition Order dated 2nd November 2006), in full and final settlement of all parties’ respective claims in relation to ancillary relief or otherwise in these proceedings:-

1.   the Respondent shall keep the following properties:-

(a)  at Po Ming Building;

(b)  at Jaffe Road; and

(c)  at Lung Cheung Court (Broadcast Drive property).

2.   it is a matter between the Petitioner and the said Interveners as to the distribution of the other properties, namely at XX of HD Court, XX of HD Court, Hankow Centre and the US property, amongst themselves;

3.   the Petitioner’s application under the Amended Notice of Application for Avoidance of Disposition Order dated 21st September 2007 be dismissed; and

4.   there be no order as to costs of these proceedings including all costs reserved.

Potential conflict of interest

33. At the end of the second day of the trial I became concerned about what appeared to me at the time to be a potential conflict of interest between the wife and the interveners which were supporting her i.e. PY, JA, J and P, together with APL. I raised the issue again at the beginning of the third day of the trial, immediately prior to J giving evidence by video link from Boston. This was heard in the Technology Court. It seemed to me that on the face of it the interests of the wife and those of the interveners may not be one and the same and that the issue needed to be resolved before J began giving his evidence.

34. The interveners were separately represented until December 2007 whereupon they all filed Notice of Acting in Person. On the 13 June 2008, the wife’s solicitors TY Lam & Co came on record for them also.

35. I stood the matter down for a while in order to give everyone time to consider the difficulty and the possible implications. Subsequently PY confirmed on behalf of herself, JA and P that the interveners would represent themselves. Likewise J did the same by video link from Boston. The trial proceeded on that basis. PY appeared in court on behalf of the interveners from the 27 October – 7 November, whereupon she returned to the States. She has not appeared in court since. P was present on the 6 and 7 November 2008 and on the 19 March 2009.  

Discussion

36. I must now turn to consider the issues, the law and the parties evidence as set out in their affirmations and as given orally by them during the hearing. I have also considered the evidence of J, PY and P and Ms ST. For the avoidance of doubt, in so far as the matters set out in this judgment differ from the evidence of the husband or wife, or of one of the interveners, that is because I have preferred the evidence of one or other of the party’s or it is because I do not find the evidence given credible, or because I consider that the documents produced confirmed my findings of fact.

Setting aside dispositions

The law - generally

37. Both parties have issued applications pursuant to s.17 Matrimonial Proceedings and Property Ordinance, Cap 192. This section states as follows:

(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) it is satisfied that the other party is, with the intention of defeating the claim for financial provision, about to make any disposition or to transfer out of the jurisdiction or otherwise deal with any property, make such order as it thinks fit for restraining the other party from so doing or otherwise for protecting the claim;

(b) 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) if it is satisfied, in a case where an order under the relevant provisions of this Ordinance has been obtained by the applicant against the other party, that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies, make such an order and give such directions as are mentioned in paragraph (b); 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.

(4) In this section-

"disposition" (財產處置) does not include any provision contained in a will or codicil but, with that exception, includes any conveyance, assurance or gift of property of any description, whether made by an instrument or otherwise;

"the relevant provisions of this Ordinance" (本條例的有關條文) means any of the provisions of sections 3, 4, 5, 6, 6A, 8, 11 (except subsection (6) ) and 15; (Amended 69 of 1997 s. 33)

and any reference to defeating an applicant's claim for financial provision is a reference to preventing financial provision from being granted to the applicant, or to the applicant for the benefit of a child of the family, or reducing the amount of any financial provision which might be so granted, or frustrating or impeding the enforcement of any order which might be or has been made at the instance of the applicant under the relevant provisions of this Ordinance.

(5) The provisions of this section shall not apply to a disposition made more than three years before the commencement of this Ordinance. [cf. 1970 c. 45 s. 16 U.K.]

38. Therefore, if I am satisfied that either side has made a disposition with the intention of defeating the other side’s claim for ancillary relief, then I may set that disposition aside. I accept that I need to look at the actual intention of the disponor at the time that the dispositions were made. I also accept that it must be clear that there was an intention to defeat the other side’s claim for ancillary relief, although it may not be the only or even the dominant intention of the disponor. In the words of Ms Irving:

It is enough if it played a substantial part in his intentions as a whole.

Kemmis v Kemmis [1998] 1 WLR 1307

39. In so far as the appropriate standard of proof to be applied, I agree that I need to be “satisfied”. In other words I must have made up my mind that, the party in question transferred property or money to a third party with the intent of defeating the other’s claim or potential claim for ancillary relief. Again in the words of Ms Irving,

The standard of proof required to satisfy the requirements of the ordinance, that the Court must be “satisfied”, was addressed in K v K (Avoidance of Reviewable Disposition) (1983) 4 FLR 31. It was held that, from Loveden v Loveden (1810) 2 Hagg Con 1:

 “The only general rule that can be laid down upon the subject is that the circumstances must be such as would lead the guarded discretion of a reasonable and just man to the conclusion.”

And in the words of Rayden, 

Standard of proof

 27.15   As to the standard of proof, the question to be asked by the judge after reviewing the evidence is: ‘Am I satisfied that the disposition was made with the intention of defeating the wife’s claim for ancillary relief?  The standard of proof remains the balance of probabilities, although it has been said that since what has to be proved is not merely a dishonourable intention but a dishonest and fraudulent one, the evidence which is required to tip the balance, has to be correspondingly more convincing. ‘Satisfied’ in this context means no more than that the judge has to make up his mind

40. I agree that in considering the intention of the parties it is necessary to look at each disponor’s conduct. In other words can each side’s intention to defeat the other’s claim, be gleaned from their conduct at the time in question? Consequently I accept that the circumstances surrounding the making of the dispositions are highly relevant.

41. Both sides have referred me to the rebuttable presumption found in s 17(3) Matrimonial Proceedings and Property Ordinance, Cap 192. In other words if the disposition was made less than three years before the s.17 application was made, then there is a presumption that it was done with the intention of defeating the other’s claim for ancillary relief.

In the words of Ms Irving:

Where the disposition was made less than 3 years before the application under s.17, it is presumed, unless the contrary is shown, that the disposition was made with the intention of defeating the applicant’s claim. In respect of four of the properties, the Respondent’s s.17 is not within 3 years. It is accepted that he now has the burden of showing that the disposition was made with the intention of defeating his claim.

Is it possible for the court to set aside the transfer of the 2C property, the 13D property, and the San Francisco property?

The law

42. When addressing the court orally during his opening, Mr. Pilbrow said

… the court’s got no power to deal with an application to set aside a transaction that took place between the disponee and a further party. So the properties that have been transferred to APL are, in my respectful submission, without the power of the court to deal with. This also applies to the property in… California, which has been transferred from the children to J.

He reiterated this in his closing as follows:

6.   As I mentioned to the Court in my opening, I submit that the Court has no power to set aside further dispositions of property by the original disponee. In this case, the relevant dispositions are those by J and P to APL of XX and XX HD respectively and by J, P, PY and JA to J of the US Property.

7.    As is apparent from the section itself, the Court only has power to set aside dispositions by “the other party”. The other party is defined as the person against whom proceedings “under the relevant provisions” of the Ordinance have been brought. The “relevant provisions of the Ordinance” are defined as sections 3, 4, 5, 6, 6A, 8, 11 and 15 of the MPPO – not section 17 MPPO.

43.  In support of this proposition he refers to two cases namely McGladdery v McGladdery [1999] 2 FLR 1102 and HKCB Finance Ltd v Yuen Yu Wan Sandy and Wong Chiu Mui CACV 355/2005. I was also referred to the case of Ansari v Ansari [2008] EWCA Civ 1456, which is a new Court of Appeal decision out of England. Although this is concerned with a slightly different point, it nevertheless reconfirms the basic proposition that a disposition must be by a party to the ancillary relief proceedings.

44. When I put this to Ms Irving in the last hearing she conceded that this was probably right. Consequently I intend to proceed on the basis that the husband’s application to set aside the dispositions referred to in paragraphs 1, 2 and 4 of his Notice of Application cannot as a matter of law succeed because in each case the properties have been transferred on by the disponee.

45. I will consider below how else these properties might be regarded.

Should the husband’s application dated the 2 November 2006, to set aside other dispositions made by the wife to the children succeed?

46. The other relevant properties are the Po Ming property held in the name of PY, the Jaffe Road property held in the name of JA, J and P and what was originally a 1/ 4 share in the Hankow Centre property held in the name of JA. The Hankow Centre property has been sold during the course of the proceedings and the 1/4 share in the sum of HK1.625 million has been paid into court. PY, J and P all received HK$1.625 million each. J said in evidence that he used his share to purchase a property for himself in Hong Kong. P said that he deposited the sum into his bank account and that part of the sum was used to pay the legal costs associated with the interveners proceedings. PY said she used her share to redeem a mortgage in the sum of HK$800,000 taken out against the Lucky House property (a property held in her sole name). She confirmed that she had given the HK$800,000 to the wife. To that end it is worth pointing out that in the consent order of the 15 May 2007 that the following undertaking was given by the interveners:

 AND UPON the Interveners’ (in respect of the Respondent’s Application for Avoidance of Disposition Order dated 2nd November 2006) undertaking to the Respondent and to the Court that: -

(i)  they will pay ¼ of the sale proceeds or the sum of HK$1,625,000 (whichever is larger) into the Court within 7 working days after the actual date of completion of the sale of the Property pending the outcome of the Respondent’s Application of Disposition Order dated 2nd November 2006 or until further order; and

(ii)    they will not remit, transfer, release or otherwise any of the remaining sale proceeds (after deducting legal costs and disbursements in the sale) of the Property to the Petitioner herein pending the outcome of the Respondent’s Application for Avoidance of Disposition Order dated 2nd November 2006.

47. I agree with Ms Irving that PY’s actions were in contravention of the spirit of this undertaking.

The wife’s case

48. The wife’s case is two fold. In the first instance she says that she transferred the properties, here the Po Ming property and the Jaffe Road property, not in order to defeat the husband’s claim, but because this was the husband’s pre-condition to a reconciliation with her. It is her case that J, after speaking to the husband, told her that the husband would be prepared to drop the US proceedings and to reconcile with her if

a) she transferred all the properties to the children and

b) she renovated the Broadcast Drive Property.

49. Secondly she argues that in any event these properties belonged not to her but to J and therefore that the husband can have no claim against them.

The transfer of properties

50. When looking at the s.17 application I intend initially to confine myself to the first line of argument as this goes to the wife’s actual intention at the time that the dispositions were made. Mr Pilbrow argues that the wife had no intent, subjective or otherwise, to defeat the husband’s claim. It is accepted that the burden is on the husband to show that the wife transferred these properties with an intention to defeat his claim. The wife puts her case on the basis that it was clear that she wanted to reconcile with the husband and that the transfers of properties were entirely consistent with this objective.  

Did the husband agree to the transfer of the properties?

51. The wife argues that it is clear that her version of events is correct, because the husband did not oppose the transfer of the properties at the time. There is a reason for this says the wife, namely that she was complying with his request.

52. In support of this the wife points to the fact that the husband agreed to “shelf” the US proceedings only shortly after having issued them.

53. On the 28 November 2003 the husband wrote to the four children by e-mail as follows:

According to mother’s lawyers in Hong Kong, the transfer of [the San Fancisco property] to 4 of you has already completed. You are all now legal owners. Your father is sincerely asking you all now one question. Do you welcome, if future circumstances arises, that I temporarily stay there and leave personal belongings there for storage? Please give concrete reply. Thank you.

54. There does not seem to have been a reply. Was this a tacit acknowledgment of the transfers by the husband? Or was this a sarcastic comment made by an aggrieved parent? I tend towards the latter interpretation.

55. In a subsequent e-mail to J dated the 12 December 2003 the husband states:

She is now asking me to have Broadcast Drive be divided among 4 of you only (D is not considered). What kind of intention was that? All four of you have received transfer of at least 1 property from your mother but D has none. Therefore I insist that Broadcast Drive be shared by the 5 children. All descendants of the T’s clan should have the right to enjoy it… From my previous e-mail to you all I have stated that I was not solicitating your endorsement of my decision. I just want it to be known that I have to put an end to my suffering and unfair treatment. My wealth did not benefit anyone else, rather your mother had control of everything. If it were not due to this (divorce) incident, you all would not have tasted a share of the wealth. In the past, most outgoings were paid by me for the home except for the maid’s salary covered by rent. You should know better since you manage the finance of the home now. Pabe (your father) isn’t that irresponsible is it? 

56. Again the suggestion by the wife is that this demonstrates an acknowledgment by the husband that he agreed to the transfers.

57. In an undated letter apparently to the wife, he also said as follows:

I have no right to interfere in the sales of the house in San Francisco because it is a property under your name. Even though you have acquired it through manipulating me, but let not forget that it is due to the fruit of hard work of my parents; thus KL should be allowed to enjoy it too. It is not a fact according to your claim that I did not give you any money. The combined value of bank and stock account in USA is around $100,000. The combined value of the Hang Seng Bank account in Hong Kong and the investment account at International Bank of Asia Limited, now known as Fubon Bank (Hong Kong) Ltd should have over HK$1,000,000 even though your cash is strapped due to the downturn market condition. Conversely, I have nothing. You still have not transferred all your properties to the children. How can you say you have nothing when you still own the properties at Po Ming Building, Jaffe Road and in San Francisco?  You have accumulated your wealth from the T’s clan; yet our elder son KL has not gotten a share. This treatment is unfair and unreasonable….

58. The wife has also produced a copy of the husband’s original will dated the 15 November 1999, in which the husband leaves his estate in equal shares to JA, PY, J and P. This says the wife was the husband’s real intention. He had always meant to leave the assets to the children. He objected to the fact that all of the family assets were held in the name of the wife; he wanted to recover some control of the family fortune and therefore insisted that this happen as a precondition to reconciliation.   

59. During cross-examination the husband admitted that there had been some negotiations between the parties after he had issued the US divorce proceedings. But he insists that he never told J that he would return to the wife if she transferred the properties to the children and renovated the Broadcast Drive property. He said, and I believe him that it was never his intention to reconcile with the wife.

60. Reference is made to possible reconciliation in letters from the wife’s US lawyers. This was not acknowledged in the responses from the husband’s lawyers. I fully accept that the husband never intended to return to the wife. But did he wish the properties to be transferred to the children in any event? If not why didn’t he take action to rectify the situation sooner?

61. The husband said that he didn’t do anything about the transfer of properties because he didn’t believe that there was anything that he could do. This did not mean that he consented to the transfers, or that the wife’s story is to be preferred. I accept that on the balance of probabilities that this is more likely than not to be correct and that the husband only decided to take action after, in his words, J and P became “traitors”.

62. Later he said that he wanted to choose for himself how the properties should be distributed.

63. I agree that there is also some difficulty with the husband’s position, especially given the fact that he did not issue proceedings to set aside until 2006.

64. Ms Irving assists by pointing to the inconsistencies in the stories of the wife and the interveners:

 15.   Furthermore the evidence on the way this “demand” by the Husband was allegedly conveyed to the Wife is so inconsistent that it is simply unbelievable. The Wife’s first mention of this is in her affirmation dated 27th February 2006, at B1/43 para 18. “He pretended to promise to settle the said US proceedings with me and return to the matrimonial home … If I transferred all the said properties to the children and decorated the said matrimonial home”. She says that believing his promise, she set about doing what he asked. Subsequently, in her 9th Affirmation, she explained that in fact it was in the middle of February 2003 that this news had been conveyed to her, not by the Respondent himself, but via J, who had been told the same in the San Francisco house while the Husband was visiting. At the same time it was said that the Husband “reiterated his wish for returning to the matrimonial home after decoration. The initial property transaction took place in March of 2003 not long after J returned to Hong Kong and relayed the Respondent’s demand to me”.[B1/159 para 3]  Consequently, then, the Wife’s evidence was that she had been told of the conditions by J after a February 2003 meeting between J and his father in San Francisco, and immediately set about doing the Husband’s bidding. According to her, that explained the first transaction taking place in March 2003.

16.    In his affidavit evidence J did not give the same version but said that “after separation, my father had met and conferred with his children numerous times mostly while having meals together and over the telephone. … Since the whole family wanted my father and mother to reconcile, both P and I also discussed the same with my father. At one point I even offered my father the idea to seek professional help from family counselling in order to restore harmony in the marriage but he rejected. After seeing how his children had pressurised their father to come home at the material time, my father thus promised to dismiss the said US proceedings with my mother and return to the matrimonial home if she transferred all the said properties …” [B3/17 para 9]

17.    However, in his oral evidence J said the “conditions” from the Husband came in a telephone discussion, which he had with his father, the same day the Wife had been served by the US proceedings, when she had rung J in great agitation having been served. She was served on 3rd January 2003. J says he tracked his father down, spoke to him “I told him to stop this madness and come to his senses. I asked what can we do as a family to stop you acting in this mad way. He gave me conditions. I agreed and told mother.”  As an aside he added “Did I mention my brother was there?”  Of course he had not mentioned that as he had never before given this version. Bizarrely, P, who says he was there with J when the alleged call took place, says he does not remember what J said about the call. It is submitted that the reason is that the call never took place, and not only is it entirely manufactured, but the witnesses also got their stories muddled. Why does the Wife say she was told in February 2003 by J which, she says, explains the first transaction in March, when J says he told her the day she was served in early January 2003?  Why was the version of the call on the day the Wife was served never produced in anyone’s affidavit before?  J’s response to that, and to other questions he could not answer, was that he did not remember, did not know, and that he did not have the luxury to be so long in his affirmations”. He filed 6 affirmations in total, one of them, the 2nd, very detailed about the property matters. This alleged exchange in January was never mentioned.

18.    This was critical. How could anyone have forgotten or overlooked such a pivotal event, when it was a central aspect of the mother’s case. That conversation never took place, either in San Francisco or over the telephone, it was entirely manufactured. Otherwise there would have been some semblance of consistency in the evidence of the witnesses. There was none. If that conversation had taken place between J and the father, with P present, P allegedly knowing the level of the Mother’s distress, would he not have recalled what happened?  It is entirely manufactured to justify and excuse what the Mother and, probably, J and P, did, which was to arrange the transfer of the properties to where they hoped they would be beyond the Husband’s reach. It is hardly surprising that J went to the lengths he did to avoid giving evidence, by applying for leave to be excused from attending the hearing, by video link or otherwise, an application which failed, when in the end of the day his evidence was so clearly untrue.

19.    That this was their intention is further supported by the later assignment of the HD properties to APL, where it would be more difficult for the Husband to take any steps to set aside the disposition. P is a lawyer. He was involved in the transactions. The reasons given for the transfers to APL are spurious at best. J is taking a medical training of some sort in the US. Why would he want or need a business vehicle in Hong Kong?

20.    J and P said they had a meeting with their father in Broadcast Drive when he asked about the transfer of the properties and confirmed his “conditions”. The husband denies this absolutely. He did have a meeting, as he was concerned about the children during Sars, but there was no such discussion. The oral evidence of the Husband is to be preferred. He was telling the truth. The oral evidence of J and P was flawed through and through.

65. I agree.

66. During oral closings Ms Irving said that it was

Perfectly within the bounds of possibility that they (J and P) said to the Respondent give us the properties and he will return

67. I accept that this is a possibility. I found both J’s and P’s evidence completely lacking in substance or credibility.

68. I have also noted the following:

·    P said during his oral testimony that J instructed him, as the conveyancing lawyer to transfer the properties, (as opposed to the mother, who was the legal owner at the time),

·    he could not remember where the deeds came from originally and

·    that J now instructed him and gave him authority to sign cheques.

·    He also said that he retained a beneficial interest in the San Francisco property, whereas PY said that the property was owned wholly by J. J likewise said that he owned the San Francisco property outright. Their testimony was contradictory.   

69. It may be that J and perhaps P decided to take action to ensure that they retained the family assets and that those assets remained under their control. However it seems to me more likely that it was the wife who remained in the driving seat and that it was J and P and to a lesser extent PY who did her bidding as and when required.

70. In the witness box the wife came across as a very difficult and domineering woman. Her evidence seemed rehearsed. She was extremely repetitive. Her credibility was completely undermined when it became clear that a letter that she had produced as evidence in support of her version of events was shown to have been doctored. The letter was altered from an 18 page to a 4-page document. The wife’s numerous explanations belied belief – e.g. that she took out the unimportant detail, that this was necessary so that her lawyer would understand it, that the husband had recreated the duplicate letter, that it was of no import etc. What the wife did was to recreate evidence so that it supported her case. Her actions were dishonest and must be condemned. It resulted in more days being spent in trial than would have otherwise have been necessary.

Past history

71. When considering the s 17 application I am also conscious of the history of this case. It seems that the wife was always concerned to have control of the family assets and to a certain extent the husband allowed this to happen. For example the San Francisco property was transferred into her own name because it was thought at the time that the husband was likely die before her and therefore it was more expedient for the property to be held solely in her name. The husband accepted this during cross-examination.

72. When the wife discovered the husband’s so called affair with the domestic helper her reaction was to ensure that the family funds were removed further from his control. PY, for example says that it was agreed that the children and the wife would manage the majority of the US funds. The fact that the family assets were controlled by the wife seemed to be a constant source of friction between herself and the husband.

73. Given the history here it seems to me inconceivable that the wife would then transfer the properties to the children because and only because she wanted the husband to return to her. It seems to me extremely unlikely that the wife would ever have considered putting herself in such a vulnerable position.

74. I have also taken on board the fact that at no point did any of the children offer to transfer any of the properties back to the husband. PY said that she didn’t want any of the properties, that she had never wanted any of them. But even she had not seemingly had the courage to transfer properties allegedly owned by her back to the husband. PY has nothing to do with the properties held in her name. They are managed by the other siblings. 

75. I am also conscious of the fact that even when the wife applied ex parte to injunct the husband’s remaining assets that nevertheless she ensured that prior to that application that funds were transferred to her from the pool of family assets. This was not disclosed in her affirmation in support of the injunction. In January 2003 US$47,797 (c. HK$372,816) was taken from the joint account with PY. A further US$58,120 (HK$453,336) was taken from the Schwab account in the United States and in August 2003 HK$540,000 was taken out of the Fubon account - in cash. The whereabouts of this sum, which totals c HK$1,365,000 has not been adequately accounted for. The wife said at one point that she had spent a considerable sum of money on a private investigator. She was unable to produce any evidence in support of this assertion. J said that he could not remember assisting the wife in taking out the cash. PY, who was in the States at the time, said that she believed that the US$47,000 odd had been transferred to maintain the San Francisco property. Why this was thought necessary was not fully explained. In addition the wife had the benefit of the HK$800,000 given to her by PY from the remortgage of the Lucky House property.  

76. Mr Pilbrow argues that

Put simply, if the circumstances at the relevant time were such that, the wife believed that she was making the said transfers for the purpose of reconciliation, it is my respectful submission, illogical to infer that she did so “with the intention to defeat” since the two clearly contradict each other. 

77. Having reviewed all of the evidence I am not convinced that the wife made the transfers with a view to reconciling with the husband. I am satisfied that she did so, at least in part, in order to ensure that the assets remained as far as possible beyond the husband’s reach. I accept that she wished to retain control of the family assets. I also accept that she was helped in this by both J and P and to a lesser extent and perhaps more unwittingly by PY. In the circumstances it seems to me entirely appropriate to set aside the wife’s transfers of the Po Ming and Jaffe Road property. I am satisfied that a different financial award will be made in the event that this is done. Likewise it seems to me entirely appropriate that the court should include the HK$1.625 from the proceeds of sale of the Hankow Centre property in the schedule of matrimonial assets.

The renovation of the Broadcast Drive property 

78. The wife also said that the husband wished her to renovate the Broadcast Drive property. She claims that she did so and has produced photographs of the so-called renovation in support of her claim.

79. The difficulty with the wife’s case on this is that it really doesn’t stand up to detailed scrutiny. It is clear from the photographs that there has only been a very peripheral attempt to tidy up the place and to make it look clean and tidy. Certainly there has not been a significant renovation of the property. Any redecoration has been minimal.

Are these properties matrimonial assets in any event? 

The beneficial ownership of the family properties

The Ritz property

80. As I have stated above, initially the wife claimed that a property known as the Ritz property was transferred to J “as a gift in anticipation for celebrating his successful graduation from university the following year i.e. 1993”. In her last affirmation she changed this version of events and said that the property was given to J as a reward, as his academic performance had been poor historically and going to university had proved to be a major milestone. (see para 7.1 – 12th affirmation dated the 30 September 2008). Thus on the wife’s case J was the legal and beneficial owner of the Ritz property. She said that J then appointed her as his power of attorney and that she then successfully sold the property for HK$9 million and thus he was also the legal and beneficial owner of the proceeds of sale. The wife then purchased three properties, she says out of the sale proceeds – namely the Jaffe Road property, the 2C property and Po Ming Building. Consequently says the wife, J legally and beneficially owned these three other properties. She does not accept that the Ritz property and those that followed were family assets,   

81. The husband, for his part said that the Ritz Property originally formed part of the estate of his mother and that it was assigned to J on trust for the parties. He said more specifically that it was transferred to J in order to evict an existing tenant on the basis of self-use. He said that it was never the intention that J should be the sole legal and beneficial owner of that property – or those that were purchased from the proceeds of sale thereafter. In support of his case the husband refers to family history and to the fact that different members of the family held property at various times and for a variety of different reasons. It is the husband’s case that these were all family properties, arising out of what might loosely be described as a family business, or interest in real estate.

82. Husband says that the only reason that the property was transferred to J was because there was a tenant in the property at the time and it was convenient to put it into J’s name

J’s name was chosen because he was not a registered owner of any property in Hong Kong and he said that he would find a job in Hong Kong, so that J was the best candidate to be my “representative” to expel the then tenant 

83. I accept what the husband has said in this respect. It makes logical sense. I have also taken due note of the fact that the wife accepts the fact that the property was repossessed

However I told the developer that since the said Ritz property had been recovered from the Tenant for self-use purpose and was subject to the 2-year restriction under the existing law… it was not feasible to sell the same to the developer. (Para 10 (b) – affirmation of the 24 February 2006)

84. I also accept the husband’s argument that this was a practice undertaken by the family in the past. For example in February 1990 the Hankow property had been transferred to JA for the same purpose. This did not mean that JA beneficially owned the property. Indeed in December 1993, it was transferred from JA’s name into the names of the wife, PY, P and J. (Incidentally the wife says that it was always the intention to transfer the property to the four children, but that because JA was out of Hong Kong at the time, her 1/ 4 share was transferred to her.)   

85. But, it is also clear that on occasions properties were either gifted to or sold to the children. Did the children then own those properties beneficially – or where they simply holding them for and on behalf of the family as a whole? This is less easy to determine. For example in January 1999 PY was given Flat XX, X/F Lucky House, No 149 Wanchai Road, Hong Kong (Lucky House), when the wife transferred the property to her. The reason for this transfer is unclear. One explanation is that PY was considering returning to Hong Kong to practice. Another suggestion was that it was a gift – rather like the Ritz property was supposed to be a gift for J. This property was then re-given to her on her wedding day. PY said in her evidence that she did not want this property and that she had never wanted any of them – that she did not need a property in which to live and if necessary she could buy her own. This property is presently vacant. It is not subject to any of the applications presently before the court.

86. In addition to having some dealings with the Hankow property, JA is also said to have purchased another property from the wife i.e. Luen Street in 1999 for HK$700,000. It is unclear if this was a transaction at arms length or whether or not JA purchased this property with the aid of a mortgage – or if in fact other family monies were provided to her for that purpose. The rental from that property was originally paid to the husband. JA stopped making this monthly contribution of HK$5,200 per month in June 2003. Thus although the property was legally owned by JA, the husband had originally received the benefit of it by way of the rental. Again this property is not subject to any application before the court. 

87. Consequently I accept as a general proposition, in the words of Ms Irving that

There was a pattern of properties being assigned to various family members’ names, but that the properties were viewed as family assets.” Family” in as much as they involved the children of the family also, who were signatories on the bank accounts, had properties transferred to them, with rent being paid into general accounts.

Other evidence

88. J said in answer to a question concerning whether the husband ever complained about accounts being held in the name of he and the wife:

I really do not recall since I don’t think there was such a complaint in the family because an ATM card and all the passwords are freely given out and shared between me, my mother and my father. So if my mother – my father wants to make deposit or withdraw money, he should not have – in order to settle – to help to settle some of the family expenses, he should have no problem doing that.

89. This reference also supports the husband’s case that the properties were regarded as family assets.

90. Generally speaking I do not accept the wife’s version of events. The Jaffe Road and Po Ming Building property will be transferred back to the wife. Although the 2C property has been transferred to APL, I am nevertheless of the view that this can loosely be described as a financial resource that the wife may have some access to. I accept that she lives there in part.

The 13D property

91. In addition the wife said that she bought the 13D property from the proceeds of sale of a further property – namely Block X, X/F, XXX – XXX Gloucester Road, Causeway Bay, Hong Kong. (The 7C Property). She maintained that although the property was held in her name that it was infact beneficially owned by her mother (the maternal Grandmother). She said that the maternal Grandmother had wanted to leave the 7C Property to J. Thus says the wife, the 13D property was also J’s property. Ms Irving points out:

40.  The Husband says that the Wife’s mother never had the funds to buy any property, and evidence regarding the Wife’s mother’s earnings was produced. The Wife says her mother had inherited money from the Wife’s brother, and she produced evidence regarding her mother’s funeral gifts of cash and a table prepared by the Husband showing other expenses, but again this is incomplete as can be seen by the fact that the first page exhibited says “continued from previous page” at the top. [C1/309 c and d]The Husband says this list was of expenses that had to be allowed for to cover the Wife’s mother’s future living costs before the estate of the brother was divided, as although the Wife’s mother inherited from the estate, she distributed the money to the family and did not keep it. The Husband says that the first omitted page would show that. It is for that reason, he says, that it is not produced.

41.  One is entitled to give considerable weight to this view given the Wife’s practice with documents. The brother’s estate was in the region of HK$16 million after expenses. The brother’s partner got 50%. The balance was split 6 ways, 1 each for four siblings, including the Wife, one share for the Respondent as he had been such a dutiful son-in-law, and one share to be divided between 8 grandchildren. As the Husband and Wife were both to receive a share, they waived the share that their children would have been entitled to as grandchildren of the grandmother. The Husband says he estimates that he and the Wife each got in the region of HK$1.3 million. That money was used to purchase XX Tonnochy Tower, which was subsequently sold to purchase 13D HD Court.

42.  The reason the Wife creates this tale about her mother’s money is to try to establish that the properties in her name at the time of separation, apart from the US property, were all either from the sale of King’s Road, [being in her version Jaffe Road property, XX HD Court and XX Po Ming Building] therefore J’s, or from her mother via XX HD, which she says purchased 13D, therefore also J’s. This would leave only the ¼ share in Hankow Centre and the San Francisco properties that were not said to be beneficially owned by J. This is sheer fabrication and not supported by any evidence whatsoever.

92. I tend to agree.

93. Consequently it seems to me that the 13D property is also a financial resource that is available to the wife. I do not accept that this property is, or ever was beneficially owned by J.

The San Francisco Property

94. This property was initially transferred to the four children in April 2003 and then on again to J in his sole name in February 2005. Mr. Pilbrow says that the reason for this is simple. J was living and working in the United States and therefore it made logical sense for the San Francisco property to be transferred to him so that he was able to manage it more effectively. The difficulty with this argument is that in fact J is presently residing and studying in Boston. He is in no better position to currently manage this property than any of the other siblings. In the circumstances it seems to me entirely probable that this property is also a financial resource that is available to the wife. I have also noted the inconsistencies between the interveners evidence, namely that PY says she does not have a beneficial interest in the property and seems to have no problem gifting J a significant asset and P who said that he retained a beneficial interest. It seems to me that a more logical explanation would be that this property, like the others, continues to be viewed as a family asset. It is presently vacant.

Should the wife’s application dated the 17 September 2007 to set aside certain dispositions made by the husband to his partner succeed?

95. The wife seeks to set aside dispositions made by the husband to Ms ST. She points in particular to cash transfers and also to the property purchased in their joint names. The husband maintains that Ms ST has not made anything but a very limited contribution to the funds held in the accounts or to the purchase of the property in China. It is his case that these transfers were made not with the intention of defeating the wife’s claim, but in order to maintain both himself and Ms ST.

The law

96. The law remains as set out above. The purchase of the property in China took place in July 2002. The alleged transfer of funds seems to have taken place from in or around that time. The wife’s application to set aside the dispositions is dated the 17 September 2007, i.e. over three years from the date of the alleged dispositions. Therefore the burden rests with her. She has to show that the husband made these dispositions with the intention of defeating her claim for ancillary relief.

Discussion

The property

97. The wife’s case that the husband purchased the property in China to defeat her claim lacks substance. In July 2002 the wife had control of all of the family assets, save for the Broadcast Drive property and the husband’s pension. Divorce proceedings had not been issued, either in the US or in Hong Kong.

98. Ms ST confirmed under cross-examination that the property was held jointly so that the husband could obtain a mortgage on it. I accept that the husband may have found it difficult to obtain a mortgage given his age and lack of earning capacity. Ms ST’s financial contribution was limited to redecoration and the purchase of furniture. She said that she held the property jointly with the husband and that it was “our” property.

99. I accept that the husband’s intention at the time was not to defeat the wife’s claim, but simply to ensure that he had somewhere modest to live with Ms ST. I also accept that given his age he thought it prudent to put the property in the joint names of himself and Ms ST. Further that this ensured that he was able to obtain a mortgage on the property. But I also accept that to all intents and purposes the husband beneficially owns the property. Therefore I will in any event include 100% of its net value in the schedule of family assets.

The cash transfers  

100. The wife’s case is that between April 2002 – October 2003 c HK$460,000 was transferred by the husband into an HSBC consolidated account held by the husband and Ms ST.

101. Reference is also made to two sums of money in particular – HK$100,000 transferred to Ms ST allegedly as a gift on the 9 April 2003 and a further sum of US$25,000 which the husband said was from PY. Originally he had intended to keep that money for her. Ms ST confirmed that both sums had been used to pay legal fees. I accept that.

102. Latterly the wife alleged that over HK$2 million had been transferred out of accounts held in either the husband’s sole name or in the joint names of both she and the husband to accounts held either by Ms ST or into joint accounts held by the husband and Ms ST. Thus she says this amount should be set aside as it was secreted out of accounts with a view to defeating her claim.

103. I do not accept this. Some of the transfers referred to in the schedule go back to February 2002. This is well before the husband left the matrimonial home in the October. The husband says that there has been some double accounting and that he never took anything like the amount of money alleged. He also maintains that up until the time of the injunction and indeed up until December 2003 he was continuing to meet family expenses for the properties and otherwise by auto pay. After that those expenses were met at least in part from the injuncted pension.

104. Mr Pilbrow for the wife asserts that I should approach the issue of these funds in the same way as Thorpe LJ in the case of Purba v Purba [2000] 1 FLR 444. In that case the Court of appeal found that money transferred by a husband to his relatives should still be taken into account by the court when considering the issue of ancillary relief:

The fact that the receiving bank account was not in the name of the husband but in the name of one or other of his close relations does not in any way inhibit the court from looking to the real question – whose money is it? It does not cease to be the husband’s money simply because it is moved into a different account. The recipient and account holder is a bare trustee. The ownership of the money, the case remains constantly with the husband and it was, in my opinion, open to the judge to deal with the cash on the basis that it remained throughout the husband’s without going through the formality of setting aside orders under s 37. 

105. I concur. In this case Ms ST confirmed that the money in the accounts belonged to the husband. She did not make any claim to it. She is presently working. Therefore it seems to me that any monies in these accounts can quite properly be included in the schedule of matrimonial assets, as the husband clearly beneficially owns them in any event. The more difficult question is how much money is there, given that no up to date accounts have been produced. The wife’s lawyers produced a table showing the balance in the husband’s accounts or those held jointly with Ms ST or the children, as totalling HK$1,010,012.45 as at the spring of 2008 (statement dates – January – April 2008). I accept those figures.  

Pension monies

106. In addition Mr. Pilbrow originally argued that as the husband has only been withdrawing HK$10,000 per month from the pension for his daily living expenses the balance should also be available for distribution.

107. Infact Ms Irving was able to show that almost the total amount had been withdrawn by consent for inter alia salaries tax, stamp duty, legal costs and to cover the auto pay arrangement for the family. On the basis that he received the sum of c. HK$33,000 per month and the money has been injuncted for 5½ years that would mean that approximately HK$2,178,000 had been received. According to the schedule of that HK$2,050,976 had been spent. There is therefore very little, if anything left to be included in the schedule of matrimonial assets.

What are the matrimonial assets and other financial resources owned legally and/or beneficially by the parties?  

The law

Ancillary relief

108. It is generally accepted that prior to determining the issue of ancillary relief, the court is charged with establishing what the matrimonial assets are and the value of those assets. This is clearly set out in DD v DKW (CACV no 91 of 2007). There the Hon Mr. Justice Cheung JA said at para 69 (3) as follows:

 (3)    The inquiry should be conducted in two stages:

1)    First, computation of the available assets of the parties such as property, income (including earning capacity) and other financial resources which the parties have and are likely to have in the foreseeable future (Charman [67]).

2) Second, distribution of the assets by reference to the three principles of need (generously interpreted), compensation and sharing. These principles can be gleaned from section 7(1) and each of the matters set out in section 7(1)(a)-(g) can be assigned to one or another of the three principles (Charman [68]).

109. As referred to above, the Hon Mr Justice Cheung JA identifies the relevant section 7 factors under the headings of need, compensation and sharing. The court shall take into account the s.7 factors when determining an application for ancillary relief. For ease of reference I have set them out again here.

(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;

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

110. DD v DKW (CACV no 91 of 2007) affirmed the basic principle developed in England that any division of assets should be reviewed against the “yardstick of equality”. In the words of Lord Nicholls of Birkenhead in the landmark House of Lords decision White v White [2000] UKHL 54.

Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.  

And later

… it should be possible to use equality as a form of check for the valuable purpose already described without this being treated as a legal presumption of equal division.

111. The statute in England and Wales has not changed. The factors that the court has to take into account can be found at s. 25 of the Matrimonial Causes Act 1973. They are largely the same as our own s.7 factors, as set out above. The difference is in the judicial interpretation of that statute, which can be summarized as a move away from the reasonable needs approach, to one of equality. It is fair to say however that there remain a large number of variables and that when considering the yardstick of equality the court has on occasion reverted to a more needs based approach to assist them in their deliberations. (See for example McCartney v Mills [2008] EWHC 401 (Fam)).

112. The correct approach to be taken in Hong Kong has again been considered in a decision handed down by our own Court of Appeal on the 12 May 2009 i.e. W and H, Z CACV 127/2008 (unreported). The Hon Rogers VP said at paragraph 48

…, but the provisions of the Ordinance mandate a flexibility in the exercise of discretion which in each case is necessary to meet the circumstances of the case. The English decisions have shown a progression towards a realisation that fairness often dictates that, on dissolution of the marriage, the family assets should, in principle, be shared between the parties unless there was good reason to depart from such a distribution. Nevertheless, each case must be decided on its own facts and its own merits. In cases of divorce, the facts and circumstances relating to the parties and the marriage can and do vary significantly. In my view it would be dangerous to attempt to decree a principle that is applicable in all cases.

At paragraph 80 the Hon Stone J added

However, we have been told that DD v LKW, op cit, is to go further, and whilst it is clear that this case currently represents the applicable law in this jurisdiction, I respectfully venture to suggest that unqualified acceptance and adoption of the approach in White v White – which appears to have encountered its share of difficulties in its application in ‘big money’ cases in England – ultimately may not provide the appropriate prescription for Hong Kong, with its different social and cultural norms.  

113. It is fair to say that neither party argued the relative merits of the appropriate approach to be taken in this case save that the wife has argued her case on a the basis of a 50:50 division of the parties assets. The question has then been - what is to be regarded as a matrimonial asset and what can and should be divided? It should also be noted that this judgment was handed down after the close of this case and therefore to an extent it is perhaps a little unfair to refer to it. But it does again raise the issue of fairness and how to achieve such an elusive goal. In this case I have found the needs based approach helpful when considering how to divide the parties assets. The yardstick of equality has been considered in that context.

Matrimonial assets

114. The parties have the following assets. Given that there has been no agreement with respect to valuations I intend to take a mean value wherever appropriate:

	H’s valuation	W’s valuation	Court’s valuation
The Po Ming Property	HK$4,500,000	HK$3,200,000	HK$3,850,000
Broadcast Drive	HK$4,350,000	HK$5,000,000	HK$4,675,000
(Taking account of 1/3 premium deducted)
Jaffe Road Property	HK$4,500,000	HK$3,300,000	HK$3,900,000
The 13D Property *	HK$8,000,000	HK$6,700,000	HK$7,350,000
The 2C Property *	HK$5,500,000	HK$4,300,000	HK$4,900,000
The San Francisco property *	HK$5,500,000	HK$5,500,000	HK$5,500,000
Proceeds of sale from Hankow Centre			HK$1,625,000
Property in China			(RMB248,000)HK$280,000
Wife’s cash assets *			Unknown
Husband’s cash assets*TOTAL			UnknownHK$32,080,000

115. Therefore there is just over HK$32 million in the matrimonial pot. Those properties marked with an * are not capable of being redistributed. I have loosely described them as a financial resource of the wife. It seems to me that she may be able to live in any one of these three properties. I accept that she currently splits her time between the 13D and 2C property. In addition there is the husband’s pension, which produces an income of c. HK$33,000 per month.

Each party’s cash assets

116. I have not subscribed a value to each party’s cash position, as it seems to me that it is impossible to accurately predict what that may or may not be. I accept that the wife has had the benefit of c HK$1,365,000 from the matrimonial pot and an additional HK$800,000 from PY. I also accept that the husband has had the benefit of other funds, some of which have been held in the name of Ms ST. As at the spring of 2008 the husband appeared to be holding something in the region of HK$1 million. To some extent these sums appear to cancel each other. I do not intend to include either in the schedule of matrimonial assets for distribution.

How then should those assets be divided, bearing in mind the principles of need, compensation and sharing and the s.7 factors?

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;

117. It is fair to say that neither party has an earning capacity. The income available to each is from the husband’s pension and from property rentals. In addition it seems that the children partially support the mother. Mdm ST is also presently working. In terms of financial resources, the wife has the 13D property, the 2C property and the San Francisco property at her disposal. I accept that both 13D and 2C are occupied by JA and P respectively and that the wife lives in both properties from time to time. Likewise I accept that she may be able to live in the San Francisco property going forward. It is empty at present. It is unclear what rental value this property may have. Both parties may also have some cash assets at their disposal, the precise amount of which it is impossible to accurately determine.

118. From PY’s evidence it appears that the Po Ming property is presently let.   

Need

(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;

119. In broad terms both parties need somewhere to live and sufficient money to live on. As I have indicated I accept that the wife splits her time mainly between the 2C and 13D property. I do not accept that she spends any significant time in the Broadcast Drive property. I accept that she could live at either of these properties, or indeed the San Francisco property. The husband for his part lives in a property in China. He wishes to return to the Broadcast Drive property in which to live. He says that he has maintained himself from an allowance of HK$10,000 per month that he has been permitted to draw from his pension. As I have indicated above, both parties appear to have had access to other cash assets in the past.     

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

120. The parties enjoyed a good standard of living during the marriage. The husband was senior civil servant earning in the region of HK$100,000 per month. They had a number of property investments which were income producing. They could be described as comfortably off.

(d)  the age of each party to the marriage;

121. Both parties are now elderly. The wife is 69 and the husband 72 years old.

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

122. This was not argued during the course of the trial.

Compensation

123. This was not argued.

Sharing

(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;

124. I accept that both parties made a significant contribution to the marriage and that in a sense neither contribution could be said to be more significant than the other.

125. The wife said that she contributed financially by astute negotiations with developers, and from the estate of the Grandmother and her brother. Although I do not accept a lot of what the wife has said in relation to the 13D property, nevertheless I accept that she contributed fully in her role as wife and mother. While the husband disputes this, I do not think that there can be any doubt that both contributed to the upbringing of their children – all of whom have done well. The husband as the breadwinner clearly made a significant financial contribution. He also brought his gratuity and inheritance to the table.

(e) the duration of the marriage;

126. By any one’s calculation this is a very long marriage.

Division of Assets

127. In order to satisfy each party’s reasonable needs and to achieve a fair and just resolution of this matter, I will to make an order as follows:

The husband shall retain

a) the Broadcast Drive property and the property in China.

b) the transfer of the Po Ming property to PY shall be set-aside within the next 28 days. Forty-two days thereafter the Po Ming property shall be transferred into the husband’s sole name. The husband shall pay for the costs of transfer.

128. There can be no change in ownership of the 13D property, the 2C property, and the San Francisco property. I accept that in part these continue to be family assets and can loosely be described as a financial resource of the wife. However although it seems to me that the wife can live in these properties, I also accept that that, with the exception of the San Francisco property, they are presently occupied. They are not income producing. It is unlikely that they can be sold. Consequently I shall further order that

a) the transfer of the Jaffe Road property to JA, J and P shall be set-aside within the next 28 days. Forty-two days thereafter the Jaffe Road property shall be transferred into the wife’s sole name. The wife shall pay for the costs of transfer.

129. Thus the husband will be able to reside in either Broadcast Drive property or in the property in China. The Po Ming property is income producing.

130. The wife for her part may continue to live in either the 2C or 13D property, or alternatively in the San Francisco property. In the alternative she may choose to live on her own in the Jaffe Road property.

131. If one includes all of the properties in the calculation, this division gives the wife HK$21,650,000 in terms of the value of the real property. The husband retains HK$8,805,000. If one takes out of the equation the 13D property, the 2C property and the San Francisco property, this gives the wife HK$3,900,000. Neither calculation achieves fairness by producing a 50:50 split of the asset base. I am however satisfied that as far as possible both sides housing needs will be met by this order. I am also cognizant of the fact that there are other assets held in the names of the children, which remain untouched. It would also be possible it seems to me for the wife to live in one of these other properties.

Given the above to what extent can and should the court depart from the yardstick of equality bearing in mind all of the factors set out above and the overriding concept of fairness?

132. As I have said I do not accept that his is a suitable case for an equal division of assets. The factual matrix is such that an equal division is virtually impossible in any event. Given the peculiar circumstances of this case it seems to me that it is more appropriate to look to the parties’ reasonable needs and the ability of the family asset base to provide for those needs. The division of assets ordered will ensure that both parties housing needs are met.

133. In so far as the proceeds of sale of the Hankow Centre property are concerned I intend to divide those proceeds on a 50:50 basis. Each side will receive HK$812,500. I appreciate that the Legal aid statutory charge will bite on the wife’s share. These funds will go someway towards satisfying each side’s bill for costs.

Should the husband pay the wife any maintenance? If so, how much?

134. The husband has argued that the wife should retain the benefit of the properties held either by her or the children. Thus she would have somewhere to live and an ongoing income from the rentals received. For his part he wishes to retain his pension.

135. The difficulty with the husband’s position, is that none of the properties originally retained by the wife, with the possible exception of the San Francisco property are, or can become, income producing. I have ordered that the Po Ming property be transferred to him. This is or can become income producing. Likewise Jaffe Road can also become income producing, if that is not the case already.

136. Both parties state in their Form E’s that they will need approximately HK$28,000 per month on which to live. (The husband says that he needs c. HK$23,000 per month and that this will increase by HK$5,000 per month, if he takes up residence in Hong Kong).

137. In these circumstances I accept that in the interests of fairness, and notwithstanding the way in which these proceedings have been conducted, that the wife should receive a share of the husband’s income. The wife seeks HK$15,000 per month. I will make an order to that effect such payments to commence on the 1 July 2009 and to continue thereafter on the 1st day of each succeeding month during the joint lives of the parties or until the wife’s remarriage whichever is the earlier. This will leave the husband with HK$18,000 per month plus a rental income from the Po Ming property. I have also noted that the wife is partially maintained by the children. She may also receive a rental income from the Jaffe Road property in the event that she continues to live with the children. Consequently I am satisfied that both parties should have sufficient money to live on going forward. This seems to me to be a fair and sensible solution in all the circumstances of this case.

Costs

138. I am of the view that a costs order should be made that accurately reflects my concerns about the wife’s litigation conduct and the fact that at the end of the day I have not come down wholly in favour of one side or the other. Therefore I will make an order nisi to be made absolute in 14 days time that the wife do pay a 50% contribution towards the husband’s party and party costs, to be taxed if not agreed. There shall be certificate for all counsel involved in the trial.