D v. L

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 1590 OF 2004

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J U D G M E N T

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1. This is the parties' application for ancillary relief upon the granting of a decree nisi of divorce to the Petitioner Husband of their 16 years marriage, with the Husband specifically seeking for the transfer of the Respondent Wife's 1 share in a limited company which holds the former matrimonial home at Lamma Island where the Husband resides, and the Wife's application for a lump sum in return for her interest in the said matrimonial home, and for periodical payment for the parties' only child of the family, a daughter now 17 years old, whose custody has been granted to the Wife.

Background

2. The Husband is a professional photographer from Australia who came to Hong Kong in 1971 to pursue travel oriented assignments.  Due to the nature of his work, he had travelled extensively, but by the late 70s he had decided to make Hong Kong his home and moved into Lamma Island, and in 1979 he formed his photo agency in Hong Kong known as  S Productions Limited ("The Agency").

3. In 1982 he purchased the top floor of a 3-storey village house at Yung She Wan, Lamma Island for $390,000.  In 1984 and 1989 he purchased the remaining floors of the house for $205,000 and $500,000 respectively.  All the purchases were effected through a holding company known as F Limited which the Husband wholly owns save for the 1 share aforesaid held by the Wife.

4. In 1984 the parties met when the Wife, a local resident, applied for a position in The Agency.  On 31^st March 1988 they married in Hong Kong when he was then 43 years old while she was 27.  She then took over the position of general manager of The Agency and also became a director of the company.  The business was very successful in the early years of the marriage, with the Wife taking over the management and administration of the Agency, and the Husband became increasingly reliant upon her for her language skills in Mandarine and Cantonese in the further development of the Agency business.  In 1994 the Husband purchased a property in Sydney for the parties to retire to in future.

5. The parties' only child, L, a daughter was born on 27^th September 1988 in Hong Kong but has Australian citizenship by descent.  She is now 17 years old and is attending grade 12 at Chinese International School.  She has been an outstanding student and is expected to go on to university upon her graduation in June 2006.

6. Despite the apparent success of their business, the parties began to experience marital discord in or about 1992, with the Husband blaming the Wife of bad temper and being too strict with their daughter on her studies, while the Wife accused the Husband of being an alcoholic.  By 1998 their relationship was coming apart, and their business was in severe difficulties due to what the Husband claims to be the Wife's bad temper and her difficulty in getting along with some of the company staff and clients, which had caused it necessary to downsize the company on more than a few occasions already.

7. The matter finally came to a head in August 1999 when the parties had a particularly heated argument after which the Wife left the matrimonial home with the daughter.  She subsequently resigned from the Husband's business and the parties had since lived apart from each other.

8. After separation the Wife and L initially stayed at the YWCA, but eventually moved to stay in one of her mother's properties in Caine Road, Hong Kong where they have since remained.  The Wife has been working as an executive secretary on annual contract basis and her present salary is about $28,000 per month.  She has also been taking a degree course in management at the University of Hong Kong, and although it is not clear from the evidence when she will complete her studies, the Social Investigation Report which was submitted to court on the question of the Husband's access to the daughter revealed that the Wife was in 2004 already in the 3^rd year of her studies.

9. In January 2000 the Husband sold his property in Sydney, claiming that he had to use the net sale proceeds of about A$190,000 to pay for the daughter's accrued school fees as well as his debts and various expenses of his agency business after the Wife left but allegedly locked her computer and refused to sign any cheques to meet the company's expenses.

10. For about a year after the parties' separation, the Husband was able to have access to L on the Saturday afternoon, but that has ceased since July 2000 after an incident between the parties on the street in the presence of their daughter that involved the police when the Husband was accused by the Wife of using violence on her and the child, for which the Husband was subsequently bound over by the police.

11. In May 2001 the Husband took out an application under the Guardianship of Minors Ordinance for access to the daughter. That application was opposed by the Wife as she alleged that the said incident in July 2000 had so frightened L that she had since refused to see her father.  As a result several social investigation reports and clinical psychological report were submitted to that court.  It is not necessary to go into these reports here, suffice to say that L has continued to refuse to see her father, or to have any contact with him up to today, and the Husband has blamed the Wife for alienating their daughter from him.

12. On 21^st February 2004 the Husband filed for divorce in these proceedings on the ground of separation, and sought an order for access to the daughter and generally ancillary relief.  On 7^th May 2004 a decree nisi of divorce was granted to the Husband with an order for reasonable access to the daughter, while her custody was granted to the Wife.  The question of ancillary relief was as usual adjourned pending the filing of their respective Financial Statement by the parties.

13. The Husband claims that by then his business had deteriorated further to the extent that he was not earning enough to pay his debts or his daughter's school fees, which by then had again fallen in arrears for over $250,000.  He therefore proposed to mortgage the ground floor of the former matrimonial home to meet these payments, but as the Wife is the other shareholder of F Ltd which holds the property and hence her signature was required for the necessary mortgage documents, and due to her un-cooperation and distrustful of him, it took him months and much legal costs to bring the matter to Court in November 2004 to finally obtain her cooperation and the mortgage loan to pay off the daughter's school fees accrued over the years and also to cover the period up to her graduation in June 2006.

14. The Husband proposes that upon his daughter's graduation, she should go to university in Australia where she holds citizenship and so she would be entitled to the lower local school fees for which he is prepared to give an undertaking to be wholly responsible by taking out a further mortgage on the remaining 2 floors of the former matrimonial home, as he figures that her total university expenses, even at locate student rate, would still be substantial and which his business income alone would not be able to meet, and hence it is necessary for him to retain the property, which he also needs for his home as well as his business on the upper 2 floors, while the ground floor has been let out for rental income which he needs to meet the present mortgage payments.  He therefore rejects the Wife's proposal to sell the property to give her half of the sale proceeds for her interest therein, as he believes that she has already been well provided for by her wealthy mother, including residing in her Caine Road property for free, if in fact that property has not already been gifted to her, and that she also stands to inherit her mother's huge estate in future.

15. While the Wife admits that she has not been paying her mother any rent for occupying her flat, it is not because she has been well provided for by her mother as alleged, but simply because she cannot afford to do so due to her limited means with no maintenance from the Husband all these years since their separation.  While she does not dispute that her mother had inherited considerable amount of money from her brother who died in 1996, the Wife insists that it has nothing to do with her, and that her mother has no obligation to make any financial provision for her or to leave any of her estate to her in future, and that in any event the Husband should not be allowed to use this as an excuse or reason to avoid his legal obligation and responsibility towards her and their daughter.

16. In addition to filing their respective financial statements, the Husband has also filed an narrative affidavit pursuant to my direction given on 20^th May 2005 at the pre-trial view, providing more detailed particulars of the background of the marriage as well as up-dating his financial position and what he believes to be the Wife's, but unfortunately the Wife, who was unrepresented throughout the proceedings, did not file hers due to what she claimed to be some misunderstanding of the direction on her part, and with a view of saving time and costs, it was agreed that she be allowed to give evidence to supplement her Financial Statement at the trial instead of adjourning it for her to comply with my direction. Both parties gave further oral evidence at the trial, as well as a former staff of the Husband who came to give evidence under a subpoena issued by him.

The Law

17. In deciding on the question of ancillary relief, the Court is required by Section 7(1) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 to have regard to the conduct of the parties and all the circumstances of the case including the matters mentioned therein but which I set out below for the benefit of the Wife who is unrepresented : -

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

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

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

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

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

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

(g) in the case of proceedings for divorce 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.

18. I shall start the above exercise on the parties' income, earning capacity, property and other financial resources that each of them has or is likely to have in the foreseeable future, which is really the central issue between the parties.

19. The Husband is now 61 years of age and is said to be suffering from severe tinnitus.  He put his average monthly income at only $8,000 when he filed his Financial Statement from his agency business S Productions Limited where he is the managing director and majority shareholder, while his other company S Limited has been dormant and insolvent as it owes its creditors about $900,000 and $82,000 in severance pay to its former staff, as well as its auditor in the sum of $13,759.  In addition he used to let out the ground floor of the former matrimonial home for $9,000 per month, giving him a total monthly income of $17,000, but the tenant has recently left and he has been trying to find another tenant at a lower rent of $8,000 per month.  He claims to have no other income and put the blame of his limited income and debt situation on the economic downturn and the Sars situation of 2003, which resulted in him essentially not having much work for the past 2 years.

20. In his evidence at the trial including documentary such as quotation from his customers ("P-5"), the Husband claimed to have only 2 job assignments this year, with one he received a gross sum of $31,000, while the 2^nd assignment was a commercial shooting of a hotel in Sydney for which he received a reduced sum of $107,400 after some dispute with his client, giving him a total income of $140,000 over the past 9 months, but after deducting the necessary expenses including travelling, he claims that his net total income was only about $65,000, giving him only $7,000 per month on average.

21. The Wife however does not accept that the Husband, an internationally well-known professional photographer, would end up with so few jobs with so little earnings as alleged.  To this the Husband explained in his evidence that he still uses film for professional shoots, whereas the successful modern day photographers all use digital equipments including digital cameras and computers which cost about $180,000 and which he says he cannot afford in his present financial statement, in particularly in view of the fact that he still owes the creditors of his other company S Ltd of more than $900,000.

22. S Ltd has remained dormant and insolvent and hence is probably the some case with his liabilities over any debts owed to its creditors.  His other company S Production Ltd is still active and is the main source of his income.  To his Financial Statement the Husband exhibited the company's audited report for the year ended 31^st March 2003 which shows a much smaller service income of $68,026 than a year before when it recorded almost 5 times more in income at $392,953.

23. Apart from the service income there were 2 significant sums reported as income : $935,082 as waiver of advance from a shareholder, and $179,540 as waiver of amounts due to related companies.  For the former the Husband initially explained that they were monies owed to the company for service rendered which he doubted would be paid or recoverable.  This item in fact also appeared in his Financial Statement under item 2.9 of monies owed to him.  Later in his evidence at the trial he corrected himself that they were probably monies which he put into the company's capital to meet its various expenses in that year, although he is unable to give any further details of the source, and bearing in mind that by then his company had already been downsized several times since the Wife's departure more than 3 years ago, it is possible that the money could have come from the sale of his Sydney property which he sold in 2000.  Irregardless the audited report appears to support his case that there were little income from his service in 2003.

24. There is unfortunately no audited report for the year 2004 or 2005 with which to verify the Husband's evidence of his present income situation, and it is therefore necessary to refer to other documents such as the bank statements of S Productions Ltd produced by the Husband to see whether a clearer picture may emerge.  While ignoring those deposits which shown on the bank statements as either of insignificant amount or in cash neither of which appear likely to be service income, for the period from April 2003 to end of March 2004, the bank statements do show a total deposit which may be said to be income of more than $400,000 which gives an average of almost $35,000 per month.

25. The Husband may of course argue that some of these deposits were not income, and it is true that he was never asked to explain these deposits at the trial, but if not all of them were income, what could they possibly be ?

26. The possibilities could of course include transfer from his other accounts, or monies borrowed from others, or even monies repaid to him by his customers.  As aforesaid unfortunately none of these were ever put to him at the hearing, nor was he cross-examined by the Wife about them.  The evidence therefore is unclear, but in any event it was then in 2004, and the further bank statements produced by the Husband at the trial, i.e. Exhibits "P-6" to "P-8" seem to support his case that his job assignments are indeed far and few in between in 2005.

27. It is not in dispute that the Husband was at the time of the marriage, and may still be, a well known professional photographer who did quite well during the marriage in particularly with the assistance of the Wife in running his business, as readily admitted by him in his affidavit and his testimony.  It is also not in dispute that the breakdown of the marriage and the subsequent resignation of the Wife from his companies had had a serious and adverse impact on his business.  The fact that he had a drinking problem certainly did not help him either. His failure to gain any contact with his daughter the past 4 years also seems to have taken a heavy toll on him too.

28. There is no doubt that the Husband blames the Wife for alienating their daughter from him.  She of course denies that it has any thing to do with her, countering that it was himself to blame due to his violent behaviour and drinking problem.  What indeed caused the rift between father and daughter was not explored at the trial, but it would be useful to refer to the Social Investigation Report submitted in this Court on 29^th June 2004 on the question of access, in particularly to the following observation of the Social Work Officer : -

"7. In the past 2 years, Mr D remained to have no access to the daughter.  Ms L stated that she had actively persuaded the unwilling daughter to maintain the contact with the father after the separation, and stopped the weekly access only because of the violence of the father in the July 2000 access as L had refused to meet him and she also dared not to persuade L to see the father anymore.  However, the father believed that the mother stopped his access since July 2000 as she had finished her study course and did not need his care of the daughter on Saturday.

8. To contact with L, Mr D kept sending her letters initially to her home address and later via the school, calling her home phone number and sending her emails.  However, L gave no reply to him, changed her email account and blocked all his phone numbers from her home phone line.  Despite he kept calling, usually weekly using others' phones, L hang up immediately after hearing his voice.  He also kept sending letters to the girl about 1 – 2 times a month telling her his wish to see her, his condition and allegations on the mother regarding the school fee issue, and attached also together photos and pocket money at times.

9. Mr D accused Ms L of obstructing L's contact with him and doubted whether the daughter had really got his letters.  He recalled that he had heard the mother shouted to the daughter asking her to tell him not to call again in a phone conversation and that the daughter was unable to get a Christmas gift which the paternal grandmother had sent to her last year.  Hoping to put a letter in their mailbox, he admitted going to Ms L's home address at a midnight in December 2002.  However, Ms L recalled that Mr D was drunk the night and was only stopped by the security guard from going to their home, and left with the police's advice.  Allegedly out of concern of the daughter's safety as Ms L was seeing another man, partly due to his frustration for his inability to contact with L and to demonstrate that he would not give up, Mr D had also reported to the police three times from mid 2003 to January 2004 late at night stating his worry on the girl's safety which had led to policemen visiting the family the nights.

10.  Both Ms L and L were annoyed with the father's repeated nuisances.  Ms L stressed that she had never obstructed the daughter's contact with the father.  Having her own room, independent email account, own mobile phone and with the only telephone and computer placed in L's bedroom, Larissa had all the freedom to contact with the father.  In fact, due to her long working and study hours, Larissa was usually the first one to clear the mailbox and receive phone calls, and could communicate with the father even without her knowledge if she choice to.

11.  L submitted her avoidance to contact with the father by blocking the father's phone numbers from the home phone line, changing her email and hanging up on the father.  She had once seen the father at school and to avoid meeting him, she ran away immediately.  She shared that the father had initially sent letters to her home address but probably as she did not reply, he sent letters to her via the school, which she felt embarrassing.  She assured that she had got the Christmas gift from the paternal grandmother, was the first one to get and read the father's letters, and had received a $20 note, 1 – 2 times attached.  Though she was still glad with the pocket money, she deemed that the act had only further aroused her awareness of the father's irresponsibility when she compared the expenses and hardship the mother had contributed for her all along.  She shared her embarrassment with the school fee problem.  Though the father had tried to give his version of the dispute in his letters, she shared and clarified with the mother afterwards, and admitted her bias that she tended to trust the mother instead".

29. While I am not saying that this report goes to support the Husband's case that it is the Wife who is responsible for his inability to have any contact with his daughter, although the Wife's bitterness and hostility towards him were clearly apparent throughout the trial, the report does show a desperate father trying all means but in vain to see his daughter which, in my view, must have at least in some way affected his ability or desire to work.  His sad and dejected appearance throughout the trial certainly gives that impression.

30. This is in fact supported by the evidence of his "reluctant" witness, Ms Ip, reluctant because she did not wish to be involved in the parties' conflict and had to be compelled to come to Court to give evidence under a subpoena, when she said that there was a time when the Husband would constantly telephone her or come to her office crying about his inability to see his daughter.

31. For these reasons I accept the Husband's evidence that at his present age and circumstances, he is perhaps already past his prime and given the effects of the failure of his marriage and his failed relationship with his daughter on him the past several years, it would be unreasonably optimistic to expect him to be able to regain or maintain his earnings or his earning capacity as before.

32. It is of course necessary for the Husband to continue to work as he has substantial expenses and liabilities to meet.  In his Financial Statement he put his monthly expenses at about $20,000 per month.  There has since been the additional monthly sum of $6,268 for the repayment instalment of the loan of $500,000 obtained by him in August 2005 by charging the ground floor of the former matrimonial home to Shanghai Commercial Bank (Exhibit "P-4") for his daughter's outstanding school fess.  The loan is for 8 years and will only be discharged in early 2013.

33. His other liabilities as set out in is Financial Statement include credit card debts of more than $100,000, debts owed to 2 friends totalling $75,000, and his outstanding legal fees in these proceedings of over $700,000.  When asked by the Wife how he was going to settle his legal costs, he replied he had no idea but probably by instalments or to raise another loan by borrowing against the matrimonial home.

34. As regard his assets, the evidence show that apart from some $935,000 being monies owed to S Production Ltd for work done which he doubts will be recoverable, the Husband has no other assets such as savings or pension save the former matrimonial home in Lamma Island as being the only valuable asset which he estimates to be worth about $2.6 million but with 2 outstanding loans in the total sum of about $750,000, leaving a net equity of about $1.85 million.  He has let out the ground floor for rental income which he says he needs to meet his monthly loan repayment, while the top 2 floors are used as his residence as well as his office and storage for his photographic materials and equipments.

35. I shall next consider the Wife's financial situation.  There is no dispute over her occupation as an executive secretary or her present income of $28,000. Although she is concerned about the security of her job as her employment contract is due to expire next year, there is no evidence to indicate that her contract will not be renewed as in the past as she appears to be doing well and has been awarded a bonus by her employer. In fact, she has throughout the trial impressed me to be a very capable person who has conducted her own litigation very competently. She was able to bring success to her former husband's business, and has tried to improve herself after separation by taking up studies in the university after work. I do not think she will have any difficulty keeping her present job or finding a better one. Like most employees in Hong Kong, she is also a member of the MPF Scheme with the HongKong and Shanghai Bank with a current value of about $18,000.  She also claims to hold 2 other pensions or provident funds namely Bank Consortium Trust Co Ltd and Hang Seng Mandatory Provident Fund, the values of which however are not disclosed, nor does the Husband take any great issue thereof.  She also holds 1 share in each of the Husband's F Limited and S Production Limited.  She does not appear to have any claim for any interest in the latter company but claims 50% of the equity of the former matrimonial home held by F Ltd.  Her Financial Statement discloses no other assets or savings.

36. She and her daughter have been residing in a property registered in her mother's name in Caine Road, Mid-levels, Hong Kong.  She claims that she is supposed to pay rent to her mother for the flat but she simply cannot afford to do so as her other expenses for herself and the daughter already exceed her income at more than $46,000 per month as set out in her Financial Statement.  They include $8,982 for her daughter's school fees which is however no longer necessary after the Husband has settled the fees up to the end of her final year at Chinese International School.  This should therefore bring her total expenditure down to about $37,000.  There is not much dispute to her other stated expenses save for the item of clothing and shoes at $9,000 per month, which takes up about a third of her income and appears to be excessive, while the expenses for her studies at the Hong Kong University may become unnecessary soon when she completes the course, which she took up after the breakdown of the marriage in about 2000.

37. She also claims to have substantial debts and liabilities, almost as much as the Husband's at more than $580,000, most of which consist of credit card debts from some 10 banks and credit card companies, accounting for about two-third of her total debts at more than $380,000.  It is not clear why she had incurred such huge debts, although she claims of receiving no financial assistance from the Husband since their separation might be a reason, or whether she has been making any repayments, as they do not appear to form any part of her monthly expenditure in her Financial Statement.

38. The Husband however believes that the Wife has been managed to handle all these debts because she has the financial support of her mother.  He said in his affidavit that after her mother inherited the estate from her deceased brother in the 90s, she did invite them to live in the deceased's expensive penthouse at May Towers in Mid-level, which shows that the Wife and her mother have always been on good terms and that her mother must have made financial provisions for her since the breakdown of her marriage, including providing accommodation for her in the Caine Road property.  He also relies on the evidence of Ms Ip.

39. Ms Ip used to work for the Husband at S Ltd for some 10 years from 1991 to 2001.  She therefore knows the parties.  On 14^th September 2005 she gave a statement at the office of the Husband's solicitors, which is exhibited to Mr Paul Firmin's affidavit of 3^rd November 2005 in which she stated that inter alia the Wife's mother Madam Y told her while she was working at S Ltd that she must help her daughter when her marriage was in trouble, which was why she bought the Caine Road property for her, although it was also for investment, and that the Wife also told her that after Madam Y received the money from her deceased brother's estate, she gave her and her 2 siblings $1 million each, which was also mentioned to her by Madam Y although she did not say how much it was that she gave the Wife.

40. As mentioned earlier in my judgment, Ms Ip was reluctant to be involved in what she saw as the private matter between the parties, and therefore refused to attend Court to verify her statement until she was compelled by a writ of subpoena and in fact only after the threat of a warrant of arrest.

41. While in court Ms Ip did verify the contents of her statement and although she was extensively cross-examined by the Wife, I find her generally a truthful and unbiased witness who tried to be as fair and neutral to both parties in her evidence, notwithstanding the fact that the Husband's company still owes her more than $80,000 in severance pay.

42. Despite the Wife's persistent denial that her mother has provided any financial assistance to her, she did admit under cross-examination that she received a sum of $300,000 from her mother for the decorating and furnishing expenses of the Caine Road property. The evidence before me also shows that the property was purchased shortly after the breakdown of the marriage and when the Wife was staying in the YWCA, and that although Madam Y may have insisted that the property was purchased as an investment, I do not believe that it was merely a coincidence that it was purchased at the same time when her daughter needed a place to stay and when her marriage was in trouble.  The fact that she has allowed her daughter and granddaughter to live there without any payment the past 5 years has reinforced my belief.

43. The Wife has also argued that her mother may one day decide to give the Caine Road property to her brother, the only son in the family, in which case she and her daughter will have no place to stay.  The Husband disputes this to be most unlikely, not just because of the good relationship the Wife has with Madam Y, but also because years ago prior to their marriage, when the Wife was residing with Madam Y and her siblings in her family's property at Broadcast Drive, Kowloon, it was the Wife who had to work hard for 8 years to pay off the mortgage of that property after her father deserted them years ago, to which he believes Madam Y owes the Wife her gratitude.  Furthermore, the Husband says that the mother had already given that property to her son when he married and therefore there is no reason why she would want to give him another property which the Wife has a greater need for her home. The Husband therefore believes that these are all part of the reasons why Madam Y will allow the Wife to continue to live in the Caine Road property without any charges, that in fact she would have already given the property, which is worth more than $4 million, to the Wife if not because of these proceedings, and that she will continue to make financial provisions and assistance to the Wife including a share of her estate when she dies, which he believes to be very substantial and which he says the Court should take into account when determining the Wife's claims.

44. There is no dispute that Madam Y did inherit her deceased brother's estate.  The Husband has produced a copy of the Grant of Letters of Administration of the estate issued to Madam Y by the High Court Probate Register (Exhibit "P-3") on 8^th April 1998 which shows that the net value of the estate was more than $117 million before payment of estate duty and interest of more than $22 million.  It is believed that it was with the money from the estate that Madam Y purchased the Caine Road property, as well as the alleged payment of $1 million to the Wife, which the Wife has denied ever receiving from her mother.

45. Although Madam Y never mentioned the amount to Ms Ip, I have no reason to doubt Ms Ip's evidence that both the Wife and Madam Y had mentioned to her about the payment.  It is of course possible that both had lied to Ms Ip, but I cannot think of any reason why they would want to do that, or that Madam Y had subsequently changed her mind and never gave the money to the Wife, as there is no evidence from any of the Wife's disclosed bank accounts which show any deposit that may resemble such payment, but given the Wife's plight at that time, it is more likely that Madam Y must have made other financial assistance to her in addition to providing her and her daughter accommodation at her Caine Road property, after all, it was a natural and normal thing for her to do so under the circumstances and given her wealth and her good relationship with her daughter.

46. This payment of $1 million, however, is not the major issue between the parties.  It is what the Husband believes the Wife's future inheritance from Madam Y that is the real issue.

47. There is no question that future inheritance can be part of "other financial resources which each of the parties …… is likely to have in the foreseeable future" under section 7(1)(a) of the Ordinance.  However, unlike pension, provident fund or gratuities, something in which a party already has a vested or contingent interest and which can usually be ascertained as to the amount or the time or circumstances under which they becomes payable, and hence should be taken into account, inheritance is simply something which the party may or may not have, hence the first question in this case is whether it is an asset which the Wife is likely to have in the foreseeable future.

48. If the answer is that it is not, then the court will not have regard to it.  This matter was considered in Michael v Michael [1986] 2 FLR 389 where after the divorce, the wife and the 2 children of the marriage continued to live in the former matrimonial home which was owned by the wife's mother.  The wife had a protected tenancy and paid her mother a weekly rent of £8.  The husband had applied for financial provision in divorce proceedings asking for lump sum and property argument orders.  The wife insisted the husband's claim in relation to the former matrimonial home on the ground that although she had an expectation of inheriting an interest in the property under her mother's will, her prospects of inheriting an absolute interest in the property were uncertain and subject to the interests of other likely beneficiaries such as her father, her brother and children and that she was vulnerable to her mother changing her will at a later stage.

49. In the ancillary proceedings the register dismissed the husband's application.  The judge allowed the husband's appeal and adjourned the application generally on the ground that he was satisfied that the wife had a reasonable prospect of inheriting a valuable interest in the property under the mother's will in the near future.  The wife appealed contending that the judge had been wrong to regard the house as property which she was likely to have in the foreseeable future within the meaning of s 25 (2) (9) of the Matrimonial Causes Act 1973 as amended.

50. In allowing the appeal, Nourse LJJ of the Court of Appeal held that on its proper instruction, in the light of its broad and informal language, s 25 (2) (a) of the Act of 1973 as amended was not intended to be exclusively confined to property or financial resources in which there is a vested or contingent interest but could extend, in certain circumstances to a mere expectancy or spes successionis, such as an interest which might be taken under the will of a living person, he also said this : -

"Suppose, for example, a case where there was clear evidence, first, that the Respondent's father was suffering from a terminal illness, secondly, that his will left property of substantial but uncertain value to the Respondent and, thirdly, that it was highly improbable that he could or would revoke.  In such a case it could hardly be doubted either that the property was property which the Respondent was likely to have in the foreseeable future or that the application should be adjourned to abide the death of the father.  However, those facts, being extremely special, demonstrate that the occasions on which such an interest will fall within s 25 (2) (a) of the Act of 1973 as amended are likely to be rare.  In the normal case uncertainties both as to the fact of inheritance and as to the time at which it will occur will make it impossible to hold that the property is property which is likely to be had in the foreseeable future.

Returning to the facts of the present case, I will say at once that it seems to me to be one which falls well within the norm.  Having carefully considered the terms of the Wife's solicitors' letter of 21^st May and para 3 of her affidavit of 8^th November, I find it impossible to hold that 20 Drybridge Street is property which the Wife is likely to inherit from her mother.  There seems to be considerable uncertainty as to whether she will take any interest, even a life interest, in the property.  Her it is worth stating the obvious, namely that anything less than an absolute interest would not in practice enable the Wife to make a lump sum provision for the Husband.  Moreover, it is worth stating another fact of life which is this.  Suppose that the judge's order were to stand.  In the absence of evidence to the contrary it is natural to assume that the Wife's mother would not wish to do anything which could endanger the continued occupation of the property by her daughter and granddaughters.  It would be a simple matter for her, on being informed of the fact and purpose of the adjournment, to provide by will either that the Wife should take no more than a life interest in the property or that it should be left to trustees for the benefit of the two daughters subject to the Wife's protected tenancy.  Indeed, it seems to me that in the normal case an adjournment of the application is often likely, for reasons such as these, to be a self-defeating exercise.

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

For these reasons I conclude that it was not open to the judge to hold that 20 Drybridge Street was property which the Wife was likely to have in the foreseeable future.  He ought to have dismissed the application and not adjourned it.  He exercised his discretion on an incorrect view of the law and his decision is one with which this court can and must interfere".

51. In K v K [1990] 2 FLR 225 where the wife's inheritance expectations were considered in the husband's application for ancillary relief from her by way of a lump sum and / or periodical payment, Scott Baker J found such expectations not significant factor to be taken into account when he said : -

" …… there has been considerable argument about the wife's possible inheritance at some time in future, either from her mother in New Zealand, or from her father, her parents having divorced some years ago.  As far as the father is concerned, the wife has no reason to suppose that she may not be a beneficiary under his will but her father has remarried and it may well be that any money would go initially to the stepmother.  As to the mother, she lives in New Zealand in a property worth about £50,000 and has capital invested of about £100,000.  The two likely beneficiaries are the wife and her brother, and on the fact of it they can expect to take in equal shares.  The mother is in good health, is aged 79 and there is no indication that the wife is likely to benefit from any inheritance in this direction in the immediate future.

It is perhaps important to point out that nobody can tell what the mother's future is likely to hold, and even the sum of £150,000 can very quickly become a good deal less if it has to be used up in, for example, nursing home expenses.  There is no evidence as to what the capital transfer or inheritance tax position is in New Zealand and in my judgment the wife's inheritance expectations are not sufficiently proximate to be taken into account as a significant factor in this case".

52. Similarly in H v H (Financial Provision : Capital Allowance) (1993) 2 FLR 335, in allowing the husband's appeal against the district judge's decision giving the wife 61% of the family capital and reducing the husband's share to 39% after taking into account inter alia of his substantial inheritance prospect from his mother's estate, Thorpe J, as he then was, said this about future inheritance : -

"The authority upon which Mr Le Grice relies is the case of Michael v Michael [1986] 2 FLR 389, and in particular he relies on a passage in the judgment of Nourse LJ at pp 396 and 397.  The district judge did not have the advantage of that judgment before him when he decided the issue as he did and, with great respect to his approach, I think it is flawed in tow respects.  First, I think that he gave insufficient weight to the obvious possibility that the husband's mother might, for tax avoidance considerations, bypass his generation in whole or part in favour of her grandchildren.  The district judge's reasoning almost implied that the mother's choice was confined to the four children of her marriage.  He seems to have given insufficient weight to the fact that the class within which the husband's mother exercises her discretion consists of thirteen and not four.

The second respect in which I differ from the district judge is his assessment of whether this hope is properly classified as being within the foreseeable future.  Although I accept the proposition at p 6, para (a), "given good health of both mother and son the son is likely nevertheless to survive his mother", the district judge in my judgment paid insufficient attention to the fact that at that date the husband's mother was only 67 years of age and in good health.  Of course he is likely to survive, but that event may lie many years forward and applying the approach of Nourse LJ as it appears from the report in Michael v Michael, it seems to me that it would be wrong in principle to bring this hope of succession into the scale in this case in anything other than the most general way.  To bring it in as though it were a vested interest, likely to fall into possession within the foreseeable future, is in my judgment to exaggerate its significance unreasonably".

53. In the present case, with the Wife being one of the 3 children of Madam Y who is a widow, there is of course the prospect of her inheriting part of her mother's estate which may indeed be quite substantial.  Madam Y is however only 69 years old and in the absence of any evidence of her health to the contrary, it could be years before the Wife stands to inherit part of her estate provided she dies intestate.  It is however the Wife's argument that as her mother is a very traditional Chinese woman, she may decide to will her entire estate or most of it to her only son, leaving nothing or very little to the Wife.

54. I am not saying that this is likely to happen, and there is no evidence to indicate that Madam Y has or has not made any will, and if so she is free to change it anyway she wants in future, and even though I do not believe, given her present good relationship with her daughter, that she would not leave anything to the Wife, the prospect of what the Wife may inherit from her mother's estate in the foreseeable future is, in my judgment, simply too uncertain to be regarded in anything other than the most general way.

55. The facts of this case are, however, somewhat different from those cited in that here the Husband tries to use the Wife's prospect of future inheritance as part of his arguments against her claims for either a lump sum or a share of the matrimonial home rather than in support of his claims for ancillary relief against her.  The question therefore is, bearing in mind that the Wife may in future stand to inherit part of her mother's estate, which could be quite substantial given the size thereof, whether the Husband should now pay her a lump sum representing her share in what remains the only valuable asset of the parties.

56. Notwithstanding the Husband's criticisms of the Wife's various unreasonable conducts in his company at the later stage of their marriage and in particularly her alienation of the daughter from him, I find that she did make contributions to the family in particularly to his business during the marriage, which he readily acknowledged in his Affidavit of 4^th August 2005 in particularly in paragraphs 8 and 10.  There is also the unchallenged evidence of Ms Ip who unreservedly praised the Wife for her devotion and efforts in the running of the Husband's agency business throughout the marriage.  The fact that the business has deteriorated to its present state since her departure also speaks volume in her favour.

57. Furthermore, it is the Wife's submission that she gave up her own job with a better salary, pension and prospect to work in the Husband's companies during which she poured most of her income back on the family and the daughter's expenses.  She believes that with her contributions made to this marriage, she has earned her right to claim a half share of the former matrimonial home.

58. Although it is not quite clear from her written submission as to what exactly were her ancillary relief claims, as in her conclusion she only refers to her opposition to the Husband's claim which is merely a transfer of her 1 share in F Ltd which holds the former matrimonial home back to him.  It is however apparent in her evidence that the Wife does wish to seek a lump sum representing a half share in the former matrimonial home which she says she needs to support her daughter's university expenses, as she herself would be content with a nominal maintenance order of $1.00 per annum from the Husband.  Although she also claimed for a transfer or settlement of property order in respect of the former matrimonial home in her Financial Statement, she agreed at the trial that she would accept a lump sum in lieu.

59. The Lamma Island property is estimated by the Husband to have a market value of $2.6 million, but the Wife believes it is worth higher at $3 million.  In the absence of any agreement or formal valuation, I shall use the mid-point between the 2 figures at $2.8 million.  There are 2 outstanding mortgage or charge in the total sum of over $700,000, giving a net equity of about $2 million, hence a lump sum which the Wife has in mind being half of the net value at $1 million.

60. It is quite obvious from the evidence before the court that the Husband simply does not have the capital to pay that amount.  The Wife suggests selling the property.  To the Husband it is not an option as he clearly has a need for a roof over his head, which the Wife already has, albeit she claims to be unsecured but which I have already indicated my reservation earlier in this judgment.  At his age and health as well as his present financial situation, it is only fair and reasonable, in my view, that he should have the same security of a home for himself where he can work while he is still capable, and to retire in future.

61. Furthermore, and not less significant in my view, there is his financial obligation to his daughter to see her through university, for which he has given his undertaking to be wholly responsible.  While there is no evidence from him as to how much it would cost for the daughter's university education other than his preference for her to attend one in Australia of which she is a citizen, as he has not been able to have any contact with her the past 4 years and as the Wife has refused to provide any information or even indication of where the daughter is likely to attend, there is however no question that she will go on to university, not just because that is the wish and expectation of both of her parents, but also because she has been such an outstanding student in the secondary school that the only logical conclusion is that she will go on to tertiary education.

62. It is unfortunate that this matter was not explored more fully at the trial, in particularly as to the projected costs of the daughter's future university education, but according to the website of the Australian Government, the average costs for undergraduate program for international students fall between A$10,500 and A$14,000 per year, plus accommodation costs, living and travelling expenses, which could run up to A$20,000 per year at the minimum.  While this is for international students, and accepting that for the parties' daughter who is a citizen and hence her school fees would be somewhat lower, it could still cost at least A$15,000 or HK$85,500 per year, or HK$250,000 for a 3 years undergraduate program. Of course should she decide to go to university in UK or USA, the costs would no doubt be much higher.  As I have said, it is unfortunate that this important matter about the daughter's future education is unclear, for which the Wife must shoulder up the blame. 

63. The bulk of the present mortgage on the property is the result of the Husband obtaining a bank loan to pay for the daughter's school fees at Chinese International School accrued from the past several years up to her graduation next year, for which he has to repay by instalment of more than $6,000 per month until early 2013 when he would be close to 70, as he had repeatedly reminded the court throughout the trial.  To meet the daughter's future university expenses, the only means, according to the Husband, is to borrow again from the bank against the property, and hence it is essential for him to keep it.

64. To this the Wife would probably argue that by giving her a lump sum, she could similarly use it to finance the daughter's education, thereby serving the same purpose and releasing the Husband of his obligation to his daughter, at the same time recognising her contributions to the marriage.  I must admit that it is not an unattractive argument, except for the fact that the Husband would then be without his home where he has lived for the past 20 years and where he hopes to retire in, thereby depriving him of the security of a roof over his head, and with his share of the sale proceeds it would be difficult, if not impossible, for him to discharge his debts and liabilities and at the same time to purchase his own home which he can also use as his work place as well as storage for his photographic equipments and materials which he needs so as to continue to make a living to support himself. This proposal will simply not work given the Husband's present situation, nor is it fair when the Wife herself, I believe, already has her own housing needs secured. 

65. Having considered all the facts, evidence and circumstances of this case, I have come to the conclusion, a difficult conclusion I must admit, not to accede to the Wife's claim for a lump sum, not because I do not think she deserves it, but for all the reasons aforesaid, in particularly that I believe the Husband has a much greater need of the former matrimonial home, not only for himself but also to enable him to fulfil his obligation and undertaking to the daughter's future costs and expenses in university which are unknown but nevertheless substantial, plus the advantage the Wife has over him in terms of age, health and earning capacity, as well as the prospect of her possible future substantial inheritance from her mother's estate.  My order is therefore, upon the Husband's undertaking to be wholly responsible for the future education expenses of the daughter, as follows : -

1.   The Petitioner Husband shall upon the decree absolute pay a nominal sum of $1.00 per annum to the Respondent Wife.

2.   The Respondent shall upon the decree absolute transfer all her shares in F Ltd, S Limited and S Productions Limited to the Petitioner.

3.   The Respondent's claims for lump sum and transfer/settlement order be dismissed.

4.   There be no order as to costs including any costs reserved.  This is an order nisi to be made absolute at the expiration of 21 days.

5.   Lastly I make the section 18 declaration in respect of the arrangement for the child of the family.