YBH v. TYC

FCMC 1091 / 2015

[2018] HKFC 31

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1091 OF 2015

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J U D G M E N T
(Ancillary Relief)

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1.  I would refer the petitioner wife as the “Wife” and the respondent husband as the “Husband”.  This is the trial on the Wife’s application for ancillary relief. 

Background

2.  The Husband was born in 1950 and brought up in Hong Kong.  He was graduated from the University of Hong Kong in 1972 and obtained his MBA from the University of British Columbia in 1976.  Between 1976 and 1997, he worked at an international bank.  Between 1998 to 2006, he was the Managing Director of an international travel agency.  He was retired from work in September 2005.

3.  The Wife was a Malaysian Chinese born in 1961.  She obtained the Diploma in Office Administration from the University of Cardiff in 1980.  Between 1992 to 2000, she carried on a partnership business in travel and tourism in Singapore.

4.  The parties met in Singapore in 1999.  In June 2000, the Husband signed an agreement for the purchase of a flat (the “Colonnade”) in Tai Hang.  At that time, the Colonnade was a development under construction that was scheduled to be completed in May 2001.  The parties were married in July 2000 in Hong Kong.  Soon after their marriage, the Wife moved to live with the Husband in a flat (the “Pacific View”) in Tai Tam that was purchased by the Husband in 1992.  In early 2001, the parties moved to live in the Colonnade.  

5.  In 2002, the Wife closed her business in Singapore and set up a travel business in Hong Kong.  In 2004, she closed her business in Hong Kong.  In about 2005, she invested in her cousin’s restaurant in Penang.  Between September 2006 to February 2007, she worked for a start-up sales office of jewel products in Hong Kong. 

6.  In July 2007, the parties had an altercation that was reported to the police.  Both parties were detained in police station overnight and sent to the Magistrates Court.  Both were charged and fined. 

7.  In about November 2007, the Wife became the executive producer of a digital audio-visual production company.  Between 2006 to 2008, the Wife was the Chairperson of the Malaysia Association of Hong Kong. 

8.  In July 2008, the parties were separated and the Wife moved to the guest room.

9.  In January 2009, she stepped down as Chairperson but remained an executive committee member from 2009 to 2010.  Between 2011 and 2013, she was the Chairperson of the Malaysia Association of Hong Kong again.

10.  In January 2015, the Wife petitioned for divorce on the ground of the parties having lived apart with each other for a continuous period of at least 2 years.  There are no children of the family.  The petition went on uncontested.  Decree Nisi was granted in September 2015.

11.  The Wife is 56 years old. She is still occupying the guestroom in the Colonnade.

12.  The Husband is 67 years old. He has been retired since September 2005.

The Wife’s case and her open proposal

13.  The gist of the Wife’s case is that, even with a generous assessment of the parties’ needs, the family assets available for distribution is more than enough to meet the parties’ needs and accordingly this is a sharing case.  Assuming that the parties’ marriage that lasted for 8 years is not a short marriage and this is a classic case that the Husband made the financial contributions and she made non-financial ones, she contends that there should be no departure from equal division of the family assets.  That is to say, both the Pacific View and the Colonnade are family assets and should be equally shared between the parties.

14.  She proposes that, to achieve clean break, the Husband will pay a lump sum payment of HK$26,600,794.60 to her, upon which she will transfer all of her title and interests of and in the Colonnade to him, on the premises that the Wife and the Husband will share the parties’ assets 40/60 respectively.

The Husband’s case and his open proposal

15.  The gist of the Husband’s case is that this is a needs case.  The Husband agrees with the Wife that there should be a clean break.  He contends that in the longer term the Wife will live in Malaysia where the living costs are much lower than those in Hong Kong.  He contends that the Wife needs not more than $30,000 per month regardless of whether she will be in Hong Kong or Malaysia, and he proposes to pay her a lump sum of HK$5.57 million by way of 2 instalments while she is keeping her own assets of not less than HK$2,253,475.  The Husband suggests that, being aged 67, retired and with his limited income generating ability, he has been running on a negative cash flow since 2005.  He intends to make the lump sum payment of HK$5.57 million with the proceeds of the sale of the Pacific View.  In the unlikely event that the Court accepts that this is a sharing case instead of a needs case, he proposes the Court to exclude a considerable percentage of the value of the Pacific View and the Colonnade and/ or ring fence some of the assets from the principle of sharing. 

The Law

16.  The jurisdiction of the court in granting financial relief for a party is governed by sections 4, 6 and 6A of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) which provides,

“4. Financial provision for party to a marriage in cases of divorce, etc.

(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of section 25(1), make any one or more of the following orders, that is to say-

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

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

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

(2)  Without prejudice to the generality of subsection (1)(c), an order under this section that a party to a marriage shall pay a lump sum to the other party-

(a)  may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before making an application for an order under this section;

(b)  may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments to be secured to the satisfaction of the court.

6. Orders for transfer and settlement of property and for variation of settlements in cases of divorce, etc.

(1)  On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation, or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of sections 10 and 25(1), make any one or more of the following orders, that is to say- (Amended 69 of 1997 s. 23)

(a)  an order that a party to the marriage shall transfer to the other party, to any child of the family or to such person as may be specified in the order for the benefit of such a child such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion;

(b)  an order that a settlement of such property as may be so specified, being property to which a party to the marriage is so entitled, be made to the satisfaction of the court for the benefit of the other party to the marriage and of the children of the family or either or any of them;

(c)  an order varying for the benefit of the parties to the marriage and of the children of the family or either or any of them any ante-nuptial or post-nuptial settlement (including such a settlement made by will or codicil) made on the parties to the marriage;

(d)  an order extinguishing or reducing the interests of either of the parties to the marriage under any such settlement;

(e)  an order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion, and for the use of the proceeds of such sale,

and the court may make an order under paragraph (c) notwithstanding that there are no children of the family.

(2)  Subsections (2) to (6) of section 6A apply in relation to orders under subsection (1)(e) as they apply in relation to orders under subsection (1) of that section.

6A.  Orders for sale of property

(1)  Where the court makes an order under section 4, 5 or 6 then, on making that order or at any time after the making of that order, the court may make a further order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion.

(2)  Any order made under subsection (1) may contain such consequential or supplementary provisions as the court thinks fit and, without affecting the generality of the preceding words of this provision, may include-

(a)  provision requiring the making of a payment out of the proceeds of sale of the property to which the order relates; and

(b) provision requiring any such property to be offered for sale to a person, or class of persons, specified in the order.

(3)  Where an order is made under subsection (1), the court may direct that the order, or such provision of the order as the court may specify, shall not take effect until the occurrence of an event specified by the court or the expiration of a period so specified.

(4)  Where an order under subsection (1) contains a provision requiring the proceeds of sale of the property to which the order relates to be used to secure periodical payments to a party to the marriage, the order shall cease to have effect on the death or re-marriage of that person.

(5)  Where a party to a marriage has a beneficial interest in any property, or in the proceeds of sale of any property, and some other person who is not a party to the marriage also has a beneficial interest in that property or in those proceeds of sale, then, before deciding whether to make an order under this section in relation to that property, it shall be the duty of the court to give that other person an opportunity to make representations with respect to the order; and any representations made by that other person shall be included among the circumstances to which the court is required to have regard under section 7(1).

(6)  An order shall not be made under subsection (1) in relation to any property where the purported assignment or other alienation of the property together with any agreement so to assign or otherwise alienate the property pursuant to the order would be void by virtue of section 17B of the Housing Ordinance (Cap 283).”

17.  Section 7(1) of the Matrimonial Proceedings and Property Ordinance (the “MPPO”), Cap 192, sets out the governing principles in relation to the distribution of assets upon dissolution of the marriage.  The Court will have regard to the conduct of the parties and all the circumstances of the case.  Section 7 provides as follows,

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

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

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

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

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

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

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

(g)    in the case of proceedings for divorce 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.  In LKW v DD, (2010) 13 HKCFAR 537, the Court of Final Appeal set out the steps to be taken by the courts in undertaking a section 7 exercise.  In brief, they are:

(i) The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing (paragraphs 71 to 73 of the Judgment);

(ii)    The assessment of the parties’ financial needs.  If the total resources are not enough to meet the parties’ needs, the s 7 exercise should stop here and there is no room to apply any sharing principle (paragraphs 74 to 79 of the Judgment);

(iii)  If surplus assets would remain after the parties’ needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division as part of that principle.  This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division (paragraphs 80 to 82 of the Judgment);

(iv)   In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of s 7 and the implicit objective of a fair distribution of the assets.  Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations (paragraphs 83 to 130 of the Judgment); and

(v)    The weight to be given to each of the factors is a matter of discretion for the court (paragraph 131 of the Judgment).

Issues

19.  In the present case, the main issues to be considered are likely to include: -

(a) Should any of the assets be regarded as non-matrimonial property?

(b) How should the Pacific View and the Colonnade be regarded?

(c) Given the above, what is the computation of assets available for distribution?

(d) What is the earning capacity of the parties? 

(e) What are the needs of the parties?  What order should be made to take care of the parties’ needs?

(f) How should the assets be divided bearing in mind the principles identified in the Court of Final Appeal’s decision in LKW v DD?

My View

Identification of Assets

20. The Wife has interests in 3 properties in Penang, including 25% interest in a house that the Wife purchased with her sisters in 1994, and two apartments that she purchased in her sole name in 2004.  There is 1 mortgage presently outstanding on the said apartments. The Wife accepts that her properties in Malaysia should be included in the computation of the assets available for distribution.

21.  The great bulk of the parties’ assets comprises of the Pacific View, the Colonnade and the Husband’s stock portfolio. 

22.  The Pacific View 1,477 sq. ft. in size is a luxurious apartment situated at Tai Tam and was purchased by the Husband for HK$6,480,000 with a staff loan in June 1992.  The loan was fully paid in February 1998.  He took out a loan for HK$1.5 million on the Pacific View in February 2012.  He took out mortgage on the Pacific View for HK$5 million in January 2014.  Part of the loan was used to pay off the outstanding of the loan that he took out in February 2012.   He obtained mortgage on the Pacific View for HK$10 million in January 2016.  HK$4.426 million of the same was used to pay the outstanding of the loan that he took out in January 2014.  He invested the balance of HK$5.56 million in stocks and i-bond.  At present, he has two investment accounts, totally valued at HK$6,223,857.  He obtained the funds for both investment accounts from the re-mortgage of the Pacific View in 2016.

23.  The Colonnade 1,805 sq. ft. in size is a luxurious flat situated at Tai Hang and was purchased by the Husband, via his previously dormant company (“Postal Power”) for HK$18,651,000 in May 2000.  At the time of purchase, Postal Power was owned by the Husband and his brother with a share each in the company.  The Husband paid HK$7,651,000 of the purchase price, and the remaining purchase price was paid with a mortgage loan.  His brother transferred his 1 share to the Wife in April 2006.  The mortgage loan was fully paid in May 2006.

24.  It is the Husband’s case the Pacific View (valued at HK$25,600,000 less outstanding mortgage of HK$9,165,038 = HK$16,434,962) should be excluded from the matrimonial assets for sharing, as it is pre-marital asset which was purchased solely from his resources prior to the marriage and not in contemplation of the marriage.  It is also his case that in calculating any final ancillary award to the Wife, the Court should only take into account 48% of the value of the Colonnade (i.e. HK$49,900,000 X 48%) to acknowledge his sole financial contribution in the acquisition of the asset, lack of contribution from the Wife and the shortness of the marriage.

The law on non-matrimonial property

25.  In LKW v DD Riberio PJ stated that the source of an asset may provide a reason for excluding it from the sharing principle on the basis that it was not an item of matrimonial property.

“E.5.a Source of assets as a material factor

[87] The source of an asset may provide a reason for excluding it from the sharing principle on the basis that it is not an item of matrimonial property. Of course, in many cases, no question of any distinction between matrimonial and non-matrimonial property will arise. But where there are assets which may be capable of being so differentiated, section 7(1)(a) implicitly requires the Court to consider whether any part of such assets ought in fairness to be excluded from the sharing principle. Differentiation might also be seen as a requirement of section 7(1)(f) if the source of a particular asset suggests that it is an independent and unmatched contribution by one of the parties…

[89] The existing case-law identifies two classes of assets as possible candidates for exclusion on the basis of source. The first involves property acquired during the marriage by one of the parties from a source wholly external to the marriage, such as by gift or inheritance. The second involves assets derived from a business or an investment conducted solely by one party (sometimes called “unilateral assets”).

26.  The Court of Appeal in PW v PPTW (CACV 224/2013) (unreported, judgment dated 12 March 2015) stated :

“46. The starting point must be the guidance given in LKW v DD as to how the broad discretion in section 7 of the MPPO should be approached. That guidance does not purport to be comprehensive, as financial provision applications are highly fact specific and the judges dealing with them must ultimately be guided by section 7 and the implicit aim of arriving at a fair financial outcome. (per Kwan JA)”

27.  The Court went on to state that:

“71. …But we do not think that it should impact on the resolution of this appeal whether the court should apply the telescoped approach or the two-step approach, as the same relevant factors should be considered in deciding whether and how to apply the sharing principle whichever approach is adopted.

72. Thus, in applying the telescoped approach regarding non-matrimonial property, and in deciding to what extent equal division should be departed from where needs have been satisfied, according to the guidance given by the courts relevant factors may include: the duration of the marriage; the nature and value of the non-matrimonial property; the way the parties organized their financial affairs; their standard of living and the extent to which it has been afforded or enhanced by drawing on the non-matrimonial assets; the way the non-matrimonial property was preserved, enhanced or depleted during the marriage.

73 Similarly, in applying the two-step approach, in deciding whether it is fair and just that the existence of non-matrimonial property should be reflected, as stated in N v F at §14, this “depends on questions of duration and mingling”. And if it does decide that reflection is fair and just, in considering how much of the pre-marital property should be excluded, the court would be looking at factors such as the historic sum, the extent of mingling, springboard effect and passive economic growth, not dissimilar to some of the relevant factors considered in the telescoped approach. In any event, the fairness of the award in applying the two-step approach is to be tested by the “overall percentage technique””

28.  In ATV then known as MAM v VNT (CACV 234/2014) (unreported, judgment dated 3 July 2015), the Court of Appeal stated :

“6.6. In PW v PPTW (CACV 224/2013) (judgement dated 12 March 2015) this Court referred to the two different approaches of the English Courts concerning the sharing of non-matrimonial property. Under the first approach, the Court simply adjusted the percentage from 50% to take into account non-matrimonial property. This is identified in cases such as Charman v Charman (No. 4) [2007] 1 FLR 1246. The second approach shown in cases such as N v F (Financial Orders: Pre-Acquired Wealth) [2011] 2 FLR 533 is to identify the scale of the non-matrimonial property to be excluded, leaving the matrimonial property alone to be divided in accordance with the equal sharing principle. This would require the Court to consider whether the existence of pre-marital property should be reflected at all. This depends on the question of duration and mingling. If the Court decides that the fraction is fair and just, the Court should then decide how much of the pre-marital property should be excluded.

…

6.8 This Court, however, refrained from deciding which approach is to be preferred. Apart from stating that the first approach is what the Court of Final Appeal had decided in WLK and restated in TCWF v LKKS & Ors [2014] 1 HKLRD 896, this Court said :

‘… Since the discretion is unfettered and the factual matrix of each case would be different, the approach of Mostyn J [in N v F] should only be regarded as an illustration of how the discretion could be exercised as opposed to laying down a formula which should be followed mechanically in every case. There may well be factors which are not relevant in the previous cases which have to be considered on the facts and circumstances of another case. [paragraph 70]’

6.9 Personally I do not find the argument in the English cases about which is the preferred approach helpful.  More importantly the Court of Final Appeal has already given guidelines on how non-matrimonial property should be dealt with under the sharing principle in a short marriage which I will deal with in the following paragraphs.  Hence starting point of excluding the matrimonial property from consideration will be contrary to the Court of Final Appeal judgment which this Court must follow…”

29.  In WLK v TMC (2013) 13 HKCFAR Riberio PJ stated at [84]:

“… The better approach is to regard the sharing principle as always applicable when there are assets surplus to needs but accepting that, as part and parcel of that principle, an equal division should indeed be departed from if good reason exists for so doing.  The shortness of a marriage, the absence of marital acquest and similar matters can all be considered as possible reasons for such a departure.  The circumstances of a particular case may lead the court to decide, for example, that equal division should be departed from to the extent of restricting the award to a sum sufficient to meet one of the parties’ needs.  But that is not to say that the sharing principle has been “displaced”.”

30.  I propose to adopt the approach as expressed by Riberio PJ in WLK v TMC in the above when dealing with the Wife’s claim for ancillary relief. 

The Colonnade

31.  Despite the Husband’s arguments to the contrary, I accept the Wife’s contention that the close proximity in time of the marriage to the purchase and her first visit to the Colonnade supports her assertion that at the material time the Colonnade was intended to be a matrimonial home.  I reject the Husband’s allegation that the purchase of the Colonnade in 2000 “was a mere coincidence”, and that he “had an open mind… as to whether [he] would sell it, rent it or live in it” without hesitation.  I also take note that the Colonnade is beneficially owned by the parties in equal shares through their respective 50% shareholding in Postal Power. With this in mind I accept that the 100% of the value of Colonnade must be included in the computation of assets available for distribution.

The Pacific View

32.  It is the Husband’s case that it is unfair if the Wife will have a share from the value of Pacific View that he purchased and fully paid so many years prior to the meeting of the parties. The Wife argues that “source” is not the only determinative factor, and the Court is required to consider other relevant factors such as the question of duration and mingling: see ATV then known as MAM v VNT (at §6.6) in the above.  Despite that the Husband remains strongly of the view that the Wife should have no claim against the Pacific View and the fact that the Wife did not make financial contribution to the purchase of the Pacific View might be a reason to depart from the yardstick of equality, in the meantime I regard that prima facie the property must be included in the computation of assets available for distribution.   

Given the above what is the computation of assets available for distribution?

33.  The parties filed a Joint Agreed Schedule of Assets and Liabilities on 17 November 2017 which has now been updated to include the updated values on the two Hong Kong properties as follows :

			HK$
A.	Joint Property
	The Colonnade		49,900,000
B.	The Wife’s Assets less Liabilities
	(1)	The Wife’s Assets
		25% interests in a house	299,000
		2 apartments	826,973
		Cash in bank	670,830
		Shareholdings in YKG	(360,548)
		Stock	134,124
		Cash value of insurance policies	885,235
		Monies owed by YKG	590,128
		Cash value of club membership	45,760
		Personal items	222,000
		MPF	36,997 3,350,498
	(2)	The Wife’s Liabilities
		Personal loans & bank loans	(1,097,023)
			2,253,475
C.	The Husband’s Assets less Liabilities
	(1)	The Husband’s Assets
		The Pacific View	16,434,962
		(Valued at HK$25,600,000 less mortgage HK9,165,038)
		Cash in bank	30,786
		Shareholdings	100,000
		Stocks	5,167,982
		Bonds	1,055,875
		Manulife policy	91,249
		Personal items	10,000 22,710,854
	(2)	Credit card liabilities	(208,655)
			22,682,199
D.	Total Net Assets		74,835,674

34.  The above-mentioned YKG is a Malaysia company set up by the Wife’s brother in 2010.  She has been a company director and shareholder of YKG since 2012.  Despite that the Husband previously queried the amount that the Wife claims she has lent to YKG and what has been repaid to her and the disposal by the Wife of her Singapore CPF and Malaysian pension, he now accepts the Wife’s proposed book valuation of YKG and, through legal representatives, he has confirmed that he agrees to the contents of the above updated Joint Agreed Schedule of Assets and Liabilities.

35.  The Husband accepts that he has provided financial support to his new girlfriend and his sister’s family in New Zealand since February 2008 but he denies that he supported the Wife and the girlfriend at the same time.  Between February 2010 to May 2015, the Husband gave totally about HK$900,000 to HK$1,000,000 to his girlfriend.  Between February 2008 to September 2014, he remitted totally HK$828,637 to his sister in New Zealand.  The Wife has not asked the Court to add back the sums given by the Husband to his girlfriend and his sister’s family.  Through legal representatives, the Wife has also confirmed that she agreed to the contents of the above updated Joint Agreed Schedule of Assets and Liabilities.

36.  As per the updated Joint Agreed Schedule of Assets and liabilities, the total net asset is HK$74,835,674.

Section 7 considerations

The Wife’s income and earning capacity

37.  The Wife does not work and has been living off the Husband since their marriage.  The Husband contends that the Wife is able to work and to forge an independent life for herself, while the Wife is contesting that she does not presently work and has no income.  It is trite that the court will look at a spouse’s ability and qualification to assess his or her earning capacity and will not confine it to current earnings.  I take the view that the Wife, aged 56, is fit for work.  It is beyond dispute that she had an impressive commercial background.  She has no responsibility for caring for a child.  I take the view that there is no obvious reason that she should remain a housewife.  There is also evidence showing that she has had business connections in London, Paris, Milan, Johannesburg, Penang, Singapore and Hong Kong, that she has/ had investment in a restaurant in Penang, that she has been a company director and shareholder of YKG since 2012, and that despite her denial of having any role in the management of YKG she has received payments of petty cash, salaries and director’s allowance from YKG.  The above all suggest that she will be able to return to the workforce within a short period of time.  I expect the Wife to work again, even though with the evidence before me I cannot put an accurate figure on her income in the future.

38.  I also accept that the Wife can take steps to rent out one of her 2 apartments in Malaysia, which will provide her with a modest rental income, despite that there is no evidence that she currently receives any rental income.

The Husband’s income and earning capacity

39.  It is not in dispute that the Husband has been retired since September 2005.  His last salary was HK$178,000 per month excluding bonus.  He used to receive rental income from the Pacific View in the range of HK$50,000 per month until the last lease ended in June 2017, but the Pacific View is now vacant and the Husband has been taking steps to sell it.  He earns dividends of about HK$110,000 per year.  He is making profits from his stock portfolio.  The Husband’s receipt from his stock accounts is HK$608,000 for 2014, HK$492,000 for 2015, HK$268,800 for 2016 and HK$808,200 from January to May 2017.  With the unpredictable probability of a stock going up versus that of it going down, again I cannot put an accurate figure on his income in the future. 

The Wife’s financial needs

40.  During the hearing, Scott schedules were helpfully produced summarizing the contentions of the parties. 

41.  The Wife states that her monthly expenses are HK$70,465. The Husband’s Scott schedule on the Wife’s monthly expenses is as follows:

	The Wife	The Husband’s proposed figure
		Hong Kong	Malaysia	Total - HK / Malaysia
General
Mortgage instalments	HK$5,056		MYR903 (HK$1,662)	HK$1,662
Food	HK$2,000	Nil	MYR1,083 (HK$2,000)	HK$2,000
Personal
Meals out of home	HK$13,000	HK$1,000	MYR544 (HK$1,000)	HK$2,000
Transport	HK$4,000	HK$1,000	MYR1,155 (HK$2,125)	HK$3,125
Clothing / Shoes	HK$10,000	-	-	HK$4,000
Personal grooming	HK$3,000	-	-	HK$3,000
Entertainment / presents	HK$4,000	-	-	HK$3,000
Holidays	HK$14,000	-	-	HK$5,000
Medical / Dental	HK$4,000	-	-	HK$1,200
Insurance Premia	HK$6,409	-	MYR1,850 (HK$3,404)	Nil
Dependent family members	HK$5,000	-	MYR1,443 (HK$2,655)	HK$2,655
	HK$70,465			HK$27,642

42.  Before embarking on a discussion on the parties’ contentions about the Wife’s expenses, I propose to firstly deal with the following two matters: - (1) the parties’ standard of living during the marriage; and (2) whether the Wife lives/ will live in Malaysia and/or Hong Kong after the divorce.

43.  In assessing financial needs, the Court will have regard to the parties’ age, health and standard of living during the marriage.  The Wife and the Husband is aged 57 and 67 respectively.  It is not seriously disputed that they are not suffering from serious illness.  They however take issue on the accustomed standard of living of the parties.  The Wife contends that the parties have lived a high standard of living.  The Husband’s case is that the standard of living during the marriage was far from being “sensibly high”.  It is accepted that the parties lived in an approximately 1,805 sq. ft. spacious upmarket apartment, hired a live-in maid, drove a BMW 5 series vehicle, and they were members of prestigious and renowned private clubs and associations and took several overseas golf and holiday travels every year during the marriage.  Given all the above, after having carefully considered, I accept that they lived a comfortable standard of living during the marriage.

44.  According to the Wife, she has left Malaysia for 25 years and has no intention of moving back to Malaysia.  Her monthly expenses living in Hong Kong are HK$70,465 that is exclusive of her future housing costs in Hong Kong when she moves out of the Colonnade.  The Husband takes notice that, after they were separated, the Wife has spent the bulk of the time away from Hong Kong, and he contends that, once these proceedings concludes, the Wife’s ties to Hong Kong will further diminish and she will move back to live in Penang in full time.  As part of the Husband’s needs case, he argues that the Wife’s costs of living in Malaysia is lower than those in Hong Kong.  On this footing, the Husband seeks to argue that the Wife’s needs are lower than what she states.  The Wife asserts that she has not moved back and has no intention of moving back to Malaysia. 

45.  It is accepted by both parties that the Wife was socially very active in Hong Kong.  She was the Chairperson of the Hong Kong Malaysia Association for 7 years.  She also involved in church activities, charities, social work and other business in Hong Kong.  It is accepted that the Wife has spent a lot of time out of Hong Kong.  From 2000, her time in Hong Kong was probably about 300 days per year based on her movement record for 2007.  From 2000 to 2005, she always travelled to Malaysia on Chinese New Year and on her deceased mother’s birthday in December to visit her close relatives.  Apart from that, she travelled for leisure and for charitable humanitarian work from time to time.  As such, she is a person who travel frequently for various reasons but be that as it may I accept that she treated Hong Kong as her place of residence during the marriage.

46.  I do not lose sight that the Wife was born in Malaysia and retains her Malaysian passport.  She has 11 brothers and sisters in Malaysia and maintains extremely close ties and relationship with them.   During the last 15 years, she spent Christmas, New Year and Chinese New Year with her family in Malaysia.  During non-festive seasons, she would travel to Malaysia frequently.  She owns 25% interest in a house and solely 2 apartments in Penang.  She has invested in her cousin’s restaurant and is the director and shareholder of YKG.  She keeps her Malaysia home town golf membership.  On the contrary, the Wife does not own landed property or any interest in business in Hong Kong, nor does she have any club membership here.  It is also worthy of noting that, since the parties were separated in 2008, the Wife’s numbers of days in Hong Kong (see below table) have been remarkably reduced:

2008 – 289 days (79%);	2009 – 210 (58%);	2010 – 266 (73%);
2011 – 290 (79%);	2012 – 247 (68%);	2013 – 230 (63%);
2014 – 154 (42%);	2015 – 144 (39%);	2016 -148 (41%);
Jan to May 2017 – 34 (22.5%)

47.  In June 2014, the Wife’s eldest nephew was diagnosed to have suffered from leukaemia and lymphoma cancers and had to receive chemotherapy treatment.  In October 2014, her 5^th brother fell sick and was diagnosed to have suffered from acute pulmonary lung disease and needed to go to hospital frequently.  His nephew had a bone marrow transplant in January 2015.  Her 5^th brother passed away in September 2016.  During their treatments, she paid them frequent visits to take care of them.  She explained that the above is why she travelled to Malaysia frequently between 2014 to 2016.  She nonetheless did not afford any explanation as to why she has spent even less time in Hong Kong since the pass away of her 5^th brother. 

48.  Despite that the Wife exerted herself to show that she regards Hong Kong as her home, after having carefully considered, I accept that, after the divorce, her ties with Hong Kong will be dissipated and more likely than not she will live with her family and to take care of her family and business in Malaysia in full time.  In Malaysia, she can live in one of her 2 apartments.

Items in dispute

Mortgage instalments

49.  The Wife now accepts that her monthly loan repayment is MYR903 (HK$1,662).

Utilities, Management fees

50.  When the Wife lives in her apartment in Malaysia, she will have to pay utilities, etc.  With the evidence before me, I cannot put an accurate figure on her expenses under this item.  I can only approach the matter on a broad brush basis.  I propose the sum of HK$2,000 per month.

Meals out of home

51.  I accept that the Wife is a socially very active woman.  She will have plenty meals out of home.  I propose the sum of HK$10,000 per month.

Transport

52.  The difference between the parties under this item is only HK$4,000 - 3,125 = HK$875.  I propose the sum of HK$3,500 per month.

Clothing/ Shoes

53.  The claim is for HK$10,000 per month.  On the face of it, I accept that it seems a little on the high side.  I prefer the Husband’s figure of HK$4,000 per month.

Entertainment/Presents

54.  The difference between the parties under this item is only HK$4,000 - 3,000 = HK$1,000.  I accept that the Wife probably goes to many social events and that as is customary it is expected that she buys a present and card.  I accept her claim of $4,000 per month.

Holidays

55.  The claim is for HK$14,000 per month.  The Husband suggests HK$5,000 per month.  The parties took several holiday travels every year but mostly were short haul trips.  I propose the sum of HK$7,000 per month.

Medical/ Dental

56.  The Wife has not provided any receipts to support her claim for HK$4,000 per month.  When the Husband was working, his employer provided medical benefits to the parties.  The Wife does not have medical insurance.  I accept that she needs provisions for medical/ dental expenses.  I propose the sum of HK$2,000 per month.

Insurance premia

57.  The premium of the Wife’s 3 policies in Singapore is SGD1,671.25, 2,862.5 and 1,105.5 per year respectively, and the premium of 2 policies in Malaysia is MYR3,469.96 and 3,859.82 per year respectively. According to the Husband’s calculation, the total payment is only HK$3,404 per month.  The Wife’s claim is for HK$6,409.  She explained that she took into account her travel insurance, golf insurance, etc. for her claim.  Taking an overview, I propose HK$4,500 per month.

Dependent family members

58.  The Wife pays two of her sisters and her god daughter MYR1,000, MYR1,000 and HK$1,000 per month.  Such payments are voluntary in nature and are made out of her love and concern for them, which may not be necessarily shared by the Husband.  I shall disregard the said payments for the purpose of the Wife’s claim for ancillary relief.

59.  Accordingly, I find that the Wife’s monthly expenses are HK$43,662.

60.  Despite that I have found in the above that the Wife has the ability to work, I cannot make any credible estimate as to how much she will earn in the future.  The Court of Final Appeal has stated in LKW v DD at 564 to 565 that the parties’ needs should be generously interpreted.  So, I shall ignore her future income in my assessment of her needs.  No Duxbury calculation is made available.  Doing a simple calculation, taking that the Wife will live to about 90 years old, I assume that she needs HK$43,662 X 12 X (90 – 56) = HK$17,814,096 in the future.

The Husband’s financial needs

61.  The gist of the Wife’s contentions on the stated expenses have been set out in the Wife’s Scott Schedule of the Husband’s monthly expenses as follows:

	The Husband	The Wife’s proposed figure
General
Mortgage	HK$68,550	Nil
Utilities	HK$7,000	HK$3,000
Management Fees	HK$15,450	No objection
Food	HK$4,000	No objection
Household expenses	HK$4,000	HK$3,000
Car expenses	HK$10,000	HK$2,000
Insurance premia	HK$1,000	HK$201.25
Domestic helper	HK$6,000	HK$4,500
Real estate tax and government rent	HK$7,838	No objection
	HK$123,838	HK$39,989.25
Personal
Meals out of home	HK$4,000	No objection
Transportation	HK$1,000	No objection
Clothing/shoes	HK$2,000	No objection
Personal grooming	HK$1,000	No objection
Entertainment/ presents	HK$3,000	HK$1,000
Holiday	HK$3,000	No objection
Medical/dental	HK$6,000	HK$2,000
Dependent family members	HK$5,000
Bank instalment loan repayment	HK$26,190	HK$0
	HK$51,390	HK$19,000
Total
	HK$175,228	HK$58,989.25

Items in dispute

Mortgage

62.  In view of that the Husband has placed the Pacific View on the market for sale since the last lease ended in June 2017, I shall disregard the monthly mortgage repayment of HK$68,550 for the calculation of his future expenses.

Utilities

63.  With the evidence before me, I cannot put an accurate figure on his expenses under this item and I can only approach the matter on a broad brush basis.  I propose the sum of HK$3,500 per month.

Household expenses

64.  The difference between the parties under this item is only HK$4,000 - 3,000 = HK$1,000.  I propose the sum of HK$3,500 per month.

Car expenses

65.  The Husband was always driving.  He has provided the particulars of his expenses.  I accept his figure of HK$10,000 per month.

Insurance premium

66.  The claim is for HK$1,000 per month, but the documentary evidence shows that the premium of the Husband’s 1 life policy is only HK$201.25 per month.  I accept the sum of HK$201.25 per month.

Domestic helper

67.  I accept that the Husband may take into account the liability for long term service payment.  I accept his figure of HK$6,000 per month.

Entertainment/Presents

68.  The difference between the parties under this item is HK$3,000 - 1,000 = HK$2,000.  I have allowed HK$4,000 per month under the same item to the Wife.  I accept the Husband’s claim for $3,000 per month.

Medical/ Dental

69.  The Husband has not provided any receipts to support his claim for HK$6,000 per month.  I have allowed HK$2,000 per month under the same item to the Wife.  I propose the same amount of HK$2,000 per month.

Dependent family members

70.  For the same reason that I have stated in the above paragraph 58, I shall disregard the Husband’s payments under this item for the present purpose.

Bank instalment loan

71.  The said bank instalment loan has already been fully paid in September 2017.

72.  Given my view that the Husband might be going to sell the Pacific View as well as the Colonnade (see paragraph 87 below), I shall take away the Husband’s stated monthly expenses of management fees of HK$15,450 and real estate tax and government rent of HK$7,838 from his future monthly expenses, despite that as current expenses they are accepted by the Wife.  At the same time, I shall add the Husband’s future housing costs into his monthly expenses.  With the evidence before me, I cannot put an accurate figure on this item and I can only approach the matter on a broad brush basis. I propose the sum of HK$30,000 per month.

73.  Accordingly, I find that the Husband’s monthly expenses are HK$73,201.25.

74.  The Husband is making profits from his stock portfolio.  Yet he may experience losses.  Coupling with my treatment to the Wife’s future income in the assessment of her needs, I consider that it is not unfair to disregard the profits and losses that he may make with his stock portfolio altogether for the present purpose.  Doing a simple calculation, taking that he earns dividends of about HK$10,000 per month, and that he will live to about 90 years old, I assume that he needs HK$(73,201.25 – $10,000) X 12 X (90 – 67) = HK$17,443,545 in the future.

The sharing principle and departure from equal division

75.  I take notice that the assets available to distribution is enough to meet the parties’ respective needs.  With that said I agree with the Wife that it would be appropriate to approach this case on the sharing principle. The next step will be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division as part of that principle.  This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division.   

76.  The Wife proposes that she receives a lump sum payment of HK$26,600,794.60, while she is keeping her assets.  This represents a 40% share of the assets available for distribution. The Husband proposes to pay a lump sum payment of HK$5.75 million to the Wife, while she is keeping her assets.  The Husband’s offer represents a 10.69% share of the assets available for distribution. 

77.  About the question of whether there are good reasons exist for departing from equal division, applying the principle laid down by LKW v DD, the answer is to be found in the terms of section 7(1) and the implicit objective of a fair distribution of the assets.

Standard of living enjoyed by the family before the breakdown of the marriage

78.  I have accepted in the above that the parties lived a comfortable standard of living during the marriage.

The age of each party and the duration of the marriage

79.  The Wife is now 56 years old and the Husband is about 10 years older.  I accept that the period after the parties were separated should not be counted towards the duration of the marriage.  The parties were married for 8 years and they have been separated for approximately 9 years.  This is a medium length marriage of some 8 years. There are no children of the family.

Physical or mental disability of either of the parties

80.  This is not in issue.

Contributions to the welfare of the family

81.  I reject the Husband’s contention that the Wife has only negligible contributions both financially and otherwise to the welfare of the family for the following reasons.  The Wife worked for at least half the time of the marriage.  It is accepted that she spent a lot of time with her family in Malaysia and she was socially very active.  As busy as she was, there is credible evidence showing that time was set aside to look after the Husband such as she cooked for him, that she worked at the household duties as for example during the period from July to December 2000 when the parties were living in Tai Tam and they did not have live-in domestic helper she took care of the housework with the help of a part-time cleaner, and to befriend with the Husband’s family.  The instance of the Wife’s discovery of the Husband’s tumour is another fine example showing that she was caring for him.  I agree with the Wife the fact that she went through two failed attempts of IVF demonstrates her role as home maker in the marriage.  While the IVFs were the Wife’s idea, the Husband was going along with it and he regretted that they were not successful.  I believe that it was the parties’ common wish to have child.  The first 30 IVF injections started in or about October 2004.  In early 2005, she was pregnant but this was miscarried after 8 weeks.  She tried for a second time from October to December 2005 with 30 more IVF injections.  On the other hand, the Husband made valuable financial contribution to the family.  Broadly speaking, financial and non-financial contributions should not receive different treatment.  For the avoidance of doubt I accept that each party has made valid contribution to the welfare of the family.  I do not accept that either party has made a greater contribution than the other.

The value to either of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring

82.  The Wife seeks to put up compensation as a material factor.  The Wife was running a travel business in Singapore when the parties were married in 2000.  After the marriage, she continued carrying on with her business until 2002.  Following the close of her business in Singapore in 2002, the Husband funded the setting up of her travel business in Hong Kong.  The Hong Kong business was closed down two years later because of the SARS epidemic and the unfortunate event that one partner committed suicide.  In 2005, she invested in her cousin’s restaurant in Penang.  She briefly worked for 6 months between late 2006 and early 2007 in Hong Kong.  In November 2006, when the Wife was working, having learnt about a job opportunity through a head-hunter that he personally knew, the Husband voluntarily ventured to provide her resume to the head-hunter.  In about November 2007, she was the executive producer of a digital audio-visual production company.  All the above suggest that the Husband has been very supportive to her career ambition.  As such, I do not accept that her marriage to the Husband has thwarted her career ambition.  I reject as having no foundation at all the Wife’s suggestion that she has suffered relationship-generated disadvantage.   

How should the assets be divided bearing in mind the principles identified in the Court of Final Appeal’s decision in LKW v DD?

83.  The Husband is currently 67 years old and the Wife is currently 56 years old.  The Husband was born and raised in Hong Kong.  I have indicated that the Wife needs HK$17,814,096 and the Husband needs HK$17,443,545 in the future.  I take notice that the future financial needs of the parties are roughly in the same ballpark. 

84.  The Wife disagreed that the Husband paid HK$2,842,890 to her since the parties’ separation in the past.  She now sensibly accepts that H paid the said sum of HK$2,842,890 to her between July 2008 to December 2014.  The Husband previously maintained that the said sum of HK$2,842,890 should be taken into account by the Court in making any final Order.  He is now prepared to not pursue this claim but requests that the Court acknowledges that he has made these payments to her.  It is not in dispute that he did not pay any maintenance to the Wife after December 2014.

85.  As per the updated Joint Agreed Schedule of Assets and liabilities, the total net asset is HK$74,835,674.  The Pacific View (valued at HK$25,600,000 less outstanding mortgage of HK$9,165,038 = HK$16,434,962), the Colonnade (valued at HK$49,900,000) and the Husband’s stock portfolio and bonds (valued at HK$5,167,982 and HK$1,055,875 respectively), together valued at approximately HK$72.5 million, make up the great bulk of the parties’ total net assets. 

86.  I have accepted the Wife’s contention that the Colonnade was at all material times intended to be a matrimonial home.  The Wife puts much stress on that the matrimonial home takes a central place in the marriage and has a particular identity in ancillary relief proceedings so much so that the guiding principle being the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been. She requests a 50% share of the 100% value of the Colonnade. In this respect, the following passage in LKW v DD at [98] per Riberio PJ is on point:

“ It should be noted that these refinements are not generally applicable to the matrimonial home and other assets which have been intended for and devoted to family use. Lord Nicholls pointed this out in Miller/ McFarlane as follows:

The parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. So it should normally be treated as matrimonial property for this purpose… in principle the entitlement of each party to a share of the matrimonial property is the same however long or short the marriage may have been.

Baroness Hale agreed, describing the matrimonial home as a prime example of a capital family asset.”

87.  On the opposite position, the Husband contends that the above guiding principle should not be an absolute one.  The Husband suggests that in calculating any final ancillary award to the Wife, the Court should only take into account 48% of the value of the Colonnade to acknowledge his sole financial contribution in the acquisition of the asset, lack of contribution from the Wife and the shortness of the marriage.  I accept that the guiding principle stated on behalf of the Wife in the above cannot usurp the broad discretion of the Court under s.7(1) of the MPPO. In the present case, I take notice that this is not a short marriage and I have found that each party has made valid contribution to the welfare of the family. Having largely dealt with the section 7(1) considerations when discussing the different issues as set out above, I have no doubt that the parties should have an equal share of the Colonnade.  In the premises, I propose that the Colonnade should be sold and the net proceeds of sale be equally divided between the parties.  

88.  The Husband vigorously protests that it will be extremely unfair if the Wife has any share from the value of Pacific View that he purchased and fully paid so many years prior to the meeting of the parties.  The Wife argues that “source” is not the only determinative factor, and the Court is required to consider other relevant factors such as the question of duration and mixing.  This is a marriage of some 8 years.  I regard it neither a long or short marriage.  It is of medium length.  During the course of the marriage, the parties mostly kept their assets separate.  Despite that during the marriage the Pacific View was rented out and provided the Husband with a source of income that was used by him for the family budget, I regard that there was no mixing or intermingling with the Pacific View and matrimonial activities in circumstances in which it may be said that the Husband must have accepted that the Pacific View should not be excluded from sharing.  I take notice that the Husband was significantly wealthier than the Wife.  So long as needs are already addressed, I accept that in the present case the fact that the Husband purchased and fully paid the Pacific View so many years prior to the meeting of the parties should be taken into account as a reason for departure.  In the circumstances, I accept it is fair and reasonable that the Husband should retain 100% value of the Pacific View as well as his stock portfolio and bonds that was sourced from the re-mortgage of the Pacific View in 2016. 

89.  Weighing the various factors and striking the balance of fairness, I regard that the Wife should retain her 25% interest in the house in Penang (valued at HK$299,000) that was purchased and paid by her well before the marriage.

90.  I have dealt with the parties’ joint property, i.e. the Colonnade, the Wife’s pre-marital property, i.e. her 25% interest in the house, and the Husband’s pre-marital property, i.e. the Pacific View, his stock portfolio and bonds.  The Wife still holds net assets to the value of HK$2,253,475 – 229,000 = HK$2,024,474 and the Husband holds HK$22,682,199 – (16,434,962 + 5,167,982 + 1,055,875) = HK$23,380.  Largely, they are family assets that were accrued during the marriage.  I propose that the parties should have an equal share of them.  In broad terms I propose that the Wife shall pay HK$1 million to the Husband.

91.  The end result is that the Wife will have about HK$2,253,475 + 23,950,000 = HK$26,203,475 and the Husband will have about HK$16,434,962 + 5,167,982 + 1,055,875 + 24,950,000 + 1,000,000 = HK$48,632,199.  The above represents that the Wife and the Husband will have 35/65 share of the total net assets respectively.

92.  With the said sums at their disposal, presumably the parties might consider investing in low risk fixed-income investments in the capital market that yield a regular income.  With the evidence before me, however, I cannot put any figure on the returns that they may offer.

93.  It appears to be common ground that this matter should be dealt with on a clean break basis and this is clearly the sensible way to proceed, especially as there are no children of the marriage.  Sometimes the assets of the parties do not allow for a clean break solution, but such was not the case here. 

The Disposal

94.  In conclusion, it is ordered that :

(a) The Colonnade be sold at market price on vacant possession basis within 3 months of the date of this Order or upon the making of the decree nisi absolute, whichever is the later;

(b) The net proceeds of sale of the Colonnade be equally divided between the parties;

(c) The Wife do upon the completion of the sale of the Colonnade or upon the making of the decree nisi absolute, whichever is the later, pay a lump sum of HK$1,000,000 to the Husband;

(d) Upon compliance with the above paragraphs (a) to (c), the parties’ claim for ancillary relief against the other be dismissed;

(e) There be liberty to apply

Costs

95.  On the whole, the Wife is the successful party.  It is ordered nisi that the Husband shall pay the Wife’s costs of the ancillary relief proceedings, including reserved costs with certificate for counsel, to be taxed, if not agreed.  The order nisi becomes absolute 14 days after the order is made unless a party has applied to the court for varying the order.

96.  It is also ordered that there be declaration that there are no children of the family to whom the section 18 applies.

97.  I am most grateful for Counsel’s assistance.