KCMA v. ABC AND OTHERS

HCMC 1/2019

[2021] HKCFI 3392

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO 1 OF 2019

_______________________

BETWEEN

______________________

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JUDGMENT

__________________

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Table of Contents

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A. INTRODUCTION

1.  The 8 day trial herein concerned ancillary relief applications arising out of matrimonial proceedings between the petitioner wife (“W”) and the respondent husband (“H”). Prior to the trial, this Court had handed down various decisions in these proceedings and for ease of reference, I shall continue to use the nomenclature therein unless otherwise indicated in this judgment.

2.  One of the major disputes between the parties is whether dispositions made by H to two US Trusts, presently governed by the law of Nevada in USA, and a disposition made by H to his father of an apartment in ________ in _______, I____ (“M______ Apartment”) and later settled in an I____ Trust, should be set aside. The US Trusts have been referred to respectively as the Family Trust and the Education Trust in this Court’s decision of 21 November 2019 in relation to W’s application for joinder (“Joinder Decision”). Pursuant to the Joinder Decision, the trustee PBB in his capacity as the trustee respectively for the Family Trust and the Education Trust have been joined respectively as the 2^nd respondent (“R2”) and 3^rd respondent (“R3”). H’s father (“R4”) has also been joined as a party in these proceedings. Subsequently, under rule 72 (1) of the Matrimonial Causes Rules, the Official Solicitor was directed to separately represent the three children of the family (“Children”) who are beneficiaries under the Family Trust and the Education Trust.

3.  Upon application by H, W’s father and mother have been joined respectively as the 5^th and 6^th respondents (“R5” and “R6”) herein in relation to issues raised by H over certain parcels of land in ________________________________ (“________”), namely (i) 2 parcels of land situate at AR 117 & AR 169 in ___________ (“S____ Land”) and (ii) 4 parcels of land situate at AV 391, AV 266, AX 331 and AX 329 in V___(“ V__ Land”) which are presently held by either singly and/or jointly in the names of W’s parents and in which W is said to have interests through resulting and/or constructive trusts (in respect of the S___ Land) and/or forced heirship laws of __________________ (in respect of the V___ Land).

4.  Apart from opposing the joinder, and after the Joinder Decision, R2 and R3 have not participated in these proceedings and were absent at the trial. R5 and R6 have not acknowledged service of H’s applications upon them and have not participated in these proceedings. As for R4, he was legally represented by H’s team of legal representatives and although he was scheduled to give evidence through video link, it eventually did not take place.

5.  The main protagonists are H and W, and for ease of reference, I shall refer to them collectively as the Parties.

6.  Counsel Mr Richard Todd and Ms Bonnie Cheng appeared for W at the trial. Counsel Mr John Scott SC and Mr Sharphan Marwah appeared for H, and Mr Ken To appeared for the Official Solicitor (“OS”) on behalf of the Children.

B. BRIEF BACKGROUND

7.  H was born in _____ in 1970 and is now 51 years old. He is an ______ citizen and holds an ______ passport. His father R4 is now about 87 years old and H’s mother is about 80 years old. H has 2 elder siblings, a brother who lives in _____ and a sister who lives in _________. H left _____ when he was 18 to attend university in the United States and after graduation, he was able to secure a good job __________________ from 1989 to 2000. In early 2000, he obtained a MBA from ______________.

8.  W was born in ______ in the ______________ in June 1971 and is now 50 years old. W holds dual US and French citizenship.

9.  W’s parents were born in ________. Her father R5 is now about 81 years old and her mother R6 is now about 72 years old. They live in ______ but have a house in ________. They have 4 children. W’s older sister lives in ________, and her brother is with US Navy. Her younger sister and her boyfriend live with W’s parents in ______ .

10.  According to W, her father R5 retired about 19 years ago in 2002 at the age of 62 and her mother R was and has continued to be a homemaker since her marriage to R5 in 1969. According to W, they are both in good health[1].

11.  H and W met in ___________________, in August 1999 and soon thereafter started their romantic relationship. In July 2000 they moved to Hong Kong together as a couple when H started to work ______ here. They were married in Hong Kong in October 2001. The Parties have a son R, who is now 18 years old, and two daughters S and A, respectively 16 and 12 years old. W has been a homemaker since she came to Hong Kong in 2000.

12.  In 2009, H _______________________________­­­­­­­­­­­­­­­­­­­­­­­­­­­ joined an investment management company which is a member of an investment group (“Group”). The letter of employment was dated 30 April 2009 with a commencement date of 1 August 2009 (“Letter of Employment”)[2]. As a result of a general corporate restructure of the Group, H’s employment was transferred to another related entity/member of the Group in Hong Kong as of 1 November 2012, for which he has been working until the present. In this judgment, unless otherwise indicated, reference to the Group will include an entity/member/subsidiary/associated company of the Group. As part of his employment benefits, H is entitled to equity participation of the Group (“GP Shares”) subject to a shareholding agreement dated 4 November 2010 (“Employee Shareholder Agreement”)[3]. Further, H is entitled to participate in the performance of certain investment funds of the Group (“LP Investments”)[4] and other performance fees.

13.  According to H, the years between 2009 and 2014 were very difficult years for him and he was focusing on his career during that time. Problems started to emerge in the Parties’ marital relationship which led to H and W attended marital counselling between September 2015 and March 2016. They later took a vacation to Sri Lanka over Easter 2016 to save their marriage but their efforts were not successful. H moved out of the former matrimonial home on 16 October 2016, although he said this was only “temporary”. W issued a petition for divorce on 21 November 2016.

14.  By a consent order dated 6 February 2017, H and W were granted joint custody of the Children with care and control to W and reasonable access. Decree Nisi was granted on 18 April 2017. Their marriage lasted about 15 years.

15.  The Parties exchanged their 1^st Form Es on about 1 February 2017 and W alleged that she only learnt for the first time of the existence of the US Trusts from H’s 1^st Form E. Thereafter, H alleged that W had involved the Children in the parties’ dispute over financial matters and this had affected H’s relationship with the Children.

16.  As said, W has been a homemaker since 2000 after she moved to Hong Kong with H. Pursuant to an order made by Judge Melloy on 11 December 2018 (“MPS Order”), H is to pay to W maintenance pending suit for her at HKD 26,450 per month, and interim maintenance for each of the Children, at HKD 26,450 per month, totalling HKD 105,800 plus various undertakings totalling about HKD 149,978 per month at the time (“Undertakings”). In total, the amount would be about HKD 255,778 per month.

17.  On 11 December 2018, Judge Melloy ordered that W’s application for ancillary relief, and all related applications, be transferred to the High Court. The issues relating to the Children have remained in the Family Court.

18.  On 19 March 2019, H took out a summons seeking a downward variation of the MPS Order. Pursuant to a decision handed down on 8 June 2020, this Court dismissed H’s application (“Variation Decision”).

19.  At the time of the trial, the Children were residing with W in an apartment in ________ while H was residing in an apartment in ______.

C. GENERAL LEGAL PRINCIPLES

20.  Section 7 of the Matrimonial Proceedings and Property Ordinance (MPPO) lays down what the court must have regard to when making orders for ancillary relief:

“(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.

(2) Without prejudice to subsection (3), it shall be the duty of the court in deciding whether to exercise its powers under section 5, 6 or 6A in relation to a child of the family and, if so, in what manner, to have regard to all the circumstances of the case including the following matters, that is to say—

(a) the financial needs of the child;

(b) the income, earning capacity (if any), property and other financial resources of the child;

(c) any physical or mental disability of the child;

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

(e) the manner in which he was being and in which the parties to the marriage expected him to be educated;

and so to exercise those powers as to place the child, so far as it is practicable and, having regard to the considerations mentioned in relation to the parties to the marriage in paragraphs (a) and (b) of subsection (1), just to do so, in the financial position in which the child would have been if the marriage had not broken down and each of those parties had properly discharged his or her financial obligations and responsibilities towards him.”

21.  The court’s powers under sections 4, 6 and 6A referred to in section 7 above are powers to make orders for a party to a marriage, for financial provision (by way of periodical payments and lump sums) and for property adjustment upon and after granting, amongst others, a decree of divorce. The court’s powers under section 5 are powers to make orders for financial provision for a child of the family in cases of, amongst others, a divorce.

22.  As set out in LKW v DD, (2010) 13 HKCFAR 537, FACV 16/2008 , there are 5 steps in carrying out the section 7 exercise in relation to a party to a marriage[5], and briefly they are:

(1) Step (1) – Identification of the assets

(2) Step (2) – Assessing the parties’ financial needs

(3) Step (3) – Deciding to apply the sharing principle

(4) Step (4) – Considering whether there are good reasons for departing from equal division

(5) Step (5) – Deciding the outcome

23.  This judgment is arranged in accordance with the above 5 Steps.

D. THE DISPUTED ISSUES

24.  There are altogether 12 issues set out in the agreed schedule of list of disputed issues setting out W’s position, H’s position and the OS’s position (“List of Issues”).

25.  As stated in paragraph 71 of LKW v DD

“The first step in the exercise is to ascertain the financial resources of each of the parties calculated as at the date of the hearing. In particular, under section 7(1)(a), the court must have regard to “the income, earning capacity, property and other financial resources” which each of the parties “has or is likely to have in the foreseeable future”. The object will of course be to compute the net financial resources, taking account of all material liabilities. At this stage, the court need not attempt to distinguish between matrimonial and non-matrimonial property, that being an exercise best undertaken (if necessary) when considering distribution of the assets”.

26.  Essentially, Issues 1, 4, 5, 6, 7, 8, 11 and 12 of the List of Issues are all under Step (1) or section 7(1)(a) of the MPPO, as they are in relation to identifying the assets and financial resources of H and W in the family pot (“Family Pot”) and the Parties’ respective income and earning capacity.

27.  Issue 1 concerns the valuation of the Parties’ assets and financial resources in the Family Pot, which should in fact come after the assets have been identified. Issues 4 and 5 concern dispositions by H into the US Trusts and H’s disposition of the M______ Apartment to his father R4, and H’s dispositions into the joint accounts of H and R4 held at K__________ Bank and from an account at Standard Chartered Bank in _______. W sought to set aside all such dispositions pursuant to two notices of applications (respectively the “1^st s17 Application” and the “2^nd s17 Application”) and for the assets disposed of be brought back to the Family Pot.

28.  Issue 6 concerns whether the S____ Land in ________ is held by W’s parents, ie R5 and R6, on constructive trust for the benefit of W and should be part of the Family Pot, or otherwise be part of W’s financial resources. Issue 7 concerns whether W has any expected interests under the French forced heirship law in the V___ Land in ________ held in the names of R5 and/or R6. Issue 8 is in relation to how the litigation funding is to be taken into account. Issue 11 concerns H’s potential inheritance of his mother’s half share in a house in _____ (“K______ M___”) as stated in H’s will of 15 May 2011 (“H’s 2011 Will”) and his mother’s will of 29 September 2011(“Mother’s 2011 Will”). Issue 12 concerns the parties’ respective income and earning capacity.

29.  Issues 2 and 3 concern the financial needs of W and the Children and are part of Step (2) and section 7(1)(b) of MPPO.

30.  Issue 9 concerns how overpayments under the MPS Order, if any, should be dealt with. Issue 10 concerns US tax implications from the divorce settlement.

E. THE WITNESSES AND EVIDENCE

(I) The factual witnesses

31.  The Parties have each filed 3 Form Es, their 1^st one in about January/February 2017 (“1^st Form E”), their 2^nd one which has been referred to as a truncated Form E (as such only contained the Parties’ updated income and expenses for the purpose of the MPS hearing) (“Truncated Form E”) on 16 October 2018, and their 3^rd one in January 2021 is their final one before the trial (“Updated Form E”). The Parties have also filed answers to each other’s questionnaires and have also provided voluntary answers.

32.  The Parties have each filed an affirmation on 1 April 2021 containing their evidence in chief for the trial (“Trial Affirmation”), and thereafter have each filed a reply affirmation to the other’s Trial Affirmation (“Reply Affirmation”).

33.  W also relied on her 3^rd and 6^th Affirmations in relation to her 1^st s 17 Application and her 2^nd Affirmation in relation to her 2^nd s17 Application and her 4^th Affirmation in relation to her application for joinder, which have been included in the trial bundles. H’s 3^rd Affirmation in opposition to W’s 1^st s17 Application has also been included in the trial bundles.

34.  The trustee PBB has filed an affidavit on 16 August 2019 in connection with W’s joinder application, and so did H’s father R4.

35.  In the end, only H and W attended the trial to give oral evidence. R4 was unable to travel to Hong Kong to attend trial physically due to the Covid-19 pandemic. Arrangements had initially been made for R4 to give evidence through video link, but on 11 May 2021, just before R4 was due to give evidence, he was diagnosed to have hypertension and chronic bronchial asthma and had a fever and was advised to rest for two weeks[6]. He did not give evidence in the end.

(II) The expert evidence

(1) On Duxbury calculations

36.  H instructed Mr Steven James Apedaile, the Managing Director of Sirius Corporate Services (“Sirius”) to prepare a report dated 8 October 2020 on Duxbury calculations[7]. W instructed Mr Kenneth Yeo of BDO Financial Services Limited (“BDO”) to prepare a report dated 29 April 2021[8]. The joint expert statement on Duxbury calculation was filed on 10 May 2021[9] (“Joint Duxbury Statement”).

37.  Mr Apedaile attended trial to give oral evidence through video link from Australia. Mr Yeo attended trial physically to give oral evidence.

(2) On valuations of land in ________

38.  W instructed Ms Johanna Morvan of ______ Real Estate to prepare 3 valuation reports filed on 3 , 5, and 11 May 2021[10].

39.  H instructed Dr Michele Robin-Clerc to prepare various valuation reports filed on 21 January 2021 and 30 April 2021[11].

40.  The two experts signed a Joint Expert Statement for valuation of the S____ Land and the V___ Land in ________ dated 11 May 2021[12] (“Joint ________ Statement”).

41.  Ms Morvan gave evidence during the trial from ________ through video link. Dr Robin-Clerc gave evidence during the trial from Paris in France through video link.

(3) On valuations of the 3 parcels of land in ______ held by Bremen

42.  Dr Michele Robin Clerc also prepared valuations of the 3 parcels of land in ______ held by Bremen respectively on 18 and 21 January 2021[13].

43.  These valuations were agreed by W.

(4) On valuations of the M______ Apartment and K____ M___ in ____

44.  The parties agreed to appoint CBRE South Asia Private Limited (“CBRE”) to be the single joint expert for the valuations of the properties in ____. CBRE submitted 2 reports on 1 February 2021, one in relation to the valuation of the M______ Apartment[14] and the other one on the valuation of another property in K__ __ M___ (as defined later)[15].

45.  There was no dispute to the valuations.

(5) On valuation of Intero

46.  H’s expert Mr Ferry Choy of Sirius Corporate Service prepared a valuation report on Intero of 27 January 2021[16] (“1^st Sirius Report”). W’s expert Mr Kenneth Yeo of BDO submitted his “Note of Advice” dated 21 April 2021[17] (“1^st BDO Report”). Mr Choy then submitted a reply valuation report on 7 May 2021 but filed on 12 May 2021[18] (“2^nd Sirius Report”).

47.  At the time of the trial, there was only a draft expert joint statement dated 7 May 2021 with Mr Yeo’s input only[19]. Mr Choy was medically unwell and was not able to complete the joint statement. Mr Choy was also not well enough to attend the trial to give oral evidence[20]. In the end, only Mr Yeo attended the trial to give oral evidence and was cross examined.

48.  It was only after the trial that the two experts were able to complete their joint statement which was eventually filed on 7 June 2021 (“Joint Intero Statement”).

(6) On French law on forced heirship

49.  H’s expert Mr Luc Godefroy prepared an expert report dated 21 January 2021on the relevant French laws as to forced heirship in relation to the land of ________[21]. W’s expert Ms Sarah-Jane Tasteyre of JC Legal prepared a legal advice on behalf of W on 22 April 2021 on the inheritance laws, ownership laws and trusts under French law[22].

50.  Although Mr Luc Godefroy was scheduled to give evidence through video link from _________________________, he failed to do so due to connection problems. In the end, as there was no dispute in relation to the French law, W decided there was no need to call Ms Tasteyre, who was originally scheduled to give evidence through video link from United Kingdom.

(7) On US tax liability

51.  H instructed PwC Hong Kong (“PWC”) to prepare a report on the US Federal Tax Implications on distributions of assets from the Family Trust in settlement of divorce proceedings. PWC prepared a report dated 27 January 2021[23] and a supplemental report on 23 April 2021[24].

F. STEP (1): IDENTIFICATION OF THE ASSETS (ISSUES 4,5,6,7,8,11,1,12)

(I) The section 17 Applications: Issue 4

(1) The relevant sections of section 17 of MPPO

52.  Under section 17(1)(b) of the MPPO, where an application for financial provision is brought by an applicant against the other party, the Court, if it is satisfied that the other party is, with the intention of defeating the claim for financial provision (“Intention”), made a disposition to which section 17 applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the order (including directions requiring the making of any payment or the disposal of any property).

53.  Under section 17(2), section 17(1)(b) applies to any disposition made by the other party (whether before or after the commencement of the proceedings for financial provision), not being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such Intention on the part of the other party.

54.  Further, under section 17(3), where an application is made with respect to a disposition which took place less than 3 years before the date of the application and the court is satisfied that the disposition would have the consequence of defeating the applicant’s claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the Intention (“Presumption”).

55.  Any reference to “defeating an applicant’s claim for financial provision” under section 17 of the MPPO is a reference to preventing financial provision from being granted to the applicant, or to the applicant for the benefit of a child of the family, or reducing the amount of any financial provision which might be so granted, or frustrating or impeding the enforcement of any order which might be or has been made at the instance of the applicant under the relevant provisions of the MPPO.

(2) The state of the Parties’ marriage at the time when H made the dispositions which are subject of W’s s17 Applications

56.  H’s evidence was that he believed W started to have affairs shortly after the birth of their youngest child A in 2009. H alleged in his Trial Affirmation that W took the Children away from him for long periods to the US and the ________ and indulged in “lewd, inappropriate and adulterous behaviours”[25]. It was further H’s allegation in his Trial Affirmation that W had even took the Children to her adulterous partners’ homes while she was over there having an affair with them and that he had tolerated W’s behaviour throughout the marriage in order to keep their family unit intact. H had described W as a “troubled person” but claimed that he grew up with traditional values when one would try to fix what was broken rather than “throw it out” and replace it[26]. H then gave examples of W’s unreasonable behaviour during the marriage[27].

57.  In W’s Trial Affirmation, her evidence was that the marriage was in difficulties in around July 2013, as follows:

(1) In July 2013, W and the children were on their vacation in the ________ and W shared with H that she was invited on stage in a concert performed by a ________ band called ___ (“___ Concert Incident”) upon which H became belligerent with her accusing her of being foolish and not having any concern about his career;

(2) H then started to investigate W by logging into her personal email accounts at hotmail.com and yahoo.com which were set up in her maiden name (collectively “Personal Email Accounts”) with passwords that W had given H years before. Having gained access to W’s personal hotmail account, H was then able to change W’s password to her Facebook account and to continue his investigations unknown to W[28].

(3) After hacking into W’s Facebook account H then found a few photographs taken in W’s teens and her early 20s in an album of a male friend of W’s whom W had known for 28 years. This started another dispute.

(4) Upon W’s return from ___________ in the summer of 2013, H had requested W to take a herpes test which she found humiliating.

58.  Then, on 2 May 2014, W’s best friend J______ was murdered by her husband in ______ and according to W, she then reflected on her and H’s mortality and about her financial security. According to W, notwithstanding she objected to H’s proposal to remove her from their joint HSBC account in May 2013, H went ahead to do it and that H’s unilateral actions caused her considerable unease and insecurity. In November 2014, W had approached H about adding her name to the M______ Apartment but H rejected her request and repeated what he told W in 2006 at the time of the purchase, that it was impossible to add her name as the M______ Apartment was mortgaged and only people with salaried jobs could have their names on the deed[29]. W said H’s refusal put another strain on their relationship and W had contacted H’s father R4 direct on the phone to try and understand why H’s mother’s name could be on the deed of his parent’s house which had a mortgage and yet W’s could not be added to the M______ Apartment. According to W, H became belligerent when he found out that W had contacted R4 direct.

59.  Thereafter, in 2015, W said H’s desire to control extended to demanding that he could check her mobile phone whenever he wanted. W said she refused and H then invaded her privacy by downloading all her messages from her phone onto his laptop computer without her knowledge after getting her password from their son R.

60.  On the other hand, H had made various allegations against W and he gave as examples of W’s unreasonable behaviour in that she was in contact with her ex-lovers on Facebook, email and texts and W would be in regular contact with her past lovers and would meet up with them during family vacations with the Children^[30].

61.  When asked about the herpes test under cross examination, H had said that W had disclosed to him that she had had unprotected sex prior to the marriage with a person who had herpes. H said he did some research and that one could still get it after 20 years and that as he also took the test himself, and he did not think W would find his request for her to take the test humiliating or offensive.

62.  H’s evidence was that W’s behaviour during the ___ Concert Incident which was posted on Youtube was lewd and inappropriate. It was put to H during cross examination that he was so troubled by the ___ Concert Incident and by his suspicions of W that he started his “deceitful” behaviour by gaining access into W’s Facebook account and that H was violating W’s privacy, H denied this. He then tried to explain that he and W both had access to each other’s email account. However, H’s evidence was inconsistent with his own emails to W, e.g. the Trust ______ Email of 27 August 2015 and the Accountability Email of 15 February 2016 referred to below in which that H had admitted invading into W’s privacy and had apologised for his behaviour.

63.  As for invading W’s privacy again in 2015 by gaining access to W’s iPhone, according to H, while he was putting W’s iPhone into a new iPhone case which he got her, he noticed an unusual “bonjour mon amour” text from a long-time family friend T_____ who lives in ___________ and H had described this a “definite red flag” , and he said that was why he asked their son R for W’s password the next morning just to see if there was anything more to this overly friendly text from T_____ and that what he then saw shook him to his core, and “Trust was indefinitely broken”. H said he felt totally betrayed and devastated[31].

64.  It was H’s evidence that when he clicked into the conversation between W and T_____, he realized that “they were having an adulterous relationship with each other, with very graphic sexting conversations between them”. It was further H’s evidence that W later admitted to him to her being in a 1.5 year adulterous relationship with T_____[32].

65.  H had not produced what he described as “sexting conversations” or “sexting messages” between W and T_____. Further, when it was put to H during cross examination that W had never said or admitted that she had an adulterous relationship with T_____, H agreed with Mr Todd that W did not use the word “adultery” and that H further said his definition of “adultery” meant “in love” and “sexting about”. H then claimed W told him that she and T_____ had kissed and that they had an “emotional relationship”.

66.  However, even taking H’s evidence to the highest, there was no sufficient evidence that W had an adulterous relationship with T_____. This was further confirmed by the reply email sent by T_____ as seen below.

67.  W had alleged that H sent T_____ an email on 16 August 2015 from an email account pretending to be W and telling T_____ that if H were to call him, not to confirm that he and W had sex in ________ (“T_____ Email”).

68.  In her Trial Affirmation, W had referred to the email account as an “alias email account” which H created himself and to which she did not have access and that H would target her friends by sending them emails from this account pretending to be W[33].

69.  H had explained in his Reply Affirmation that the “alias email account” referred to by W was set up by him in 2011, using W’s married name, and was a sub account (“Yahoo Sub Account”) linked to his own account (“H’s Yahoo Email Account”). According to H, the reason why he set up the Yahoo Sub Account for W, because W used to send emails from H’s Yahoo Email Account. H had further said during the trial that even after July 2013, W had continued to have access to H’s Yahoo Email Account and/or the Yahoo Sub Account. It was H’s evidence that W had used the Yahoo Sub Account to book Airbnb rooms, make travel arrangements and to send other communications to his family and to businesses[34].

70.  During the trial, W’s evidence was that after the ___ Concert Incident, or after August/summer 2013, and after H hacking into her Personal Email Accounts and Facebook account, she changed the password to W’s Personal Email Accounts and she did not have access to the Yahoo Sub Account. It was W’s evidence that H had sent emails out from the Yahoo Sub Account in her name. On the other hand, H had again said during the trial that W was often sending emails to his family pretending to be him from H’s Yahoo Email Account address. H had told W not to and that was why he then set up the Yahoo Sub Account for W under H’s Yahoo Email Account so that she could send emails in her own name from the Yahoo Sub Account. What seems clear from their evidence is that the Yahoo Sub Account was set up by H in W’s name, and that both of them had the password to that account as well as H’s Yahoo Email Account.

71.  During the trial, H had said that W had access to the Yahoo Sub Account and/or H’s Yahoo Email Account until his moving out of the former matrimonial home in October 2016. However, if according to H, his moving out was only temporary, then there was no reason why he would have stopped W’s access to the Yahoo Sub Account/H’s Yahoo Email Account after he moved out.

72.  Anyway, H alleged that W used to send emails in his name from H’s Yahoo Email Account and W alleged it was H who sent emails from the Yahoo Sub Account in her name. I find that it is impossible for this Court to decide whether the email/s were sent by W in H’s name or sent by H in W’s name, simply by looking at the email account/address (ie whether the Yahoo Sub Account or H’s Yahoo Email Account) from which it was sent, or the name of the sender of the email.

73.  So far as W was concerned, it would seem unlikely that after H accessed her Personal Email Accounts and Facebook account in the summer 2013, she would use the Yahoo Sub Account for her personal communications even if she could still access the account. Anyway, after the T_____ Email was sent, T_____ had responded by asking W what she was talking about and that he never had sex with her[35].

74.  When H was cross examined about the T_____ Email, H denied he was the one who sent the T_____ Email and alleged that it was W who had sent the email. When asked why W would send such an email, he said the H’s Yahoo Email Account address was opened on the screen and that W had sent the T_____ Email mistakenly or inadvertently.

75.  What H had said did not seem to make sense. If according to H’s case in his Reply Affirmation that W had admitted to H about her being in a 1.5 year adulterous relationship with T____[36], then there was no need for W to send the T_____ Email as she had already admitted the relationship to H. If W did not make such an admission and had indeed wanted to send the T_____ Email to alert T_____ in case H were to call/contact him, one would expect W to take care not to let H know, and W would have sent the T_____ Email from one of her Personal Email Accounts or to alert T_____ in another manner. There was no reason why W would want to send it from the Yahoo Sub Account to which H had access. It was not clear as to how W could have mistakenly or inadvertently sent the T_____ Email as alleged by H. In fact, in H’s Reply Affirmation, he did not specifically deny W’s allegation that it was H who sent the T____ Email. I do not find H’s evidence that it was W who mistakenly/inadvertently sent the T_____ Email from H’s Yahoo Email Account probable or credible.

76.  W had produced 4 emails sent by H to W between 22 August 2015 and 27 August 2015 which she had described as “bizarre and confusing”[37] (“Bizarre Emails”). The 1^st of these Bizarre Emails was sent by H on 22 August 2015 with the subject matter “ED and other thoughts” (ED Email) in which H referred to various intimate issues between him and W. H had said had said amongst other things that the Parties were at the cross roads then and he needed W to be more constructive if she wanted reconciliation, and that they both had to be motivated to fix their failing relationship, and this could only be done exclusively by the two of them, maybe with the help a professional counsellor[38].

77.  The 2^nd of the Bizarre Emails was sent by H to W on 26 August 2015 with the subject matter “[W’s] Perspective according to [H]” (Perspective Email) he had suggested amongst other things that in order to fix their relationship issues and failings, they must understand each other’s narratives and perspective and he then set out his own perspective ( negatives and positives)[39].

78.  The 3^rd and the 4^th of the Bizarre Emails were both sent by H to W on 27 August 2016:

(1) the 1^st one with the subject matter “COMMUNICATION AND CONFLICT RESOLUTION”[40] (Communications Email), in which H had said there were major differences in the way they communicated and then set out his communication style and W’s. H had said to W that: “Your communication style in my opinion has been a major contributing factor to why we are at this failed stage today”. H had also referred to his own hurtful comments and put downs of W and had referred to “the last ten day emotional roller-coaster ride” they took together[41].

(2) the 2^nd one with the subject matter “TRUST ISSUES & THE SUMMER OF ___”[42] (Trust _____ Email), in which H had mentioned the ___ Concert Incident again and admitted he started reading all W’s emails and that that was a grave mistake because from that day on, he permanently lost her trust. H admitted that his jealousy and concerns were unfounded and said he was sincerely apologetic. W then changed her passwords back and he swore never to go back into her personal space again. However, he then referred to his gaining access to W’s iPhone and read the text messages from T_____ and that after what he saw, “Trust was indefinitely broken ….”.

79.  Although H claimed under cross examination that by August 2016, the ___ Concert was “water under the bridge completely”, it was clear that it was not, as H was still referring to the ___ Concert Incident in the Trust _____ Email, which was over two years after the event.

80.  After the above mentioned Bizarre Emails, on 17 September 2015, H sent W an email on “Divorce 101 HK”[43] (“Divorce Email”). H had said the email was cut short. In this email, although H started off by saying he sincerely hoped it would not come to that, he then provided W with information on divorce in Hong Kong.

81.  There was another an email later on 17 September 2015 in which it H stated he seeking help from a therapist to cope with his own issues and he asked W also to consider seeing a therapist[44]. According to W, the Parties had another heated argument on 29 September 2015 when H admitted to W that he had been downloading messages from her phone onto his computer for months[45].

82.  As mentioned earlier, the parties attended counselling between September 2015 and March 2016.

83.  Later, in an email which H sent to W on 15 February 2016 with the subject matter “Accountability”[46] (Accountability Email) H had admitted it was wrong of him to go into W’s email account to investigate and to break into W’s Facebook account in 2013 and he had said that all those things seemed rather trivial in comparison to the “ sh*t storm” they had dealt with for past 7 months. The 7 month period would be between about 15 August 2015 and 15 February 2016.

84.  H was asked during cross examination when he thought the marriage was over, H’s answer was “not even when W filed a petition. I do not want a divorce. I have always tried to reconcile and when the petition was served on me, I was shakened.” H then reiterated that in October 2016, when he moved out of the matrimonial home, it was only “temporary”, and it was for him to concentrate on his work. When it was put to him that there were great difficulties by 2015 and the marriage was really over by 2015, he disagreed. H claimed that he thought he was making progress during marriage counselling. When pointed out that he had sent the Divorce Email, H then replied that the email related to a friend who was going through divorce. However, that was not the impression one would get when reading the Divorce Email, and I do not find his answer credible. His oral evidence did not accord with what he had written in his own emails.

85.  Whether W did have any exchange of “sexting messages” or any “emotional relationship” with T_____ or not, and whether W had any adulterous relationship with any one or not, what was clear from the emails was that the Parties appeared to have ceased their physical relationship after the birth of their youngest child A and that by end of August 2015, after the ___ Concert Incident and the T_____ Email and H’s invasion into W’s privacy, as H himself had said in his emails, trust was indefinitely broken. The marriage was clearly in serious difficulties. Whatever H may now say, in my view, divorce was very much in the mind of H and that of W, and it was under those circumstances that H sent the Divorce Email to W. Even if as H now maintains, he himself does not believe in divorce because of his Asian culture and attitudes, he must have realised in September 2015 that it was very likely that W would file for divorce.

86.  As mentioned earlier, in November 2014, W had asked H to put the M______ Property in her name and she was concerned over her financial security and control. H’s evidence was that W had expressly agreed to the family assets from date of marriage not to be held in her name except for joint accounts but H admitted during the trial that when they closed down their joint accounts W had objected and that after J______’s murder (which was in May 2014), W had wanted substantial assets to be put in her name. It was H’s written evidence that after J______’s murder, W had projected all her insecurities and misguided fears onto him. Suffice to say, H’s own evidence showed that by 2014, W had wanted financial security and there was a lack of trust of H on W’s part.

87.  Having considered all the evidence before this Court, I find the marriage was indeed mortally wounded (as described by Mr Todd) sometime between 2013 (the ___ Concert Incident) and September 2015, and thereafter, lingered on until October 2016 when H moved out of the matrimonial home, followed by W filing her divorce petition. The dispositions which were subject of W’s s17 Applications were made by H between November 2015 and January 2017 and such dispositions have to be viewed against the Parties’ then relationship.

(3) W’s 1st s17 Application

(i) Generally

88.  It was not disputed that in 2009, at around the time H began to work for the Group, he set up a BVI company (“Intero”) for the purpose of holding the GP Shares. According to its certificate of incumbency[47], Intero was incorporated on 2 July 2009 and on 30 September 2009, H was registered as the sole director and shareholder. According to H, he transferred a portion of his personal assets into Intero in 2009[48]. Intero has been described as H’s “Estate Planning Vehicle” or “Controlled Company” in the Employee Shareholder Agreement[49].

89.  It was also not disputed that later in 2012, H set up another BVI company (“Bremen”). According to its certificate of incumbency[50], Bremen was incorporated on 3 July 2012. On 13 September 2012, H was registered as the sole director and shareholder. According to H, Bremen was incorporated to hold real estate investments, ie to hold land acquisitions in ______ and the S____ Land in _______.

90.  On 1 November 2015, H’s share in Intero was settled into the Family Trust. According to H, his share in Bremen was also settled into the Education Trust on 1 November 2015, but as seen later, the Education Trust was only set up on 1 July 2016.

91.  According to W, H bought the M______ Apartment out of their family funds. What is not disputed is that on 28 October 2005, H signed a loan agreement (“Home Loan Agreement”)[51] as borrower for the purchase of the M______ Apartment[52]. The purchase price was INR27,412,500 and the loan was INR 22,875,210. Upon the loan being paid off, the title of the M______ Apartment was registered in the name of H’s father R4 on 12 September 2016. The M______ Apartment was later settled into the I_____ Trust on 30 August 2017.

92.  W’s case is that the M______ Apartment, the shares of Intero and the shares of Bremen are all part of the Family Pot.

93.  By her 1^st s17 Application issued on 29 August 2017, W seeks to set aside the following dispositions made by H[53]:

In relation to the US Trusts –

(1) the disposition of the shares in Intero into the Family Trust on 1 November 2015;

(2) the disposition of the shares in Bremen to the Education Trust on 1 November 2015 or in about July 2016;

(3) the disposition of the shares in Intero from the Family Trust to Bremen on 1 July 2016;

(4) the transfer of the Family Trust from the jurisdiction of New Hampshire to that of the jurisdiction of Nevada in about January 2017;

In relation of the M______ Apartment –

(1) the disposition of the M______ Apartment to his father R4 in August 2016 and all transfers thereafter;

94.  Alternatively to the above setting aside applications, W seeks a variation of nuptial settlement under sections 6(1)(c) and (d) of the MPPO, namely:

(1) the US Trusts and the I_____ Trust be dissolved and assets held by the trusts be distributed to W and/or H; or alternatively,

(2) The US Trusts and the I_____ Trust be varied to enable W and/or H to benefit from one or all of the trusts.

95.  The above dispositions were all made by H within 3 years prior to W’s 1^st s17 Application, and in the circumstances if the Court is satisfied that the dispositions would have the consequence of defeating W’s claim for financial provision, the Presumption applies. The burden will be on H to satisfy this Court that the dispositions were not made with the Intention.

(ii) The structure, nature and effect of the US Trusts

96.  The Family Trust was initially set up by H as the settlor pursuant to a trust deed dated 1 November 2015 (“2015 Family Trust Deed”)[54] under the law of the State of New Hampshire in United States. Mr T___ B_____ (“Mr B_____”) was the original trustee and under Part 4 of the Schedule to 2015 Family Trust Deed, the beneficiaries were H the settlor, W the settlor’s spouse and the issue of both the settlor and the settlor’s spouse[55]. The excluded persons were the trustee, the protector and the beneficiary’s spouse save the Parties. Under Part 7 of the Schedule, a committee was appointed its “Protector”, comprising of H’s father, brother, and two friends said to be of H and W, one of whom will be referred hereinafter as simply I_____; and the committee, by majority vote had the power to add one more individual as a member of the committee among individuals named therein including W’s brother. However, under Part 9, the settlor, ie H had the power to remove a “Protector” with or without cause.

97.  H, being the settlor was the “Investment Director” whose investment powers were set out in Part 1.1.1 of the Schedule[56]. Under Part 1, paragraphs 6.5 and 6.6[57], the settlor may appoint the Investment Director during his lifetime, and in default, H’s brother and I______ are to be Investment Directors to exercise the powers of a successor to the settlor.

98.  On 1 November 2015, by a letter of wishes[58] (“2015 Family Trust Wishes”), H had expressed his wish, amongst other things, that during his lifetime, he and W should be treated as the primary beneficiaries and the Children should be treated as secondary beneficiaries and they be treated as primary beneficiaries after both he and W have died.

99.  On 1 November 2015, in consideration of the sum of USD 1, H transferred his one share in Intero to Mr B____ as trustee of the Family Trust.

100.  Then, on 1 July 2016, the following events took place:

(1) The Education Trust was set up;

(2) By a deed of gift (“Deed of Gift”)[59], H gifted the assets in the Schedule A (“Schedule A”) to the Education Trust. However, no Schedule A was attached in the copy produced by H to W, and this was only produced by H during the trial (Exhibit R2) after he obtained a copy from Mr B____, and in Schedule A, the asset set out was one share of the sole issued share of Bremen;

(3) The Family Trust and Bremen entered into a sale and purchase agreement pursuant to which the Family Trust sold its shares in Intero to Bremen for an aggregate consideration (which amount was not actually filled in on the copy produced by H in the trial bundles[60]);

(4) Bremen as borrower executed a promissory note dated 1 July 2016 in the sum of USD 10,500,000 in favour of the Family Trust as lender (“Promissory Note”)[61], and Bremen’s share(s) in Intero was/were the collateral.

101.  As a result of the above series of transactions, the one share in Intero has become the asset of Bremen, and the Family Trust only holds the Promissory Note as its asset.

102.  The Family Trust was thereafter moved to the State of Nevada and was amended and restated by a trust deed dated 1 January 2017 (“2017 Family Trust Deed”)[62]. PBB (R2) was appointed its new trustee and he has remained the trustee since. H is identified by name as the Investment Director/Investment Advisor, and the Protector[63]. H has the power to appoint any additional or successor trust Protector provided in default of such appointment, there shall be a committee of 5 persons including the settlor’s father, brother and two of his friends including I______, and the “settlor’s spouse” and the committee may by majority add one or more persons as a member of the committee with preference among 4 persons including the settlor’s spouse and W’s brother.

103.  Section 5.1 of the 2017 Family Trust Deed then sets out the beneficiaries, being, H, W, the descendants of H and W, certain charitable organisations as contingent beneficiaries and any person whom the trustee adds as a beneficiary by exercising his power under section 5.4. Under section 5.4, the trustee has the power to exclude irrevocably any person as beneficiary other than H and W.

104.  By a letter of wishes dated 6 January 2017[64] (“2017 Family Trust Wishes”), again H and W are stated to be the primary beneficiaries and the Children are secondary beneficiaries and are only the primary beneficiaries after H and W have both died.

105.  As for the Education Trust, notwithstanding H’s evidence that this was set up by H at the same time as the Family Trust, the documentation clearly showed that it was in fact set up by H as settlor pursuant to a trust deed dated 1 July 2016 (“2016 Education Trust Deed”)[65] under the law of the State of Nevada right from the beginning. Mr B___ _ was appointed its original trustee. H was the initial Protector, and the successor Protector was a committee comprising of H’s father, H’s brother and H’s friend I______. H was the Investment Director, being the settlor. The beneficiaries were stated to be “the issue of both the settlor and the settlor’s spouse”.

106.  By a letter of wishes dated 1 July 2016 for the Education Trust[66] (“2016 Education Trust Wishes”), under clause 4 thereof, the initial primary beneficiaries of the trust are the class composed of H’s children, each of whom is living at the date of the letter of wishes. The class of class of beneficiaries also includes all issue of H and W, and these unborn issue constitute the current class of remainder beneficiaries.

107.  The Education Trust was revised and restated by a trust deed dated 1 January 2017 (“ 2017 Education Trust Deed”)[67], on the same day as the Family Trust. The trustee was changed to PBB (R3) and H had remained the initial Protector. In default of H exercising his power to appoint additional or successor protectors, the successor shall be a committee comprised of H’s father, H’s brother, I______ and the settlor’s spouse. The beneficiaries are stated to be (i) the settlor’s descendants; (ii) the descendants of the settlor’s spouse, W, including her descendants born after any divorce from the settlor but not including any descendants of any future spouse of the settlor unless such persons are also descendants of the settlor; (iii) certain charitable organizations as contingent beneficiaries. H was also named as the Investment Director/Investment Advisor.

108.  Thereafter, the Education Trust was further revised and restated by a trust deed dated 1 January 2019 (“2019 Education Trust Deed”)[68]. This was only found by W among documents provided by H to his US tax expert PWC earlier this year. There was no proper disclosure by H to W, and the deed was executed after W had issued her 1^st s17 Application and her summons on 21 November 2018 seeking orders including injunctive relief. In fact, there was also no proper disclosure to the Court about the 2019 Education Trust Deed at the time of the hearing before this Court in September 2019 in relation to W’s joinder application, injunction application and discovery application.

109.  The 2019 Education Trust Deed is said to supersede the 2016 Education Trust Deed as amended (presumably this included the amendment by the 2017 Education Trust Deed). R3 continues to be its trustee, and the governing law remains the law of the State of Nevada, and the definition of beneficiaries appear to have remained the same. However, H’s brother, identified by name, has since been appointed as the “Investment Trustee”[69] and the Investment Trustee appears to have replaced the “Investment Director”, as there is no mention of an “Investment Director” in the 2019 Education Trust Deed. The Protector has also since been a committee of H’s brother and H’s friend I______, instead of H.

110.  Notwithstanding the Education Trust having been amended and restated by first the 2017 Education Trust Deed and then by the 2019 Education Trust Deed, the only letters of wishes which H had produced were the 2016 Education Trust Wishes.

111.  The Education Trust holds a substantial part of the family assets (through holding the shares of Intero and Bremen).

112.  It was not quite clear as to why the Family Trust was moved to Nevada or why the terms of the US Trusts were amended and re-stated on 1 January 2017. H’s explanation in his Trial Affirmation[70] was that the action was taken by the prior trustee (namely Mr B____) to primarily take advantage of a more robust trust administration infrastructure provided by a dedicated licensed trustee, namely PBB, based in Nevada. H had also advanced the case that the change was for costs saving by appointing a new trustee in Nevada who would charge a fixed rate, as opposed to Mr B____ who charged an hourly rate.

113.  As pointed out by Mr To, the cost-saving effect did not appear to be borne out by evidence, and notwithstanding PBB being appointed as the new trustee, Mr B____ had continued to advise H on matters relating to the Family Trust. In fact, Mr B____ was also the trustee’s counsel, at least for the Family Trust[71].

114.  Having considered the evidence, I do not find H’s explanation for the reasons why the Family Trust was moved to Nevada, and/or why both the Family Trust and the Education Trust were then amended and restated, satisfactory.

115.  As this Court understands, the US Trusts are irrevocable discretionary trusts. H had described that the Family Trust as a “Foreign, non-grantor irrevocable trust”[72]. H’s expert PWC on US tax described the Family Trust and the Education Trust, as “foreign non grantor trusts for US income tax purposes”[73]. In the 2017 Family Trust Deed and the 2017 Education Trust Deed, the trusts are stated to be “Foreign Trusts” and “Non-Grantor Trusts”[74]. As stated in section 9.2 of the 2017 Family Trust Deed, a “grantor trust” means a trust or a portion of a trust of which under sections 671 through 679 of the Internal Revenue Code the trust’s settlor or another person is treated as the owner. A “non-grantor trust” means any trust or a portion of a trust which is not a grantor trust.

116.  PBB had described in his affidavit of 16 August 2019 filed in relation to W’s joinder application, the Family Trust is a “Nevada self-settled spendthrift trust” settled by H in accordance with the Spendthrift Trust Act of Nevada (Chapter 166 of the Nevada Revised Statutes) and he had produced a copy of the act[75].

117.  In particular, NRS 166.110 of the Spendthrift Trust Act of Nevada under “Discretion of trustee”, provides that the discretionary power of payment of sums to the beneficiary thereunder shall be absolute and such discretion shall never be interfered with for any consideration of the needs, station in life or mode of life of the beneficiary, or for uncertainty, or on any pretext whatever[76]. Further, NRS 166.120 sets out the restraints on alienation, and the exclusive jurisdiction of the court over any proceedings pursuant to this section.

118.  As seen in the Joinder Decision, PBB had obtained an order of the Nevada Court on 10 July 2019 that, amongst other things, the Nevada Court takes in rem jurisdiction over the Family Trust to the exclusion of all other courts and tribunals including exclusive jurisdiction over all of the Family Trust’s administration and internal affairs[77].

119.  PBB had pointed out in his affidavit that the Family Trust is a directed trust meaning that he, as trustee, does not make investment decisions for the Family Trust and that H, as Investment Director has the exclusive duty and power to invest and to maintain control over investment matters, and otherwise manage all of the trust property, and further that H in his capacity as the Investment Director shall have the duty to provide information of investment of the trust property to the trustee[78]. The trustee’s duty is primarily limited to administering the trust in Nevada and to making discretionary distributions of some or all of the trust property to or for the benefit of the beneficiaries.

120.  PBB’s affidavit was essentially in relation to the Family Trust and so was the legal opinion of Mr R______ produced by H[79]. For some reasons, neither PBB nor R______ had referred to the Education Trust. This was pointed out by this Court in the Joinder Decision, and as stated therein, for the purpose of the joinder application, W’s case was that the information provided by PBB for the Family Trust should also apply to the Education Trust[80].

121.  There was also no evidence as to what the law on trusts is under the law of New Hampshire, as the Family Trust was first set up under the law of that state. However, there were the two spendthrift restrictions set out in clause 30 of the 2015 Family Trust Deed[81], which would seem to make the Family Trust a spendthrift trust from the date of it being set up under the law of New Hampshire. In any event, there seemed to be no challenge from H that both the Family Trust and the Education Trust are self-settled spendthrift trusts.

122.  Mr To had referred this Court to a commentary paper Developing Trust in the Self-Settled Spendthrift Trust by Kellsie J. Nienhuser published in the Wyoming Law Review, Vol 15, 2015, Number 2,551. As pointed out by the author, a self-settled spendthrift trust, also known as an “asset protection trust” is a trust created by the settlor for his or her own benefit[82]. As further stated by the author:

“One of the most settlor-friendly states for creating an asset protection trust is Nevada. Nevada’s statute allows a self-settle spendthrift trust to shelter trust assets against child support obligations, alimony claims, tort actions and property division upon divorce.”

123.  Mr To had also referred the Court to an article Domestic Assets Protection Trusts in Divorce Litigation by Amy J Amundsen in Vol 29, 2016, Journal of the American Academy of Matrimonial Lawyers, 1, in relation to US domestic asset protection trusts (“DAPTs”) and their problems. Ms Amundsen had pointed out as follows[83]:

“DAPTs are trust created by the settlor who can designate himself (called ‘self-settled trusts’ or others, as beneficiaries. … People generally use DAPTs to protect their assets from potential creditors and taxation. They are created prior to marriages to protect one spouse from another in the event of a divorce as a spouse in that instance would be a future creditor. However most concerning of all, DAPTs are sometimes created during the marriage with marital property, and without proper protection, such a DAPT would allow the self-settling spouse to effectively pillage the rightful property of the other on his or her way out of the marriage.” (pp 3-4)

(emphasis underlined)

124.  Mr To further referred to Protect Assets Held in a Spendthrift Trust from Divorce by Breitstone & Breitstone (Trusts & Estates; New York (Sep 2019): 18), where it is highlighted that:

“Only 17 states currently permit DAPTS: … Nevada and Alaska have adopted legislation that shields against marital and child support claims.”

(emphasis underlined)

125.  Mr To submitted that the terms of the US Trusts and the letters of wishes showed a high level of direct or indirect control retained by H, whether through himself, his family members and his friends, or the trustee as someone who may be removed by H with or without reasons. Mr To pointed out that[84]:

(1) H or his family members or friends was/were appointed the Protector of the US Trusts, with the candidates of successor Protector being predominantly H’s family members or friends;

(2) Under Part 9 of the Schedule to the 2015 Family Trust Deed, H as settlor had the power to remove a Protector of the Family Trust with or without cause[85]; Under section 12.8 of the 2016 Education Trust Deed, the initial trust Protector is H who had the power to remove a trust Protector with or without cause (where the removed trust protector was appointed after the trust protector, or where a majority of trust protectors acts against the removed trust protector regardless of date of appointment)[86].

(3) H, as the trust Protector under the 2017 Family Trust Deed, has the power to remove the trustee of the Family Trust with or without cause[87]; Similarly, H, as the trust Protector under the 2016 Education Trust Deed and 2017 Education Trust Deed (until the 2019 Education Trust Deed) had the power to remove the trustee of the Education Trust with or without cause[88];

(4) H had reserved an overwhelming power as an Investment Director to deal with the assets of the Family Trust and Education Trust “as if an absolute owner”[89]. H’s investment power was one of personal (as opposed to fiduciary) and the trustee has to comply with any written investment directions given by him. Upon amendments in the 2017 Family Trust Deed and the 2017 Education Trust Deed (until the 2019 Education Trust Deed), H had remained to be the Investment Director, and had extensive investment power although his investment power then became a fiduciary one[90];

(5) whilst the Family Trust is stated to be irrevocable by the settlor or any beneficiary under clause 33 of the 2015 Family Trust Deed, it may be terminated by the trustee and upon termination, the trustee shall hold the trust fund and income upon trust for the settlor, ie H whilst alive[91]; As for the Education Trust, upon termination by the trustee, the trustee shall hold the trust fund and income for the beneficiaries then living or in existence[92];

(6) the trustee may appoint new trusts powers or revoke all or any of the trust powers under the two US Trusts, giving a free hand to the trustee to change the very nature and form of the trust (including discretionary trust powers)[93];

(7) under the Education Trust, during lifetime of H as settlor, H shall have the right to alter the manner in which the trust fund will be divided among the beneficiaries at his death[94]. This is repeated in the 2016 Education Trust Wishes[95].

126.  In his Trial Affirmation, H said R3 had removed him as the Investment Director of the Education Trust with effect from 1 August 2017 and an Investment Committee was formed[96]. There were no documents provided by H to support what he said, nor was this disclosed at the hearing of the joinder application.

127.  Mr To and/or Mr Todd also highlighted certain provisions in the trust deeds and letters of wishes. There are three relevant provisions in the 2017 Family Trust Deed and/or the letters of wishes dated 6 January 2017. The 1^st relevant provision is section 24.2 of the 2017 Family Trust Deed which provides that a beneficiary’s interest is a “mere expectancy” and that “A beneficiary’s interest in any trust created under the trust agreement shall be free from any interference or claim that may be made by the beneficiary’s spouse or any other party pursuant to any separation, divorce, or related proceedings” (“Spousal/Other Party Claim Provision”)[97]. It is further stated therein that “This provision is a material purpose of the trust”.

128.  The 2^nd relevant provision is the “No-Contest Provision” set out under section 29 of the 2017 Family Trust Deed[98] (“No Contest Provision”). In particular, section 29.1 of the 2017 Family Trust Deed for provides that upon contesting the trust, a person’s interest in the trust shall terminate, except as otherwise provided in sections 29.2 (power of suspension of interest), 29.3 (section 29 does not apply to the trust protector who under section 4.3 of the 2017 Family Trust Deed was H) and 29.5. Under section 29.5, a person contests the trust if he/she directly or indirectly initiates or otherwise pursues any of the actions stated therein, including any action to (a) contest the validity of the trust or the terms of the trust ;(b) any action to set aside or vary the terms of the trust.

129.  The Spousal/Other Party Claim Provision and the No Contest Provision only appeared in the 2017 Family Trust Deed. The Family Trust was moved to Nevada and the 2017 Family Trust Deed came into effect on 1 January 2017, after W issued the divorce petition against H on 21 November 2016.

130.  Under the Spousal/Other Party Claim Provision, the interest of H, being a beneficiary, in the Family Trust, shall be free from any interference or claim that may be made by W pursuant to any divorce or related proceedings, or vice versa.

131.  When asked by Mr To during his cross examination of H that the material purpose of the Spouse/Other Party Claim Provision was to defeat spousal claim, H disagreed and he then claimed his understanding was that the Spousal/Other Party Claim Provision relates to a claim by a future spouse of H or W and that this was clear in the original 2015 Family Trust Deed, and that W could not be excluded or removed as a beneficiary. H maintained his intention that section 24.2 was referring to a future spouse and that he wanted his children to know that he did not believe in divorce.

132.  H’s answer did not make sense. As pointed out by Mr To, section 24.2 is not about removal or excluding a beneficiary.

133.  When H was asked by Mr To in relation to section 29.1, H then claimed that he had nothing to do with the deed or words to that effect, and that his intention was the 2015 Family Trust Deed was that W could not be removed as a beneficiary. Again, H’s answer did not seem to make sense.

134.  In light of W’s 1^st s17 Application seeking the setting aside of dispositions into the Family Trust and in the alternative, seeking varying of the terms of the Family Trust, she would be caught by the No Contest Provision, and her interest in the Family Trust shall terminate permanently or be suspended.

135.  The 3^rd relevant provision is H’s wish expressed in paragraph 9 of 2017 Family Trust Wishes[99] (“Troubled Beneficiary Provision”) and the 2017 Family Trust Wishes were expressly stated to be deemed effective as of 1 August 2016 [100].

136.  Unlike the Spousal/Other Party Claim Provision and the No Contest Provision which only appeared in the 2017 Family Trust Deed, the Trouble Beneficiary Provision had also appeared in the 2015 Family Trust Wishes[101].

137.  Under the Troubled Beneficiary Provision, it is H’s wish that in the event that there are any imminent, potential or actual claims or proceedings of any kind whatsoever, including but not limited to matrimonial or other spousal-related disputes (including disputed concerning civil or common-law partners, palimony-related claims and child support claim), bankruptcy proceedings, or other contractual or tort disputes (“disputes”), by any creditor, claimant or other person against the “troubled beneficiary, H’s strong wish is that , amongst other things, until such time as such disputes have been resolved or completed, the trustee is to ignore or reject any requests made by the “troubled beneficiary” for any payments or distributions and for any existing payments or distributions to be suspended provided that the trustee may make payments to provide for the reasonable living and any emergency needs of the “troubled beneficiary”.

138.  On my reading of the provision, as the “disputes” include matrimonial or spousal-related disputes, “creditor, claimant, or other person” is wide enough to include either H or W. The effect of this would appear to be that if W makes a claim against H, H then becomes a “troubled beneficiary” and upon the trustee’s suspension of payments to H, there could be nothing available for W to claim. The reverse is if H makes a claim against W, W then becomes a “troubled beneficiary”, and she may be only entitled to reasonable living expenses and emergency needs under the Troubled Beneficiary Provision. I do not agree with Mr Scott that the Troubled Beneficiary Provision is only limited to claims against the beneficiaries by third parties, or that W and OS had misunderstood the meaning and the effect of the Troubled Beneficiary Provision.

139.  As for the Education Trust, although at the outset, the proper law of the trust is the Nevada law, the 2016 Education Trust Deed was of a similar format as the 2015 Family Trust Deed. There was no Spousal/Other Party Claim Provision, nor the No Contest Provision in the 2016 Education Trust Deed.

140.  Both these provisions appeared in the 2017 Education Trust Deed, namely the Spousal/Other Party Claim Provision in section 23.2 and the No Contest Provision in section 29 thereof.

141.  Under section 23.2 (Spousal /Other Party Claim Provision), the Children’s “mere expectancy” interests will be free from any interference or claim that may be made by any other party (ie including H or W) pursuant to any divorce or related proceedings. Under section 29 (No Contest Provision), the Children (through the OS) do not oppose the setting aside of the US Trusts. Although there may be concern on the part of OS, in my view, the Children cannot be said to have directly or indirectly initiated or otherwise pursued any actions contesting the Education Trust under section 29.5, and in my view, the No Contest Provision should not affect the Children’s “mere expectancy” interests. Section 29 is stated not to apply to the settlor or the settlor’s spouse.

142.  The Troubled Beneficiary Provision also appears in the 2016 Education Trust Wishes, and the Children will be protected under this provision if any person (including H and W) makes any claim against them.

143.  Mr Scott had submitted that OS’s contention that the US Trusts do not benefit the Children was plainly wrong. However, this was not OS’s contention.

144.  What Mr To submitted for the Family Trust was that under Part 4 of the Schedule of the 2015 Family Trust Deed, the Children were only one out of three beneficiaries, the other two being H and W. H and W were stated to be “primary” beneficiaries, and the Children and the Parties’ future grandchildren were stated to be “secondary” beneficiaries in paragraph 4 and 6(i) of the letter of wishes dated 1 November 2015. Under section 5.1 (a) of the 2017 Family Trust Deed, the Children, as descendants of H and W, were only one out of five beneficiaries. Under section 24.2 of the 2017 Family Trust Deed, a beneficiary ’s interests is stated to be a “mere expectancy”. In H’s 2017 Family Trust Wishes, H has expressed that he and W should be treated as “primary” beneficiaries and that the Children should be treated as “primary” beneficiaries after both H and W have passed away, but it is H’s strong wish that after H and W have passed away, the trustee should transfer all or as much of the trust property of the Family Trust to the Education Trust and to be held and administrated under the terms of the Education Trust. Mr To thus submitted that at best it seemed theoretical, if not illusory, to suggest that the Children have or will derive any monetary benefit under the Family Trust. I agree.

145.  As for the Education Trust, it was Mr To’s submission that by operation of the 2016 Education Trust Deed, W ceased to be the “settlor’s spouse” under clause 1.1 thereof and the Children fall outside the definition of beneficiaries being “issue of both the settlor and the settlor’s spouse” whether from either 16 October 2016 (date of H moving out from the former matrimonial home) or from 16 November 2016 (date of divorce petition).

146.  It was clearly stated under clause 1.1 under the definition “settlor’s spouse”, that as of the date of the 2016 Education Trust Deed, the settlor’s spouse was W. However, it seems that under the definition, the relevant time was “at the time in question”. In my view, there was ambiguity in the definition.

147.  Anyway, under section 5.1 of the 2017 Education Trust Deed, the beneficiaries have been redefined to be descendants of H (whether with W or not) and descendants of W, being named as the settlor’s spouse, including her descendants born after any divorce from the settlor but not including any descendants of any future spouse of the settlor unless such persons are also descendants of the settlor. Further under section 5.1(b), there are no primary beneficiaries or other classes of beneficiaries.

148.  As said earlier, H did not seem to have produced any other letter of wishes save the 2016 Education Trust Wishes which still refers to the Children being initial “primary beneficiaries” and which appears to be inconsistent with section 5.1(b) of the 2017 Education Trust Deed. Further, it is stated in the 2016 Education Trust Wishes that while education is not the sole purpose of the trust, it is the primary purpose for which the trust was created and funded, and that the primary purpose is to support education for not only the initial class of primary beneficiaries but for the potentially larger class of remainder beneficiaries and that the fund may last for 350 years, ie preserved for the use of “multiple generations”. There are conditions imposed in the 2016 Education Trust Wishes for distributions for tuition and fees and related education expenses for a beneficiary including that for the secondary education, college/university education, and doctorate-level education, the beneficiary has to meet a “grade point average”.

149.  Under the 2019 Education Trust Deed, the definition of the beneficiaries remains the same and so does the extent of the Children’s interest under it. In light of the provisions in the Education Trust Trust Deeds and the 2016 Education Trust Wishes, OS took the view that the monetary interest of the Children under the Education Trust would most likely represent only a small part of the trust fund. I agree.

150.  Mr Scott had argued that there was nothing untoward about H’s investment powers in the trust deeds. However, those powers showed that H was the one who has continued to have all the control in the investment of the funds and assets of Intero and Bremen notwithstanding the setting up of the US Trusts. As seen PBB’s affidavit in the joinder application, H was the one who held all the financial and investment information and that H was the one who had the duty to provide such information to the trustee.

151.  As mentioned earlier, it is H’s present case that he was removed as the Investment Director of the Education Trust as from 1 August 2017 and that an Investment Committee was appointed. Further, under the 2019 Education Trust Deed, H’s brother has been appointed the Investment Trustee and a person DM has been appointed as the Investment Manager or Advisor to the Education Trust and that according to H, his role as director of Intero and Bremen is mostly administrative, and that he has since 1 August 2017 only followed investment decisions and directions from the Trust Investment Committee.[102] However, in the same Trial Affirmation, he had also mentioned a number of investments recommended by the “Investment Manager”. H did not say those investments were recommended to the Investment Committee/Investment Trustee or what they thought of the investments. H was blaming W for causing Intero the loss of some USD 5m in profit due to the injunction order made by this Court against H on 22 November 2019[103]. H had further mentioned that it was impossible for R2 and R3 to find a new replacement “Investment Director” and “Investment Manager”. It is not exactly clear which “Investment Director” or “Investment Manager” R2 and R3 were trying to replace, and in any event, it is clear from what H said he had remained the sole signatory to the bank accounts of Intero and Bremen. In my view, H is clearly still the one in charge of investment decisions.

152.  Mr Scott had pointed out that H was not the Protector under the 2015 Family Trust Deed. This is correct as the then Protector was a committee comprised of H’s father and brother and I______ and another friend. However, this was amended as upon moving to Nevada, H was appointed the sole trust Protector under the 2017 Family Trust Deed. As for the Education Trust, all along H was the Protector until under the 2019 Education Trust Deed, the Protector was changed to a committee of H’s brother and I______.

153.  In any event, those amendments and restatements of the Trust Deeds, and changes made in relation to the Protector, the Investment Director and/or the Investment Trustee demonstrate the ease for the Protector and/or the Investment Director/Investment Trustee to be changed from H to his family member(s) and/or friend, or vice versa, without consent and knowledge of W.

154.  Under clause 26 of the 2015 Family Trust Deed, subject to prior written notice to the Protector, the trustee has power to change the proper law and forum of administration of the Family Trust to any part of the world, which the trustee did, as seen in the move and change to the Nevada law. This was clearly done with H’s knowledge and consent. Under clause 26 of the 2016 Family Trust Deed, the trustee has similar powers. The trustee again has such powers under sections 21 and 22 of the 2017 Family Trust Deed and sections 20 and 21 of the 2017 Education Trust Deed, subject to a 30 day notice to the protector and exceptions/provisions stated in the relevant sections.

155.  Further , under section 27 of the 2017 Family Trust Deed and section 26 of the 2017 Education Trust Deed, the trustee has the power to decant subject to a 30 day notice to the Protector, and provisions thereunder[104].

156.  To summarise, I agree with Mr To that the terms of the US Trusts and the letters of wishes showed a high level of direct and/or indirect control retained by H, whether through himself, his family members or his friends. Even though H had said the friends named by him in the additional/successor Protector committee are carefully selected by H as they are the Parties’ friends, I accept W’s evidence that they are really H’s friends, since there was no sufficient evidence that H’s named friends, in particular I______, had ever informed W of his appointment as a member of the Protector committee.

157.  The effect of the H setting up US Trusts and H injecting of the majority of assets held by H into the US Trusts is that W has no control over the assets held under the US Trusts and such assets can be moved from one jurisdiction to another without her knowledge or consent and she would only be provided with whatever financial information that the trustee would be provided with by H/Investor Director/Investment Trustee.

(iii) Whether W had knowledge of H setting up of the US Trusts

Between 2009 and 2015

158.  It was not disputed that US citizens could be at risk of onerous worldwide income, capital gains, estate tax and other tax reporting obligations. W and the Children hold US passports and US citizenship, although W also holds a French passport.

159.  H’s evidence in his Trial Affirmation was that after setting up Intero in 2009, he began to explore estate and financial planning options with regards to the setup of efficient financial structures for the family as the family assets began to grow. H said he had concerns in relation to W’s and the Children’s US tax reporting obligations and liabilities and the Children’s potential USA liabilities on their inheritance and that from 2009 to 2015, he had various discussions with W regarding the setting up of family trusts, estate planning options and W’s own US tax liability risks[105].

160.  It was also H’s case that W was in charge of filing all important documents and incoming mail in their home filing cabinet and that he would pass various trust brochures to W for filing and that she had read them all and had filed them in the home filing cabinet.

161.  Hence, it was H’s case that W was fully aware of his concerns and that W had the knowledge of his intention of setting up of family trusts. H relied on evidence including the following, as set out and defined later, (i) the Withers Letter; (ii) the R_________ Emails; (iii) the C_____ 2012 Emails; (iv) the L____ Email; (v) the setting up of the ______ Insurance Trust; (vi) the SBH Emails.

162.  H’s allegations were denied by W who said it was only in October 2015 that she became aware that H was pushing for the setting up of a family trust.

163.  In H’s Trial Affirmation, H’s evidence was that in or around October 2012, he had asked W to join him at a meeting at Withers, solicitors, for estate planning and tax advice especially as the V___ Land was undergoing a conveyance to W from her parents and that based on W’s and the Children’s US status, Withers advised the Parties to set up a trust and to place the investment portfolio into a US tax compliant trust[106].

164.  According to H, following the Parties’ meeting with Withers, Withers had sent them a letter on 26 October 2012 setting out their advice in relation to US tax and their scope of engagement in respect of estate planning including the settlement of family trusts (“Withers Letter”)[107]. He then said as the fees quoted by Withers were high, he tried to consult other firms such as Butler Snow which was referred to him by Nerine Trust Company and in his Trial Affirmation, H had produced emails between him and ____ R_______________________ between 9-19 October 2012[108] (“R_________ Emails”).

165.  However, the R_________ Emails were in fact earlier than the Withers Letter. The R_________ Emails were sent to H’s Yahoo Email Account. There was no evidence that they were copied to W or forwarded to W. There was no sufficient evidence that W was aware of H having consulted Nerine Trust Company and/or ____ R____________________, or that W was aware of what was discussed between H and ____ R________.

166.  It was W’s case that she never attended any meeting at Withers and she never saw the Withers Letter until H produced it in these proceedings. The Withers Letter was sent to H’s Yahoo Email Account. The Withers Letter had also mentioned to matters discussed in the “initial meeting”.

167.  When W was cross examined over the meeting with Withers, she claimed that all three of the Children had pneumonia at the time and she was taking them to and from hospital and H would not have invited her to the meeting. Mr Scott pointed out that the first time W had mentioned about the Children being ill at that time was during the trial.

168.  The Withers Letter indicated that there had been at least two meetings with H. H had not made it clear in his Trial Affirmation that there had been two meetings[109]. When H was cross examined over the meetings with Withers, he admitted that W was not present at what he called the “first intake meeting” with a Mr Erik Wallace at Withers but he then claimed that he would have sat down with W and he would have explained about that first intake meeting with Withers.

169.  H then said he attended a further meeting with Mr Wallace at Withers. Under cross examination, and when put that W was not asked to join the meeting, H then became somewhat equivocal and said that he could not remember whether W was physically present at the meeting or she had just dialled into the meeting or that he had called her. However, H said that the reason why W was dialled in was because it was W’s US/US Virgin Island tax issue that was a key subject of the meeting. H’s evidence that he had raised with Mr Wallace the question of whether a “_________ naturalised citizen” had any special US tax treatment (which apparently was advice received by W). Anyway, H again claimed that even if W was not physically present at that meeting, he would have sat down with W afterwards to explain what was discussed with Withers and maintained that he had left a copy of the Withers’ Letter in a box in the study at home and that W would file it.

170.  W admitted that she was responsible for filing of some documents in their cabinet at home, such as bank statements, but only those documents which H brought home for her to file. She maintained that she had never seen the Withers Letter until it was produced by H.

171.  It appeared that H first produced a copy of the Withers Letter in his 10^th affirmation of 12 August 2020.

172.  H’s written evidence in his Trial Affirmation gave the impression he and W were both at a meeting with Withers during which Withers had advised both of them to set up a trust and to place the investment portfolio into a US tax compliant trust. H had not produced any attendance notes from Withers of the two meetings. The 1^st Form Es were exchanged in 2017, and upon discovery of the setting up the US Trusts, W’s allegation was essentially this was done behind her back. As this issue arose as early as 2017, which was only about 5 years after the Withers’ meetings, there was no reason as to why H could not have tried to obtain attendance notes or written confirmation from Withers to support his case, as to the dates of the two meetings and whether W was present or was dialled in.

173.  What H said was the reason he went to consult Withers was also rather confusing. He had said it was for estate planning and tax advice and H mentioned about the V___ Land. There was however no sufficient evidence that the V___ Land was undergoing a conveyance to W form her parents at that time. Further, there was nothing stated in the Withers Letter in relation to advice as to whether W was subject to US Tax by reason of her being a “naturalised ______ citizen”. Withers had set out quite clearly the basis of their services for providing advice regarding US tax in 3 areas, namely (i) Estate Plans; (ii) W’s US Tax Compliance; (iii) Other Planning.

174.  Under (iii) Other Planning, the Withers Letters stated that they discussed with [H] the possibility of establishing a foreign grantor trust. It did not state “…..discussed with H and W”.

175.  In any event, having considered the evidence, I find there was no sufficient evidence that W had attended or was dialled into H’s meeting/s with Withers. As for the Withers Letter, as said earlier, it was sent by email only to H’s Yahoo Email Account. As the letter was addressed to both H and W, there was no reason why H could not have given Withers W’s email address or H could have forwarded a copy to W by email. I find there was no sufficient evidence that H had given W a copy at the time to file at the file, or that he had discussed with her and/or explained to her in full the advice of Withers at the time.

176.  In his Reply Trial Affirmation, about two weeks before the commencement of the trial, H had produced purported emails between W and one C_____________________________ between 6 October 2012 and 22 November 2012: “Re: Estate Planing and Property Purchase in _______”[110] (“C_____ 2012 Emails”). It was W’s case that H was the author of those emails and he had sent them in her name to C_____ from the Yahoo Sub Account mentioned earlier. W said she only met C_____ in December 2015[111] and never spoke to C_____ nor met her before December 2015 and that it was H who gave C_____’s email address to her. H denied this and claimed that W used the Yahoo Sub Account to communicate with C_____. It was H’s evidence that W was seeking C_____’s advice in 2012 while he was having a parallel discussion with Withers, and that W dealt with “________ conversations” while he dealt with “Hong Kong conversations.”

177.  H had also produced an email dated 17 September 2013 sent from H’s Yahoo Email Account with the same subject matter “Re: Estate Planing (sic) and Property Purchase in ________” informing C_____ that that he was in the process of buying a land parcel in ________ and stated that he had a couple of BVI companies already set out which would be his preferred ownership route and but not want to “trip up” any French wealth tax issues and was seeking advice from C_____ in relation to ownership structure. H admitted that this email was sent by him to C_____.

178.  As pointed out by Mr Todd, the reply email from C_____ on 7 October 2012 to the one purportedly sent by W on 6 October 2012 did not show the full email address of the recipient and was sent addressed simply to the H’s surname/W’s married surname. There was no salutation, and there were a number of “chevron signs” and blank space/gaps, and this was same as the one sent by C_____ on 22 November 2012. H had forwarded the C_____ 2012 Emails to his solicitors and had typed in “Subject: C____________ emails from 2012 sent [by W] from my yahoo account”[112]. It seemed that H was referred to H’s Yahoo Email Account.

179.  I also note that the email of 17 September 2013 which was admittedly sent by H to C_____ had the same subject matter and same typing error in the word “Planing”, which seemed to suggest that it was part of a chain of emails which followed on from the earlier C_____ 2012 Emails which H produced and purportedly sent by W.

180.  C_____ had passed away and was not able to give evidence as to whether she had a telephone meeting with W or with H in 2012, and whether it was H or W who first contacted her. However, the email from C_____ of 7 October 2012 was copied to one M____ L___________. There was no reason why she or someone in C_____’s office could not have been contacted by H to obtain attendance notes or record which would shed light whether it was H or W who communicated with C_____ and/or spoke to C_____ on the telephone in 2012.

181.  As mentioned earlier, H had alleged W had sent emails in his name from H’s Yahoo Email Account and W had alleged H had sent emails in her name from the Yahoo Sub Account. Having considered the C_____ 2012 Emails, notwithstanding the email of 6 October 2012 was purportedly sent by W, it is not possible to say whether those emails were sent by W, or sent by H in W’s name.

182.  In any event, in C_____’s reply email of 22 November 2012, she had recommended a notaire in ________, ie _____ C____ (“Mr C_____”) to assist[113]. Subsequently, it appeared to be H who liaised with Mr C_____ in relation to the acquisition of the S____ Land, as set out later in this judgment.

183.  H’s own evidence in H’s Trial Affirmation was that W never expressed to him any opposition to estate planning and wanted him to be responsible for their family finances. H had said in his Trial Affirmation that he notified W of all major financial decisions but did not necessarily seek her consent and that she never had an opinion either way and would usually just look at him blankly or change the topic by saying that this was his area of expertise[114]. H had also said that he had shared with W various trust structure brochures which he obtained from bankers, trustee companies and advisors, but W was dismissive and disengaged at the best of times, and had asserted that this was really H’s area of expertise and that H should take care of all family financial planning. In fact, it was also H’s evidence that the meeting in December 2015 between W and C_____ was arranged by him[115]. H said during the trial he arranged the meeting by email, but he had not produced these email exchanges with C_____.

184.  Based on H’s own written evidence of W’s attitude of being “dismissive and disengaged”, it seemed rather unlikely that he would have worked as a “team” with W or that W was to deal with “________ conversations” while he was to deal with “Hong Kong conversations” in relation to financial planning. I do not find H’s oral evidence was consistent with his written evidence. In any event, the C_____ 2012 Emails and also H’s own email in 2013 were only in relation to obtaining advice from C_____ on how best to take transfer of parcels of land in ________ from an estate planning and tax efficiency perspective. There was no mention of the setting up of any trust structure in the C_____ 2012 Emails.

185.  H had produced an email of 25 February 2013 sent by a _______ L________________________ to H (“L___ Email”), with copies of two charts together with a draft of H’s will with a date of 18 April 2013[116]. In the L____ Email, Mr L____ had said he knew H consulted Withers and that no doubt Withers had suggested building in various trusts into the wills to make them as tax efficient as possible.

186.  The L____ Email was sent to H at his work email address and copied to H’s Yahoo Email Account. W admitted that in 2013, H began to engage in estate planning and said H once showed her in April 2013 a copy of a draft will. When W was asked about the L____ Email, her answer was that there were never any signed wills, and that H had refused to pay Professional Wills Ltd and was later taken to the Small Claims Tribunal. W maintained that she did not know whether H was advised by Withers over trusts and that although H had discussed wills with her, he had never discussed trusts with her.

187.  Even if W was forwarded a copy of the L____ Email and could have known about H having consulted Withers had she read the L___ Email, there was nothing to show that she was aware of the details of any discussion H had with Withers.

188.  On about 13 July 2013, H applied to purchase a life insurance policy from AIA and subsequently, a life insurance policy “Wealth Preserver 3 – Infinity” was issued /effected on 4 September 2013 (“AIA Policy”)[117]. The beneficiary stated in H’s application form was his “Own Estate”. H then settled a trust called the ______ Insurance Trust on 10 October 2013 with original trustee Standard Chartered Trust (Guernsey) Limited for holding the AIA Policy (“______ Insurance Trust”)[118]. According to H, the insurance premium of USD 1,500,000 was partially funded by Intero (USD450,000) and partially funded by a loan from the Standard Chartered Bank (USD 1,050,000) and the loan plus interest was payable by Intero and guaranteed by H.

189.  H said he and W jointly attended a meeting in 2013 at the offices of Standard Chartered Bank to understand the settling of the of this trust[119]. In W’s 6^th affirmation filed in support of her 1^st s17 Application, she had said that the ______ Insurance Trust was the only trust set up within her knowledge. In her Trial Affirmation, W had also said she attended a meeting at Standard Chartered Bank with H in setting up the ______ Insurance Trust[120]. However, during cross examination, W clarified that she was mistaken as to when she attended the meeting and that it was only in October 2014 that she attended a meeting, to discuss the AIA Policy and how she and the Children would benefit from it, and not for setting up any trust, as the ______ Insurance Trust had already been set up earlier. It was further her evidence that when she attended the meeting, to her mind, it was in relation to the AIA Policy and that she only found out about the ______ Insurance Trust after it was set up. In this respect, W’s evidence was not consistent with her written evidence. However, whether she found out in 2013 or 2014, she clearly had knowledge of the ______ Insurance Trust and this was not denied by her. Having said this, the only asset of the ______ Insurance Trust was the AIA Policy and the trust was governed by the laws of ________[121] and the trust was a revocable trust. Further, although H had said that W and the Children were the beneficiaries, in fact there are 5 named beneficiaries of the ______ Insurance Trust, namely H, W and the Children[122]. The fact that W knew about the setting up of the ______ Insurance Trust did not mean that she had knowledge that H was intending to set up the US Trusts into which he would inject the majority of the Parties’ marital assets.

190.  W was also asked about an email which H had with a Mr _______ B___ of a New York firm of attorneys _________ ____ ____________ of 7-12 January 2015 on subject matter “VI Estate Taxes”[123], which were copied to W at one of W’s Personal Email Accounts(“SBH Emails”). In H’s email of 7 January 2015 initially to a Mr R______, H had said that he needed some estate planning advice for W and he mentioned the S____ Land had finally been transferred to W’s father to avoid a right of first refusal which the local townhall/collectivite had on all transfers of property in _______ to non-residents (“ROFR”) and that the local notaire in ________ had advised that subsequent gifts from a resident father to his non-resident daughter would not trigger any ROFR. H then asked how W should take the S____ Land from her father, whether it should be in her name or in a tax structure as the ultimate plan was to develop the land and leave the asset/rental yield to their children upon their death.

191.  Mr _______ B___’s initial advice on 8 January 2015 was that there would be no US tax impediment for W’s father to transfer the S____ Land to W by gift. After H’s email with some factual corrections/clarifications which on 9 January 2015, Mr B___ then believed that a trust would be essential to achieve H’s goals of minimizing US taxes while being able to control the S____ Land and most likely the trust should be the direct donee of a gift transfer from W’s father. Mr B___ further pointed out that there needed to be discussions on what provisions would need to be in the trust especially with beneficiaries and trustees to avoid the ROFR problem. H replied on 12 January 2015 to say he would get some answers from the notaire on what provisions a trust would require to be viewed as the same as a transfer from a ________ resident directly to his daughter. H had then said that the notaire had mentioned to him that if his BVI holding company was 51% owned by W, her father could gift the property to that entity and it would not trigger a ROFR. H had mentioned that their ________ Notaire was Mr C____.

192.  W was cross examined over the SBH Emails that she knew what was being discussed was setting up of a trust. W’s response was H did not discuss with her and he only copied her in the SBH Emails. In any event, it appeared that the SBH Emails were mainly in relation to the specific purpose of how the S____ Land could be transferred without triggering off ROFR.

193.  W admitted she was aware of H’s estate planning in that it involved preparation of wills, but as she pointed out, notwithstanding the Withers Letter and all H’s subsequent enquiries, no wills had in fact been signed by her or by H, apart from H’s 2011 Will executed by H in ____.

194.  As for W’s US tax reporting compliance, W had not worked since she moved to Hong Kong and had no income. H was fully aware of this, and that W had not filed any US tax returns since her move to Hong Kong in July 2000. According to H, in 2009 after he became a partner of the Group, he commenced estate and financial planning[124], and it would be prudent and reasonable for H to take steps to obtain professional advice about US tax and to act upon it.

195.  H had complained about W’s failure to submit required US tax documents, failure to make FBAR[125] filings and failure to confirm her citizenship status to banks under the FATCA[126] requirements.

196.  It was also H’s evidence that in 2013, he learnt that the US Internal Revenue Services (“IRS”) had sent officers to Hong Kong to investigate US expats non-tax compliance and that he became very concerned about W’s US Tax non compliance and immediately moved to close his joint account with W at HSBC[127]. In April 2014, BNP was seeking information of the Parties’ joint accounts and explained that this was in relation to the US law and the FATCA requirements starting from 1 July 2014, and W’s response to this was to ask BNP to close their joint account[128]. W had said in her Trial Affirmation that it was H who did not want to disclose his income to the US Government. W further explained during the trial that he BNP joint account was opened for the purpose of the house in ________, and that after closing the joint account, H had opened another account in his own name in ________.

197.  However, notwithstanding all the above, there was no sufficient evidence that H had any real concerns or that he had taken any concrete steps to resolve the matter of W’s US Tax Compliance with W. Although it appeared from the Withers Letter that for W’s US Tax Compliance, a US accountant would have to be instructed, there was no sufficient evidence that H had obtained any advice or quotation of fees from any US accountant after receiving the Withers Letter.

198.  In the end, it was W who herself had dealt with the issue and remedied her tax issues after the divorce proceedings had commenced. As set out in her Reply Affirmation, W said she had engaged Mr ______ T___ of US Asia Tax and Business Services Limited to help her with her FBAR filings. She had completed the FBAR amnesty program and had made filings from 2009 to 2014 and from 2016 to present. W had explained that she did not have any tax filings or relevant mandatory returns because since 2000 she has had no income to report[129].

199.  First, those emails produced by H only dated from about October 2012. There was no sufficient evidence that prior thereto, ie between 2009 and 2012 that H had obtained various trust brochures or engaged with discussions with banks, trust companies or law firms to explore estate and financial planning options as alleged by him. Even if he had, there was no sufficient evidence as to what intentions he had regarding setting up of trusts or that W was made aware of such intentions.

200.  Second, as seen in those emails produced by him, the advice H was seeking was piecemeal and from different service providers for different purposes, including how W was to take land from her parents or how H was to acquire land in ________ and to avoid “wealth tax”. Those emails were in my view no more than general or preliminary enquiries. It would appear therein that H had not decided what he wanted to do. In any event, there were no formal letters of engagements/appointments produced by H save the Withers Letter.

201.  Third, as H himself had said, when he discussed estate planning/tax/trusts with W, W was dismissive and disengaged at best of times. This in my view would not be surprising since as I have said above, all those emails only showed that H was making general or preliminary enquiries.

202.  Fourth, notwithstanding that the Withers Letter had set out clearly what their services and charges were, there was no follow up by H, whether with Withers or with any one else, save making further enquiries. As said, nothing concrete was done until October 2015 and even then, as seen below, it was only in connection with setting up the US Trusts. Nothing was done about making wills (so far as W was aware), nor resolving W’s US tax issues.

203.  Fifth, that W knew about the setting up of the __ ____ Insurance Trust in 2013/2014 does not mean that W would have knowledge of H’s intention of setting up a US Foreign Non Grantor Trust/Spendthrift Trusts in the nature of the US Trusts into which he would inject most of the family’s assets.

204.  Having considered the above, I find there was no sufficient evidence that between 2009 and 2015 that W had knowledge that it was H’s intention to set up trusts of the structure, nature and effect of the US Trusts, even if H had mentioned about “trusts” to her and that there was mention of “trusts” in those emails produced by H.

205.  What is clear is that H’s own words indicated W was not interested in the idea of setting up any trust and had viewed such ideas with suspicion. As seen in the H’s ED Email of 22 August 2015, H had complained to W that “The trust planning ideas I wanted you to investigate with K______ in ___ is not important to you, as you would rather believe that I wish to leave you penniless. All because the day you called my father and opened a Pandora’s box with him … You have refused to spend time to understand or independently research any of solutions that I have been proposing to give you the financial security you desire”[130]. In H’s “Perspective Email” to W of 26 August 2015, he had said referring to himself “He has intentionally kept no assets in my name so I will always be dependent on him. The US tax issue is just an excuse; the real reason is he wants to keep me subjugated under his control. I don’t trust him. He will steal everything I have in ________ given half a chance”[131]. In the “Communications Email” of 27 August 2015, in referring to hurtful words he had used with W, H had given an example “if you called my dad about the ______ flat and then accused me of some conspiracy to hide assets from you”[132].

October 2015

206.  It was H’s own evidence in his Trial Affirmation that W had complained about the lack of assets in her name and that he wanted to find a solution “to place assets in W’s beneficial interest”, so he could address and resolve her concerns around independent financial security[133]. He then went on to refer to a meeting on 27 October 2015 which he and W attended with Mr B____ who was at that time with the firm of solicitors DLA Piper in Hong Kong (“27.10.15 Meeting”).

207.  It would appear that H had contacted Mr B____ in early October 2015. H had said it was ____ R_________ who referred him to Mr B_____. When asked by Mr To, H said he could not recall when he first approached Mr B____. H had sent W an email on 6 October 2015 with the telephone number and email address of Mr B____ and that he had asked W to listen to the audio recording of a meeting he had with Mr B____ first before W was to call Mr B____ as there were lots of information in there and H was with Mr B____ for almost an hour[134]. This email was about 3 weeks after H sent W the Divorce Email.

208.  H then sent W a further email on 8 October 2015 forwarding to her an email from Mr B____ providing a quotation of a fixed fee of USD 30,000 for addressing all the planning discussed in relation to the trust, letter of wishes, wills, trust funding, written tax advice and related memoranda, consultation (in person, phone and email) and liaising with the trustee, as well as amnesty for W regarding her past tax issues[135]. H again asked W to listen to the audio recording first before W “fire him any questions”. H had said during the trial that W could not follow the audio recording, and that was why she had requested a meeting with Mr B____.

209.  What was not disputed was that on 13 October 2015, W had sent Mr B____ an email informing him that she had listened to the recorded meeting he had with H. W had asked to meet with Mr B____ briefly for clarification and in particular she had asked Mr B____ if all the assets were in a trust structure, what would happen if she and H were to get divorced (“13.10.15 Email”)[136].

210.  There was no reply email from Mr B____ to W’s 13.10.15 Email. What was not disputed was that W did attend, with H, the 27.10.15 Meeting with Mr B____.

211.  H’s evidence was that at the 27.10.15 Meeting, Mr B____ reiterated the same advice given by Withers in 2012, and that he and W were advised that setting up a family trust would be in the best interest of their family to protect their family assets, especially given their US tax considerations. They contemplated a separate trust fund or educational fund for the Children but they first wanted to get the simpler Family Trust set up as the letter of wishes for the Children’s Trust would be a more involved task. According to H, Mr B____ advised them to settle a trust that would allow for W to be a beneficiary of 50% of the marital assets and at the same time it would mitigate her US tax liabilities and report requirements[137].

212.  According to H, Mr B____ had proposed various solutions to address all of W’s concerns and that Mr B____ drafted the Family Trust deed to specifically allay her concerns, including the addition of W’s brother Alex to the list of Protector[138], and that at the meeting, W did not object to any of Mr B____’s advice. Further, according to H, Mr B____ advised that a two-trust structure was preferable. It was H’s evidence that W did not object to this suggestion and did not make any adverse comments on this advice.

213.  It was also H’s evidence that if W had concerns about the settlement of the US Trusts and her divorce settlement, she was at liberty to contact Mr B____ directly as he had provided her with Mr B____’s contact details and H had said he presumed that Mr B____ had not responded to W’s 13.10.15 Email because he had extensively addressed her divorce concerns at the meeting[139].

214.  On the other hand, it was W’s evidence that it was only in October 2015 that H suddenly became “gung-ho about trusts” and that he started “pushing” for the setting up of trusts. During cross examination, W said there were no discussions about a two-trust structure at the 27.10.15 Meeting, and that there was only one trust proposed for H and W and nothing in relation to a trust for the Children. She said she had told H that it (the trust) was not for her, and that she did not want a trust structure, and thereafter she shut off and later left the meeting. According to W, she only knew that H went ahead without her agreement when he disclosed it in his Form E.

215.  W pointed out that her brother was never named as a Protector in the “Protector list” or “Protector committee” in the 2015 Family Trust Deed and that her brother was only named as one of the 3 “preferred” persons besides H’s two friends whom the then Protector committee could, by majority vote, add to be a member of the Committee already filled by persons chosen by H himself[140]. Nevertheless, according to W, it did come as a shock to her when she first saw her brother’s name in the trust deed after the trust deed was disclosed by H in his Form E, and she had asked her brother as to whether H had ever discussed with him about settling trusts and invited him to be a “Protector”. His brother’s answer was there could have been a “theoretical discussion” but there was no serious proposal[141].

216.  W’s evidence that after the meeting with Mr B____, she went to meet with C_____ over her FBAR filing, streamlined filing compliance procedures and tax advice[142]. It was W’s evidence that she also consulted C_____ to get a second opinion after Mr B__ __’s advice in relation to setting up a trust. It was H who gave her C_____’s email address and W met with C_____ in December 2015. According to W, she was advised against the setting up of a trust by C_____ who reaffirmed that setting up a trust was not in W’s best interests, considering that the marriage was falling apart and C_____ suggested that W should work on her US tax amnesty instead. W said she was also advised by C_____ that H could have gifted money as well as properties to his wife (ie W) without attracting US tax penalty, and according to W, she had told H C_____’s advice.

217.  H had not kept a copy of the audio recording of the meeting he had with Mr B____. Mr B____ had mentioned in his email of 8 October 2015 about sending H a formal engagement letter with more details. There was no evidence that H had sent a copy of this formal engagement letter to W or that the engagement letter was addressed to both H and W or the engagement letter had required W’s signature, unlike the Withers Letter. Withers Letter had mentioned specifically that if conflicts of interests were to arise in case of a dispute between H and W, Withers would have to cease to act for one or both of them. In light of the 13.10.15 Email from W, the possibility of divorce, and thus conflict of interest would not have escaped Mr B____’s mind, or for that matter, H’s mind. Thus, in my view, even though W was present at the 27.10.15 Meeting, the evidence showed that H was in fact the client whom Mr B____ was advising and was acting for in the matter of setup of the trusts. In any event, Mr B____ had not replied directly to W’s 13.10.15 Email and W had not had any contact with Mr B____ since the 27.10.15 Meeting.

218.  The evidence showed that H met with Mr B____ on about 6 October 2015. There was no sufficient evidence that any draft deed was made available to W at the 27.10.15 Meeting. The 2015 Family Trust Deed was executed by H as the Settlor and Mr B_ ___ as the Original Trustee on 1 November 2015 without W being present.

219.  When producing the C____ 2012 Emails, H had also produced what’s app chats which he had with W on 10 December 2015 when W told him about her meeting with C_____[143]. According to those chats, W told H that C_____ had said for W to take the property in her name and no trust. W had asked H what type of trust he wanted to put the assets in and H had replied “Foreign Grantor Trust” and W said she would send the information to C_____.

220.  H had already executed the 2015 Family Trust Deed by then and if, as he said, it was executed with the understanding that there was no objection from W, there would have been no need for W to meet with C_____ to seek further advice. Further, when W asked H what type of trust, it would have been easy for H to send to W a copy of the executed trust deed and asked W to forward to C_____.

221.  There were two emails sent by H to W which would support W’s case that she had not agreed to any tax structure:

(1) H’s email of 31 January 2016 with the subject matter “Journal entry I made in my diary recently”[144]

(2) H’s email of 7 August 2016 with the subject matter “Some clarifications and thoughts”[145]

222.  In email (1) above, H had referred to the parties’ relationship and had said “railroading” seemed to be a big negative relationship theme for W and he reminded W of examples of W “railroading” him, including “no trust structure”. H was cross examined over this email and it was put to him that W had diametrically opposed a trust structure, his response was that the email was sent inadvertently to W and that it was meant for his own journal entry only, and that W’s complaint was after the trust had been set up and that had she had any objection, she should have said so at the 27.10.15 Meeting.

223.  I find H’s evidence that he sent the email to W inadvertently simply not credible, and in any event, the Education Trust was not set up by H until 1 July 2016. When this Court pointed out to him that it was open to him not to go ahead with the Education Trust, H had tried to explain that instructions for Mr B____ to set up both trusts had already been given in October/November 2015 and that he had committed to pay for both trusts and there was a delay due to Mr B____’s own personal issues. He then admitted that he could have stopped Mr B____ in January 2016, but he said he did not as there was no other solution to putting assets in a US citizen’s name.

224.  There was no supporting evidence that H had already committed to pay for both trusts in October/November 2015 and that the delay was due to Mr B____’s personal issues. The evidence showed that the Family Trust was set up within a very short time, and there was no reason why the Education Trust could not have been set up at the same time. H must be aware that whether he had given instructions to Mr B____ or whether he had committed to pay or not, the Education Trust was not set up when he executed the 2015 Family Trust Deed. Further, he clearly could have stopped the setting up of the Education Trust when he found out that W did not agree to the setting up of the Family Trust, yet he went ahead nevertheless to set up another trust.

225.  In email (2), H was complaining to W that even her sister did not understand and the lawyer (Mr B____) was baffled as to why a trust structure which he had been recommending for years and which most of the world of Non-US spouses had put in place for their US spouses would not work for W[146]. When H was cross examined over this email, his response was W was fully aware of the US Trusts being set up and only started to complain afterwards. When it was pointed out to H there was no evidence to support H’s case, H had responded it was only his word and Mr B____’s word (against W’s) and that W had taken a neutral stance and that even though she did bring up some concerns, Mr B__ __ suggested many solutions and W said she would think about them. H said he then went ahead and did what was in the best interests of the family and her.

226.  Mr To, on behalf of the OS, had also put to H that it would not have mattered whether W had objected to no, as he would still set up the trusts and would have transferred the assets into the trusts. H claimed he would take W’s views into consideration but she had no better solution for the family and so he went ahead with the best solution for the family. When it was put to him that even had W objected during the 27.10.15 Meeting, he would still regard that as the best solution and set up the trusts, H’s response was that he firmly believed the two trusts were the best solution possible.

227.  Mr B____ was not called by H to give evidence in this case, nor had H produced any attendance notes of Mr B____ in relation to the 27.10.15 Meeting. It was clarified during the trial that although H seemed to be asserting legal professional privilege at one stage in relation to his communications with Mr B__ __, he was not asserting the same in answering any questions asked of him by Mr To. Anyway, it was submitted on behalf of H that W herself could have called Mr B____ to give evidence. However, Mr B____ now resides in USA, and as said, H was Mr B____’s client in setting up the US Trusts and not W. As mentioned earlier, Mr B____ was the trustee’s counsel, as well as H’s. It is clear that H was the one who has remained in contact with Mr B____ and was able to obtain a copy of the missing Schedule A during the trial from Mr B____.

228.  In any event, the burden was on H to rebut the Presumption.

229.  I find there was no sufficient evidence that there had been any consent or agreement from W to the setting up of the US Trusts. There was also no sufficient evidence that W was fully explained the terms of the draft Family Trust deed before H’s execution. W was meeting up with C_____ in December 2015 to seek a second opinion, by which time H had already executed the 2015 Family Trust Deed. In any event, H’s own evidence clearly indicated whether W had consented or no, H would have gone ahead.

230.  There was no proper explanation by H for the sudden “expedited time line” in setting up the Family Trust.

231.  Instead of placing family assets in W’s beneficial interests and/or directly under her control as W had asked for, H had, without W’s agreement, moved the family assets further away from W and beyond her control by executing the 2015 Family Trust Deed on 1 November 2015 and injecting Intero into the Family Trust on the same day. Later on 1 July 2016, notwithstanding by then on H’s own evidence, he clearly knew of W’s objections to the trust arrangement, H went ahead to set up the Education Trust by executing the 2016 Education Trust Deed and arranged for Intero (through Bremen) to be transferred to the Education Trust. W was not named as a beneficiary of the Education Trust.

232.  As seen earlier, the US Trusts were amended and re-stated in 2017 and the Education Trust further amended and re-stated in 2019, all without W’s prior knowledge or agreement. There was no sufficient evidence that W knew that H had set up the US Trusts until he disclosed it in his Form E. There was also no sufficient evidence that a copy of the 2015 Family Trust Deed was given to W by either H or Mr B____ after execution until sometime in 2017 when R2 sent a copy to W[147].

233.  I also find that there was no sufficient evidence as alleged by H, that there was any agreement in or around 2013 between H and W that none of the family assets which H had generated would be placed in W’s name or their joint names as alleged by H. In fact, as seen earlier, W had clearly asked for her name be added to the M______ Apartment. The setting up of the US Trusts was rushed and it was at a time when the parties had lost their trust in each other and as found earlier, the marriage was in a “mortally wounded” state and they were arranging to see a marriage counsellor as a final attempt to save their marriage.

234.  Mr To had submitted that the setting up of the US Trusts (and also the I_____ Trust) was in the middle of a series of systematic efforts by H in “distancing assets” held by H and/or their information from W.

235.  The various acts of “distancing assets” relied on by Mr To were between July 2013 to September 2016[148], and carried out against the background of the Parties’ then marital state as earlier found by this Court. Although H had suggested to W to close the Parties’ HSBC Joint Account in May 2013, the actual closing was done in July 2014 without W’s knowledge and while she was away. Although the cancelling of W’s credit cards was temporary, as W pointed out, H seemed to think he could do whatever he wanted. There was no sufficient evidence that H had informed W of his other acts in relation to his finances as set out by Mr To.

236.  Anyway having considered all the evidence, I am satisfied that the dispositions made by H into the US Trusts would have the consequence of defeating W’s claim for financial provision. As said earlier, the burden is on H to rebut the Presumption in relation to W’s 1^st s 17 Application regarding the US Trusts, and to satisfy this Court that the dispositions he made into the US Trusts were not made with the Intention. Having considered all the evidence, I find H has not been able to discharge the burden.

(iv) The M_______ Apartment

237.  The M______ Apartment is an apartment in a gated community in ____________. As said earlier, it was W’s case that H bought this property out of their family funds.

238.  H’s case in relation to the alleged arrangements between him and R4 regarding the M______ Apartment had been inconsistent and confusing:

(i) H’s initial evidence in his 1^st Form E on 1 February 2017 was that the property was transferred by him to his father to be held on trust for asset protection, tax and succession planning for the benefit of the Children and H’s parents[149]. His then case was clearly that R4 was a trustee and appeared to be saying his parents were residing in the property. In H’s 1^st Answers on 28 July 2017 to W’s Questionnaire, his position however changed in that his then evidence was that the property was originally purchased by H with the intention for his parents to live in but they had not moved in yet and that the M______ Apartment was at the time leased out and that the rental income was retained by the trust[150]. Nevertheless, H’s case at that stage was clearly that he purchased the property and he transferred title to R4 for R4 to hold it on a trust for the Children and H’s parents.

(ii) After W issued the 1^st s17 Application, in H’s 3^rd affirmation in opposition filed in October 2017, H’s evidence changed completely in that his case was in 2006, he decided to co-invest in a property in _____ with R4 which would be primarily for his parents’ use and benefit and this would ensure he would meet his legal obligations under the Senior Citizens Act and that he had told W about this[151]. H had also said there was “partial financial contribution” from R4. In his 2^nd Answer filed in April 2018 in response to W’s questionnaire, H’s evidence was that he no longer had record of R4’s “partial financial contribution” nor recollection of the exact amount, and that he recalled R4 “put in cash investment and put in sweat equity” and that R4 would have earned approximately 30-40% of the beneficial interest in the property, and that he would ask R4 to collate records[152]. It was only in H’s 2^nd Answer that he disclosed the I_____ Trust Deed and other documents in relation to the M______ Apartment. As further seen in this Court’s decision of 22 November 2019 in relation to W’s applications for injunction and discovery[153], H’s arrangement of the transfer by R4 of the M______ Apartment into the I_____ Trust was the day after H had given his 1 Undertaking;

(iii) In H’s Trial Affirmation in April 2021, his evidence changed again in that R4 and he agreed that R4 would have a call option to purchase the M______ Apartment from him by reimbursing the mortgage obtained on his behalf and for any costs incurred by him, and said he paid INR 25,125,310/HKD 2,684,393 and that R4 paid a total of INR 12m /HKD 1,274,388 towards the purchase of the M______ Apartment[154].

239.  A seen above, H’s case in relation to the M______ Apartment was like a moveable feast moving from that he originally purchased the property which was transferred to R4 as trustee, to a co-investment between him and R4, and finally to an agreement between him and R4 with R4 having a “call option”. H’s case was also inconsistent with his father’s evidence in R4’s affirmation of 18 September 2019.

240.  It was R4’s evidence that there were two verbal agreements between him and H in relation to the M______ Apartment, one at the time of the joint purchase by him and H in September 2005 (“1^st Agreement”) and the other one at the time when title was transferred to R4 by H on 12 September 2016 (“2^nd Agreement”). According to the 1^st Agreement, the property was to be purchased in H’s name in order for H to obtain preferential mortgage and that H would assist R4 in paying the down payment on the understanding that the property was to be owned by R4 and his wife (H’s parents) and that H’s parents would make payment towards the down payment , contribute cash towards the finishing of the property etc and based on this understanding, R4 said he had incurred costs of approximately INR 8,000,000/HKD 880,000 to finish the interiors, management fees and other expenses.

241.  Then, according to R4, at the time of the title transfer, he offered to reimburse H for the initial purchase cost less any equity contributions R4 made, but H highlighted his obligation under the Senior Citizens Act and therefore there was the 2^nd Agreement in relation that the settling of the property into a trust for the Children and that R4 and his wife had the right to reside in the property and to access any income generated from the property to support themselves during their lifetime. It was also R4’s evidence that he did not feel comfortable moving into the property until legal title was in his name and that they planned to move within the year, namely 2019.

242.  Thus, R4’s evidence indicated that only a sum of about HKD 880,000 was incurred by him for the finishing of the interiors management fees and other expenses. There was no evidence or supporting documents produced by R4 that it was R4 who had paid the down payment, and that on R4’s case, although he had offered to reimburse H at the time of the 2^nd Agreement, the effect of the 2^nd Agreement appeared to be that instead of R4 reimbursing H, R4 agreed with H to settle the property into the I_____ Trust.

243.  It was not disputed that the M______ Apartment was purchased in September/October 2005. As seen in the letter dated 28 October 2005[155] from the developer, the total costs was INR 27,412,500 of which the sum paid at the time of booking was INR 2,500,000, and after a discount/rebate of INR 2,037,190, the balance payable on 29 October 2005, the date of foreclosure ( or date of completion), was INR 22,875,310.

244.  There was no other deposit/down payment payable apart from the booking fee.

245.  H obtained a loan for non-resident Indians for INR 22,875,310 and the term of repayment was 240 months, or 20 years. H was the only borrower on the loan application form[156] (“Loan Application Form”). Although R4’s name was being stated to be the name of the father of the applicant for the loan and that R4’s name was given to be the “local contact power of attorney (in ____)”, the sole applicant for the loan was H, who had provided the details of his employment including his monthly income. There was no co-applicant, and this again contradicted H’s evidence in his Trial Affirmation that he and his father made a joint loan application[157]. Under cross examination, H then admitted he had been “mistaken” and that he thought R4’s name being stated thereon made R4 a co-applicant. I find H’s evidence simply not credible.

246.  The Home Loan agreement was executed by H on the same day. Under article 5 of the Home Loan Agreement, H covenanted he had absolute, clear and marketable title to the property and that the property was absolutely unencumbered and free from any liability whatsoever.

247.  Further, by a power of attorney dated 15 November 2014, H had appointed R4 as authorized signatory to execute any lease agreements and related documentation as well as the purchase and sale agreements and related documentation in respect of the M______ Apartment[158]. In the power of attorney, it was stated that H was the owner of the M______ Apartment.

248.  Under the transfer deed dated 12 September 2016 pursuant to which H transferred the M______ Apartment to R4 , it was stated that H was “the absolute owner and seized and possessed of full and undivided share” of the property and that the transfer was in consideration of his “natural love and affection” for his father[159].

249.  In H’s Trial Affirmation, H’s evidence was that after paying the initial deposit, R4 made payments amounting to INR 9.5m or HKD 1,180,077 towards various costs, including the down payment, leasing fees, management and renovation[160]. H’s evidence was again confusing. As seen earlier, there was only the booking fee of INR 2,500,000 and there was no other initial deposit or down payment payable. Anyway, H’s evidence appeared to be that the total sum of INR 9.5m would include the booking fee/initial deposit/down payment of INR 2.5m as well. H had set out a table of such costs and produced receipts[161]. Apart from 2 receipts from a painter contractor _______ Y____ on his letterhead with address and mobile numbers, the others were all from one _____ K___ and Associates with no letterhead and were stated to be for “Management and Consultancy Fees”, for looking after all work related to the apartment and were issued annually between December 2011 and December 2020. None of those receipts concerned the payment of the initial deposit/booking fee/down payment of INR 2.5m.

250.  On the Loan Application Form, the incidental costs for the purchase eg stamp duty and registration charges were stated to be INR 1,370,625 (“Incidental Costs”) and it was also stated that an amount of INR 2,500,000 was already spent. The loan applied for by H was initially INR 26,283,125, but the actual loan amount in the Loan Agreement was in the end INR 22,875,310, which was the balance of the purchase price as seen earlier in the letter of 28 October 2005.

251.  When H was cross examined over what H said R4 had paid, H came out with a total figure of INR 12m, being INR 2.5m plus INR 9.5m, which meant the total figure had changed again from H’s Trial Affirmation. In any event, there was no evidence as to who paid for the Incidental Costs. There was no receipt produced by R4 or by H as for the payment of INR 2.5m.

252.  It was put to H that any money paid by R4 was from money made available to R4 by H. He denied this and claimed that only the loan repayments were paid by him.

253.  Then, on the 5^th day of trial, H suddenly produced a letter dated 16 September 2005 purported to be signed by his father (“Exhibit R-3”) stating among other things that R4 had paid the “booking deposit” of INR 2,500,000 to the developer. H claimed that he had made attempts to look for this letter from his files either in the cabinet or the computer and that his father and his brother looked into the basement of the old house (K______ M___) and found the letter. However, according to H, R4 had moved into the M______ Apartment, I____ was under lockdown and that H’s brother was supposedly unable to even go over to assist R4 with giving evidence through VCF, and further R4 was unwell and was not able to give evidence, not even through VCF.

254.  When asked when R4 and H’s brother found Exhibit R-3, H then said it was prior to his starting to give evidence. If this were true, there was no reason why H made no mention of it when he was being cross examined over R4’s payments on the 4^th day of the trial, and then only produced it on the 5^th day. Further, there must have been evidence of how the letter was sent to/received by H, whether by fax or by email or by courier etc, but no such evidence was produced by H. I do not find H’s evidence credible at all and I do not attach any weight to this letter. In any event, the letter was not consistent with H’s earlier evidence in his 1^st Form E that he paid the purchase price, nor R4’s evidence in his affirmation that H had assisted R4 in paying the deposit of INR 2.5m.

255.  It was submitted on behalf of H that it was hardly surprising that H was named as the owner on the Home Loan Agreement or the mortgage or 2014 power of attorney as the developer and the bank respectively would not have known about H’s and R4’s private family arrangement.

256.  However, there was plenty of documentary evidence which indicated that all along H had himself regarded the M______ Apartment to be his assets. In his email of 9 October 2012 to ____ R_________, H set out a list of his assets of which item 6 referred to a “property in I____ (held under [H’s] individual name)”[162]. It was also stated in Withers Letter that H had property in I____, which H confirmed during the trial that the reference was to the M______ Apartment. In H’s email to Mr B___ of 7 January 2015, he told Mr B___ that he would prepare a list of his assets and he had said most of his assets were held under two BVI companies of which he was the sole shareholder and director and that the only assets he held directly in his own name were some bank accounts, one brokerage account and an apartment in I____[163].

257.  When the above was pointed out to H during the trial, H’s answer was that he had “corrected” or made clear” to the professionals that he was holding the M______ Apartment for his father. There was no supporting evidence produced by him in relation to his “correction”. H had also said he wanted to consult the professionals on the “temporary tax consequences” on him as holder of the property, but as pointed out by Mr Todd, this would mean all the more important why he should have made this clear in the first place when listing out his assets.

258.  Finally in H’s Trial Affirmation, he had produced two charts depicting the structure of the family assets in November 2015 and July 2016 respectively and 100% of the “I____ Apartment” was listed by him under H’s assets in both charts[164].

259.  H had said in his 3^rd affirmation in opposition to W’s 1^st s17 Application that in December 2015 he decided to prepay the outstanding mortgage loan of USD 200,000 because he did not wish to continue to pay a high fixed interest rate of 8.5% for a mortgage loan on non-income producing property and there was no prepayment penalty[165]. At trial, H then gave another reason, that at that time the rupee had collapsed. In any event, it was put to H that the real reason for paying off the mortgage was that without doing so, he could not transfer the property to his father by reason of Article 5.4 of the Home Loan Agreement, which stipulated that H was not to let out or otherwise part with possession of the property or any part thereof, or sell, mortgage, lease, surrender or otherwise however alienate the property or any part thereof unless with the agreement of the mortgagee[166]. He denied this.

260.  The repayment and the discharge of the mortgage was in December 2015 shortly after the setting up of the US Family Trust by H and prior to the setting up of the Education Trust. The M______ Apartment was transferred to R4 on 12 September 2016, which was about a month before H moved out of the former matrimonial home. On 27 September 2016, R4 entered into a 11 month lease for the property to be rented out.

261.  W’s evidence during the trial was that the M______ Apartment was purchased by her and H together as a “rental investment”. She had said during the trial that the property was chosen because it was near a golf course where H’s sister was a member and that in 2015 it was rented to a “German-Malaysian couple with a child”. H’s evidence was however his sister lived in ________ and was not a member of a nearby golf course and did not play golf and that there were no discussions regarding any rental returns as alleged by W. Whichever, even on H’s own evidence, it was rented out.

262.  W admitted that the interior decoration of the M______ Apartment was carried out by H’s mother although W had also claimed to have been consulted on some interior design decisions.

263.  The fact that H’s parents had received marketing brochures from the developer or they had helped with the interior decoration of the property would not necessarily mean that they then acquired beneficial interest in the property. Even if R4 did pay about INR 12m, according to H’s latest case during the trial, there was no sufficient evidence that the amount had come from R4’s own resources.

264.  There was no evidence that W had ever consented to H placing the title of the M______ Apartment in the name of R4. In fact, on the contrary, she had asked H to add her name to the M______ Apartment in November 2014. Even on H’s own case, from those emails he sent to W at end of August 2015, he knew W had called R4 about the M______ Apartment and had accused H of some conspiracy to hide assets from her, yet after paying off the mortgage loan, H then proceeded to transfer the title of the M______ Apartment to R4. Also, notwithstanding H’s 1^st Undertaking to the Court, R4 was arranged to transfer the M______ Apartment to the I_____ Trust.

265.  Having considered all the evidence, I am satisfied H’s disposition of M______ Apartment into R4’s name would have the consequence of defeating W’s claim for financial provision. Again, I find that H had not been able to rebut the Presumption on him, in that he was not able to satisfy this Court that the transfer of the M______ Apartment into R4’s name was not with the Intention.

(v) The OS’s position in relation to W’s 1st s 17 Application

266.  In the OS Opening Submissions, Mr To had made it known that subject to the oral evidence given in the trial, the OS took the provisional view that the Children had genuine difficulties in supporting H’s case under W’s 1^st s17 Application, for the reasons set out earlier in this judgment, OS took the view that it is theoretical if not illusory that the Children have or will derive any monetary benefit under the Family Trust, and that under the Education Trust, the Children’s monetary interest would most likely represent only a small part of the trust fund.

267.  In the OS Closing Submissions, Mr To confirmed the OS on behalf of the Children do not object to the setting aside of the US Trusts or alternatively they do not object to the varying of the US trusts, save and except that in the event of variation, (i) not less than HKD 15m to HKD 20m should be retained under the Education Trust; (ii) the Education Trust should be varied to the effect that H shall not have any right to alter how the trust fund will be divided among the beneficiaries, whether at his death or otherwise; (iii) the Family Trust and the Education Trust should be varied by expressly stating that the Children’s participation in these proceedings will not be construed as having contested it in any way.

268.  In so far as the M______ Apartment was concerned, Mr To submitted that the Children’s interest would vary materially according to the factual cases put forward by H at different times in relation to the M______ Apartment.

(vi) Conclusion on W’s 1st s 17 Application

269.  Having considered all the above, as I am of the view that H has not been able to discharge the burden on him or to displace the Presumption in relation to his dispositions into the US Trusts and his disposition of his interests in the M______ Apartment to R4, I have come to the conclusion that the following dispositions, namely (i) the disposition by H of his share(s) in Intero to the Family Trust on 1 November 2015, (ii) the disposition by H of his share(s) in Bremen to the Education Trust on 1 July 2016, and (iii) the transfer of H’s legal and beneficial interests in the M______ Apartment to R4 on 12 September 2016 should be set aside.

270.  In so far as the US Trusts, in light of the dispositions in (i) and (ii) being set aside, it follows that any subsequent disposition/transfer/purported sale by Family Trust of the share(s) in Intero to Bremen will be set aside. There is no need to make any further setting aside orders as sought by W. Similarly, in relation to the M______ Apartment, in light of the disposition in (iii) being set aside, it follows that the subsequent transfer by R4 to the I____ Trust will be set aside.

271.  As the application for variation of the trusts was only an alternative application, in light of my conclusion that the dispositions should be set aside, there is no need to consider any variation of the trusts.

272.  The effect of the setting aside order is that the share(s) in Intero and in Bremen should be re-registered in H’s sole name, and the M______ Apartment should be registered in H’s sole name. In any event, the value of those assets should be included in the Family Pot for division.

(4) W’s 2^nd s 17 Application - Issue 5

273.  W’s 2^nd s 17 Application was filed on 22 March 2017 and amended and refiled on 22 March 2021 in relation to dispositions/withdrawals made from two sets of bank accounts[167].

274.  The two sets of bank accounts are:

(1) 2 banks accounts (ending “783” and “776” respectively) held in the joint names of H and R4 at the K___ _______ Bank (respectively “_ __ 783 Account” and “_ __ 776 Account”, and collectively “K___ Accounts”)

(2) a bank account held in the sole name of H at the Standard Chartered Bank in ____________ (“SC _______ Account”).

275.  In so far as the K___ Accounts were concerned, there were 5 dispositions/withdrawals totalling INR 16,200,000 (or about HKD 1.8m) which W set out in her 2^nd s 17 Application and which she applied to set aside:

(1) The withdrawal of INR 1,200,000 from the accounts to R4 on 24 February 2016;

(2) The withdrawal of INR 500,000 from the accounts to H’s mother on 24 February 2016

(3) The withdrawal of INR 2,500,000 from the accounts to R4 on 24 February 2016;

(4) The withdrawal of INR 10,000,000 from the accounts to H’s mother on 16 August 2016;

(5) the withdrawals of INR 2,000,000 from the accounts to R4 on 16 August 2016.

276.  In W’s Opening, it was W’s case that there were further sums totalling at least INR 17m withdrawn from the K___ Accounts August 2016 to November 2018[168]. Thus, W was seeking a total sum of about INR 33.2m to be set aside or treated as H’s resources. However, in W’s Closing Submissions, the dispositions from the K___ Accounts were set out in a table, and W corrected the final total amount of the dispositions from the K___ Accounts in her 2^nd s17 Application to be INR 17,133,000, instead of INR 33.2m.

277.  As for the disposition in relation to the SC _______ Account was concerned, in W’s 2^nd s17 Application, W applied to set aside a total sum of USD 3,231,833.55 withdrawn from the SC _______ Account to H’s Personal Standard Chartered Private Bank Account (“SC Private Bank Account”) on 3 January 2017 and from H’s SC Private Bank Account to Intero or other unknown third parties on 18 January 2017. However, in W’s Closing Submissions, it would appear that the total amount of the sum withdrawn from H’s SC Private Bank Account to Intero on 24 January 2017 was only USD 526,107.55[169].

278.  It was also stated in W’s Opening Submissions that W had not formally applied to set aside the dispositions in her 2^nd s 17 Application which would interleave another layer of third-party dispute and that W did not need to, as it was sufficient to say that those dispositions/withdrawals were resources of H[170] and that the main issue was whether, as H contended, that he held the two sets of bank accounts on trust for his parents, and it was stated in W’s notice of application that she intended to apply to set aside in the event that H, and/or third parties failed to show, in respect of one of either of the accounts set out, that the beneficial ownership does not follow the legal ownership.

(i) The K___ Accounts

279.  The main issue in relation to the K___ Accounts was whether, as alleged by H, those accounts belonged to H’s parents and were operated by them.

280.  It was H’s evidence that the K___ Accounts belonged to his parents and that all deposits into that accounts were made solely by his parents out of their life savings and that the accounts were opened for the benefit of H’s parents to take advantage of the preferential non-residential deposit rates of 9.4% per annum for one year which H could obtain compared to the 6-7% interest rates available to local residents.

281.  The problem with H’s case is that, like his case in relation to the M______ Apartment, his case moved from one to another:

(1) In his 1^st Form E, in “Annex 2.3 “ he had set out a list of his bank accounts but disclosed only the ____ 783 Account which he had indicated that that R4 was the other account holder and the balance as at 30 January 2017 was INR 5,299 and that H’s interest therein was said to be “0”[171]. H had annexed to his 1^st Form E (i) a letter dated 16 August 2012 from R4 (“16.08.12 Letter”)[172]; and (ii) copies of the statements of the ____ 783 Account and also the ____ 776 Account from 1 January 2016 to 16 January 2017, also quarterly statements from 1 January 2016 – 31 December 2016 (which were only faintly legible)[173] (collectively “K___ Statements”). In the 16.08.12 Letter headed “SAVINGS ACCOUNT WITH K___ BANK HERE IN YOUR NAME”, R4 stated that he was proposing that H open two savings account in India to which would be credited money R4 remit to H for the purpose of earning a slightly higher rate of interest and that it was clearly understood that H had nothing to do with this money whatsoever and that H would give a mandate in R4’s name so that R4 could operate and close them whenever R4 wanted. The K___ Statements showed H’s name and R4’s name (MANDATE);

(2) When asked in W’s 1^st Questionnaire about the source of initial funds, the answer H gave in his 1^st Answer was that there were two sums USD 188,136 and USD 125,001 respectively transferred on 27 March 2012 and 30 April 2012 from H’s HSBC HK Premier Account (“HK Premier Account”) into H’s HSBC ____ Premier Account (“_____ Premier Account”) which were then transferred into the ____ 783 Account on 5 May 2012 in order to open an NRE (Non Resident) account[174]. H had stated that the initial funds were deposited by H as support to his parents given he did not provide monthly maintenance to his parents to assist with their living expenses[175]. H then annexed copy of an email from R4 to H dated 25 July 2017 with R4 (“25.07.17 Email”) stating that the attached statement dated 29 May 2012 of H’s HK Premier Account showed that funds came in on 2 and 3 May from which funds were transferred on 5 May to ____ to open an NRE account with them which related to the funds sent to H by H’s mother on 26 April[176]. The K___ Statement indicated two amounts of INR 5,219,182.95 and INR 5,241,946.05 were credited into H’s ____ Premier Account respectively on 2 and 3 May 2012 and on 5 May 2012, INR 10,000,056.18 was transferred into the ____ Account “776” with H’s name thereon and the words “TFR to SELF NRE FD”[177].

(3) In H’s 2^nd Answer to W’s further questions, his answer was essentially that the K___ Accounts belonged to R4 and H was simply holding the sums therein on trust to obtain the preferential non-residential rates and that H had/has no interests in these accounts. H’s explanation of the initial funding was that it was merely a pass through of monies provided to H from his parents for placing in the deposit account and referred to “Annexure II”[178]. In “Annexure II”, H produced a copy of his HK Premier Account statement for the month ending 27 April 2012[179]. He identified an amount of USD 188,136.05 credited into H’s HK Premier Account on 27 April 2012 and another amount USD 125,001.53 credited on 30 April 2012 but there were no details from where the amounts were deposited/transferred.

(4) Then suddenly in H’s Trial Affirmation, he said he made a mistake in his answer 8.3 of his 1^st Answer in referring to the USD 125,001 which he received on 30 April 2012 as that sum did not relate to any of the K___ Accounts and was a transfer from one of his other accounts or Intero to his HK Premier Account[180].

(5) When H realised that R4’s 16.08.12 Letter in which R4 was proposing to H to open two savings accounts was in fact more than 3 months after the initial two sums were transferred to the K___ Accounts on 5 May 2012, H then suddenly produced another purported letter from R4, this time dated 2 January 2012, but with exactly the same contents as the 16.08.12 Letter (“02.01.12 Letter”)[181].

282.  When H was cross examined about the two identical letters, namely the 16.08.12 Letter and the 02.01.12 Letter which were sent within a fortnight, H said that R4 had inadvertently put his birthday on the 16.08.12 Letter and the 02.01.12 Letter was R4’s “reminder” to H of what he needed to do. I do not find H’s evidence credible. There was also no evidence as to how the 16.08.12 Letter or the 02.01.12 Letter were sent by R4 to H, whether they were sent by R4 by email or by fax or by posting.

283.  Anyway, what one can make out from the faintly legible K___ Statements, under “Account Name (account numbers)”, there were two savings account numbers but only H’s name appears as the “account name” for both savings accounts [182]. Someone had written “NRE” against what appeared to be the ____ 775 Account and “NRO” against what appeared to be the ____ 783 Account. As mentioned earlier, the rest of the statements showed H’s name, and R4’s name only shown as the (MANDATE). In fact, it was also H’s own case that the K___ Accounts were opened in his name to hold on trust for R4[183]. In H’s Trial Affirmation, H produced an email R4 had sent H on 19 April 2012 in which R4 said he had checked with HSBC and that they only offered 8% per annum for 2 year Tax Free FD to NRE and so R4 had asked K___ Bank to tell H how to open an online NRE A/C with Power of Attorney for R4, and they [K___ Bank] offered 9.4% per annum for 1 year from that day so ICICI must have also reduced from today (“19.04.12 Email”)[184]. Further, in the bank statement of H’s ____ Premier Account, the transfer out of INR 10,000,056.18 on 5 May 2012 was stated to be “TFR TO SELF NRE FD”[185]. In the K___ Accounts statement, there was a “CASH WITHDRAWAL BY SELF @4253” of INR 10,000. By comparison, withdrawals by H’s parents were with their full names stated.

284.  Having considered the above, I find that the K___ Accounts were/are in fact not “joint accounts”, nor were they held in the joint names of H and R4 as stated in W’s 2^nd s17 Application. In my view, the K___ Accounts were opened in H’s sole name only, with a mandate, or power of attorney to R4.

285.  As the K___ Accounts were opened in H’s sole name and held by him, the burden was on H to satisfy this Court that the beneficial interest in the K___ Accounts belonged/belong to R4 and/or his mother, and not to H.

286.  The 19.04.12 Email from R4 indicated that H would be explained by K___ on how to open an online NRE A/C, and there was no reason as to why H could not have obtained copies of the account opening mandate/instructions he gave to the K___ Bank at the time of opening the K___ Accounts since H was the one who opened the account. There was also no reason as to why H could not have obtained legible bank statements from the bank. There was no reason as to why H could not have obtained transaction advices from the bank. Normally, banks keep bank statements and account transactions for at least 7 years and there was no sufficient evidence that the K___ Bank adopted a different practice. Further, the amount of USD 188,130.05 on 27 April 2012 and the amount of USD 125,001.53 were both stated to be “DEPOSIT” and again H could have obtained transaction advice from HSBC as to the source of those “Deposits”. It was not clear why suddenly H realised he had made a mistake about the deposit of USD 125,001.53. However, the total amounts transferred to H’s _____ Premier Account were USD 200,000, and this was more than the USD 188,130.05 balance in the account, and thus the sum of USD 200,000 could in fact only be transferred out on 3 May 2012, after the deposit of the USD 125,001.53.

287.  More importantly, there was simply no sufficient evidence that the sum of USD 188,130.05 or any subsequent sums credited into the K___ Accounts came from R4 and/or H’s mother. R4 only filed one affirmation, namely his affirmation of 20 September 2019 after he was served with W’s 1^st s17 Application. Even though R4 did not appear to have been formally served with W’s 2^nd s17 Application, he must have known of W’s allegations in relation to the K___ Accounts, and further H was fully aware of W’s allegations. Yet, there was no further affirmation filed by R4 to support H’s case in relation to the K___ Accounts, including that the date on the 16.08.12 Letter was a mistake.

288.  Looking at the 2016 bank statement of the ____ 783 Account, the opening balance on 15 January 2016 was INR 559,813.75, the total withdrawals were INR 559,813.75 and total deposits were INR 138,723. The deposits were from mainly 2 sources, namely (i) “BY CLG INST 795539 ICICI AT __________”; and (ii) “Int Pd [783]; 31-03-2015 to 21-03-2016”. Thus, the source of the deposits were from interests, and from transfers from/through an ICICI account in __________. If R4 was the holder of the ICICI Account, he could have produced, or H could have arranged for R4 to produce, any bank statement/s or transaction advices as supporting evidence. There was none.

289.  As for the 2016 bank statement of the ____ 776 Account, the opening balance on 11 February 2016 was INR 77,742.98, the total withdrawals were IND 15,200,000 and the total deposits were INR 15,419,239.00. It would appear that 4 fixed deposits of about INR 16,353,915 had matured.

290.  Having considered the evidence, I find H was not able to satisfy this Court that the initial funds for the K___ Accounts did not originate from him, nor was he able to satisfy this Court that those transfers from/through ICICI did not originate from him. There was simply no sufficient evidence that the deposits originated from R4 or H’s parents. Having considered all the evidence, I find H was/is the legal and beneficial owner of the K___ Accounts.

291.  H’s case was that the transfers to his parents were for their living expenses. There was again no sufficient evidence to support H’s allegation.

292.  In my view, those withdrawals totalling INR 17,133,000 would have all fallen within the 3 year period prior to the 2^nd s17 Application had it been a formal application, and for which the Presumption would apply. I am satisfied that those withdrawals dispositions would have the consequence of defeating W’s claim for financial provision. On the evidence, H would not be able to displace the Presumption.

293.  The amount of INR 17,133,000 should be added back to the Family Pot.

(ii) The SC _______ Account

294.  In W’s 2^nd s17 Application, she sought to set aside a withdrawal of USD 3,231,833.55 from the SC _______ Account to H’s SC Private Bank Account on 3 January 2017 and then from H’s SC Private Bank Account to Intero or third parties on 18 January 2017.

295.  H claimed that he had disclosed in his 1^st Form E at Part 5.1 that he had paid from his SC Private Bank Account USD 526,107 into Intero’s Standard Chartered Bank account being the profit made from a fixed income deposit which H invested on behalf of Intero in an _____ structured deposit trade. He explained that he made this foreign currency non-resident deposit on behalf of Intero to take advantage of his non-resident _____ status as the investment was only available to non-resident _____[186].

296.  According to H, the net profit earned was USD 536,107.55 of which he kept USD 10,000 and the balance of USD 526,107 was returned to the bank account of Intero on 24 January 2017 as confirmed in the bank statement provided at Annexure 63.2 of his 1^st Form E.

297.  Mr Todd pointed out in W’s Closing Submissions that H had failed to provide any reasonable answer as to why he did not disclose the SC _______ Account in the first place in his 1^st Form E or explained the transaction, rather than alleging he held the amount as “constructive trust” for Intero in his 1^st Answer to W’s questionnaire.

298.  What is clear is that notwithstanding that by then Intero, having been injected into the Family Trust by H, was sold to Bremen by the Family Trust and then held by the Education Trust, H was clearly freely moving money between his personal account/s and Intero’s bank account and he had referred to the Intero’s bank account as “my company account” in his letter of instructions to the SC Private Bank for the transfer of USD 526,107.55[187].

299.  Anyway, in light of my earlier finding that the dispositions by H into the two US Trusts should be set aside and the assets should form part of the Family Pot. It is not necessary to make any separate order over this amount, as the amount of USD 525,107 was credited into the bank account of Intero on 24 January 2017, and that it should be reflected in the books of Intero, and the amount forms part of Intero’s assets and valuation.

(II) S____ Land – Issue 6

(1) The parties’ respective case

300.  H’s case in his Trial Affirmation was that the S____ Land was an investment made by H and W out of family assets during the marriage and was/is only held by W’s parents R5 and R6 as trustees for W and that the S____ Land should form part of the Family Pot.

301.  On the other hand, W’s case was that the understanding at the time was that W’s parents would only give up their right to purchase the S____ Land in exchange for an acre of the Parties’ land in ______ , and that H never upheld his side of the bargain for the “swap”.

(2) The background

302.  The S____ Land consists of two plots of land in _____________________, one on AR117 and one on 169. It can be seen in the two agreements set out later, a Mr JBGQ was the record owner of AR 117 and held a deed in his possession for an additional plot of land on AR 169. After the death of Mr JBGQ, and later his wife, AR117 was under the control of their 3 children (“Qs”). In about 2003, Qs became aware that there was an illegal transfer of AR 169 and there was a dispute over the title of AR 169 which led to a legal action (“Legal Action”).

303.  According to W, since Qs were based in the United States, they needed someone in ________ to handle the Legal Action on their behalf and that Qs had asked W’s father R5 and W’s cousin (“A___”) and also Qs’ own first cousin for assistance. As the Legal Action went on, Qs’ first cousin became unnecessary and that R5 and A___ had single-handedly carried on the Legal Action and on 6 May 2009, Qs then gave a power of attorney to R5 and A___[188] (“2009 S____ P/A”).

304.  It was also W’s evidence in her Trial Affirmation[189] that in exchange for the help and assistance provided by R5 and A___ to continue with the Legal Action, Qs agreed to give R5 and A___ the right to purchase the S____ Land when the Legal Action was over.

305.  The Legal Action led to a decision of the Court of Appeal ________________ on 7 September 2009 in Qs’ favour, which was later confirmed by a judgment of the Court of Cassation (the French Supreme Court) delivered on 22 May 2013.

306.  W had said that in around 2012, she and H became interested in purchasing real estate in ______ , and according to H, in about August 2012, R5 identified a number of distressed real estate opportunities in ______ ___________ for the Parties’ investment including the S____ Land. It was not disputed that between 2013 and 2016, the Parties purchased through Bremen over 20 acres of land in ______ .

307.  It was H’s case that in 2012, Qs wanted to find an investor to fund the Legal Action and in exchange, they would agree to give the investor the right to buy the S____ Land if they were successful in the Legal Action[190]. According to H, R5 did not himself have the risk appetite, knowledge or expertise in investments and that H and W then considered this would be a good investment for them.

308.  H and W then started to discuss with R5 and A___ the possibility of buying the S____ Land. W referred to an email on 7 February 2013 with subject matter “[R5] Call notes- version 2” which was sent from the Yahoo Sub Account to W’s Yahoo Personal Account (“07.02.13 Email”)[191]. In my view, this email was clearly sent by H from the W’s Yahoo Sub Account to W providing an analysis of the then situation, as it did not make sense for W to send herself an email.

309.  Anyway, the 07.02.13 Email had set out that Qs wanted one buyer who would take care of probate and money on account as soon as possible, and the buyer had to move fast and to take on unpaid and future Legal Action costs. This email also showed that the S____ Land was put into the “green zone” and that H/W wanted to “buy, fund cleanup, get it out of green zone however long that takes, build some yielding project on the property, and leave the cashflows and property for the kids, never plan to sell”. The 07.12.13 Email concluded with “OUR WIN WIN PROPOSAL”, namely (i) W: buy all 3 parcels and to deal with Green Zone; (ii) R5: M____ acre swap: 2-3 acres, plus cash if required, (iii) A___: hush money - $20k (“Win Win Proposal”).

310.  In H’s Trial Affirmation, H’s evidence was that he and W agreed to compensate R5 for identifying this investment opportunity and they would pay R5 a fixed fee of up to USD 30,000-50,000 in cash or kind, if Bremen was successful in acquiring the S____ Land. As an alternative, he and W had discussed giving R5 a small parcel of land in M____, ______ held by Bremen, if R5 did not want payment in cash. The idea was to give R5 a half-acre of ‘small subdivided parcel of the 22 acres of land in ______ held by Bremen, which was worth approximately USD 200 per acre[192].

311.  H’s evidence in his Trial Affirmation was however not the same as the Win Win Proposal set out in the 07.02.13 Email. In any event, there was also no sufficient evidence that R5 and/or A___ had agreed to the Win Win Proposal or any proposal.

312.  What was not disputed was that about a month after the 07.02.13 Email, Bremen entered into a sale and purchase agreement with Qs in respect of the S____ Land, which was described by H as a “call-option” agreement (“1^st S____ Agreement”)[193] which Qs executed on 13 March 2013 as sellers and Bremen executed on 2 April 2013 as purchaser. Bremen agreed to pay total purchase price of USD 150,000 for the S____ Land, USD 15,000 being paid as down payment upon execution of the 1^st S____ Agreement and the balance of USD 135,000 at “Closing”, and the “Closing Date” was 1 March 2015. The down payment of USD 15,000 was paid on 15 March 2013. The governing law was stated to be the laws of the State of New York and the attorneys acting for Bremen were SBH.

313.  The 1^st S____ Agreement seemed to have reflected at least what Qs wanted as stated in the 07.02.13 Email, namely one buyer (ie Bremen) who would take care of probate (as seen in clause 6(b) and (c) of the 1^st S____ Agreement) and money on account as soon as possible (USD 15,000 as down payment pursuant to clause 2(a)), and the buyer had to take on the Legal Action costs (clauses 5 and 6).

314.  It was H’s evidence that he then began funding a “protracted litigation dispute” on behalf of Qs[194]. According to H, W was fully involved in all the Legal Action and correspondence through their lawyer in ________, Ms _____ D_____, who also represented Qs in the litigation in France. It was H ‘s evidence in his Trial Affirmation that he funded all the Legal Action costs and other expenses estimated at over USD 75,000 towards French legal fees and to SBH.

315.  The 1^st S____ Agreement was executed in March 2013 and by 31 May 2013, H had received a copy of the judgment from the French Court of Cassation (dated 22 May 2013) in favour of Qs. Thereafter, H sent an email on 31 May 2013 to his attorneys at SBH asking them to help coordinate the acquisition of the land[195].

316.  Thus, the Legal Action did not in fact continue for that long after the execution of the 1^st S____ Agreement as portrayed by H, but it would appear that there was another step which needed to be undertaken, namely to apply for demarcation (bornage) between AR 169 and other adjoining lots. It appeared that an application was made by or on behalf of the Qs on about 9 September 2013 to the Tribunal D’Instance de _______, for a request to appoint a surveyor to proceed with the demarcation between AR 169 and other adjoining lots[196] (“Demarcation Application”).

317.  As seen earlier, on 17 September 2013, H sent an email to C_____ informing her that he was in the process of buying a land parcel in ________ and seeking her advice as to ownership structure to mitigate French tax issues[197]. There was no reply email from C_____ produced by H.

318.  It appeared that the Demarcation Application was opposed. Then on 22 January 2014, Ms D____ issued a writ on behalf of the Qs (or in their name) against the owners of adjoining plots over the demarcation issue[198] (“Demarcation Action”).

319.  As mentioned earlier, it was C___________ who had recommended the notaire Mr C_____ to the Parties in her email of 22 November 2012. By a power of attorney of 28 May 2014, H on behalf of Bremen appointed a clerk of the notaire Mr C_____ to execute the sale and purchase agreement on behalf of Bremen pursuant to the terms of the 1^st S____ Agreement (“Bremen P/A”)[199].

320.  According to H, just before Bremen was about to exercise the call option over the S____ Land, he was advised by W that the local government in ________ might exercise its ROFR due to the low purchase price option of USD 150,000 plus costs since Bremen was a non resident corporate entity. Thus, the Parties had to identify a resident of ________ to hold the S____ Land as trustee on their behalf. H said all his discussions were with W and the lawyers and he never had any direct communication on this matter with W’s parents as W spoke with her parents who speak poor English and it was W and her relatives dealt with the lawyer Ms D____ who speaks only French.

321.  W’s case was that H had learnt from Mr C_____ about the ROFR. What is clear is that H did have a meeting with Mr C_____ in ________ on 29 July 2014. In an email of 8 August 2014 from H to Mr C_____ (“08.08.14 Email”), H had referred to that meeting and discussion and that pursuant to their discussions, H had said that Bremen had resolved to assign all rights under the 1^st S____ Agreement over to R5 and that the valuation of the S____ Land should be USD 300,000, or Euros 223,413 (fx rate: 1.342804582)[200]. H had attached in the 08.08.14 Email (i) a copy of R5’s French passport; (ii) a copy of the agreement to sell the property (10% already been paid to Qs and the balance due was USD 135,000 and all purchase costs to be borne by R5); and (iii) the 1^st S____ Agreement.

322.  From a further email of 12 August 2014 which was sent to W (“12.08.14 Email”) containing his draft email to SBH[201], H had set out in his draft email the information/advice which he had received from Mr C_____ that:

(1) There was a more than a 20%-30% risk of the ________ collectivite exercising the ROFR;

(2) The collectivite/land department reclassified the subject land (S_____ Land) from Residential Zone to Green Zone (non-buildable) mid-way through the Legal Action and reclassifying it to Green Zone would serve to discourage buyers.

323.  As a result, a new structure was proposed by Mr C_____ for H (“New Structure”) as follows:

(1) Qs to sell the S____ Land to a ‘resident” of ________, ie W’s father R5;

(2) R5 could gift the land to his child (ie W) in his lifetime or at death with no local tax consequence, and with no subsequent ROFR requirement at time of gifting.

(3) In order to provide R5 with the funds to complete the deal, Bremen to lend him (R5) the purchase consideration and to take a 1^st lien charge over the underlying property (S____ Land);

324.  As H had said in the 12.08.14 Email, assuming the 1^st lien charge could be registered, he would need the lawyers SBH to draft a secured loan agreement under New York or US __________ law and that this encumbrance should help “ring fence” the underlying land parcels (ie the S____ Land) from the rest of R5’s estate, especially in the unlikely event that something were to happen to R5 between then and the time at which he made the gift to W. It would appear that the Parties were proceeding with the New Structure.

325.  What was not disputed was that subsequently there was another sale agreement executed on 19 December 2014 and on 22 December 2014 pursuant to which Qs sold the S____ Land to W’s parents (“2^nd S____ Agreement”) for EUR 109,860[202]. Each of the Qs (two on 14 July 2014 and one on 5 September 2014) had given a power of attorney to a clerk of Mr C_____’s office to (i) complete the probate of their father JBGQ and to (ii) sell the S____ Land for a sum of EUR109,860 (representing as at 22 May 2014 the equivalent of USD 150,000) (“Qs P/As”). The name/s of the purchaser/s were not in fact stated in the Qs P/As, although there was a draft agreement for sale and purchase referred to in the Qs P/As.

326.  It was provided under “Previous Agreements” that the terms of the 2^nd S____ Agreement were in full substitution for those contained in “J’avant contract” [203]and in any other document whatsoever settled between the parties prior to the date of the 2^nd S____ Agreement[204]. Thus, the 1^st S____ Agreement had been superseded by the 2^nd S____ Agreement. It was further stated in the 2^nd S____ Agreement that the Collectivite ___________ decided not to exercise the statutory ROFR.

327.  The 2^nd S____ Agreement was executed by R6 on 22 December 2014 on behalf of both herself and R5. H had produced remittance instructions and advices which indicated that a sum of Euros 117,960 (equivalent to USD 145,505,05) was remitted out of Intero’s Standard Chartered Bank Account to Mr C_____ on about 9 December 2014[205].

328.  H had produced an email dated 4 November 2015 which he sent to W[206] to remind her that it was important for her to get the promissory note referred in that email signed[207]. The promissory note was dated 20 August 2014 in favour of W, for USD 300,000 with compound interest at 15% per annum and a default compound interest at 25% per annum, and that the principal and any accrued but unpaid interest would be due at maturity, which was 31 December 2016 and the maker of the promissory note had the option to pay off the note at any time in kind, by delivering title of the S____ Land in full settlement of the note (payment in kind) , and upon that, all indebtedness would be extinguished if the payment in kind was received (“S____ Note”). The S____ Note was to be signed by W’s parents. It was never signed.

329.  H had also produced a draft deed “Gift Inter Vivos” of the S____ Land between W’s parents as donor and W as donee which seemed to be prepared sometime in 2015 (“Draft Deed of Gift”)[208]. This was not executed by W’s parents. Of note is the S____ Land was stated “depends from the community of assets existing between [R5 and R6][209].

(3) The evidence

(i) Whether W’s father and cousin had an option to buy the S____ Land

330.  Under the 2009 S____ P/A, R5 and A___ only had the power to sell on behalf of Qs and that W’s father and cousin had to discuss any sale with Qs and that any sale would have to be with the agreement of Qs.

331.  There was nothing in the 2009 S____ P/A which indicated that R5 or A___ had been granted any right or option to buy the S____ Land by Qs upon completion of the Legal Action. W had said that after Qs executed the 2009 S____ P/A, everything was then paid for upfront by R5 and A___, but she also said R5 and A___ were reimbursed by Qs.

332.  There were no other documents produced by W to show that R5 or A___ had any right or option to buy the S____ Land. It was thus not quite clear why W had said during the trial that she was co-ordinating the acquisition of the S____ Land for her parents from A___, although it would appear that A___ was very much involved in the S____ Land and/or the Demarcation Application in December 2014[210].

333.  During the trial W had referred to powers of attorney which gave her father and A___ the option to purchase the S____ Land. The only other powers of attorney I could see were the Qs P/As mentioned earlier. As pointed out earlier, the names of the purchasers were not in fact specified in the Qs P/As and the 2^nd S____ Agreement was executed with the Qs P/As. A copy of the draft sale and purchase agreement referred to in the Qs P/As was not attached.

334.  It would appear that Mr C_____ should know what actually happened, as to what led to the execution of the 2^nd S____ Agreement. However, neither H nor W had approached Mr C_____ for further evidence. On the present evidence, there was no sufficient evidence that R5 and A___ had any option to purchase the S____ Land. However, they were clearly the ones who were in direct contact with Qs and had the full trust of Qs under the 2009 S____ P/A. There was no sufficient evidence whether or when the 2009 S____ P/A had been terminated by Qs under clause 6 on the “CONTINGENCIES” or whether the probate had been carried out. It was also not clear whether there was any breach on the part of Qs or on the part of Bremen of their respective obligations under the 1^st S____ Agreement. What is clear is that the 2^nd S____ Agreement superseded the 1^st S____ Agreement (executed by Qs personally) and the S____ Land was later conveyed to R5 and R6 by Qs under the Qs P/As.

(ii) The amounts paid by the Parties out of matrimonial funds in relation to the S____ Land

335.  In so far this Court can gather, the 1^st S____ Agreement was simply an agreement for the sale of the S____ Land between the Qs directly with Bremen with the “Closing Date” postponed until on or before 1 March 2015, presumably to take into account the appeal or the time which the French Supreme Court would take to deliver its judgment. Further, as seen in the 1^st S____ Agreement, the estate of Qs’ father JBGQ and the estate of Qs’ mother had not been properly probated[211] and under the “CONTINGENCIES” it would appear that within 6 months from the date of the agreement, Qs as sellers had to terminate the 2009 S____ P/A and to cooperate with the purchaser, ie Bremen, in the purchaser’s attempts to institute and complete the two probate.

336.  The 1^st S____ Agreement did not appear to be an option agreement or an agreement for a “call option” as H had described it. In any event, whether it was an option agreement or not, it was set out in Clause 5 “EXPENSES OF SALE “of the 1^st S____ Agreement that the purchaser was to pay all costs associated with the transfer and successful recording of good title to the S____ Land and the purchaser was to assume and pay the actual costs of satisfying the “CONTINGENCIES”(as defined therein and set out above) and the continued prosecution of the litigation and to pay all the incidental costs set out therein.

337.  The amount of what the Parties actually paid out of their matrimonial funds in relation to the S____ Land was not in fact clear. H’s evidence in his Trial Affirmation was the litigation costs and other expenses funded by him were estimated at over USD 75,000[212]. Thus, it would appear that the total amount should be USD 225,000 (ie the purchase price of USD 150,000 plus other expenses of USD 75,000). During the trial, under cross examination, H’s evidence was that he paid USD 150,000 to Qs plus another USD 150,000 for litigations costs and other expenses, ie a total of USD 300,000. The amount of USD 300,000 was the amount stated in the draft S____ Note. However, there seemed to be no invoices produced by H as to his total estimate of USD 300,000.

338.  W in her Trial Affirmation had referred to H “seeking to have [W] get, if not trick” her father into signing the S____ Note (which was for a loan amount of USD 300,000) back dated to 20 August 2014[213].

339.  Among those emails between H and W in November 2015[214], there was one which W sent to H at 2:24 pm on 5 November 2015 in which it appeared that W had queried about the figure USD 300,000 in the S____ Note[215]. In response, H then set out that the total amount which the Parties would need to reserve was USD 150,000 to the Qs, USD 100,000 to R5 and A___ as sourcing fee and USD 50,000 for legal and for W’s efforts. He further went on to say that W would want her loan amount to R5 to be “realistically high” so that if a claim was made by her siblings, W would still come out on top as they would need to pay her USD 300,000 plus interest first before they could ask for any upside (“05.11.15 Emails”).

340.  Although H seemed to be referring to on-going commitments, by 5 November 2015, the purchase price of USD 150,000 had already been paid in full to Qs in December 2014 at the time of the execution of the 2^nd S____ Agreement, and the H’s estimates for on-going commitments would seem to have included what had already been paid by the Parties Further, the USD 100,000 to R5 and A___ was for their “sourcing fee” or compensation and was a payment which was paid/to be paid by the Parties to R5 and A___. It was not clear how this amount could then be included by H in justifying the sum USD 300,000 for the loan amount to R5 in the S____ Note. In any event, there was no evidence that the USD 100,000 was paid to R5 and A___. Further, it would appear that by backdating the S____ Note to 20 August 2014, the compound interest of 15% per annum would be calculable from that date.

341.  Anyway, it appeared that the actual total amount paid by the Parties for the S____ Land (whether through Bremen or Intero) was the total purchase price of USD 150,000 to Qs plus other expenses of only about USD 50,000 indicated by H in the 05.11.15 Emails, or the most, according to H’s own evidence in his Trial Affirmation, about USD 75,000, which would make the total amount in the region of USD 225,000. If so, the loan amount of USD 300,000 in the S____ Land would seem to be some 30% over what the Parties actually paid or incurred.

(iii) The compensation to R5 and A___

342.  It was H’s own case in his Trial Affirmation was that there was an agreement between H and W to compensate R5 for identifying this investment opportunity if Bremen was successful in acquiring the S____ Land[216]. H did not mention any compensation or payment to A___, even though both in 07.02.13 Email mentioned earlier and in the 05.11.15 Emails, H had mentioned “hush money” or “sourcing fee” for A___. W did not deny that she and H had agreed that R5 and A___ should be compensated. However, as said earlier, there was no sufficient evidence that R5 and A___ had accepted the Parties’ offer or proposal.

343.  There was a period of some 4 months between Mr C____’s advice and the execution of the 2^nd S____ Agreement. There seemed to be no written cancellation by the Qs and Bremen of the 1^st S____ Agreement, nor was there any written assignment of Bremen’s interests under the 1^st S____ Agreement to W’s parents, nor had H requested or insisted on the S____ Note and/or the Deed of Gift be executed by W’s parents prior to the execution of the 2^nd S____ Agreement, nor was there any written agreement signed by the Parties with R5 and/or A___ for the compensation.

344.  In fact, the evidence clearly showed there was no concluded agreement reached between R5 and/or A___ on one side and the Parties on the other for the compensation. In the 05.11.15 Emails, H had mentioned USD 100,000 to R5 and A___ as “sourcing fee”, which suggested USD 50,000 for each, but W responded that R5 would not sign the S____ Note and that R5 did not want USD 50,000, and that R5 wanted 1 acre of land in ______ which was USD 200,000[217].

(iv) Whether W had beneficial interests in the S____ Land

345.  H had also produced what’s app messages between him and W during the period May 2015 and August 2016 extracted by him and then grouped by him under 4 subject matters added by H[218], namely (i) S____ Land (EUR 2m value); (ii) How to fix the zoning issue on S____ Land; (iii) W talks about opening a gas station on her S____ Land; (iv) W talks about arguments about splitting the inheritance between siblings.

346.  In particular, H referred to those messages under (iii), at about 6:11 pm on 26 May 2016 about a gas station[219]. As the earlier emails had not been produced, it was not clear under what context was the gas station mentioned. When W was cross examined over this, she had said the gas station was her cousin A___’s idea but only possible if the land was in Green Zone. In the emails, W had asked H what about opening a gas station but clearly stated that it would be at some point when the S____ Land was out of the Green Zone and that she would do some research on this matter.

347.  W’s message to H on 8 July 2016 further indicated that the S____ Land would not be transferred to her that summer because of the Demarcation Action and needed to wait until fall or end of the year. On 10 August 2016, W had sent H a message that she would get her parents to sign to get the S____ Land out of the disputes among W’s siblings over their inheritance land.

348.  The above messages indicated that W was working together with H in trying to get her parents to sign over to W the S____ Land. However, there seemed to be no sufficient evidence that H was in the process of transferring the 1 acre of land in ______ to R5, as requested by R5. It was also not quite clear as to whether A___ had been paid.

349.  W had said during the trial that H had said that the S____ Land would be a gift to R5 if an acre of the ______ land was not transferred by Bremen to her sister by the end of 2016. This however had not been mentioned in any of her previous affirmations and I do not find this part of W’s evidence satisfactory. In any event, what W said was not supported by any documentary evidence and as said earlier those what’s app messages indicated that W was all along working together with H in trying to get R5 and R6 to sign over the S____ Land to W.

350.  The fact is that the S____ Land is held in the names of W’s parents. H’s case in relation to the S____ Land was again confusing. He had first included in his 1^st Form E under Part 2.11 regarding any other assets , a “___________ Investment Land Trust” that (i) he was the settlor of a trust holding the S____ Land[220] (no details given by H as to who was the trustee or the beneficiary) and that H “advanced” money to R5 to purchase investment land in ________ (ie the S____ Land) and that it was agreed that ________ property (ie the S____ Land) was to be held by R5 on constructive trust for W[221]. Thus, at that time, although the S____ Land was held in the joint names of R5 and R6, H’s case appeared to be only R5 was the trustee and the beneficiary was W.

351.  Then, in his Updated Form E of 25 January 2021 under the same Part 2.11, H did not mention the “________ Investment Land Trust”[222], and instead under Part 5.2, he stated W had failed to disclose the S____ Land which is held on trust by W’s parents in favour of W[223]. Hence, the trustees became both R5 and R6.

352.  In his Trial Affirmation, H’s most recent case was that the S____ Land was held on constructive trust/resulting trust by W’s parents on behalf of W[224]. He went on to say that (i) it was always intended that W’s parents would hold the S____ Land as W’s trustees until it was conveyed to W and that it was clear that the S____ Land was purchased using matrimonial funds by H through Bremen and Intero, and that W’s parents made no financial contribution nor any contribution towards the purchase of the S____ Land, that there was a common intention that the S____ Land would be beneficially owned by W via her parents holding the S____ Land as trustees of a constructive trust.

353.  As for common intention constructive trust, it is trite that a plaintiff asserting beneficial interest would need to satisfy the court that:

(1) there was a common intention of the parties concerned at the time of the purchase (or exceptionally, thereafter) that the beneficial ownership in fact differed from the legal ownership;

(2) the plaintiff altered his or her position in detrimental reliance upon the common intention; and

(3) it is unconscionable for the property owner to assert ownership in reliance on the legal title.

354.  Here, the date of purchase was the date of the 2^nd S____ Agreement. The parties concerned were R5 and R6 on one part and W on the other. There was no evidence from H at all as to how R6 was involved in the transaction. In any event, the allegation of the constructive trust did not appear to be consistent with H’s case of a loan to R5 for the purchase as per the S____ Note and/or that there was an agreement that H and W were to compensate R5 by payment or a swap of land.

355.  At the trial, under cross examination when it was put to H that on 22 December 2014, when R5 and R6 executed the 2^nd S____ Agreement, the Qs were then in breach of the 1^st S____ Agreement, there would be a cause of action arose in favour of Bremen for breach of contract. What H then replied was that the “breach was waived” by reason of a power of attorney. When asked which power of attorney, H referred to the Bremen P/A, which did not make sense.

356.  H then went on to allege that there was a tripartite agreement between W, R5 and R6 and Bremen on 28 May 2014, which was the date of the Bremen P/A, and that Bremen had authorised R5 and R6 to complete the transaction (“Tripartite Agreement”).

357.  As seen earlier, the Bremen P/A was for a clerk of Mr C_____ to act as signatory of Bremen to execute the sale and purchase agreement in respect of the S____ Land on behalf of Bremen, pursuant to the 1^st S____ Agreement, and this was not for Qs waiving the breach, nor a power of attorney authorising R5 and R6 to sign the 2^nd S____ Agreement on behalf of Bremen.

358.  In his oral evidence, H alleged the Tripartite Agreement was in May 2014 and this also had to be seen against his own evidence in his Trial Affirmation that after J______’s murder on 2 May 2014, W was going through trauma and grief and was behaving unreasonably. When this was put to H, his evidence then changed again, and said negotiations started regarding the Tripartite Agreement much earlier and that the date of the Tripartite Agreement was reached was on 28 May 2014.

359.  I do not find H’s evidence satisfactory and in any event, I find there was no sufficient evidence that there was the Tripartite Agreement as alleged by H.

360.  What was clear from the emails between H and W in November 2015 and those what’s app messages between H and W that there were hiccups about R5 and R6 transferring or “gifting” to W the S____ Land. Further, the what’s app messages indicated there was disagreement amongst W and her siblings about their inheritance land.

361.  What is also clear is that on H’s own case that there was between him and W an agreement to compensate R5, but there was no evidence that H had taken any steps towards performing the Parties’ obligations in paying any compensation to R5, whether by cash or by swap of land.

362.  It was submitted on behalf of W that there was no constructive trust concept under French law. However, Mr Scott pointed out that H’s expert on French law, Mr Godefroy had explained that the alleged agreement with W’s parents was a “gentlemen’s agreement” under Article 1101 of the French Civil Code and would be recognised. Even if there were a “gentlemen’s agreement” between H and W on one part and R5 and R6 on the other, as mentioned earlier, there was no evidence that H had any taken any steps in meeting his side of the bargain. W’s evidence during the trial was that it was H who was not able to give R5 the one acre of land in ______ , and that all deals were off and that it was H who reneged on the agreement.

363.  Having considered the evidence, I am not satisfied that there was sufficient evidence of any common intention constructive trust or any agreement that R5 and R6 were to hold the S____ Land on trust for W. As for the alleged resulting trust, this only appeared in H’s Trial Affirmation. In light of the S____ Note, whatever amounts paid to R5 and R6 were, on H’s case, in the nature of a loan. H’s allegation of a resulting trust cannot stand.

364.  I find more probable than not that the agreement or understanding between the Parties on one part and W’s parents on the other was that (i) the total sum paid by H (or the Parties and whether through Intero/Bremen) for the acquisition of the S____ Land was to be regarded as a loan to R5 (and/or R6); (ii) R5 was to be transferred one acre of land in ______ from H as compensation or sourcing fee for the S____ Land; (iii) upon being transferred the one acre of land in ______ , R5 and R6 were to transfer the S____ Land to W by way of a gift; and (iv) upon the transfer of the S____ Land to W, the loan and interests due from R5 would be regarded as fully paid.

365.  As to who reneged on the agreement first and whether R5 and R6 should repay the total sum paid by H (and W) is a matter for separate litigation between H (and W) on one part and R5 and R6 on the other. It is also unclear as to whether such claim will be statute barred, whether under the US law or French law. In any event, due to uncertainties in enforcing their claim, if any, against R5 and R6, I do not regard the S____ Land or the amount of funds paid by the Parties out of the matrimonial funds should be regarded as a financial resource of the Parties in the foreseeable future, nor should they be added to the Family Pot for division.

(III) The V___ Land – Issue 7

(1) Background

366.  There are 4 parcels of land in V___, namely, AV 266, AV 329, AV 331 and AV 391, with R5 (and/or R6) being registered legal title owner. According to W, one parcel was gifted to her mother R6, two parcels inherited by her father R5, and AV331 was bought by R5.

367.  The expression “V___ Land” seemed to have been applied by the Parties to sometimes referring to all 4 parcels and sometimes to only one of the 4 parcels, namely AV 391.

368.  According to H, W’s interests or inheritance in the V___ Land should be regarded as her assets/financial resources. The Parties however gave different evidence as to the present health condition of R5 and R6. H alleged that R5 and R6 are respectively 79 and 71 years old, and are currently in poor health, in that R5 is taking anti-depressive and anxiety medications and R6 has major eye issues and is also chronically depressed.

369.  On the other hand, W’s evidence was that R5 is 81 years old and R6 is 72. According to W, her parents are in good health[225].

(2) The Parties’ respective case

370.  H’s case in relation to the V___ Land was again rather confusing. In paragraph 101 of his Trial Affirmation, he had referred to “various parcels of land” in V___ as being the “V___ Land” and he alleged that (i) W would receive the V___ Land based on the French heirship laws in ________[226]; (ii) R5 had told W that if she wanted one of the parcels AV391 she should obtain a building permit for the land in her own name and in December 2015, W had told him that AV391 would be put in her name by R5 during summer of 2016[227]; (iii) the V___ Land is held by R5 and R6 on constructive trust and/or resulting trust for W[228].

371.  Each of the above cases is different. Under (i), W would only receive her share of the V___ Land including AV391 after the death of her parents. Under (ii), it appears that H was alleging that AV391 was promised to W by R5, or was to be a gift inter vivos to W, upon W obtaining a building permit. H’s case under (iii) is completely different from (i) or (ii).

372.  As for W, in her Trial Affirmation, W’s evidence was that in around 1998 before she met H, she started discussing with her parents a building project, which involved building a house on “a parcel of their land” to generate rental income to be then shared between her parents as land owners and W, as “payment” for her work in the project. W said the project was actually discussed with her siblings but none of them was interested. After she and H became a couple, H was keen to put such a plan to work.

373.  During the trial, W had said that when she first discussed the project with her parents in around 1998, it was about AX331. Then after she met H, the project turned to AV391 as AX331 has no view, and AV391 has a better view.

374.  According to W, the project took a long time and it took 5 years just to complete the building plan in December 2015. She applied for a building permit in December 2015, which was issued to W on 29 July 2016 (“Building Permit”)[229]. The Building Permit had referred to 2 plot numbers “AV0744, 743”, which according to W, were sub-division numbers of AV391.

375.  W said that by the time the Building Permit was issued, the marriage was already falling apart, and the project never commenced. The Building Permit was only valid for 2 years and had expired on 28 July 2018[230]. According to W, the project will not happen.

(3) The evidence

376.  As pointed out by Mr Todd, in H’s Closing Submissions, his case appeared to have rested on (1) the concept of forced heirship under French law; and (2) the fact of W having applied for and obtained a building permit in respect of AV391.

377.  In reply, it was submitted on behalf of H that as set out in H’s Closing, that the V___ Land had been “allocated” to W and was a project that H and W had been working on together for a number of years[231]. Thus, it seems that H was referring to only AV 391.

378.  As said earlier, in paragraph 101 of H’s Trial Affirmation, the V___ Land was referred by H to “various parcels” and not merely AV 391. In any event, even if W were to inherit all 4 parcels of V___ Land as part of her inheritance under the forced heirship laws, it does not mean that all 4 parcels of the land would be inherited solely by her.

379.  As for H’s case that AV391 was promised or allocated to W by R5, H had said in his Trial Affirmation that W had told him that the V___ Land/AV 391 was undergoing conveyance to her so that she could commence the building of a villa and that he believed that it was only as a result of these proceedings that W had told her parents not to complete the conveyance so that she did not have those assets in her legal name[232].

380.  At present, there is a house standing on AV391 belonging to W’s parents[233]. According to W, her parents live in the house when they are in ________ although R5 had not been there recently due to his medical issues and also the pandemic. W’s parents’ house occupies only one portion of AV391 and the plan was to allow W to build on the unoccupied portion of AV391. The Parties had instructed architects to prepare architectural drawings/plans for an intended villa to be built and the plans were sent to the Parties in March 2014[234]. The emails which W had with the architect showed that R5 was shown the plans and that R5 wanted his land to be partitioned into two lots before the plans were submitted for a building permit[235]. The Parties then instructed a “geometre-expert” Mr ____ B____ on about 14 April 2015 for the partition/division of the land. Mr B____’s quotation for his fee was EUR 1,680[236]. According to an email dated 3 July 2015 sent by Mr B____ to W, the expert said he had finally received the division from the land registry[237].

381.  It was not really disputed that the costs for the architectural plans and for the expert Mr B____ were paid by H (and W) out of matrimonial/family funds. H had produced a transfer instructions to HSBC for transfer of a sum of EUR 5,000 for the final payment to the architect on 19 December 2015 for the architectural plans[238].

382.  H had also relied on an attestation of a right of way (“Attestation”)[239] in which R5 was described as the owner of plots AV 744 & 743 1017, located in V___ and W was described as “Maitre d’ouvrage”, or owner of the construction project of a single-family house on AV 744. It states that the access to parcel AV 743 will be via an existing passageway and that the land division has just been completed, and it will be necessary to create a right of way at the level of the existing road if the plots change ownership. W had agreed to leave the existing access for the existing building. The Attestation bore W’s signature and the date in 2016 had not been completed presumably because R5 had not yet signed the document.

383.  H had also relied on those what’s app messages mentioned earlier on he had with W, in particular those on 10 August 2016 which had H’s annotation of the subject matter “[W] talks about arguments about splitting the inheritance land between siblings”[240]. However, although W had said she asked R5 15 years ago and that R5 had told everyone that they had a right to all the property and whoever came to him with a desire and willingness to build would get their first choice, it was clear from those messages which started at 8:51am until 9:22am and started again at 12:48pm until 1:24pm, that there was a serious disagreement among the siblings about W getting the land she wanted, and that W was quite upset. She ended up by saying “ 5 fxxxxxx years of working on that plan and it is fxxxxx up”[241].

384.  When W was asked during cross examination why the Building Permit was issued to her, she said she had R5’s permission to apply. She denied that she was entitled to the plot, and maintained that she (and H) were to share with R5 the rental income of the villa when built. However, when asked what was the arrangement of the rental income sharing with R5, W then said it was never discussed as it took such a long time to get it done, as H wanted a lap pool constructed and that they did not know how much it would cost and she got a quotation of about EUR 2.7m to EUR 3.3m to build, and that even if she and H were still together, it was too expensive. W denied that the land was to be hers and it was never registered in her name and that her parents could sell it.

385.  H had also referred to the email of 4 November 2015 sent to W in which he had asked her to get the S____ Note attached to be signed by R5. In this email, H had also asked W to make a list for R5 for him to follow the steps involved in relation to V___. H had said he thought the only steps left were (a) the valuation split between all the inheritance properties and (b) signing over the inheritance gift and title documents to W, saying that it sounded like it could be achieved in one final meeting with Mr C_____ in December[242]. There was no particular mention about AV391 being singled out and transferred to W.

386.  In relation to AV391, H’s expert Mr Godefroy had opined that it seemed obvious that this parcel of land had been donated to W by her parents as a part of an inheritance given in advance[243] and he had set out rights of the heirs according to the French law and that W, as a forced heir out of 4 children, will thus be entitled ¼ of the inheritance.

387.  W’s expert Ms Tasteyre had however pointed out that notwithstanding the rules of forced heirship, under French law, an individual can choose to use up all the assets in his/her estate during his/her lifetime and there is absolutely no obligation to keep assets for one’s issue, but for the protection of children and their descendants, there is the “reserved portion” of the estate that cannot be freely disposed of and which must be divided in equal shares between the protected heirs. For more than 3 children, the “reserve portion” will be ¾ of the estate.

388.  Ms Tasteyre however pointed out that the inheritance laws and the principles attached will only be applied upon death and until then there is no guarantee that there will be anything left in the estate to distribute since there is no obligation to keep anything for the heirs[244].

389.  Having considered all the evidence, although it appears that it was indeed R5’s intention that whoever of his 4 children first came up with a building plan and was willing to pay for the building thereon, that child would have a first choice of a parcel of land, this does not mean that the value of that parcel of land will not be taken into account against that child’s share of his/her “inheritance properties”. What is clear is that the Building Permit has now lapsed and W will have to re-apply and in any event, W will have to invest further sums in building a villa, whether in accordance with the previous architectural plan or otherwise.

390.  Further, even if AV 391 were to be transferred to W, this would have to be accounted for as part of her inheritance under the forced heirship. Finally, there is no guarantee that there will be anything left in the estate of R5 and R6 to distribute since there is no obligation on their part to keep anything for their heirs. Although R5 and R6 had/have some health issues, there was no sufficient evidence that R5 and R6 were in poor health at the time of the trial, or that W’s inheritance would be a resource to her in the foreseeable future.

391.  Having regard to all above said, I am of the view that the V___ Land should not be included as part of the Family Pot.

(IV) Potential Inheritance K__ __ M___ – Issue 11

392.  K__ __ M___ is a house in _______ where H’s parents lived until recently when they were said to have moved into the M______ Apartment. The legal title of K__ __ M___ is held jointly by H’s brother and his mother.

393.  W had produced a copy of the Mother’s 2011 Will, namely the will made by H’s mother on 29 September 2011[245] in which H’s mother bequeathed her half share of K__ __ M___ to H so that H and his brother would be joint owners. According to W, the arrangement arose in 2003/2004 when H’s parents asked H and W for a loan of around USD 120,000 to repay debts, buy 2 cars and build a pool in the backyard of their house, in exchange for which H would receive half of the house in inheritance. It was also W’s case that shortly before Mother’s 2011 Will, H’s mother also had H make a will, namely H’s 2011 Will, which was executed in _____ on 15 May 2011, in which H bequeathed his estate to W and the Children[246].

394.  It was H’s case that the land was purchased by his brother in around 1986, and that his brother added their mother’s name to the title to give her a sense of security should anything ever happen to H’s father, and that H’s mother was merely a nominee.

395.  Then in H’s Trial Affidavit, H suddenly produced for the first time two documents: (i) a document dated 1 November 2017 purported to be a new will made by his mother (“Mother’s 2017 Will”)[247]; and (ii) a letter allegedly from H’s parents (signed by H’s father only) to H of 7 July 2013[248].

396.  In Mother’s 2017 Will, H’s mother bequeathed all her real and personal estate to H’s father and in the event of H’s father predeceasing her, she bequeathed all her estate to H’s brother and further clarified that K______ M___ belongs to H’s brother and that he added her name as a nominee only.

397.  In H’s parents’ purported letter of 7 July 2013, H’s parents stated reasons why they would like to bequeath H’s mother’s share of K______ M___ to H’s brother, including that H’s brother had not been as fortunate as H with his career. Mr Todd pointed out that in a letter dated 11 January 2017 from H’s brother, he was seeking confirmation that as General Manager of JD (as defined later) his annual salary would be USD 200,000. Thus, it did not appear that H’s brother was doing too badly, but I accept H’s brother’s salary was only half of H’s monthly basic income as stated in his 1^st Form E in February 2017.

398.  In any event, as pointed out by Mr Todd, H’s case was inconsistent. In my view, it simply did not make sense. If H’s mother was/is holding her 1/2 share for H’s brother as nominee as stated in Mother’s 2017 Will, then there would be no need for her to try to justify why she is bequeathing her 1/2 share to H’s brother. Further, in Mother’s 2017 Will, she is not bequeathing her 1/2 share to H’s brother but to H’s father.

399.  What is clear is that the legal title of K______ M___ is held by H’s mother and brother. On the face of it, they are presumed to be the beneficial owners. There were no affirmations filed by H’s mother or brother in support of H’s case that H’s mother was only holding K______ M___ as a nominee. I find there was no sufficient evidence why the beneficial interest in K______ M___ should not follow the legal title.

400.  Although Mother’s 2017 Will was not notarised, there is nothing to stop H’s mother to make a new will and to bequeath her half share in K______ M___ to any one she wants. There is no sufficient evidence that H’s mother is in poor health. I do not find that the 1/2 share in K_____ M___ is a financial resource for H in the foreseeable future.

(V) Value of the Parties’ assets – Issue 1

(1) The agreed valuations

401.  The parties were able to agree on the value of the following properties:

(1) The M______ Apartment at INR 144m, say @ 0.1, ie HKD 14.4m

(2) The 3 parcels of land in ______ held by Bremen at USD 12.9m

402.  K______ M___ was agreed at INR 107m, @ 0.1, about HKD 14.7m, and 1/2 share is HKD 7.35m. In light of my finding that K______ M___ is not a financial resource for H in the foreseeable future, the valuation is no longer relevant.

403.  The disputed valuations are in respect of Intero, the S___ Land, and the V___ Land. Again, in light of my earlier findings in respect of the S____ Land, and the V___ Land, their present valuations are in my view no longer relevant. The main disputed valuation was over Intero.

(2) Intero Valuation

(i) Intero – generally

404.  In his 1^st Sirius Report, Mr Choy concluded that the value of Intero as at 30 September 2020 (“Valuation Date”) was HKD79,696,053.

405.  In the 1^st BDO Report , Mr Yeo valued Intero’s assets to be approximately HKD 127.7m and HKD 129.2m subject to change upon provisions of further information[249].

406.  In the 2^nd Sirius Report, after correcting the exchange rate, Mr Choy’s valuation of Intero was updated to HKD 79,689,545.

407.  As mentioned earlier, the Joint Intero Statement was only filed after the trial.

408.  In the Joint Intero Statement, Mr Choy’s valuation of Intero was HKD 79.68m and Mr Yeo’s was HKD 122.9m to HKD 151.8m[250].

409.  Mr Scott had complained that Mr Yeo had changed his valuation in the Joint Intero Statement after giving evidence at trial. However, neither side had applied for a further date to be fixed for Mr Choy to be cross examined or to give oral evidence, or for Mr Yeo to be recalled for cross examination and had lodged their Final Submissions based on the reports of their respective experts, and the Joint Intero Statement. Bearing in mind that the experts were only able to meet and to finalize their joint statement after the trial, and as they both owe a duty to the Court in giving expert evidence, I do not find Mr Yeo’s adjustments untoward.

410.  As seen in the 1^st BDO Report and Joint Intero Statement, there were a total of 13 items of Intero’s underlying assets and liabilities, and initially the disagreed and/or to be confirmed (TBC) items were as follows:

(1) The GP shares (“GP Shares”)

(2) The LP Investments (“LP Investments”)

(3) The equity interest in FP Limited (“FP Equity”)

(4) The loan to JD FZE (“JD Loan”)

(5) The equity interest in a Singapore brokerage firm (“Equity in Singapore brokerage firm”)

(6) The IP loan (“IP Loan”)

(7) The IP warrant (“IP Warrant”)

(8) The IP RE1 – Project King (“Project King”)

(9) Bremen – intercompany loan (“Bremen Loan”)

(10) The loan owing to the Group for acquisition of the GP Shares (“GP Shares Loan”)

411.  Amongst the above, the most significant difference between the experts was the value of the GP Shares. Mr Choy valued them at HKD 13.24m and Mr Yeo initially valued them at HKD 50.72m to 52.24m[251], which he maintained in his oral evidence. In the Joint Intero Statement, Mr Yeo’s latest value was between HKD 46.98 to HKD 75.86m.

(ii) Intero – GP Shares

Article II of the Employee Shareholder Agreement

412.  Mr Yeo had been criticised for questioning in his 1^st BDO Report whether the unsigned Employee Shareholder Agreement should be relied on. In fact, it seemed that both experts were referring to the unsigned copy. H had produced a copy of the signed Employee Shareholder Agreement dated 4 November 2010 in his 2^nd Answers of 9 April 2018[252]. It was not clear why the experts were not provided with the signed copy by their instructing solicitors. Anyway, it was clear from paragraph 19(i) of the 1^st BDO Report, Mr Yeo had considered section 2.7(d) under Article II “RESTRICTION ON TRANSFER, RIGHTS” (“Article II”). During the trial, when asked, Yeo agreed that Intero would be bound by the restrictions therein (“Transfer Restrictions”).

413.  In the 1^st Sirius Report, Mr Choy adopted the dividend discount model (DDM) to be the more appropriate method to value the GP Shares and valued them to be HKD 13.24m. As seen in the 1^st BDO Report[253], Mr Yeo pointed out a number of issues in Mr Choy’s method of calculations and concluded that Mr Choy’s valuation of the GP Shares was understated.

414.  As seen in the Joint Intero Statement, the main area of disagreement between the experts is over whether the fair market value of the GP Shares should be excluded after H’s 65^th year under the DDM method.

415.  Section 2.1 of the Transfer Restrictions under Article II essentially stipulates that the employee cannot transfer his/her GP Shares without (i) written consent of a majority of the Board (as defined therein) and (ii) satisfying the requirements of sections 2.2, 2.3, 2.6 or 2.7 under Article II , as applicable.

416.  Under section 2.2, the Group has the first right to acquire the shares which the employee offered to transfer to a third party subject to the terms set out therein (“Purchase Rights”).

417.  However, under section 2.7 (d), as pointed out by Mr Yeo, the Group shall have no right to purchase the shares held by the employee shareholder once the employee shareholder has reached the age of 65. In other words, upon H reaching the age of 65, the Group shall no longer have any of the Purchase Rights in respect of the GP Shares held by H through Intero.

418.  In light of section 2.7(d), Mr Yeo is of the view that the market value of the shares after H’s 65^th year should be taken into consideration.

419.  On the other hand, Mr Choy was of the view that (i) it would be very difficult to ensure that the Group would still exist after 15 years; (ii) the value of the dividend payments after H’s 65^th year would be subject to significant discount when considering the time value of money; (iii) the estimation of long-term dividend payments was always subject to uncertainty; (iv) the valuation of HKD 13.2m would still be within the valuation range even if post 65^th year dividends were included.

Whether the Group will still exist after 15 years (or 14 years from now)

420.  So far as (i) was concerned, Mr Yeo however pointed out that a basic valuation assumption in adopting the DDM method, or income approach, is that the business being valued will exist perpetually, and therefore it is not necessary to predict or ensure how long the business will continue to exist, and therefore, ignoring the value of the GP Shares after H’s 65^th year is incorrect and contradicts the model Mr Choy adopted[254].

421.  I find that there was no basis, nor was there any sufficient evidence to say that the Group would not continue to exist after 15 years. As had been pointed out by Mr Yeo, according to the Group’s website, it was managing some USD 40b of capital across different assets classes. Further, based on the total dividends declared by the Group of USD 40.0m in 2016 and USD 67.5m in 2020, the compound annual growth rate (CAGR) of the dividends was about 13.98% and the Group’s profits had been improving[255].

Whether H is likely to leave the Group before he is 55 years of age

422.  Under the terms of the Employee Shareholder Agreement, the GP Shares could be repurchased at HKD 1 if H left the Group before his 55^th birthday. Mr Choy pointed out that “it is common to see turnover of staff in the job market” and thus, he had assumed and applied a decreasing percentage on the probability of H leaving the Group between the ages of 51 and 55 (starting at 90% and decreasing by 10% each year), and that this probability percentage was then used to reduce the projected annual dividend income during those years up to the 65^th year. The discount was over 40% between the 56^th and 65^th year.

423.  Mr Scott pointed out that Mr Yeo had similarly adopted the starting turnover rate of 10% in Appendix 8 of his 1^st BDO Report[256]. However, Mr Yeo had made it clear that this probability percentage was unnecessary [257]. Mr Yeo had also made clear at the outset that he disagreed with Mr Choy’s approach, and what Mr Yeo was setting out in Appendix 8 was merely adopting Mr Choy’s valuation assumptions and inputs and performed a valuation of the GP Shares using the DDM method and the result was that he had arrived at 4 times Mr Choy’s valuation.

424.  In the Joint Intero Statement, Mr Yeo had made it clear that the adoption of 10% was arbitrary[258]. Mr Choy on the other hand said that the 10% assumption was based on the turnover rate of fund managers in Mainland China.

425.  Mr Yeo however pointed out that notwithstanding H had mentioned that it was possible that he might leave the Group before reaching 55 years old and/or his employment might be terminated, it would not be logical for H to leave the Group before he reaches the age of 55 years and to forego the GP Shares which are worth at least HKD 13.24m according to H’s own expert Mr Choy.

426.  On the other hand, Mr Scott submitted that it was obvious that H’s bonuses had collapsed over the last several years, and that H would have good reason to leave the Group if he were offered a higher salary/bonus. H’s own evidence was that chances were low that performance based organization would keep someone like him who had not performed and received very little in the way of performance related bonus.

427.  Mr Scott further pointed out that W had admitted in her evidence that at one stage H felt he was going to lose his job and there was a period of time he was having some issues at work and the Parties had looked into schools for the Children in ______ . However, W’s evidence about looking into schools for the Children in ______ was when the Parties were together as a family and that was some years ago. W had also said clearly that no application for the school had actually been made by her in the end.

428.  During the trial, H suddenly said he was looking for another job and that he had attended interviews with a headhunter a year ago. But he admitted that he had not made any formal application for another job. H had produced no evidence to support that he was looking for another job. I also find his oral evidence inconsistent with his written evidence. As pointed out by Mr Todd, H’s evidence in his own Trial Affirmation was that he hoped that after the conclusion of the present proceedings, he would continue to work for the Group at the same level until his retirement at age 60 or 65 years old[259]. Having considered all the evidence, I find no sufficient evidence that H was planning to leave the Group in the next 4 years (by now, he is 51 years old), nor was there any sufficient evidence that his employment might be terminated.

The annual dividend payment

429.  Mr Choy assumed a constant annual dividend payment of USD 440,000 would be paid to H from 51 years to 65 years old regardless of the business growth of the Group. Mr Choy’s scenarios of the dividend payment period were all based on reduced sums from his initial dividend payment USD 440,000 (up to 65) as he applied different years to arrive at the average annual dividend.

430.  In Appendix 6 of the 1^st BDO Report[260], Mr Yeo calculated the CAGR of the dividends received by Intero in the 5 years between 2016 and 2020 and arrived at a CAGR for the dividends of 5.65%.

431.  Mr Choy however pointed out that there was no dividend at all in 2015 and if the years 2017 to 2020 were used, the CAGR would be negative, ie -1.74% and there was also a risk of further dilution of Intero’s shares, which had fallen by over a third from 1.415% to 0.84% between 2016 and 2020, and that Mr Yeo had not taken into account the dilution.

432.  In his 2^nd Sirius Report, Mr Choy had also said that he could not be persuaded to accept a long-term growth rate assumption to be applied in the valuation of the GP Shares without detailed financial information and the dividend payment policy information[261].

433.  The lack of detailed financial information is a matter which has clearly hampered the experts. Mr Yeo was of the view that the shareholding held by Intero was not relevant as the DDM valuation was based on the dividends received by Intero over 2016 and 2020. In fact, it would appear to me that as the dilution of the shares mentioned by Mr Choy was between 2016 and 2020, it would make even more sense to look at the dividends between those years. In any event, I find Mr Yeo was entitled to look at the dividends over 5 years between 2016 and 2020 and that in my view, his adoption of 5.65% for CAGR of the dividends of the GP Shares was reasonable.

The ROE/COE rate

434.  Mr Choy had used a return on earnings (ROE) rate of 15.79% to discount the dividends to present value.

435.  In his 1^st BDO Report, Yeo had pointed out no supporting documents or research details were provided by Mr Choy to support his ROE rate of 15.79%. Further, Mr Yeo pointed out that Mr Choy should have used the cost of equity (COE) instead of the ROE in computing his discount rate[262]. Mr Yeo then produced a COE of 10.15% as seen in Appendix 7 of his 1^st BDO Report.

436.  Mr Choy however considered that Mr Yeo’s comment regarding the difference on ROE and COE was irrelevant as the discount rate Mr Choy used was the ‘required’ return on equity, ie the same as COE. He disagreed with Mr Yeo’s 10.15% as it was an aggressive assumption.

437.  The two experts then set out their respective arguments on the COE. Having considered their evidence, and without hearing oral evidence from Mr Choy, and in view of the lack of financial information available to the two experts, I have come to the view it is reasonable to adopt the average of their rates, ie 12.97%. Mr Yeo had also included a “Sensitivity Analysis 2” based on 12.97% in Appendix 5b of the Joint Intero Statement[263] in which a figure of HKD 46,978,672 was arrived at, or HKD 46.98, which formed the lower figure for his updated valuation.

438.  Having regard to all said above, I find that the value for the GP Shares to be at least HKD 46.98m.

439.  In fact the “Company” under section 2.6(b) of the Employee Shareholder Agreement the Group also has a Purchase Right in the event of the divorce of the employee shareholder if the spouse of the divorced shareholder acquires or obtains the right to acquire any of shares held by the divorced shareholder, at a price per share equal to the Company’s net book value per share as shown in the most recent audited financial statement[264].

440.  Thus, there was no reason why audited financial statements of the Company could not made available for W to consider this option or obtained by H for the experts for their valuation.

(iii) Intero – LP Investments

441.  The LP Investments represented H’s/Intero’s investments different funds managed by the Group. As at the Valuation Date, there were 4 funds and regularly updated account statements of those funds had been provided by H. Mr Choy relied on the net asset value of those funds in arriving at his valuation was HKD 2.79m, namely by adding up the net asset values of the individual underlying funds and their respective pre-funded capital and then applied a 30% DLOM (discount for lack of marketability).

442.  The main dispute between the experts is the DLOM. Mr Yeo’s valuation of the LP Investments was HKD 3.99m, without the 30% DLOM. Mr Yeo disagreed that a DLOM should be applied to the investment capital as these were cash balances, instead of fair value.

443.  Mr Choy admitted that the details of the underlying investments of the funds are important for the fund valuation, and without such information, the valuation could not be completed. However Mr Choy considered that a limited partner, ie the fund investor, always has difficulties obtaining information regarding the underlying investments of a fund due to confidentiality issues and thus the investors will be provided with funds statements to show the values of their current investments.

444.  As for the 30% DLOM, Mr Choy was of the view that this type of fund investments was long term and illiquid and usually subject to transfer restrictions. Mr Choy was also of the view that it would be difficult to seek investors to replace the positions of existing investors and any transfer would usually incur high administration costs and other restrictive expenses and he explained that the 30% DLOM was a reduction from the 40% set out in a research document titled “2020 Edition of Stout Restricted Stock Companion Guide” published by Stout Risius Ross, llC (“Stout’s Research”) given that the fund investments would commonly have a defined investment period.

445.  Mr Yeo disagreed with Mr Choy’s view that a small limited partner might not be able to obtain information of the underlying investments of fund and Mr Yeo was of the view that any limited partner, small or big, should be receiving the regular (eg annual, half-yearly or even quarterly) reports of the underlying investments of the fund they have invested and that Mr Yeo cited the example of Project King (as set out later), the quarterly and annual reports of the fund were obtained by Intero even though Intero was only a minority shareholder of Project King.

446.  What is clear that H’s failure to provide the underlying investments of the funds has again handicapped the experts. I agree with Mr Yeo and I find it surprising that H was not able to information of the underlying investments of the funds he had invested. Further, Mr Yeo had referred to a quarterly report of another of the Group’s own funds provided by W as an illustration, which report demonstrated that the Group does prepare and issue quarterly reports of their proprietary funds to the investors of funds[265].

447.  Having considered the above, I find there was no reasonable explanation provided by H as to why similar reports could not have been provided for the LP Investments. I am prepared to draw the adverse inference against H and adopt Mr Yeo’s valuation of HKD 3.99m for the LP Investments.

(iv) Intero – FP Equity

448.  Intero held 1,000 ordinary shares or 2.2% equity interest in FP Limited(FP) as at Valuation Date. In his 1^st Sirius Report, Mr Choy valued the FP Equity to be HKD 1.2m. On the other hand, in his 1^st BDO Report, Mr Yeo valued it to be HKD 5.37m and in the Joint Intero Statement, Mr Yeo’s final valuation was HKD 4.49m.

449.  As set out in the Joint Intero Statement, the areas of dispute between the experts were: (i) whether FP was engaging in a similar business as F Capital; (ii) whether the results for the financial period between January and December 2020 should be used; (iii) whether a P/E multiple of 13.8x should be used; (iv) whether the fair value of non-operating assets should be assessed and added back to the valuation result; (v) whether the DLOM should be applied before adding back non-operating assets; (vi) what DLOM rate should be applied.

Whether FP was engaging in a similar business as F Capital

450.  Mr Yeo pointed out that from the latest financial statements, FP Limited held long-term receivables due by (i) F ____ Growth Fund Advisors, (ii) FG Limited and (iii) held investments of 100 class B shares in FB Limited, membership interest in FB (US) LLC, and 500 class A shares in F Capital. These loan receivables and investments were identified as “non-operating assets”.

451.  As the details of the business operations of FP were not provided by H, Mr Yeo assumed that FP was engaging in a similar business as F Capital, a UK-based principal investment firm investing in various assets classes, and based on this, Mr Yeo had selected a set of comparable companies.

452.  In fact, in the 1^st Sirius Report, Mr Choy had also referred to the website F Capital and F Capital’s business as stated on the website[266].

453.  However, in the 2^nd Sirius Report, Mr Choy said he was advised that FP and F Capital are not doing the same businesses, and that F Capital is an asset management company while FP Limited is an advisory firm. Further, although as at Valuation Date, FP Limited held 500 class A shares, these were sold on 22 October 2020 and that those shares were “bought back at par”, and thus FP and F Capital are now two independent companies. The sale of the 500 class A shares in F Capital was only disclosed in the 2^nd Sirius Report.

454.  Mr Choy pointed out that the financial statements showed that the major source of revenue was arrangement fee (a kind of service fee) and that the management fee only contributed less than 10% of revenue and there was no performance fee and that asset management company would also have to invest into the funds they manage but FP did not have this kind of investments. Mr Choy further said he was advised that the performance in 2020 was poor for FP Limited due to the Covid-19 and that to ignore this and using 2019 outdated financial information was over-estimating the value of the FP Equity.

455.  As pointed out by Mr Yeo, there was no supporting evidence that FP was/is an investment advisory firm. Mr Yeo noted that based on announcement on 5 November 2015 when FP Limited acquired a minority stake in a London Gin company, FP was in fact described as a UK-based investment firm and F Capital was said to be a subsidiary of FP[267]. Mr Yeo had also pointed out, FP had invested in F Capital. In fact, according to the financial statements, FP held / holds other investments/ non-operating assets.

456.  Due to the lack of supporting information provided by H, I find whether FP was/is an investment management firm or not, and whether it carries out advisory services or not, it would appear that it is at least also an investments holding firm, as appeared in the above announcement and the non-operating assets held by FP.

Whether the results for the financial period between January and December 2020 should be used

457.  At the time of 1^st Sirius Report and 2^nd Sirius Report, the audited financial statements of FP Limited available were for the year ended 31 July 2018 and from 1 August 2018 to 31 December 2019. In other words, those financial statements for the year 1 January 2020 to 31 December 2020 were not yet available. Mr Choy adopted a pro-rata 12-month earnings based on the 1 August 2018 to 31 December 2020 results.

458.  As Mr Yeo pointed out, the agreed Valuation Date was 30 September 2020 and the results of the year 2020 would include the period after the Valuation Date and thus, Mr Yeo used only the figures for the financial period from 1 August 2018 to 31 December 2019. As further pointed out by Mr Yeo, the profits for the financial period from 1 August 2018 to 31 December 2019 were from the audited financial statements which showed a net profit of USD 2,654,877. For the period of 1 January to 31 December 2020, there was an estimated loss of USD 750,000, but this was an estimate only.

459.  The estimate appeared to be provided in an email dated 14 January 2021 from the managing partner of F Capital to H in relation to the financial performance of FP (“14.01.21 Email”)[268].

460.  As Mr Choy had himself said in his 2^nd Sirius Report, he was advised that no updated financial information could be provided for FP Limited.

461.  The problem, as pointed out by Mr Todd, H’s answers often raised even more questions. If indeed according to H, FP and F Capital are two independent companies after FP’s sale of its 500 class A shares in F Capital in October 2020, why was it the managing director of F Capital who sent the 14.01.21 Email in relation to the financial performance of FP.

462.  Without knowing the details of the operating business in relation to FP, it is not possible to say whether and/or how Covid-19 had affected the company’s performance in 2020. It is also not clear when FP was incorporated but it seems from the public announcement referred to earlier on that in 2015, it was already making investments. Further, H was the one who decided to make the investment in FP, which he seems to have held since prior to 2016. It is not clear why audited financial statements of FP for a longer period, say from 2015, could not have been provided by H.

463.  Again, as H was the one who had failed to provide all detailed information, I am prepared to draw an adverse inference against him and I am not prepared to accept an average figure of net profit based on the results from 1 August 2018 and 31 December 2020 only.

Whether a P/E multiple of 13.8x should be used

464.  As for the P/E multiple of 13.8x, according to Mr Choy, it was the median P/S multiple of selected comparable companies listed in Hong Kong[269]. On the other hand, Mr Yeo pointed out that the details of the business operations of FP Limited were not provided and he was unable to comment on the multiple used until all relevant details had been provided.

465.  As mentioned earlier, Mr Yeo went on to assume that FP was engaging in a similar business as F Capital and selected a set of comparable companies and came up with a P/E multiple of 18.12x.

466.  Mr Yeo also pointed out that notwithstanding Mr Choy now saying that FP is only a small advisory firm, the comparable companies selected by Mr Choy were also investment holding or investment management companies. Further, they were listed in Hong Kong whereas FP is UK based. Also, Mr Choy had used the multiple of 13.79 of a company which is engaged in investment banking and investment management services in Hong Kong.

467.  Again, as the details of the business operations of FP Limited were not provided by H, I am of the view that an adverse inference should be drawn against H, and I will accept Mr Yeo’s P/E multiple of 18.12x.

The remaining disputed areas (iv), (v) and (vi)

468.  Mr Yeo pointed out that Mr Choy did not assess the fair value of non-operating assets and applied the DLOM after adding the costs of the non-operating assets, whereas Mr Yeo applied the DLOM before adding back the non-operating assets. Mr Yeo referred to the Stout’s Research for his calculations in Appendix 10 of his 1^st Report and came up with the median discount of 9.6% for the “finance, insurance and real estate industry”, and that he opined that the adopted DLOM of 40% adopted by Mr Choy was much higher than the median discount of 9.6%.

469.  I agree with Mr Yeo there is no reason why the fair value of the non-operating assets should not be assessed. I will not set out the details of the respective arguments of the experts but again, the experts were clearly hampered by the lack of detailed financial information of the operations of FP Limited. Mr Choy had explained that Mr Yeo’s 9.6% was based on a misapplication of Stout’s Research. However, Mr Yeo’s 9.6% was derived from all sample data from the Stout Research, and there was no clear explanation from Mr Choy as to why he adopted 40% for the DLOM.

470.  Doing the best one can, I am of the view that adopting the average of the two rates, ie adopting 24.8 % for the DLOM is reasonable.

Value of the FP Equity

471.  Based on all above said, I accept Mr Yeo’s updated valuation of HKD 4.49m for FP Equity, adopting the 24.8% for the DLOM.

(v) Intero – JD Investment

472.  JD was said by W to be an investment between H and his brother and as seen earlier, H’s brother was said to be receiving an annual salary of USD 200,000 therefrom. Anyway, Mr Choy adopted a valuation of HKD 0.22m for the loan. In the 1^st BDO Report, Mr Yeo had indicated he needed more information to confirm. In the Joint Intero Statement, this valuation was agreed at HKD 0.22m.

(vi) Intero – Equity in Singaporean brokerage firm

473.  Intero holds 2,368 shares, or a 1.38% stake in a small Singaporean brokerage firm and Mr Choy proposed HKD 0.10m for this valuation. Although there was a mistake in exchange rate used by Mr Choy, as he pointed out, the difference of HKD 13,491 was immaterial compared to the overall valuation of Interio. Mr Yeo’s valuation was HKD 0.26m originally, and his updated valuation was HKD 0.21m.

474.  Both experts adopted the average implied enterprise value-to-sales (EV/Sales) approach in their valuation as the investment was loss-making. Mr Choy adopted a EV/Sales ratio of 4.72x and Mr Yeo proposed 8.55x.

475.  Mr Choy used two comparable companies of Singaporean brokerage firms facing the same regulatory environment. Mr Yeo based his on 4 comparable companies, including Hong Kong brokerages, and if the Hong Kong listed companies were removed, there were also only two Singaporean firms which had been covered by Mr Choy.

476.  The experts were again divided over the DLOM, namely 40% adopted by Mr Choy and 9.6% adopted by Mr Yeo. Again, I am of the view that an average of 24.80% for DLOM is reasonable. Based on this, Mr Choy’s valuation would be HKD 136,781 and Mr Yeo’s was HKD 213,924.

477.  The nature of the business of the Singaporean brokerage firm is clear and audited annual reports from 1 July 2017 to 30 September 2019 were produced and there was no dispute that the firm was incurring losses. Due to the small difference between the two valuations, I am prepared to adopt a further average of their valuations, making the valuation of this item, namely about HKD 175,000.

(vii) Intero – IP Loan

478.  According to the loan agreement between IP Limited (IP) and Intero, Intero lent USD 87,500 to IP on 1 June 2018 and the loan would mature on 1 June 2021 with an interest rate payable of 10% per year, and 100% of the equity interest of IP was pledged for this loan. IP also issued a warrant to Intero in connection with this loan, and Intero was entitled to purchase up to 20% fully paid and non-assessable shares of IP at an exercise price of HKD 0.01. Intero could exercise the warrant, in whole or in part, any time until 21 May 2021.

479.  According to IP’s website, IP was founded in 2013 and is a boutique Asia-based venture development firm that focuses on real estate, private equity and early-stage venture.

480.  So far as the loan was concerned, this was agreed in the Joint Intero Statement to be HKD 0.81m.

(viii) Intero – IP Warrant

481.  As said, a warrant was issued by IP Limited to Intero in connection with the loan from Intero to IP.

482.  Mr Choy adopted a valuation of 0.09m for IP Warrant, and Mr Yeo indicated a valuation of HKD 0.57m in his 1^st BDO Report. In the Joint Intero Statement, Mr Yeo’s updated figure was HKD 0.47m.

483.  Mr Scott pointed out that the difference in the valuations was due to 3 factors: (1) the P/E ratio of 3.15x for the one-man company in the business development stage while Mr Yeo adopted 12.64% of various listed companies ;(2) Mr Choy deducted the estimated tax owed by IP whereas Mr Yeo to concern only the previous years’ losses and ignored last years’ profit; (3) the experts’ difference on the DLOM.

484.  I will adopt the same approach as for the Singapore Brokerage firm, and adopt an average of the two valuations, ie HKD 0.28m.

(ix) Intero – Project King

485.  Intero through another company of IP, namely I Real Estate 1 Limited (IRE1) made an investment of HKD 400,000 into an Hong Kong Real Estate Fund involved in a real estate project, namely the renovation and reposition of a commercial building (a non-performing hotel) for leasing business.

486.  Mr Choy noted from the email of the founder of IP dated 20 January 2021 to H, the net book value as at the Valuation Date would be negative. Mr Choy considered that any appreciation in the investment in Project King was nominal and did not assess the fair value of Project King.

487.  Mr Choy noted from the emails between the founder of IP and H on 16 July 2020 that Project King had a capital deficit of HKD 20m and was looking for re-financing, and that the hotel’s expenses far exceeded its income, and also that it had only HKD 32,201 in cash as at 30 September 2020. Mr Choy had also pointed out that the project faced a lot of uncertainty due to Covid-19.

488.  Mr Yeo accepted that the status of the corporate lease business operated by Project King would be closely aligned to the overall economy in Hong Kong.

489.  However, Mr Yeo pointed out that the agreed Valuation Date was 30 September 2020 and the pandemic was already here since early 2020. As further pointed out by Mr Yeo, the unaudited third quarter report of Project King as at 30 September 2020 indicated the net asset value of the Real Estate Fund should be considered, which was HKD 811,293,115 as at Valuation Date. Further a report issued by IRE1 indicated the valuation of Intero’s investment in Project King was HKD 514,669 as at 30 June 2020.

490.  In light of the above reports, I find Mr Yeo’s valuation of 0.51m for Project King as at the Valuation Date is reasonable.

(x) Intero – Bremen Intercompany loan

491.  As at Valuation Date, there was an intercompany loan due from Bremen, Intero’s direct shareholder of USD 658,839, or about HKD 5,106,000. Mr Choy had added the full amount to the value of Intero. Mr Yeo indicated in his 1^st BDO Report that this was a TBC item. The value was then agreed in the Joint Intero Statement.

(xi) Intero – GP Shares Loan

492.  It was H’s case that in order to purchase the GP Shares, he had borrowed USD 130,000 on 31 October 2019 from two companies and USD 254,000 on 31 December 2019 from one of the Group’s companies. The interest rate of both notes is 2.75% per year and they had not expired as at the Valuation Date. Mr Choy set out in his Table 15 under paragraph 4.12.3 of the 1^st Sirius Report the outstanding principal and interest being HKD 4,006,796.

493.  Mr Yeo queried in his 1^st BDO Report whether the loans should be included as part of the liabilities o Intero as (i) H was the issuer of the promissory notes and not Intero, and no supporting documents had been provided to indicate that the loans had been transferred to Intero at Valuation Date and thus the liabilities remained that of H and not of Intero; (ii) the maturity dates of the notes were 31 October 2019 and 31 December 2019 which were earlier than the Valuation Date and no supporting document or details on any extension upon maturity were provided.

494.  In his 2^nd Sirius Report, Mr Choy indicated that he had been advised by H that those loans would be transferred to Intero.

495.  As no supporting documents were produced by H to show that the loans had been transferred to Intero and if they had been, there should be a corresponding consideration paid to Intero to assume the loan. Further, there was no supporting evidence that the maturity dates of the loans had been extended.

496.  Having considered the above, I agree with Mr Yeo, those loans should not be included or impact Intero’s valuation.

(xii) Conclusion on the Intero valuation

497.  There were 3 items of assets of Intero, the valuation of which were agreed, namely (i) the balance in DBS Bank of HKD 20.26m, (ii) the balance in Deutshce Bank of HKD 33.54m and (iii) the balance in Intero’s account with CI, a securities firm of HKD 6.33m. The 3 items totalled HKD 60.13m.

498.  For the 10 disagreed items, the total value as found by this Court or later agreed came to HKD 62.565m, as follows:

(i) GP Shares – 46.98m

(ii) LP Investments – 3.99m

(iii) FP Equity – 4.49m

(iv) JD Investment – 0.22m

(v) Equity in Singapore brokerage firm – 0.175m

(vi) IP Loan – 0.81m

(vii) IP Warrant – 0.28m

(viii) Project King – 0.51m

(ix) Bremen Intercompany loan – 5.11m

(x) GP Shares Loan – nil

499.  The total of the 13 items will come to about HKD 122.695m, or rounded up to HKD 122.70m.

500.  I will make two observations. First, on H’s own case, the shares in Intero were transferred to Bremen on 1 July 2016, and according to H at arms length, for the value of the Promissory Note of USD 10.5m @ 7.8, HKD81.9[270]. There was however no independent valuation provided by him to support how he arrived at the figure of USD 10.5m. In the list of assets for Intero provided by him in January 2017, he listed only 9 items of underlying assets of Intero’s (8 items of assets + 1 liability) and stated that the total valuation for those items (2) to (9) (ranging from dates from September 2016 to January 2017) was HKD 50,650,393 (of which the cash in bank accounts and securities at CI were about HKD 50.16m) with the value of the GP Shares stated to be “unknown”[271]. It would then seem the GP Shares were estimated by H to be some HKD 31.25m, which would seem more than double Mr Choy’s valuation of HKD 13.24m at 30 September 2020. In H’s Trial Affirmation, he had said the value of the Promissory Note had fully reflected the value of the underlying assets set out by him in paragraph 77 therein and he then referred to Mr Choy’s valuation as at 30 September 2020[272]. It was however not clear how H could use Mr Choy’s valuation of Intero in September 2020 to support the consideration of USD 10.5m in July 2016. In any event, H’s own valuation of USD 10.5m (or HKD 81.9m) for Intero as at 1 July 2016 was higher than Mr Choy’s valuation of USD 79.68m as at 30 September 2020.

501.  Second, H’s transfer on 1 November 2012, was stated to be on the same terms and conditions as the Letter of Employment of 1 August 2009. H’s responsibilities for the Group as stated therein are, amongst other things, in connection with sourcing and analysing investments and has included a particular focus on public and private stressed and distressed investments. H thus had some 10 years’ experience in sourcing and analysing investments and he must be fully aware that there would be illiquidity in the investments he made in those private companies through Intero. In fact, he had himself described those private investments as illiquid. H had not made full disclosure of the reasons of his investments, namely there had been no explanation from H as to why he made those illiquid investments.

502.  In any event, having considered the evidence from the two experts, I have come to the view that HKD 122.42m is a reasonable valuation for Intero as at 30 September 2020.

(3) S____ Land

503.  In light of my earlier findings, the present value of the S____ Land would not be relevant. However, I will consider the two experts’ respective evidence, in the event it should become relevant.

504.  W’s expert, Ms. Morvan, had been in real estate only since January 2016 and had been educated in communications. She is a property agent with ________ in ________. Ms Morvan gave evidence through video link from _______. Ms Morvan accepted that her qualifications and expertise were not close to Mr Robin-Clerc’s on urban planning.

505.  H’s expert, Dr Robin-Clerc, has a doctorate in Planning and Urbanism, and is a court expert on real estate appraisals for the Courts of Appeal of Basse-Terre (Guadeloupe) and Bordeaux (France). She gave oral evidence through video link from France.

506.  Their respective valuations are as follows:

Plot Number and area	W’s expert, Ms Morvan   @ approximately EUR 100/ sq m	H’s expert Dr Robin-Clerc In N Zone (light green colour) @ approximately EUR 500 /sq m	H’s expert Dr Robin-Clerc In UR Zone (pink colour) @ approximately EUR 900/sq m
AR 169 (area 3,963 sq m)	EUR 390,000 to  420,000	EUR 1,982,000	EUR 3,567,000
AR 117 (area 2,040 sq m, average slope of 26%, 15 degrees, a difference in level of 17m between the northern highest point and the southern lowest point)	EUR 200,000 to 220,000	EUR 1,020,000	EUR1,840,000

507.  The basis of Dr Robin-Clerc’s valuation was based primarily on a transaction in 2010 by which the public authority in ________ acquired 6,000 sq m of land at EUR 500 per sq m. It was however not clear why the public authority bought that sizeable piece of land.

508.  What is clear from the experts’ joint statement[273] is that the major difference between the experts appears to lie in whether the current zoning of the S____ Land is likely to remain for 10 years (per Ms Morvan) or may change in the next 3-5 years (per Dr Robin-Clerc). It is noted that in Dr Robin-Clerc’s 1^st report of 21 January 2021, she opined that there was no prospect of the S____ Land being rezoned to the UR Zone in the next 3/5 years[274] but in her 2^nd report of 3 May 2021, she amended this and said there was such a prospect[275].

509.  I also note that in the 07.02.13 Email mentioned earlier, H seemed to be saying that it was A___ who “unilaterally decided to put the [S____ Land] into green zone” and as stated therein W wanted to “buy, fund cleanup, get it out of green zone however long that takes…”. Thus, it was anticipated that it would take time to “get it out of green zone”, and it appeared that steps had to be taken before the S____ Land could be taken out of Green Zone.

510.  In light of Ms Morvan’s evidence that the town zoning map she used was one issued by the authority in December 2020, I accept her evidence that that it did not seem likely that there would be a change in the zoning by the authority in the next 3-5 years, but this would not mean any purchaser of the land could not make an application for changing the zone, but there was no evidence as to whether this was possible or how long it would take.

511.  On the other hand, Dr Robin-Clerc has pointed out that the S____ Land is not in “N1a zone”, ie the “dark green zone” and that it is only in “light green zone”. Dr Robin-Clerc agreed that Ms Morvan’s valuation of EUR 100 per sq m would be appropriate if the S____ Land is in the N1a zone, or “dark green zone”. Further, she pointed out that the S____ Land is “located near a beautiful road next to some shopping and convenient facilities, next to some houses being building around, and there is no prospect it will ever be a national park, and that it is in a buildable zone”.

512.  H had said that R5 was helping the Parties in identifying a number of distressed real estate opportunities in ________ and ______ and the S____ Land came up. As the evidence showed, H /the Parties had hoped to make “multiples”, presumably when one day they managed to move the S____ Land out of Green Zone. As found earlier, in 2014/2015, the Parties had only paid about USD 225,000 for the S____ Land. Even if they paid R5 and A___ of about USD 100,000 (as proposed by H in one of the emails) or do a swap with R5 for 1 acre of land in ______ worth about USD 200,000, this would make the total payments by the Parties (in cash and in kind) in the region of some USD 325,000 - USD 425,000.

513.  Prices of land in ________ may have gone up since 2014/2015 but at present, the zoning has not yet been changed. Looking at the progress of the Legal Action and the Demarcation Action, the change of zoning may take time, and generally it may take time to sell in light of the current global pandemic. However, it seems that there may be a purchaser, similar to H, who would buy while the land is still in Green Zone and then moves to change the zone. Having considered this, I find that Ms Morvan’s valuation may be over conservative. On the other hand, although Dr Robin-Clerc is an accredited expert, she is not a property agent in ________, and when it comes to estimating a sale value, one would have to depend on a local agent.

514.  Taking a broad brush approach, I am of the view that the present value would be somewhere between EUR 100 and EUR 500, and I find that the median figure EUR 300 would be a reasonable value per sq m for the S____ Land.

(4) AV 391

515.  Again, in light of my earlier finding, the present value of the plot is not really relevant. Further, where the Parties were planning to build a villa and for which W was applying for a building permit was on only one portion of the land, and there is an existing house on the other portion which, according to W, was then still being used by W’s parents when they were in ________. However, Ms Morvan’s valuation was based on the entire lot of AV 391.

516.  Anyway, both experts agree that AV 391 is 1,939 sq m in UR zone land with a good sea view. Dr Robin-Clerc values AV 391 at EUR 4,317,000 for the land plus the existing house which was built on 1,023 sq m, whereas Ms Morvan values it at EUR 3 to 3.2m, or about EUR 3.1m.

517.  Ms Morvan’s evidence during the trial as to whether her valuation was based only on land or with the existing house was rather confusing. In her report, she did state there was a residential house on the land which was well maintained and in good condition although she had said it was not what one would call a “luxury villa” and did not add much value to the plot[276].

518.  If Ms Morvan’s valuation is only of the land, then this would mean the land is between EUR 1,547 to EUR 1,650 per sq m, or about EUR 1,600 per sq m, which is substantially more than Dr Robin-Clerc’s valuation of the land at EUR 1,100 per sq m. Further, Ms Morvan did not consider the division between the land where the existing house was and the residual land.

519.  According to Dr Robin-Clerc, the residual land is 916 sq m, and the estimated value is EUR 1,007,600. I accept her valuation of the residual land.

520.  For the entire plot with the existing house, I am of the view that the value would be somewhere between the two experts’ valuations, namely about EUR 3.7m.

(5) Other 3 plots of the V___ Land

521.  Dr Robin-Clerc adopts EUR 200 per sq m across the board for N1a zone (dark green zone), EUR 500 per sq m for N zone, and EUR 1200 per sq m for UR zone. On the other hand, Ms Morvan considered each plot individually and came up with a valuation for each plot. Again, I am of the view the average of the two valuations would be reasonable.

(VI) Computation of the assets: the Family Pot

(1) Generally

522.  The Parties have filed an agreed Scott Schedule of Assets and Liabilities (“Scott Schedule”).

523.  First, in relation to the credit card charges, there was no sufficient evidence that those outstanding amounts are capital liabilities and the charges seemed to be the recurring spending or monthly expenses of the Parties under Sections 2.1, 2.2 and 2.3 of their respective Form Es. I am of the view that they should not be treated as liabilities against capital.

524.  Second, the amounts paid for litigation funding will be considered separately.

(2) Assets held by/available for W

525.  In W’s Updated Form E, she gave her interests in her bank accounts to be HKD 77,634.40 and HKD 30,000 for her valuable personal items[277]. In the Scott Schedule, the balance of her bank accounts was reduced to about HKD 17,559, whereas H said should be HKD 66,634.40, which appeared to be the total balances in W’s bank accounts as at 31 March 2021. W closed 3 of her 4 bank accounts in March 2021 and opened a new account with HSBC in April 2021 and HKD 17,559 was her updated balance in her new account.

526.  It was not quite clear as to the whereabouts of the balances in her previous accounts, but she was not really cross examined over this. There was no sufficient evidence that in April/May 2021, W had cash in her bank accounts of HKD 66,634.40.

527.  In the Scott Schedule, H had also alleged that W’s valuable personal items were HKD 400,000, but W had said household furniture and electronics and other household items could not be sold as they were being used and most were between 10 and 15 years old. As for jewellery and 6 Persian carpets, W was not cross examined on it. There was no sufficient evidence that W had valuables of HKD 400,000 and I accept W’s figure of HKD 30,000.

528.  I thus find assets held under W’s personal name to be about HKD 47,559 (being HKD 17,559 + HKD 30,000).

529.  W alleged that H owed her reimbursements for payments under the MPS Order. Those amounts were disagreed by H, and there is no reason why W cannot proceed with enforcement in usual manner, if so advised.

(3) Assets held by H/available for H

530.  Under Part 2.2 of H’s Form E (landed properties in Hong Kong or elsewhere), in light of my earlier finding that the disposition made by H of his interest in M______ Apartment to his father R4 shall be set aside, the value of M______ Apartment should be added back to be assets held by H, namely INR 144,000,000, or HKD 15,840,000. As for rental, according to W, there was rental income for 56 months of INR 325,000 per month, or a total of INR 18,200,000. However there would have to be expenses in connection with the apartment. There was no sufficient evidence as to what the net figure should be. I will disregard the rental. As found earlier, there was no sufficient evidence that H held any interest in K______ M___.

531.  Under Part 2.3 (bank accounts), in light of my finding in relation to the K___ Accounts, the funds transferred out of the K___ Accounts of INR 17,133,000, or HKD 1,796,607.02 should be added back to form part of assets under H’s name. I accept W’s figure for the balance in H’s bank accounts, namely a total of HKD 6,308,908.

532.  Under Part 2.4 (H’s shareholding/beneficial interest in private companies), in light of my earlier finding that H’s dispositions of his shares in Intero and Bremen to the US Trusts should be set aside, the value of H’s shares in those two companies should be added back as assets held by H.

533.  As set out earlier, my finding of the value of H’s share/interest in Intero is around HKD 122.42m. As for Bremen, the value of the land in ______ was agreed at USD 1.29m, or @ 7.75, HKD 9.9975m. As the sum of the intercompany loan of HKD 5.11m was added to Intero, I agree that sum should be regarded as Bremen’s liability and Bremen’s value is about HKD 4.89m (HKD 9.9975m – HKD 5.11m).

534.  Under Part 2.7 (stocks, bonds and other quoted securities/investments), the balance in H’s brokerage accounts/securities was agreed to be HKD 16,955 as at 25 January 2021.

535.  Under Part 2.8 (life insurance etc), I accept the value for ______ Insurance Trust set out by H in the Scott Schedule, namely HKD 2,980,754, being the net of the surrender value at 11 January 2021 less the loan taken out by H secured against the policy to fund the policy premium.

536.  Under Part 2.9 (monies owed to H), there is no reason why the rental deposits paid by H to the Parties’ respective landlords should not be counted as part of H’s assets, as they, or at least part thereof, should be refunded to H upon termination. However, I accept that there may be repair/reinstatement costs charged by the respective landlords. According to H, he had lent HKD 15,458.33 to his father R4 for legal costs for these proceedings. In the Scott Schedule, according to W, the total of monies due to H is about HKD 327,445.33. Allowing some deductions by the respective landlords, I find under this heading, a sum of HKD 300,000 is reasonable.

537.  Under Part 2.10 (valuables), according to H, he no longer owns any cars. There was no sufficient evidence to contradict H’s evidence in this respect. There was no sufficient evidence as to the whereabouts of the 6 silver pieces or W’s alleged figure of HKD 950,000. I accept a value of HKD 100,000 for H’s valuables.

538.  Under Part 2.11 (Other assets), the S____ Land and the V___ Land have been included in the Scott Schedule. In light of my findings earlier, they do not form part of the Family Pot or the Parties’ family resources, or W’s own financial resources.

539.  Under 2.14 (pension/ MPF), there was no sufficient evidence to contradict H’s valuation of MPF to be about HKD 3,716,827 as at 31 December 2020, which I accept.

540.  As for liabilities under Part 2.13 (liabilities), as mentioned earlier, there was no sufficient evidence that the credit card outstanding amounts were capital liabilities. Legal fees should be considered separately under the costs orders. There were no other liabilities set out by H under Part 2.13 of his Updated Form E[278]. In item 71 of the Scott Schedule, W had referred to a loan alleged by H that he borrowed from his friend AW through a company called Cottonwood, and this was in fact referred to in this Court’s decision of 8 June 2020 in relation to H’s then application for downward variation of his payments under the MPS Order[279]. Anyway, H said the loan had been repaid by him, and there was no sufficient evidence to contradict what he said.

541.  The total assets under H’s personal name and/or his financial resources are therefore in the region of HKD 156,163,444:

Part 2.2	M______ Apartment:	HKD 15,840,000
Part 2.3	Bank Accounts:	HKD 6, 308,908
Part 2.4	Shareholding in private companies, H’s share/interest in the companies at Valuaion Date were:
	Intero:	HKD 122,420,000
	Bremen:	HKD 4,480,000
Part 2.7	Securities:	HKD 16,955
Part 2.8	______ Insurance Trust /AIA Policy:	HKD 2,980,754
Part 2.9	Monies owed to H:	HKD 300,000
Part 2.10	Valuables:	HKD 100,000
Part 2.11	Other assets:
Part 2.12	MPF:	HKD 3,716,827

542.  Thus, the total of the assets held under by W and H and/or their financial resources amount to approximately HKD156,211,003, as follows:

(A) Assets held by W	47,559
(B) Assets held by H	156,163,444

(4) Litigation Funding – Issue 8

543.  As seen in various authorities, litigation funding for a spouse may be provided by way of interim periodical payments or maintenance pending suit for the spouse. In the present case, the litigation funding paid to W was paid, not by way of interim periodical payments/maintenance pending suit but by way of various sums from family assets, whether from assets held under H’s personal name and/or from the US Trusts.

544.  According to the Scott Schedule, the total litigation funding distribution from the US Trusts was HKD 14.5m[280]:

To W -	Total HKD 6.6m	(HKD 1.3m on 7 December 2020 + HKD 5.3m on 1 April 2021)
To H -	HKD 5.3m on 1 April 2021:
To OS -	HKD 2.6m	( HKD 400,000 on 7 December 2020 + HKD 2.2m on 1 April 2021)

545.  However, it appears from the PwC supplemental report on US tax liability[281], the litigation funding for W, as well as H, had been as follows:

Date	Amount received by W	Amount received by H	Remarks
28.04.17	HKD 600,000		Paid by H
28.12.17	HKD 600,000		Paid by H
08.05.18	HKD 600,000		Paid by H
04.09.18	HKD 600,000		Paid by H
11.12.18	USD125,000, or HKD 975,000	USD 125,000, or HKD 975,000	See Melloy Order of 11.12.18 and paid out of assets held by US Trusts
21.07.20	HKD 1,500,000	HKD 1,500,000	This Court’s Order of 21.05.20 and paid out of assets held by US Trusts
15.12.20	HKD 1,300,000	HKD1,300,000	Paid out of assets held by US Trusts
07.04.21	HKD 5,300,000	HKD 5,300,000	Paid out of assets held by US Trusts

546.  W had thus received a total of HKD 11,475,000 for litigation funding. The initial 4 payments of HKD 600,000 each and totalling HKD 2.4m appeared to be paid by H to W out of assets held in H’s name. However, prior to 11 December 2018, H must have also incurred costs of his own and had paid such costs out of assets held in his name. Since the Melloy Order of 11 December 2018, the rest of the litigation funding was paid out of assets held by the US Trusts on the basis of an equal distribution to H and W.

547.  As the litigation funding was paid by way of capital sums out of the family assets, in my view, they were really advances from the family assets in that had they not been drawn/spent, they would in fact all fall into the Family Pot. On the basis that the costs of H and W being more or less equal[282], I will assume that H had also obtained or spent about HKD 11,475,000 from the family assets for his own costs funding. Such advances to the Parties should be notionally added back to the Family Pot for computation of the total amount for division.

548.  Further, the litigation funding paid to OS of a total of HKD 2,600,000 was also an advance to the OS from the family assets. In my view, this should also be notionally added back to the Family Pot for computation of the total amount for division.

549.  Hence, the total Family Pot should be in the region of HKD 181,761,003, being HKD 156,211,003 (as found earlier on) + HKD 22,950,000 (being approximately the total sums advanced to H and W for their respective litigation funding/costs) + HKD 2,600,000 (being the sum advanced to OS for litigation funding).

550.  As said, the total sum for litigation funding which had been received by W was HKD 11,475,000, and this amount should be deducted from her share of the family assets.

(VII) The Parties’ income and earning capacity – Issue 12

(1) W’s income earning capacity

551.  W is now 50 years old and she holds a Master’s degree in Environment Studies and she had previously worked with a Government Department of Planning and Natural Resources prior to coming to Hong Kong.

552.  Although W has not worked in Hong Kong for some 21 years, and notwithstanding all her alleged medical/dental expenses, there is no sufficient evidence that she has any physical or mental disability or any health issues by reason of which she is not able to work. The Children will need less of their mother’s care as they grow up. The Parties’ son is now 18, and their daughters now 16 and 12.

553.  W is an intelligent and educated woman and in my view, even though she has been out of the work force in Hong Kong for 21 years, she does have some earning capacity, but having said this, there is no sufficient evidence as to what her earning capacity is for the foreseeable future.

(2) H’s income and earning capacity

554.  In his Updated Form E in January 2021, H stated his income to be HKD 313,750 per month (after deduction of MPF contribution)[283] plus a discretionary bonus of an average HKD 65,000 per month (based on HKD 780,000 bonus for 2019/2020), ie a total of HKD 378,750 per month[284].

555.  H’s evidence during the trial that for the last 4 1/2 years, he had not been able to perform at work because of access arrangements with W forced upon him. H also said he had not been able to invest or perform or source transactions largely due to these proceedings and access arrangements, and that it is highly unlikely that he can expect to earn a bonus over the next 3 years.

556.  As found earlier, there was no sufficient evidence that H would leave his present employment or that his employment would be terminated by the Group. Further, if he receives no bonuses or less, his tax liability will be reduced correspondingly. In any event, I am satisfied that he is able to meet his own financial needs and the Children’s financial needs from his income.

557.  As said earlier, with the end of these proceedings hopefully in sight, no doubt both of them can concentrate on rebuilding their lives. There is no reason why H cannot earn a bonus again in the foreseeable future.

G. STEP (2): THE PARTIES’ RESPECTIVE NEEDS – ISSUE 2 AND THE CHILDREN’S NEEDS – ISSUE 3

(I) W’s reasonable needs – Issue 2

558.  I set out hereunder a table of W’s claimed expenses and the amounts of the MPS Order for comparison:

	W’s 1st Form E (16.01.17)	W’s 2nd Form E (truncated) (16.10.18)	MPS Order (11.12.18)	W’s Updated Form E (25.01.21)	W’s Trial Affirmation (01.04.21)
Rent including carpark	100,000	70,000	70,000	74,000 (since April 2019)	74,000- amended to 70,000 after April 2021
General	56,050	43,500 (less car insurance and repairs and club expenses)	105,800, ie 26,450 for each of W and the Children +H’s Undertakings of total about 142,320	48,300	45,920
Personal	22,490	27,800 (less medical insurance)		37,000	51,540
Children (school fees and other payments paid by H direct)	48,358	School fees + school bus + medical insurance covered by H/employer	48,358 + School bus 3,500 + club 7,500 + medical and dental insurance + uncovered medical and dental
Children (other expenses)	38,076	34,500	26,450 x 3 = 79,350	21,650

559.  As has been said, the Parties’ needs should be “generously interpreted and accordingly, in trying to ensure that each party and their children have enough to supply their needs set at a level that equates, in so far as resources allow, to the standard of living they enjoyed during the marriage, those needs should not be assessed according to some perceived lowest common denominator, but with flexibility in the light of all the relevant circumstances[285].

560.  There was no dispute as to the Parties’ living standard prior to the breakdown of the marriage. They were living on the south side, and the Children attend international schools. They have the use of a private members’ club and they travel to other parts of the world for holidays. They were leading a comfortable expatriate lifestyle, but it was not an extravagant lifestyle.

561.  With the above in mind, I turn to the main disputed items of W’s reasonable financial needs as set out hereinafter.

(1) W’s housing needs and utilities expenses

562.  Although in paragraph 220 of her Trial Affirmation, W had said she very much hoped someday that she would be able to buy a home, no evidence was provided then as to where she wanted to buy a home or what she had in mind. It was only 4 days before the trial, on 30 April 2021, that her solicitors wrote to H’s solicitors enclosing listing information of properties of net area of about 2,000 sq ft in the neighbourhood of W’s current residence, ranging from HKD 53m to HKD 80m.

563.  The Parties have been living in Hong Kong for some 21 years since 2010 and all those 21 years, they were living in rented accommodation. According to W, the Parties had considered the option of purchasing accommodation during the marriage and had viewed properties in the building of the Parties’ former matrimonial home. However, as mentioned earlier, W had also said that at one stage, they were looking at schools for the Children in ______ when H thought he was losing his job, and that the schools were where the Children had gone to summer camps. The 1^st real estate they bought was the M______ Apartment and the 2^nd real estate they invested in was land in ______ through Bremen.

564.  I find no sufficient evidence that the Parties had seriously planned to purchase a home in Hong Kong. The Children will most likely be furthering their education abroad upon completing their secondary education in Hong Kong. W’s roots and family members and friends are in ___________ to which she has been returning at least once a year and has done so even during the pandemic. As seen earlier, her good friend who was murdered lived in ___________. She had said during the trial she enjoyed hiking and going to gym in her spare time but she had very little spare time as she had to look after the Children. She had not mentioned any good friends in Hong Kong.

565.  As said earlier, she and H and the Children have been leading an expatriate lifestyle in Hong Kong. When she was asked whether she had boyfriends in ____________, W suddenly said she has a boyfriend in Hong Kong but then quickly added it was not a reasonably stable relationship and that had nothing to do with whether she had to stay in Hong Kong long term. Notwithstanding that she has lived in Hong Kong for 21 years and may continue to do so for the foreseeable future, and whether she has a boyfriend here or not, I do not find that there was sufficient evidence at present that she would want to make Hong Kong her permanent home and/or she would need to purchase a home in Hong Kong.

566.  Having considered the above, I do not find W’s evidence that her housing needs to include purchase of a flat in Hong Kong of about 2,000 sq ft on the south side to be reasonable.

567.  As for rental, W admitted that the lease of her present flat has been renewed on 27 April 2021 at HKD 70,000 per month. H seems to be suggesting that the rent should be divided into 4 shares of HKD 17,500 each, one for W and one for each of the Children. I do not think this is reasonable, as this will mean that when one child becomes independent and self-supporting and H’s maintenance payments for that child will cease, the rental allowance for the rest will be affected, or when all the Children become independent and self-supporting, W’s share is then reduced to only HKD 17,500 per month, if by then she is still living in Hong Kong. On the other hand, when the Children all become independent and self-supporting, W will not need an apartment of the same size as her present one.

568.  By comparison, H’s own current rental is HKD 59,620 per month. In my view, a reasonable sum for W’s own housing needs should be about HKD 60,000 per month. The remaining HKD 10,000 per month will be regarded as the Children’s share of housing costs.

569.  As for her share of the utilities, she seeks a sum of HKD 4,000 per month, same as H’s. I find this reasonable.

(2) Car insurance expense

570.  W’s estimate for car expenses under “General” expenses” was HKD 8,720 per month, namely HKD 4,100 for gas and HKD 4,520 for insurance and repairs. Mr Scott pointed out that the insurance estimate of HKD 4,620 per month was based on W’s old car which had a lot of issues. HKD 4,620 per month would mean HKD 55,440 per annum, which seems quite high. In particular, W had also claimed another amount of HKD2,600 per month for transport under “Personal” expenses.

571.  I find a sum of HKD 5,000 per month for total car expenses under “General” would be reasonable.

(3) Club replacement expense

572.  W claimed HKD 10,000 per month for this item for herself, which included gym, classes, training and meals. The expenses from May to October 2017 was a monthly average of HKD 5,828 most of which was for the Children. Under the MPS Order, H undertook to pay HKD 7,500 per month for W’s and the Children’s expenses at the club. During the trial, W had said that the Children were not using the club due to the pandemic, and that as of late the allowance was mainly used by her.

573.  I am of the view, that the level of club replacement expenses of around HKD 4,000 for W would be reasonable.

(4) Clothing/Shoes expenses

574.  W claimed HKD 2,000 per month in her 1^st Form E, HKD 3,000 in her Truncated Form E and HKD 5,500 per month in her Updated Form E and her Trial Affirmation. H complained that she had developed a reckless spending pattern and unhealthy shopping behaviour. W had explained that her weight had fluctuated due to the stress of these proceedings and also nowadays she would shop in more expensive stores rather than “thrift stores” in Stanley. No doubt these proceedings have taken a toll on not just W but also on H, but with completion in sight, the Parties should be able to return to normal life. The amount of HKD 2,000 per month was however in 2017. In my view, a sum of HKD 5,000 per month would be reasonable for this item.

(5) Medical/Dental (uninsured) expense

575.  W has proposed a generous insurance coverage for herself on the basis of continuation with the current insurer Cigna of HKD 7,940 per month. For the uncovered medical/dental expenses, in her 1^st Form E it was only HKD 2,000 per month, and in her updated Form E earlier in January this year. W claimed HKD 3,500 per month. Suddenly in her Trial Affirmation, E claimed HKD 10,000 per month. W said she had dental issues for which she had undergone surgeries and she required melisma treatment, psychotherapy, osteopathy, acid reflux hormone replacement therapy and other uninsurable treatments and this item had increased to HKD 10,000 per month, which meant some HKD 120,000 per annum. I find there was no sufficient documentary evidence to support this claim and some of the items may be one off items. In my view, this is on the high side. I find HKD 3,500 per month reasonable for uncovered expenses.

(6) Meals out of home, personal grooming and holiday expenses

576.  For meals out of home and personal grooming, W claimed a total of HKD 5,990 in her 1^st Form E and she claimed HKD 8,000 per month in her Updated Form E in January 2021. In her Trial Affirmation, she claimed HKD 4,000 per month for meals out of home and HKD 5,500 per month for personal grooming, totalling HKD 9,500 per month. I find HKD 4,000 per month reasonable for meals out of home and for personal grooming, a monthly sum of HKD 4,000 is reasonable.

577.  As for her holiday expenses, she claimed HKD 6,000 per month in her 1^st Form E in January 2017, HKD 10,000 per month in her Truncated Form E in October 2018, HKD 6,000 per month in her Updated Form E in January 2021 and HKD 10,000 in her Trial Affirmation. According to W, her expenses were HKD 10,000 per month in pre-Covid days. I find HKD 10,000 per month reasonable.

(7) W’s reasonable needs

578.  In light of the above, W’s reasonable expenses (including rent) under paragraph 256 of her Trial Affirmation[286] would come to HKD 96,200 per month under “General” expenses and HKD 39,540 per month under “Personal” expenses, totalling HKD 135,740 per month as follows:-

General	HKD (pm)	Personal	HKD (pm)
Rent	60,000	Meals out	3,500
Utilities	4,000	Transport	2,600
Food	5,500	Clothing/Shoes	4,000
Household	5,000	Personal grooming	3,500
Car expenses	5,000	Entertainment	4,000
Domestic helper	10,000	Holiday	10,000
Other out of pocket expenses	400	Uninsured medical/dental	3,500
Pets	1,500	Insurance & premium	7,940
Club replacement	4,000	Mobile	500
Handyman	800
	96,200		39,540

579.  I will round up to HKD 138,000 per month and this amount I find to be reasonable for W’s financial needs.

(II) H’s reasonable needs – Issue 2

580.  In H’s Updated Form E, under section 4.1 “General”, his expenses were HKD 99,955 per month including rent of HKD 49,620 per month.

581.  As for his expenses under section 4.2 “Personal”, he had included HKD 248,120 for the amounts he had to pay under the MPS Order including the Undertakings, and HKD 100,000 per month for his legal costs. In addition to the MPS Order, under section 4.3 “Children”, his expenses were HKD 10,800 per month.

582.  The total of H’s monthly expenses came to HKD 525,835 per month.

583.  Leaving aside the MPS Order and the legal costs, and the Children’s expenses for the time being, his expenses under “General” and “Personal” were about HKD 166,915 per month, including HKD 55,960 per month for his tax. Excluding tax, his expenses were about HKD 110,955 per month.

584.  H was not really challenged on his monthly expenses, which I find reasonable.

(III) The Children’s reasonable needs – Issue 3

585.  In section 4.3 of her Updated Form E[287], W has set out the Children’s monthly expenses of HKD 21, 650 per month excluding their share of the “General” expenses and other direct payments from H under the MPS Order and with adjusted amounts due to Covid. According to my calculations, without the adjustments due to Covid, the Children’s expenses (ie adding back the decreased amounts due to Covid, in particular travelling, and deducting those increased amounts due to Covid) total about HKD 38,650 per month, less the direct payments by H of school fees school bus and insurance premia[288]. This is without taking into account the Children’s share of the “General” expenses.

586.  Under the MPS Order, H is currently paying HKD 26,450 per month respectively for W and each of the Children, namely a total of HKD 105,800 per month plus the Undertakings. H’s evidence was that he was paying a total of about HKD 248,120 per month for W and the Children under the MPS Order. The apportionment of HKD 26,450 per month each therein was only made or accepted by H on a broad brush interim basis. I am of the view that H should not be regarded as having agreed that each child’s expenses were HKD 26,450 per month.

587.  H has undertaken to continue to pay the Children’s reasonable education expenses until they complete their tertiary education. His proposal was to pay maintenance to W for the Children at HKD 32,500 per month for each child inclusive of their share of the rental (being 1/4 of the monthly rental of HKD 70,000, or HKD 17,500 each) until they reach the age of 18 or complete full time education. This would mean H was proposing to pay a sum of HKD 15,000 per month per child excluding their share of the rental.

588.  H has also set out for this Court’s consideration as to the Children’s prospective financial needs. The son R is now in his penultimate high school year and will be attending university in 2022 and that the Parties’ agreement had been for R to attend university in USA, and that R would need around USD 70,000 to USD 80,000 per annum, which would be over HKD 33,000 per month higher than his current school fees. The older daughter S had also expressed her wishes to attend boarding school in the US and that such may cost HKD 25,425 per month more than her current school fees. In light of this, H had said his expenses for the Children would increase by at least HKD 58, 425 per month starting from 2022.

589.  W on the other hand has proposed HKD 31,650 per month for each of the Children exclusive of their share of rental.

590.  As said earlier, the monthly rental should not be apportioned equally among W and the Children. The Children’s share of the monthly rental should only be HKD 3,333.33 per month (being 1/3 of HKD10,000 per month out of the current monthly rental of HKD70,000 per month). The monthly expenses for the domestic helper and the car have been included in W’s own monthly expenses. However, the Children’s other “General” expenses such as utilities, food, household expenses and any club replacement expenses should be taken into account.

591.  As said, according to W’s Updated Form E, the Children’s expenses under section 4.3 would be a total of about HKD 38,650 per month or about HKD 12,883 per month per child, under normal circumstances, without Covid, and with H paying direct (i) their school fees and transport to school (school bus); (ii) uninsured medical and dental insurance expenses with the insurance premia paid by the Group.

592.  As their lunch expenses have been included in the monthly sum of HKD 38,650, their food expenses at home should be reduced. In the hope of Covid restrictions will be over soon, and having considered the Children’s share of the current rental of about HKD 3,333 per month each, I find a monthly budget of HKD 20,000 per month for each of the Children (including their share of the rental and the “General” expenses) would be reasonable. As a total of HKD 7,000 per month has been included in the Children’s monthly expenses under section 4.3 for their extra tuition (such as mandarin lessons) and for their extra curricular activities, I do not think H needs to undertake to pay any extra save that H should undertake to pay direct R’s SAT classes separately. H should also undertake to pay the Children’s reasonable tuition fees and all related costs which appear on the school invoice until each/them shall leave secondary school in HK and reasonable uninsured medical and dental expenses (excluding over the counter medication). I understand H agrees to continue to pay for the Children’s reasonable education expenses until they reach 18 or cease full time education whichever shall be later. As the Parties have joint custody of the Children, any future education plans have to be agreed by them and there will be change of circumstances and they may need to apply for variation for Children’s periodical payments when the time comes.

(IV) Duxbury Calculations

593.  W’s expert Mr Yeo adopted an annual inflation rate of 3.06% based on the average rate of change of the Hong Kong CPI Composite between 2011 and 2020 (ie 10 years) from his research in Bloomberg on 23 April 2021. He also used the same period of 10 years for calculating the average returns for his proposed investment types. On the assumption that W would invest 50% in bonds, 30% in securities and 10% in time deposits and 10% in savings deposit, he arrived at an annual capital growth of 0.85% and annual investment return was 2.43%[289]. In the Joint Duxbury Statement, He arrived at an average annual portfolio return (comprising both income and capital) of 3.26%. The initial capital sum to provide monthly average expenditure of HKD 167,460 would be HKD 77.05m.

594.  H’s expert Mr Apedaile was instructed to use a figure of monthly expenditure of HKD 49,326, and based on the parameters and assumptions he set out in his report, he arrived at an initial capital sum of HKD 19,043,676. He adopted an inflation rate of 2.299 % per annum based on the average of 5 years between August 2015 and August 2020 for the CPI Composite and an average annual investment return of 3.378 %. Further based on such inflation and investment return, for the sake of comparison, Mr Apedaile also set out his calculations based on W’s case of her monthly expenditure of HKD 167,460, and arrived at a figure HKD 64.65m. In his latest update of 7 May 2021, adopting an annual inflation rate of 1.597 % between March 2016 and March 2021 for the CPI Composite and 3.38 % average portfolio return, he arrived at an initial capital sum of HKD 57.40m for a monthly expenditure of HKD 167,460[290].

595.  The main areas of disagreement between the experts are the inflation rate and the average annual return. In light of the result produced by Mr Apedaile by using his earlier inflation rate and his updated inflation rate in “Scenario B” is that, as pointed out by Mr Todd, W would have received HKD 7.25m in 2020 than in 2021. Anyway, having considered their evidence, I am of the view that that it is more appropriate to adopt an average over a longer period of 10 years rather than 5 years.

596.  As for the annual portfolio return, Mr Yeo’s was 3.276% and Mr Apedaile’s under Scenario A was 3.378% and under Scenario B was 3.38%.

597.  Mr Apedaile had referred to the investment portfolio, he had referred to the one set out by Bharwaney J in the personal injury case Chan Pak Ting v Chan Chi Kuen (No 2) [2013] 2 HKLRD 1 and for needs of over 10 years, the “Bharwaney portfolio” is an “average” portfolio of 10% in time deposits, 70% in high quality bonds of BBB + or better, and 20% in high quality blue-chips that qualify as “widows and orphans” stock. In Hong Kong Family Court Tables 2020, the “Bharwaney portfolio” were used for Duxbury calculations and based on this, an investment return of 2.65% was used.

598.  The deposit interest rate is very low at the moment. For savings deposit, according to Mr Yeo, the annual return was 0.02%. According to Mr Yeo, the 12 month HKD deposit rate was 0.19% per annum as at 23 April 2021. According to Mr Apedaile, it was 0.15% per annum. However, although the savings deposit rate was low, I am inclined to agree with Mr Yeo that in case of any urgent needs, W should maintain some ready cash. In my view, and in light of the capital sum, keeping 5 % of the capital sum which I am going to order in ready cash should be sufficient. Thus, the 10% cash should be divided into 5% on savings deposit and 5% on 12-month time deposit. I am of the view that the rest should be as set out in the “Bharwaney portfolio”.

599.  In any event, I find W’s share of the Family Pot, as decided by this Court, should be sufficient to cover her reasonable financial needs.

H. STEP (3) DECIDING WHETHER TO APPLY THE SHARING PRINCIPLE AND STEP (4) WHETHER DEPARTURE FROM EQUAL DIVISION

600.  H’s reasons for departure from equal division:

(1) The GP Shares were conditional upon H’s continued employment with the Group. The Parties separated in October 2016 and the legal right to obtain a fair value and complete ownership over the GP Shares will only occur when H turns 65 in 2036 and if he is still employed by the Group.

(2) W’s litigation conduct in (i) failing to provide full and frank disclosure in respect of her interests in the S____ Land and V___ Land; (ii) refusing to attend private FDR/mediation as ordered by the Court; unwilling to agree on the appointment of single joint experts and only filed last minutes expert reports shortly before the trial despite the fact that expert reports were ordered on 19 June 2020, and W had received litigation funding; (iii) W’s refusal to seek any disclosure directly from R2 and R3 whom she joined as parties to these proceedings.

601.  As pointed out by Mr Todd, it was only in H’s Closing Submissions that it was asserted that there should be a departure from equal division in respect of H’s GP Shares. In H’s Open Proposals, his own position then was still an equal division of assets. In any event, both Mr Yeo and Mr Choy were instructed to prepare the valuation as at the Valuation Date of 30 September 2020. I do not see that (1) is any reason for departure.

602.  As for (2)(i), there was no finding against W by this Court of her failing to provide full and frank disclosure in respect of the S____ Land and V___ Land. As for (2)(ii) this would be a matter for argument on costs. As for (2)(iii), as set out earlier, according to PBB, H was the only who had all the financial information of the US Trust assets and H was to provide PBB with such financial information. Further, H is the one who is under a duty of full and frank disclosure towards W in these proceedings and not PBB. As set out earlier, I have found that H had failed to provide details and information in particular in relation to his private investments. He had failed to comply with his duty to make full and frank disclosure of his finances and this has led to the Court drawing adverse inferences against him. His disclosure had been piecemeal and as pointed out by Mr Todd, which I agree, very often, his answers or the information provided by him raised even more questions.

603.  In light of the above, H’s reasons for departure from equal division have not been made out.

604.  As for W’s reasons for departure from equal division, namely that she requires a capital sum for purchase of accommodation in Hong Kong, this has been dealt with earlier. Her reasons for departure from equal division have not been made out either.

605.  Other than those set out in the List of Issues, there were no other disputes over the section 7 factors or otherwise. The Parties’ marriage lasted about 15 years. W, although she had not had any earned income during the marriage, she has been a full time homemaker and has contributed towards the family by looking after the home and caring for the family. H on the other hand is the sole breadwinner of the family. They have made equal contribution towards the welfare of the family. Apart from the loss of the use of the club and H’s medical insurance policy (which have been taken into account in considering W’s reasonable needs), there were no other submissions as to what other benefits W would lose the chance of acquiring upon the divorce. Equally, there were no submissions on any loss to H in this respect.

I. STEP (5) DECIDING THE OUTCOME

606.  I have found the Family Pot to be HKD 181,761,000. Having considered all the circumstances of this case and the section 7 factors, I see no reason why there should be any departure from equal division.

607.  On equal division, W should be entitled to HKD 90,880,500. W had already received HKD 11,475,000 as an advance from the Family Pot for her litigation funding, and her own assets were about HKD 47,559. Thus, what she should receive out of the Family Pot is another HKD 79,357,941, or rounded off to HKD 79.4m.

608.  I am of the view this capital sum of HKD 79.4m will cover all W’s reasonable needs and should be paid to her on a clean break basis.

(I) Overpayment of MPS – Issue 9

609.  H seemed to be alleging that there had been overpayment by him under the MPS Order under Issue 9 of the Scott Schedule but in light of my finding of the Parties’ respective needs and the Children’s needs, there was no overpayment which needs to be deducted from W’s share.

(II) US Tax implications – Issue 10

610.  As for US Tax implication under Issue 10, I understand that W will propose a structure for the payment of the capital sum awarded to her to minimize US Tax, if any is payable. It was submitted on behalf of W that H should bear W’s US Tax liability. I do not see why but will hear further submission on this.

J. ORDER

611.  In light of all said above, the effect of my order is:

(1) H shall personally pay to W a lump sum of HKD 79.4m in full and final of all her claims for ancillary relief. Upon full payment, the Parties’ respective claims for ancillary relief against each other shall be dismissed;

(2) H shall pay to W periodical payments for each of the Children HKD 20,000 per month until they complete full time education or further order, subject to H’s undertaking to directly pay their reasonable tuition expenses, including school bus and their reasonable medical and dental expenses not covered by H’s employer’s medical insurance policy (but excluding any over the counter medications).

612.  I understand that the Parties wish to address the Court on payment schedule and the exact structure of the final order. I will direct the Parties to submit agreed directions for lodging their submissions on the outstanding matters and the estimated length of hearing on the outstanding matters.

613.  In the meantime, the MPS Order shall continue to have effect until further order.

K. COSTS

614.  In my view, W is overall the successful party in these proceedings, and I make an order nisi that H shall pay W’s costs, to be taxed on party and party if not agreed, inclusive of all reserved costs and costs of the BVI proceedings, with certificate for two counsel save for costs of W’s 2^nd Summons for litigation funding issued on 12 August 2019 and costs of 3 May 2021.

615.  For W’s 2^nd Summons for litigation funding, as seen in this Court’s judgment[291], there was no reason as to why W, or H, could not have simply agreed to jointly request the trustee for distribution on the same basis as set out in the Melloy Order of 11 December 2018. I make no order as to costs of that summons. I also make no order as to costs as between the Parties on 3 May 2021 as the parties were not able to comply with this Court’s directions for lodging of agreed trial template and updated timetable for attendance of overseas witnesses.

616.  As for OS’s costs, in my view, the OS was directed to represent the Children due to the setting aside applications. As W is the successful party in the setting aside applications, I make an order nisi that OS’s costs shall be paid by H, to be taxed on party and party basis, if not agreed, with credit by given to H for the HKD 2.6m advanced to OS for litigation funding.

617.  The above orders nisi on costs will be made final after 28 days.