YING KA KWOK TANIA v. ELMER YUEN

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

DIVORCE JURISDICTION

ACTION NO. 8 OF 1986

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BETWEEN

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JUDGMENT

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1. This was a protracted application by the petitioner for ancillary relief. The hearing lasted 15 days. I regret that it was my impression that the parties are bitterly opposed towards each other. It has not been a simple application and I propose dealing as best I can with what seem to me to be the most important issues which arise. I say this because a great deal of time has been spent by the parties respective legal advisors and accountants in going through a mass of material in an endeavour to advance the contentions they were making. While at the end of the day I have come to the conclusion that there has been sufficient disclosure of assets by the respondent it has only come about as a result of the respondent being pressed very hard to provide the particulars which have been sought.

2. One of the most unsatisfactory aspects of this application has been the highly irregular manner the respondent has ordered his affairs. I refer to the fact that even up to the present time no satisfactory or convincing efforts have been made to differentiate between the respondent's personal finances and those of the various companies he has been concerned with. In most cases he has had a controlling interest in the companies and he has not been remunerated for the services he has performed. What has happened is that the respondent has arranged for his companies to defray his expenses whether they are of a personal nature or whether the expenses were validly incurred for business purposes. At one stage in his testimony, he gave evidence that no salaries should be paid to himself or the petitioner when she was working for the company if the amount of the salaries would be sufficient to lead to the incidence of salaries tax While in no way condoning such a practice, I have come to the conclusion that it is not right for me to concern myself with any irregularities which may have occurred as this seems to me to fall outside my terms of reference in the summons which lies before me.

3. Before dealing with the evidence which was presented to me it may be helpful to make some comment upon the way in which this application was prepared. The petitioner's advisors saw fit to prepare lengthy and detailed affidavits which contain a great deal of material which was germane to the application. The respondent's advisors approached the matter in a different way. Initially the respondent was clearly unwilling to co-operate. Only when he was forced to do so did he file an affidavit of means. This affidavit was extremely brief having regard to the very considerable assets he possessed. Also the respondent did not choose to take issue or challenge the vast majority of the evidence which was adduced by the petitioner in her affidavits. This led to difficulties.

4. It is trite law to state that in applications of this nature the affidavits are intended to be treated as the pleadings of the parties. Mr. Ching for the petitioner took great exception to issues being ventilated which had in effect not been challenged by the respondent on the affidavits. He went further. He objected to the respondent going into the witness box to amplify upon the evidence contained in his affidavits. I was required to make a Ruling upon the extent to which the respondent should be permitted to give evidence and to challenge the petitioner's evidence.

5. I adopted what I regarded as being a fairly liberal approach to the problems raised. I considered it to be necessary for the respondent to be given a sufficient opportunity to amplify upon his evidence particularly having regard to the circumstances which existed when Tele-Art Ltd. in effect went public. My main reason for this Ruling was that I considered it to be a sterile exercise of the discretion reposed in me to adopt a formal or legalistic approach to the application which would have the effect of shutting out a great of evidence which it was essential I should have if I was to do justice between the parties.

6. The parties were married in June 1972. They are both now in their late thirties. They both received part of their education in the United States of America. I think that it could fairly be said that they both come from good middle class families who are quite wealthy. However, neither the petitioner nor the respondent had very substantial assets available to them initially.

7. The petitioner gave evidence that she received a dowry of HK$60,000 from her parents which money was used to finance in part their honeymoon. The respondent had various business interests which were not particularly successful over the first few years of the marriage. In any event it was necessary for the petitioner to go out to work so as to enable her to contribute towards the family fortunes such as they were. The petitioner went out to work notwithstanding the fact that she gave birth three children. The first a girl was born in February 1973, the second a boy in January 1978 and the youngest a girl born in September 1980.

8. From a very early stage the petitioner worked in the respondent's various companies and it is perhaps the most important matter which I have to consider is the nature and extent of her participation or involvement. It is the petitioner's case that her contribution was such that in fairness she should be deemed to have an equitable interest in the companies notwithstanding the fact that she was issued no shares in her name. The respondent accepts that she did work for the various companies but contends that her contribution did not amount to much more than her being a somewhat glorified book-keeper who did not make a particularly signicant contribution towards the family fortunes. I will consider this crucial issue later in this judgment.

9. It seems clear from the wife's evidence, most of which I accept, that in the early years the parties were fairly hard up. Indeed when they did eventually purchase a modest flat as the matrimonial home it was necessary for the petitioner to obtain financial assistance from her parents. The loan which was obtained was subsequently repaid. In June 1973 an event occurred which had considerable implications on the family's finances. The Midland Bank in England made a clerical error and remitted to one of the companies HK$888,000 instead of HK$88,000 which was the correct amount they were expecting to receive. At that time the respondent was trading with a partner and a decision was made that the excess payment should be retained as long as possible and the bank's attention should not be drawn to their error. Although I have not had sufficient opportunity to analyse the relevant accounts it seems likely that this over-payment had the effect of providing an injection of capital to the respondent's affairs which may have played no small part in starting him effectively on the road to riches.

10. Mr. Ching made much of this payment as indicating that the respondent is and was a man of dubious business morality. This may well be the case. However, I do not see how this impinges to any large extent upon the matters which I must consider. In the first place I have no doubt that the petitioner was quite prepared to accept the position and I simply do not accept that she was vehemently opposed to the respondent adopting the attitude he did. Perhaps more important than this I do not see it as part of my function to weigh and consider the conduct of the parties unless it is of a serious and grave nature. I do not think that this has been established. Be that as it may the respondent was able to keep the excess monies for a considerable period of time and this was of the greatest assistance to him in his endeavours.

11. In 1976 after the respondent had had a dispute with his partner a decision was made to activate a private limited liability company the shares of which were owned by members of the respondent's family. The company was called Tele-Art Limited. It had previously been involved in the retail trade. The scheme which was advanced by the respondent's family was for the respondent to transfer the assets of his previous ventures to Tele-Art and for a substantial proportion of shares to be transferred to him. Unfortunately, even here the waters were rather muddy. It was the respondent's evidence that a considerable portion of the shares registered in his name were in fact beneficially owned by his father Robert Yuen, his mother and his elder sister, Louise. Although I have had some reservations concerning the respondent's credibility I have come to the conclusion that he has been telling the truth concerning these interests in the shares. I am prepared to accept his evidence that he was the beneficial owner of only approximately 58% of the shares in Tel-Art Ltd.

12. Tele-Art Ltd. was the main vehicle for building up the respondent's financial fortunes. I do not think that it would be unfair to say that the company was generally used to fund the needs of the respondent's family. I refer to his parents and sister as well as his wife and children. The main business of Tele-Art was the manufacture of digital watches. In this it appears to have been inordinately successful. Large volumes of sales are effected to markets in the United States of America and Europe. As the fortunes of the company continued to gather momentum various purchases were made of flats and flated factories. The majority of these purchases were made on a rising market. According to my notes at least ten purchases of properties were made. It may well be the case that some of these purchases led to liquidity problems. The respondent gave evidence, which I accept, that the volume watch business is highly volatile. At one stage difficulties were encountered due to the fact that Tele-Art Ltd. tended to concentrate on digital watches at the upper end of the market at a time when cheaper products had gained in popularity. This led to a crisis which nearly jeopardized the whole operation.

13. Be that as it may the fortunes of Tele-Art generally continued to flourish. The respondent said that at times finances were extremely tight and this was consequent upon outside pressures which were brought to bear on the company. At other times this was self-inflicted. As a matter of efficiency, he attempted to run a fairly tight ship.

14. I do not think that it is possible or realistic to attempt to follow a graph indicating the company's fortunes over the years. It is clear that the various accounts which were produced over the relevant period were trading accounts. In other words they were prepared in such a manner as to demonstrate the trading activities of the company. What the accounts did not do was to keep a record of the real estate transactions which had been undertaken. This matter was further complicated by the fact that a practice was adopted of using shelf companies to hold some of the various properties purchased and for Tele-Art or the respondent to have the shares registered in their name. In any event when the accounts were prepared no formal valuations were obtained from expert valuers and accordingly I am not prepared to accept that the accounts satisfactorily showed the true capital position of the company. The leads to considerable difficulties as I do not think that it is possible to ascertain with any satisfactory degree of precision what was the worth of Tele-Art at the time of the break up of the marriage in 1982. This may not matter too much as I am equally not satisfied that it would be realistic to attempt to value any contribution made by the petitioner at the date when she ceased working for Tele-Art.

15. At this point I propose considering the roles which were adopted by the petitioner and the respondent in Tele-Art Ltd. The petitioner has itemized at some length the nature of the duties or functions she performed while she was working at Tele-Art. I am satisfied that in this respect her evidence is to be believed. These activities go far beyond those of a book-keeper. I do not think that it would be an exaggeration to state that the functions she undertook were much more akin to those of a manager or a proprietor. She undertook the internal control of the company and was responsible for maintaining the accounts. She also communicated with the company's various bankers and was clearly a key figure in the company. She was also responsible for the supervision of staff and ensuring that the work of the company was properly performed.

16. In a way her role admirably complemented the role of the respondent. He was the ideas man and the person in the company responsible for external matters. Perhaps most important of all he was the party to generate sales and to be responsible for getting in parts and components for the manufacture of watches.

17. I have no doubt that the roles of both the petitioner and the respondent were of the utmost importance and indeed were critical to the overall success of the venture. In this respect it is very important to bear one factor in mind. In the early days of the company operations would have been on a much smaller scale than is presently the case. The contributions of particular individuals are much more important at this time than they would be after the company had reached maturity. This observation would be particularly relevant to the petitioner's contribution.

18. The petitioner and respondent worked together in Tele-Art from 1976 until 1982. With the continuing success of the company it was possible for the parties to enjoy a much higher standard of living than had hitherto been the case. In particular a decision teas made in 1979 to purchase a property called Casa Pino at Waterloo Hill Road for 3.9 million dollars. This was to be the matrimonial home. The area of the property is in excess of 5,000 sq. ft. and it is obvious that residence in this flat would connote a marked improvement in the standard of living enjoyed by the parties. They moved into the property in 1980 and it was partly used for company entertainment purposes. The respondent gave evidence that one of the motives which activated him in having such an opulent property was to seek to impress parties he was doing business with. This is quite understandable in the circumstances.

19. In 1981 and 1982 there was something of a down turn in the fortunes of the company. This led to severe liquidity problems. At this time the petitioner was exercising control over the accounts and restraining the respondent from incurring what she deemed to be excessive expenditure. It would appear that this might have been one of the main reasons for disharmony between the parties.

20. It is instructive to consider how the petitioner organised the accounts she kept. She claimed that she acted in accordance with the respondent's wishes in this connection. She was required to keep a separate account which was designed to record receipts and payments which it was intended should not pass through the company accounts. One of the counsel accurately described the payments as being "on the side". One of the examples of such payments given by the petitioner was extra payments or tips to employees for special services rendered by them when it was the intention that other employees should not know about it.

21. It would appear that the petitioner used this special account for a number of purposes. One of the purposes was payment of house-keeping expenses. She claimed to have had the respondent's agreement to her deciding the quantum of such expenses. Apparently if she was able to run the household on less than the amount of expenses assigned for a particular month she felt that she was entitled to keep the balance for herself. It does not require a great deal of imagination to see how this could be abused. I am not suggesting that it was abused while the parties were living together as man and wife and the household was being run for the whole family's benefit.

22. The position was further complicated by the fact that the petitioner kept a separate account which recorded loans and payments. She gave evidence that she herself and her sister and brothers had each received in 1979 half a million Hong Kong dollars. She had lent this money to Tele-Art Ltd. when it was suffering a cash flow problem. She also used monies which she claimed had beer here to pay of a supplier and felt entitled to herself receive the repayment from the supplier when the payment was made.

23. It seemed to me that the rationale or logic for payments into and out of the special account was muddled and unsatisfactory. This led to substantial difficulties between the parties. The petitioner seemed to be under the impression that the majority of the monies in the account belonged to her. On several occasions she referred to the monies as representing her savings. It would seem to me that with the exception of the loan which she made to the company of the half million dollars she had received from her parents the source of all the other monies was Tele-Art. At one stage the petitioner referred to savings she had made out the salary she received from Tele-Art. She went on to say that she had used her salary to support household expenses.

24. I do not think that the petitioner can have it both ways. I do not think that she can on the one hand claim to have made very large savings from the monies she received and at the same time claim that she was expending all her time and energy for Tele-Art and not receiving a reward for it.

25. It would appear that the marriage essentially broke up in the early months of 1982. The respondent started absenting himself from the matrimonial home and it became evident to the petitioner that he was forming liaisons with other women and telling her lies about it. She then decided to discontinue her work at Tele-Art. However it appears to have been her impression that she was still owed a substantial sum of money by the company. She then attempted whenever possible to withdraw monies from the company for her own purposes. As I have indicated earlier, if one discounts the salary she received and the loan of $500,000 from her parents all of the other monies could loosely be described as being Tele-Art monies. It would appear that the respondent learned about her withdrawing monies from the company in either August or September 1982 and it was at this stage that he gave instructions to all of the company's bankers to cancel her mandate to sign cheques. I am inclined to believe that the petitioner thought that she was justified in withdrawing all of the monies she withdrew during this period. It is not though difficult to imagine the effect all of this would have had upon the mind of the respondent. His feelings would have been accentuated by the fact that it would seem to be common to both parties that Tele-Art was in a perilous financial position over the relevant period. It is likely that the respondent would have regarded the petitioner's conduct in withdrawing capital sums as being highly detrimental to the interests of the company. I have no doubt whatever that this is one of the main reasons for the respondent's bitterness towards the petitioner.

26. The petitioner gave evidence concerning her financial position since the breakdown of the marriage. She continued living at Casa Pino with the children. From the time of the respondent's final departure from the matrimonial home in 1982 until late 1985, he made no payment of maintenance for her or the children. It has been the respondent's contention that his reason for not making payments was that the petitioner had milked money out of the company and accordingly had plenty of cash at her disposal. In this connection it would seem to be fair to observe that the respondent never seems to have taken any satisfactory measures to ascertain the exact amount of money taken by the petitioner and I think that it could fairly be said that his action in not making payments over such a long period could be described as irresponsible and reprehensible.

27. On the other hand, the petitioner gave evidence that in 1982 she had available to her between $950,000 and 1,000,000. She regarded those monies as being hers. The petitioner kept the most minute details of all expenditure she had incurred particularly on the children's behalf from 1982 onwards and it is easy to see how the petitioner became ever more financially embarrassed as time went by.

28. The petitioner filed a petition for the dissolution of her marriage in November 1982. In the petition she prayed for maintenance to be ordered for the children but only asked for one dollar's token maintenance per annum for herself. I do not think that the petitioner has really given any very satisfactory explanation for only asking for one dollar's maintenance. The reason she gave for the delay in prosecuting the present application was that she was optimistic that it might in due course prove to be possible to effect a reconciliation with the respondent. In his evidence the respondent denied that there had ever been any realistic prospect of this and in this connection I am more disposed to accept the respondent's evidence than I am the petitioner's. Mr. Ching urged me to take cognizance of the very long period of time over which the respondent had failed to support his family. This is a factor which I do undoubtedly weigh but I do consider that it is also necessary to have regard to the monies which the petitioner herself withdrew from Tele-Art. In a similar manner Mr. Chug asked me to bear in mind the evidence which existed to the effect that Tele-Art Ltd.'s accounts seemed to indicate firstly that the petitioner's account with them was owed 2.4 million dollars and then the reduced amount of 1.8 million dollars. Having regard to the evidence in its entirely, it is difficult to see how these monies could in reality belong to the petitioner having regard to the other evidence she gave. The question has to be asked where, did the money come from. It would certainly seem to be likely that the original source of the funds was Tele-Art Ltd.

29. In August 1985 a consent order was made whereby it was ordered that the respondent should pay the petitioner $22,725.70 per month as maintenance pending suit. Unfortunately the respondent did not make payments under this order. Indeed it was necessary in November for the petitioner to take out enforcement proceedings under the order. It was only in the face of the prospect of his being committed to prison for contempt that the respondent made payments under the order. It was in this connection that I thought that the respondent gave the most unconvincing evidence. The reason he gave for not complying with the consent order was that he could not afford it. Having regard to the overall financial situation and also of a number of contemporaneous payments made at that time I find this evidence utterly unconvincing. I have no doubt whatever that the reason for non-pyament was simply his unwillingness to comply with the terms of the consent order.

30. Shortly after this the respondent tooks steps in an endeavour to recover vacant possession of Casa Pino. What he did was to commence proceedings in Tele-Art's name against himself as the tenant for vacant possession of the house. When requisite notices were affixed at the premises the petitioner immediately went to her legal advisors and sought an injunction to restrain the respondent from evicting the petitioner and the children from the premises. It is difficult not to sympathize with the criticisms Mr. Ching levelled against the respondent in this connection. The respondent's explanation for his conduct was that it was his intention to teach the petitioner a lesson.

31. In September 1986 the respondent made an application to the Court to reduce the amount of maintenance which should be payable by him. Having regard to the overall financial situation this would certainly appear to be a thoroughly unjustified application and I am sure that it would have had the effect of further embittering relations between the parties. The only thing which can be said to the credit of the respondent was that he did not proceed with the application. The relevance of all of these matters is to convince me that if at all possible, I should order a lump sum at the end of the day so as to enable there to be a clean break between the parties.

32. After the petitioner left Tele-Art, its fortunes took a turn for the better. The business continued to expand and prosper. During 1985 and 1986 the respondent gave consideration to Tele-Art Ltd. going public. Eventually a decision was made that this should be done in the United Stages of America. The main crux of the scheme was that a new company Tele-Art Inc. would be formed which would be incorporated in the British Virgin Islands and the public flotation would take place in the United States of America. A firm of underwriters, Blinder Robinson would assist in this. A mass of documentation was exhibited as evidence concerning the implementation of these proposals. For the purpose of this judgment it is only necessary to deal with a few aspects of the matter. One effect of going public would be to greatly expand the capital base of the operation. In the words of the respondent it would in all likelihood see the end of any cash flow problems. In practical terms the respondent's equity would be reduced from approximately 53% to 37%. However the value of shares would be greatly enhanced and at the end of the day the respondent's shareholding would be worth much more than previously.

33. Another important matter which has bearing on these proceedings was that it was necessary for the respondent to enter into a written undertaking with Blinder Robinson not to sell or pledge his shareholding for three years from the date of going public, namely September 1986. Mr. Stephen Chu, a New York attorney, gave evidence in this connection. He also gave evidence of restrictions contained in Rule 144 of the SEC Regulations which are applicable when companies go public. I was satisfied that the evidence given by Mr. Chu was essentially truthful and that there are very real limitations imposed upon the respondent in selling or pledging his shares. However I am reluctant to believe that it would be a complete impossibility for the respondent to raise substantial sums of money as I only have his word for this. As I have earlier indicated in this judgment, I was not always able to find him a truthful witness. Having said this, I do not believe that it was the respondent's intention to evade his responsibilities to his wife and children when Tele-Art went public. I believe that it is for genuine business reasons and that taking this action added dramatically to the value of shares in the company.

34. A further matter I would refer to in the context of going public was that an extremely valuable share option arrangement was made available to the respondent. In the event of Tele-Art Inc.'s profits exceeding half a million dollars in any of first five years, the respondent is entitled to receive 50 million shares without payment. This applies for any of the first five years from going public. If during the five year period, profits exceed US$1.5 million then he would be entitled to the whole of the balance of 250 million shares which can be allocated under this scheme. There were indications that the respondent would be entitled to 50 million shares to be allocated to him in the first year's trading.

35. During the currency of the proceedings before me, accountants representing the interests of both parties continued to work on the voluminous accounts and papers. I am much indebted to them for their efforts. One of the most valuable bonuses for this work was that it was possible for the respective accountants on behalf of their principles to agree the value of the respondent's assets. It will be noted that by far the greatest part of the respondent's assets are comprised in his shareholding in Tele-Art Inc. and its subsidiaries. The respondent also has valuable interests in companies in the Sanyo group. I think that it might be helpful to provide the particulars which were given particularly as they are in a short and readily comprehensible form.

36. A further matter which has to be considered is the benefit which the respondent has got from Tele-Art Ltd. and Tele-Art Inc. As I indicated earlier in this judgment, no satisfactory attempt has been made to differentiate between the respondent's personal position and the company's position other than reference to various borrowings. Up to the present time the respondent has never received remuneration for his services. However, in the documentation relating to Tele-Art Inc. going public there was reference to an agreement whereby the respondent could draw a salary of up to US$130,000 per annum. This was clearly intended as an upper figure so as to prevent the respondent from milking the company dry against the interests of the body of shareholders at large.

37. The respondent gave evidence that he had not yet decided to take his salary, nor had he decided how much it would be. No convincing reason was given for this and I find myself to be forced reluctantly to the conclusion that even after the company had gone public it has not been necessary for the respondent to mend his ways and subject himself to the discipline of differentiating between the company and his own affairs. This is of relevance when considering the ease with which he may be able to liquidate assets to meet any lump sum order that I may make.

38. I realise that in most cases where orders are made for ancillary relief it is essential to consider both capital and income resources. In the present case I am inclined to think that this might lead to a rather artifical situation. It is obvious from the material which has been agreed between the parties that the respondent has available to him capital resources of something of the order of 30 million dollars.

39. A great deal of time and energy was expended over the respondent's expenditure over the years. It was necessary to consider his drawings from Tele-Art Ltd. together with accounts which were submitted in relation to the credit cards he holds. As one would expect these records indicated that the respondent spent widely fluctuating amounts at different times. It was, of course, complicated by the difficulty that it was virtually impossible to ascertain what expenditure had been incurred for his personal use and what had been valid business expenditure. In evidence he hazarded a guess that his personal expenditure was something of the order of $20,000 per month. When asked to itemize his expenditure, he gave as one example the fact that he would get approximate the five suits each year, each costing between four and five thousand dollars.

40. It was not generally my impression that the respondent is a self-indulgent man. It is my impression that he is something of a workaholic and that he does not have time to enjoy a luxurious life style. What is clear though is that his wealth is such that it is entirely within his choice how much honey he should spend at any particular time. I propose proceeding upon the basis that he is an extremely wealthy man who owns very substantial property. I do, however, accept that he may encounter considerable difficulties in raising large capital sums over a short period of time. In this connection I was definitely inclined to accept the evidence of Mr. Steve Chu.

41. When everything is boiled down at the end of the day, the major item which is in dispute between the parties is the extent of the petitioner's contribution to Tele-Art Ltd. In general terms I found the petitioner to be a trustworthy witness. The main reservation I had concerning her testimony was what I regarded as being her lack of candour in disclosing assets belonging to her. I doubt whether it was simply a matter of inadvertence that she failed to disclose the existence of the jewelled Cartier watch. Likewise I am by no means satisfied that all of the truth emerged concerning the account she has at the Australia and Zealand Bank with her sister. Also I suspect that the house in Australia is in reality hers and that her parents have made this very clear to her. Having expressed these reservations I would observe that in other respects, she struck me as a truthful and reliable person. She is undoubtedly a lady of very considerable ability with figures and she was able to answer nearly all of the questions which were put to her by Mr. Rodway in her lengthy cross-examination what is important is that I do accept her evidence concerning the contribution which she made to Tele-Art Ltd. I am satisfied that her contribution was such that it is only fair on an application of this nature to make an award on the basis that in reality she has a part equity interest in Tele-Art.

42. Having regard to all of the circumstances of this case and in particular the great wealth of the respondent and his previous attitude, I have no hesitation in coming to the conclusion that the most appropriate order for me to make is to order that the respondent should be required to pay a lump sum payment in respect of his commitments to both the petitioner and the children of marriage.

43. I consider that the correct approach to adopt is to determine a capital sum which would be appropriate for the petitioner and then add a further sum which will enable her to look after the needs of the children while they need to be maintained and educated. In this connection, I was pleased to note that the parties had succeeded in agreeing a custody order for the children with access for the respondent and I made the desired order. The main basis of the order was that the children would continue to reside with the petitioner.

44. In deciding the correct amount of the lump sum which should be ordered, it is necessary for me to have regard to all of the matters which are referred to in section 7(1) of the Matrimonial Proceedings in Property Ordinance Cap. 192. In his submission to me, Mr. Rodway took me through each of the clauses in the section and addressed me upon the matters I should consider. The approach he adopted was to accept all of the wife's evidence concerning her present expenditure and then by using a factor of 8% interest to gross the income requirements up into a capital sum. He also accepted the necessity for the petitioner to have accommodation provided for her and he included the capital costs of providing a flat in his calculations. So far as the accommodation was concerned, he proposed a figure of $2,250,000.

45. I do not regard the figure proposed for the flat to be unreasonable. It is common knowledge that many wealthy people in Hong Kong live in flats of this sort of value and I am confident that a suitable flat could be found in a convenient location for this sum.

46. The proposals made for the balance of the suggested capital sum are much less satisfactory. They are based on a number of misapprehensions. Mr. Rodway based his calculation on the present expenses of the petitioner and the children. Built into the calculations is the assumption that it will be necessary for the petitioner to go out to work and contribute part of her salary towards her upkeep. I do not regard this as a fair assumption.

47. It is, of course, true that the petitioner is a lady of some ability who has worked successfully in the past. However, when she worked for the various family companies, she was in effect working as one of the proprietors of the businesses. This is an entirely different matter to being forced to go out onto the labour market and probably having to accept employment in a comparatively menial executive capacity working under the direction and control of other people.

48. Having regard to the very great wealth of the respondent I consider that it is entirely unreasonable to base calculations on an assumption that it should be necessary for the petitioner to do this. In the financial circumstances of the parties I think that it should be a matter of choice as to whether or not the petitioner works.

49. What is of much greater importance is that Mr. Rodway has paid insufficient attention to the provisions in s. 7(1)(f). He has based his calculations on the petitioner's needs and he has attached little or no weight to the very real contributions which have been made by the petitioner. As I have indicated earlier, I find that the petitioner contributed a key role in building up Tele-Art Ltd. In addition to this there can be no doubt that she has brought up the three children of the marriage. She must be given credit for all of this. Indeed the award which I make must reflect the fact that in reality she should be entitled to a substantial share of the wealth of the respondent represented by his shareholding in Tele-Art Inc.

50. This was the approach which was adopted by Mr. Ching. He submitted that as the present value of the respondent's shareholding in Tele-Art Inc. amounted to something in the region of $30 million, the petitioner should be entitled to 15 million being 50% of the interest. I do not think that this can be right. The main fallacy in Mr. Ching's approach is that he proposes that I should base the lump sum on the present value of the shares held by the respondent. This disregards the fact that it is common ground that since about the middle of 1982 the petitioner has made no contribution whatever towards the welfare of the respondent's companies.

51. For the reasons I have given earlier, I do not think that it is possible to place a value on Tele-Art Ltd.'s shares in 1982. Nor do I think that it would be fair to attempt to assess the value of the petitioner's interest at this time. The respondent gave evidence of the volatile nature of the watch business and I consider that it would be most unjust to arbitrarily pick the date when the petitioner discontinued working for Tele-Art Ltd.

52. It is much fairer to have regard to the fact that whatever the value of the assets in 1982 the company was the base upon which all subsequent fortunes were built. On the other hand, I do not think that it would be right to give to the petitioner the benefit of the dramatic increase in the value of the respondent's interests as a result of Tele-Art going public. This increase in value was solely attributable to the respondent's business acumen and enterprise. I consider that a fair approach is to arrive at a valuation somewhere between the extremes I have indicated.

53. The next matter I must consider is the consequence of my ordering that in effect the petitioner is entitled to a share in Tele-Art Ltd. It will be appreciated that this will of itself mean that the petitioner is a wealthy person and accordingly her financial needs will be greatly reduced.

54. In trying to weigh all of the factors I have above referred to including the children's needs and requirements I have come to the conclusion that I should award to the petitioner a lump sum payment of $7.5 million.

55. The final matter I must consider is how the payment is to be made. Wachtel v. Wachtel⁽¹⁾ is authority for the proposition that it would be wrong for me to make an order which would have the effect of bankrupting the husband. I am satisfied this is right. I am also satisfied that the respondent would not be able to pay $7.5 million forthwith. I am in some difficulty in knowing how much he could pay as I regret I do not regard him as bing an entirely truthful and reliable witness.

56. Common sense would indicate that the requirements of SEC regulation 144 would have to be adhered to for another 18 months or so. Even after that it would be necessary for the respondent to reach some form of compromise with Blinder Robinson to enable him to dispose of a sufficient number of shares to make a large payment. The alternative would be to realise other assets.

57. For the reasons I have given earlier I am by no means convinced that the respondent is locked into a strait jacket concerning the payment of monies or the receipt of assets from Tele-Art Inc. Over and above this it is inconceivable that a man of the respondent's wealth could not raise substantial loans if he really made the effort to do so.

58. I do, however, have some guidence on this. In making his submission to me Mr. Rodway put forward proposals as to how payments should be made. He suggested that 2¼ million could be paid in 6 months and the balance of the 4 million he proposed could be paid 18 months thereafter. He also suggested that substantial periodic payments could be made in the interim.

59. I think having regard to all the circumstances that a proper schedule of payments would be as follows.

60. The costs of both parties are obviously substantial. Subject to submissions I order that the respondent will pay the petitioner's costs.

61. I also consider that some form of security is required for payments I have ordered. I will hear submissions from the parties on this.

(1)    [1972]   FAM Law Report P. 73