BC v. MSH also known as H, MSO AND OTHERS

FCMC 13741 / 2019

[2023] HKFC 222

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13741 OF 2019

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JUDGMENT

( Ancillary relief: disclosure of crypto currencies; adds-back;
conduct; whether back-dating children maintenance )

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The parties

1.  Before me is the trial of the final ancillary relief matters between the petitioner (“wife”) and the 1^st respondent (“husband”), together with an application taken out by the husband pursuant to section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) in respect of the funds that were transferred by the wife to her parents.

2.  The 2^nd respondent is the father of the husband but he no longer features in this trial, as both of them conceded in the hearing of 13 September 2022 before me that the husband was the legal and beneficial owner of Luen Tak Building.

3.  The 3^rd and the 4^th respondents are respectively the father and mother of the wife. They were joined into these proceedings by the husband in respect of $5,343,137.43 (“Section 17 Sums”) that were transferred by the wife to them on divers dates between 8 April 2019 and 1 September 2021[1]. The husband says that the Section 17 Sums are dispositions meant to part her moneys out of his reach. The wife categorically denies this and claims that the moneys were repayment of loans and/or monthly allowances paid to her parents pursuant to previous agreements between them. After the parents had given their oral evidence, the wife conceded on Day 4 of the trial that the Section 17 Sums should be added back to the family pot under her ledger.

4.  What then remain for determination are the cross claims of the wife and the husband for sharing of their assets and the amount of maintenance payable by the husband for the 3 children of the family.

Their case & open offer

5.  While it is a common ground that there should be a financial clean break between the husband and the wife, there are disparities as to what they each say should be included into the family pot for sharing, and whether there should be a departure from the equal sharing principle.

6.  The wife avers that the husband is guilty of failing to give timely, full and frank disclosure of his income and assets, in particularly his income from his side businesses and his investment in crypto products. She is thus left with the only choice of relying on his bank withdrawal/transfer and his allegation that a total of about $2,121,750 (consisting of $120,000 and USD255,000) were withdrawn and spent on crypto investments. The crypto investments have since significantly been devalued to about $1,119,158.52 as at 28 October 2022. The wife is adamant to say that the crypto investments do not conform with his historical pattern of investments, and hence are “wanton” or reckless investments, such that the amount of the initial crypto investments of $2,121,750 but not its current value should be added back to the pot.

7.  As to her own assets, she concedes that the Section 17 Sums should be added back, but not the other cash withdrawals in the total sum of $1,080,100 because these were legitimately spent on the daily expenses of her and the children especially since April 2019 when the husband abruptly stopped contributing to the expenses of the children. She further claims that the balances in her Australian bank accounts in the total sum of AUD475,292[2], which is equivalent roughly to $2,328,931 (collectively “Australian Funds”), and her Australian MPF account worth of AUD42,575 which is equivalent roughly to $208,618 (“Australian MPF”), are pre-martial assets which should be not shared by the husband.

8.  Hence, it is her case that the total pot, including her pre-martial assets, is worth $46,578,227, to which she has $26,141,502 and the husband has $20,436,725. However, due to the conduct of the husband in terms of his unsatisfactory disclosure, the non-martial nature of the Australian Funds/Australian MPF, and the needs of her and the children, she should be awarded 60% of the total pot, which she openly offers by way of revised proposal given on Day 4 of the trial that he should pay her a lump sum of $1,805,434.20 in order to achieve a financial clean break.

9.  The husband, while highly critical that the wife conceded to add back the Section 17 Sums only on Day 4 of the trial but not earlier, accepted on Day 1 of the trial that he no longer sought to add-back her church donations but was still adamant to say that the other cash withdrawals from her bank accounts in the total sum of $1,080,100 should be added back to her ledger for sharing, on the ground that these are reckless spending, or alternatively, withdrawn and concealed by her elsewhere. He categorically disputes that the crypto investments are reckless investments and thus there is absolutely no basis for the wife to advance an argument of adding-back.

10.  To him, all their respective assets, whether pre-marital or not, should be shared equally, due to the length of the marriage, the fact that 3 children were born within the wedlock, and that they both made their contribution to financially support the household. His original case is that the total pot is worth about $46,490,614, but with the concession made in respect of the wife’s church donations, it is understood that the total pot is revised to be about $45,910,000 or so. He asks that the wife should pay him a lump sum of about $4,380,000 (which is now understood to be about $4,100,000) in order to equalise their respective sharing of the assets.

11.  As to the maintenance for the children, the wife is insistent to say that the husband has a superior earning capacity (of about $280,000 per month)[3] than her (of about $90,000), or that she has a reduced earning ability due to her health issues partly caused by the stress of the divorce. Due to his failure to comply with an unless order made by me on 3 March 2022, the court has already ordered that an adverse inference be drawn against him that “he shall have the financial resources and financial means to pay whatever maintenance for the children of the family as ordered by the court”. Hence, he should be made to take up 60% of the expenses of the children estimated by her to be about $106,284.50 per month, which means that he should pay her $63,771 per month for the 3 children of the family. Such children maintenance should be back-dated to the date of petition, meaning that he should pay her a lump sum of $1,069,569 to cover children maintenance.

12.  The husband obviously disputes the wife’s case on the expenses of the children, claiming that the family led a very frugal life during marriage and that she has grossly inflated the expenses of the children which is very reflective of her litigious attitude. He further claims that although the wife actually earned more than him prior to their separation, he is prepared to proceed on the basis that they each have equal earning capacity, which means that they shall share the children’s expenses equally. In his 1^st open offer, he says that the total monthly expenses of the 3 children are merely $21,729.50 per month, to which he should bear 50% or $10,865. In addition, he undertakes to share 50% of the school fees, fees of tuition and extra-curricular activities upon production of receipts. He makes a revised open offer in the afternoon of Day 1 of the trial that he would pay $33,319 per month to cover 50% of all-inclusive expenses of the 3 children per month, which means that his latest view is that the total monthly children expenses are roughly $66,638 per month.

Issues

13.  The major issues for trial are thus these:

(1)  Whether the cash withdrawals of the wife in the total sum of about $1,080,100 are reckless spending or concealed asset which should be added back to her ledger?

(2)  Whether the wife’s withdrawal of AUD125,000 should be added back?

(3)  Whether the husband had non-disclosure on the crypto investments? Whether the crypto investments are “wanton” spending and should be added back to his ledger?

(4)  Should there be a departure of sharing the assets?

(5)  Whether the wife’s Australian Funds and Australian MPF should be shared by the husband?

(6)  What should be the amount of children maintenance to be paid by the husband? And should children maintenance be backdated to the date of petition?

Background

14.  The husband and the wife met in Hong Kong in 2007 and registered their marriage in February 2008. Three children were born within their wedlock in 2008, 2010 and 2015 respectively. They are now about 15, 13 and 8 respectively.

15.  The wife was born in Fiji in 1976, but moved to live in Australia with her family at a young age. She attained a double degree in Law and Accounting and Finance and a Master Degree of Business Administration at reputable universities in Sydney in 1999 and 2005 respectively. In 2006, she came to work in Hong Kong. Since then, she worked for various global law firms mainly in marketing and business development, with her last job earning almost $239,483 per month (inclusive of basic salary, double pay and bonus). She was made redundant and has not been working since 18 March 2021.

16.  The husband was born in Hong Kong in 1976. He emigrated with his family to Canada in 1989 and graduated with a Bachelor Degree in Applied Science in Electrical and Computer Engineering at the University of British Columbia. He then moved to live and work in Seattle until 2007 when he returned to Hong Kong. He later obtained his Master of Business Administration awarded by the University of Southern California. Since 2012, the husband changed his career to the field of travel industry, and occupied top management posts at different online travel agencies. His last job is the managing director (sales) seconded to xxx.com, earning net income of $180,143.50 per month (inclusive of basic salary and other fringe benefits). [4]

17.  It is indisputable that apart from the aforesaid regular job, the husband has investments in other side businesses, such as renting out cubicle flats of Luen Tak Building, Hoi Sing Building and Wo Yick Building (all 3 properties either legally or beneficially owned by him), or operating travel websites offering coupons and discounts.

18.  However, due to Covid-19 pandemic, he lost his primary job in December 2020. He claims that his side businesses were also affected, such that the side businesses no longer generate any or any meaningful income.

19.  This marriage can be said as a turbulent one from the beginning. Each side has made fairly serious allegations of physical violence which allegedly took place in September 2009, September 2013 and May 2019. Marriage counselling was sought but sadly failed to solve their disparities. They separated and lived in separate bedrooms since June 2018.

20.  The parties’ marital relationship came to head-on breakdown in May 2019. The wife alleged that the husband acted aggressively towards her in his car, and police was called. They were both arrested by the police but no charge was laid by the police against any of them in the end. The husband moved out of the matrimonial home in August 2019.

21.  In November 2019, the wife filed her petition for divorce. Decree nisi was granted in February 2021. By then, their marriage lasted for 13 years.

22.  By the Order made by HHJ Melloy on 16 October 2020, the custody of the children is granted jointly to them, with care and control to the wife. The husband has reasonable access to the children.

23.  By a judgment delivered by HHJ Melloy on 19 April 2021, it is ordered that the husband shall pay a sum of $10,500 per child each month (totalling $31,500 per month) to the wife as the interim maintenance of the children from 1 May 2021 until further court order (“Interim Maintenance Order”).

Applicable Law

24.  Section 7 of the MPPO sets out the matters that 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.”

25.  The Court of Final Appeal in its landmark judgment of LKW v DD [2010] 13 HKCFAR 537 has enunciated 4 guiding principles as to how section 7 of the MPPO should be approached, namely:

(1)  objective of fairness;

(2)  rejection of sex or role discrimination;

(3)  yardstick of equal division; and

(4)  rejection of minute retrospective investigation.

26.  The Court of Final Appeal has further laid down a 5-step approach in dealing with ancillary relief claims, including:

(1)  to ascertain the financial resources of each of the parties calculated as at the date of the hearing;

(2)  to assess the financial needs of the parties;

(3)  to apply the sharing principle to the parties’ total assets (if surplus assets would remain after the parties’ needs have been catered for);

(4)  to consider whether there is/are good reasons for departing from the principle of equal division;

(5)  to decide the outcome.

27.  With these principles in mind, I am of the view that I should, in the circumstances of this case, start my analysis in relation to the living standard during the marriage.

Financial arrangement & living standard during marriage

28.  To begin with, it is indisputable that both the husband and the wife are highly educated and have abundant working experiences. Their background and income are already set out at [15] to [18] above. The average total family income, including their basic pay, bonuses and other benefits, before they each allegedly lost their job was close to $420,000 per month (excluding the income of the husband’s side businesses, if any).

29.  The wife claims that during the marriage, the husband contributed $40,000 per month into their joint Citibank account in order to defray the expenses of the matrimonial home and of the children. On top of that, he paid for the domestic helper’s salary and related expenses, the children’s extra-curricular activities, family holidays and computers. On the other hand, the husband says that they each used to pay $30,000 into the joint Citibank bank, but he increased the contribution to $40,000 per month during the time when he received marriage counselling service in order to appease the wife.

30.  In this trial, the court is provided with the bank statements of the joint Citibank account from about January 2018, but not earlier. The court is also provided with a joint table on the payment made by the husband into the joint Citibank account (Table C). I have read these bank statements carefully. The records do not support the wife’s claim that each of them were contributing $40,000 per month on a regular basis into the joint account during the marriage. Rather, the records generally tend to support the husband’s case that he increased his contribution to about $40,000, or sometimes even more, starting from around May 2018 for a few months until the end of 2018, after which he reverted back to paying $30,000 per month into the joint account. However, he abruptly stopped this arrangement since April 2019, by reducing the contribution to $16,000 per month and then further cut it to less than $10,000 per month, on an irregularly basis.

31.  It is thus my conclusion that during their marriage, the parties contributed generally about $30,000 into the joint Citibank account to defray expenses of the matrimonial home and of the children. The increase to $40,000 per month by the husband is not a norm, but merely an attempt to try to salvage the marriage. I will take this into account when I consider the living standard during the marriage.

32.  The husband describes their living standard in all his Form Es as “middle class standard”, with no club ownership, taking around 2 short-haul trips each year to Asian countries, and dining out twice a week. But he suggests in his oral evidence that the family lived very frugally during the marriage.

33.  On the other hand, the wife says that the family enjoyed “an upper middle class” living standard.[5] They lived in a 1,000 sq feet apartment in the Mid-Levels. The family car is a Ferrari. They have the service of a maid, and had 2 maids when the 3^rd child was born. They travelled frequently for about 5 times a year on business and economy classes, and stayed at 5-starred hotels or Airbnb. The eldest daughter studied at English Foundation School. All the children participated in a lot of extra-curricular activities, such pianos, drama, swimming etc.

34.  Upon considering all evidence, I reject the husband’s oral evidence that the family led a frugal life during the marriage. One can hardly be described his living standard as “frugal” if he owns a Ferrari car purchased at over $1,000,000. I am of the view that the description of “middle class standard” in his Form Es should be preferred.

35.  Neither do I accept the wife’s claim that the family lived an upper middle class standard during marriage. In my view, despite the high income of the parties, they did not lead a lavish or luxurious living pattern. On the wife’s own case, the matrimonial home, though located at the Mid-Levels and measuring about 1,000 sq feet, is “relatively old and with no facilities”. They did not enjoy any private club membership. While it is true that the eldest daughter studies within the English Foundation Schools system, the younger two ones are at local schools only. None of them is studying at expensive private schools. As reflected in the wife’s Form Es, she did/does not own any expensive personal chattels, such as jewelleries and branded handbags. The husband at the most owned a Ferrari car (purchased at over $1,000,000) and a Rolex Daytona. I accept that the family did travel rather extensively during their marriage, but some of these trips were made available at discounted prices or coupons due to the husband’s connection with the travel industry. All these are not reflective of an “upper middle class” living standard.

36.  I thus conclude and rule that this family enjoyed an average middle-class living standard during the marriage. With this finding in mind, I shall go to step one in LKW (supra), namely ascertaining the assets of the parties.

Cash withdrawals of $1,080,100

37.  It is not in dispute that between 22 May 2019 and 20 August 2022 (about 39 months), the wife has withdrawn by way of ATM withdrawal total sums of $1,080,100 from her HSBC accounts and Hang Seng Bank account. The breakdowns are set out in the joint table of cash withdrawals (Table B).

38.  Broadly, the wife explains that these withdrawals are for the “personal and family expenses” including “day-to-day family maintenance, meals and entertainment, holiday spending, clothes and apparel, donations, tech purchases and repairs, lawyers’ fees, home maintenance, church support, therapy and support sessions, transportation, fitness and mediation sessions including 27 hours of mediation with Ms XXXX Choi.”[6]

39.  On behalf of the husband, Mr Jeffrey Li of counsel submits that the husband already raised requisitions over the wife’s bank withdrawals between May to December 2019, and requested her to tell the “purpose/use” of such withdrawals, and to provide supporting documents. However, she merely gave “general and ill-particularised descriptions” and completely ignored the husband’s request for documentary support. Mr Li also suggests that the withdrawals from her bank account cannot support the notion that they were for defraying family expenses, because the amount of withdrawals were strangely more in 2019 than in 2020, despite that the husband was not paying any interim maintenance in 2020. Mr Li goes on to suggest this is because by early 2020, she had dissipated most of her savings.[7] Hence, counsel submits that the court should draw adverse inference against her for her non-disclosure, by finding either (i) that these withdrawals are reckless spending, because the withdrawals are 10 times more (about $54,000 per month) if compared to her withdrawal pattern from January to April 2019 (about $5,000 per month), or (ii) that she withdrew the cash and kept them at home, as the children allegedly told the husband that she was keeping “stacks of cash at home”.

40.  In either scenarios, the husband invites me to add back the said $1,080,100 into the family pot under the wife’s ledger for sharing.

41.  I would simply reject the husband’s submission that the wife has withdrawn and stacked the cash at home, basing on his mere say-so of what the children told him. The remaining factual question to determine is whether I believe that the wife withdrew these moneys for defraying personal and family expenses, for which I have the following to say.

42.  It is important to point out that the husband unilaterally stopped paying his usual contribution of $30,000 per month (which was later increased to $40,000 per month for several months) into the parties’ joint Citibank account from April 2019. Since April 2019, he either paid irregularly, or not at all between August 2019 to August 2020. When he did pay into the joint Citibank account, he cut the usual contribution to $16,000 per month and later further cut to less than $10,000 per month.

43.  I take note that the husband says in his affirmation (in opposition to the wife’s application for interim maintenance) that he paid there and then about $23,000 per month to cover children’s expenses and the maid’s expenses.[8] I do not believe this is the case. Notably, it is his historical and long term arrangement that he would pay his contribution of family expenses into the joint Citibank account. If he had really paid about $23,000 per month for the children and the maid, I see no discernible reason(s) why he could not have continued to pay his suggested sum into the joint Citibank account, in order to keep track and records of his payment. Further, while he criticizes the wife for not providing all the receipts about children’s expenses, he applies a double standard by allowing himself to conveniently say, in reply to the wife’s questionnaire, that he does not have the habit of keeping the receipts showing that he was paying $23,000 a month or for any parts of the expenses of the children at the material times.

44.  Hence, it is my view that before the Interim Maintenance Order was made, the husband’s contribution to the children and family expenses, especially since April 2019, is reflected wholly and only by his payment into the joint Citibank account. He paid $95,310 between May 2019 and April 2021[9], averaging out to be $3,971 per month over these 24 months. This is clearly not sufficient, in particularly in view that there are 3 children and their needs are increasing as they grow up. Pertinent for me to point out that even according to his own case, he claims that their average monthly spending was on the rise from $48,120.71 in 2017 to $58,514.04 in 2018.

45.  It must be true that as a result, the wife had to dive into her own reserve in order to pay for the household and children’s expenses. It is thus not very fair of the husband to rely on her change of pattern and amount of bank withdrawals pre-April 2019 and post-April 2019, or from 2019 to 2021 to argue that she had recklessly spent or dissipated her moneys.

46.  On the other hand, a broad brush calculation shows that the wife’s average bank withdrawals amount to about $27,000 - $28,000 per month over the aforesaid 39 months. The court cannot accept that this average monthly amount of withdrawal is “wanton” or “reckless” spending, in particularly in the light of the findings of the children’s expenses at the later part of this judgment.

47.  In conclusion, I reject Mr Li’s submission that the wife’s withdrawals of $1,080,100 are “wanton” or “reckless” spending, nor I do accept that there is non-disclosure on her part. I refuse to add back this amount to her ledger.

Withdrawal of AUD125,000

48.  The wife held AUD125,587.07 in her HSBC premier account. This sum was transferred to her HSBC advance account on 22 May 2019. She subsequently withdrew AUD125,000 from this HSBC advance account on 2 July 2019.

49.  The husband asks about this transaction in his questionnaire. However, the wife merely replies that this sum is pre-marital asset which has not mingled with the other family assets during the marriage:

“[Husband] is aware of this amount being pre-marital in nature. AUD100,000 was originally transferred from my Australian account for a term deposit with Seaoil Philippines. This amount was subsequently placed in various term deposits with ICBCI under [my] name only. The final amount matured on 13/10/2017 was AUD122,259.59 which was transferred to my HSBC account. There has been no mingling with other assets.”

50.  Mr Li for the husband took the wife through her various bank accounts of the relevant period. She had to concede that none of her bank accounts, whether in Hong Kong or Australia, had a credit entry of and/or equivalent to AUD125,000 on or around 2 July 2019. The question of where she has put the money is left unanswered. This amounts to a non-disclosure which cannot be disregarded by the court. Accordingly, this amount should be added back to her ledger.

The crypto investments

51.  According to the husband’s 1^st Form E (dated 24 January 2020), the total value of all his bank accounts is $5,150,441.43. Such bank balances remain more or less the same in his 2^nd Form E (dated 9 February 2022) which stands at about $5,236,736.18. However, about 8 months later, his 3^rd Form E (dated 5 October 2022) shows a significant drop of his bank balances to $2,609,494.

52.  The husband explains that the significant drop of his bank balances is because he withdrew the money for his daily use and, more mainly, for the purpose of investing in crypto currency, the value of which have, unfortunately, dropped significantly.

53.  The wife avers that the husband has not fulfilled his duty of timely, full and frank disclosure of his income and assets, in particularly about his alleged crypto investments. He provides only fragments of documents and information which are “indecipherable, informal, missing key information, or related to unknown accounts”. He fails to provide a detailed list of his holdings in various crypto accounts, or any reliable evidence to support his claimed value thereof. In the result, she is left with the only choice of relying on the bank withdrawals/transfers that he alleges were for crypto investments, ie $2,121,750. Yet, he now says that the crypto investments suffer financial loss to about $1,119,158.52 as at 28 October 2022, representing almost 50% loss of the initial investments. The wife takes the view that the crypto investments are “wanton” or “reckless” spending, and asks that the initial amount of investments but not its current value should be added back to the pot. Even more, she invites the court to take this financial conduct of the husband into account and order a departure from equal distribution of their assets by awarding her 60% of the total assets.

54.  The following points are thus the issues that need my determination at this stage:

(1)  Whether the husband has failed to fulfil his duty of full and frank disclosure in respect of the crypto investments.

(2)  Whether the crypto investments are “wanton” or “reckless” spending that should be added-back?

Legal principles on disclosure

55.  It is trite to say that in ancillary relief proceedings the parties have the duty to give “full and frank” disclosure of all the relevant information and documents. It is important for the court to remind litigants in matrimonial proceedings (as well as their legal representatives) of the following principles.

56.  First, the duty of a party in ancillary relief proceedings to give full and frank disclosure is not only owed to the other side, but more importantly, is also owed to the court. The parties have the duty to provide to the court of all such material and documents that are relevant to enable the court to exercise its power and discretion, as the court is required to consider “all the circumstances of the case” under section 7 of the MPPO.

57.  This duty applies invariably to contested proceedings, as well as to exchanges of information between the parties (and their solicitors) leading to consent orders on settlement of the ancillary relief matters.

58.  In Livesey (formerly Jenkins) v Jenkins [1985] 1 AC 424, the parties reached a settlement on ancillary relief whereby the husband was to transfer his half share in the matrimonial home to the wife so as to provide a roof for her and the children. However, the wife failed to disclose of her intention to remarry at the time of their settlement. Two days after the husband conveyed his share in the matrimonial home to her, she remarried L. On appeal by the husband, the consent order was set aside, due to her failure to disclose her intention to marry. When Lord Brandon said of the factors for the court to take into account when it makes a financial order under section 25 of the Matrimonial Causes Act 1973 (similar to section 7 of the MPPO), His Lordship said at 436 that:

“…the terms of section 25(1) of the Act of 1973… are, in my opinion, of crucial importance in relation to the questions raised by this appeal. The scheme which the legislature enacted by sections 23, 24 and 25 of the Act of 1973 was a scheme under which the court would be bound, before deciding whether to exercise its power under sections 23 and 24, and, if so, in what manner to have regard to all the circumstances of the case, including, inter alia, the particular matters specified in paragraphs (a) and (b) of section 25(1). It follows that, in proceedings in which parties invoke the exercise of the court’s powers under sections 23 and 24, they must provide the court with information about all the circumstances of the case, including, inter alia, the particular matters so specified. Unless they do so, directly or indirectly, and ensure that the information is correct, complete and up to date, the court is not equipped to exercise, and cannot therefore lawfully and properly exercise, its discretion in the manner ordained by section 25(1).”[10] (the underlined is my emphasis)

59.  Second, the duty of full and frank disclosure is a continuous one. The material and documents that are disclosed must be “correct, complete and up to date” (See: Livesey (formerly Jenkins) v Jenkins (supra) at 436H – 437A).

60.  Third, the duty of full and frank disclosure is a “positive” one, and should be fulfilled “bona fide”. This is explained by Lam PJ (then Lam J) in the often-quoted case of L v. L [2006] 1 HKFLR 121 where His Lordship explained that,

“197. … A good litmus test for distinguishing a bona fide fulfillment of the duty to give disclosure from an attempt to obfuscate is to ask whether the answer or the material can on its own meaningfully assist in informing others as to the means of that party…

198. It is high time that litigants in matrimonial proceedings and those advising them should appreciate that affirmation of means and answer to questionnaire are not a game of hide and seek. Too much legal costs and judicial time had been spent on such wasteful exercise. As stressed by Mr. Mostyn, the onus falls squarely and fairly on a party to give full and frank disclosure of his or her own means. To adopt a wait and see approach with a hope that the opponent might fail to ask the right question is a tactic to be deplored. That by itself is a breach of the positive duty to give disclosure. As Coleridge J. put it recently in J v V [2004] 1 FLR 1042 ‘all cards must be put on the table face up at the earliest stage if huge costs bills are to be avoided.’” (the underlined is my emphasis)

61.  I invite litigants in the Family Court (as well as their legal representatives) to read these illumining words of Lam PJ carefully. All family law practitioners should duly advise their client accordingly.

62.  I beg to add that such “positive” duty on disclosure applies invariably to a party who is legally represented, or a litigant in person.

63.  Fourth, as to how the disclosure should be made, Recorder Cheng SC explained at §20-§21 in Katherine Ching Yip v Horst Joachim Franz Geicke, HCA 676/2016, date of judgment 9 November 2016, that the disclosure must be “full, frank and clear”, and “to give a presentation that is immediately understandable by a solicitor of average financial sophistication”:

“20. As to how a disclosure should be made, Deputy High Court Judge Nicholas Mostyn QC stated in GW v RW[11] that it not only has to be full and frank but also clear so that it would be understandable by the other party :

‘Moreover, when a person’s financial affairs are complicated it is incumbent on him, as part of the duty of full, frank and clear disclosure to give a presentation that is immediately understandable by a solicitor of average financial sophistication. It is no good to present very complex material in such a way that only an accountant of enormous financial acumen can understand it. …. It cannot be emphasised often enough in these cases that a party’s obligations of disclosure are not confined to providing the information and documents prescribed by Form E and as ordered by the court in response to a questionnaire. There is a continuing duty to provide, without being asked, new information and documents that may affect the exercise of the statutory discretion.’ (Emphasis added)

21. Furthermore, where the financial affairs are complicated involving complex offshore structures, the standard of duty is heightened and as held by Coleridge J in J v V (Disclosure: Offshore Corporations):[12]

‘In order to prevent the instigation of an exhaustively searching enquiry, respondents to such applications [involving complex offshore structures] are required to be from the outset perhaps even fuller and franker in the exposure and explanation of their assets than in conventional onshore cases. ‌Otherwise skulduggery is instantly presumed. ‌Applicants justifiably believe that advantage is being taken to hide assets from view amongst complex corporate undergrowth.’ (Emphasis added)”

64.  There, the parties were originally married couple. The matrimonial assets relating to the plaintiff wife’s claim for ancillary relief in the divorce proceedings included the shares of several companies which were later re-structured pursuant to a Principal Shareholders Agreement (PSA). The wife was not made a party to the PSA, nor was she awarded any shares in the primary holding company (called PAGH). The parties settled on their ancillary relief pursuant to 2 consent orders made in 2011 and 2012. The decree absolute was issued in December 2012. The wife later sought to set aside the consent orders in the Court of First Instance, for, inter alia, the husband’s failing to make full and frank disclosure on the preferred shares held by him. The husband did not disclose the full copy of the PSA to the wife until 2014. The husband took out a summons to strike out the wife’s statement of claim, which was rejected by the learnt Recorder.

65.  Fifth, I shall complete the legal principles on the duty of full and frank disclosure by referring to the judgment of Mostyn J in NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 (Fam), in which the learnt judge summarized the approach on a parties’ non-disclosure as follows:

“16. Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then:

(i) The Court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.

(ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the Court is satisfied he has not got.

(iii) If the Court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.

(iv) In making its judgment as to quantification the Court will first look to direct evidence such as documentation and observations made by the other party.

…

(viii) The Court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than that the Court should be drawn into making an order that is unfair to the Claimant.”

Disclosure of his crypto investments

66.  Applying the above principles to this case, I have the following to say about the husband’s disclosure in relation to his crypto investments.

67.  There cannot be any dispute that crypto or virtual currency is a new area of asset or investment, totally unlike traditional paper money or stock trading. It does not exist in physical form. Unlike paper money, crypto currency is not issued or backed by a central authority, such as a national bank, which also means that there is no central authority to manage its value. In my view, the novelty and complexity of crypto currency, in terms of how it operates, trades and values, cannot be underestimated. The case law is clear that when one’s asset or asset structure is complex, that party (and in this case, I mean the husband) is required to “from the outset” provide “even fuller and franker” exposure and explanation of his assets (See: J v V (supra)).

68.  However, the husband’s disclosure on his crypto investments is far from full and complete, and some of his documents are simply incomprehensible. I shall give a few examples as follows:

In relation to his 2^nd Form E

(1)  he says in his 2^nd Form E (dated 9 February 2022) that he held “Allcoins” with Coinbase.com at current value of USD380.49. He fails to set out the account number or user ID in the 2^nd Form E. The transaction reports provided by him do not show the current holding and value of the same;[13]

In relation to his 3^rd Form E

(2)  he claims in his 3^rd Form E (dated 5 October 2022) that he held “Allcoins” with Coinbase.com, Binance.com, Crypto.com, Yieldnodes.com, MetaMask Wallet #1 and MetaMask Wallet #2.[14] Yet, he fails to state the account number or user ID of these crypto accounts in his 3^rd Form E;

(3)  He encloses some transaction reports from Coinbase.com[15]. Yet these transaction reports merely give a list of transactions, but not the current holding or value. He attempts to explain in his oral evidence that he could not control what was downloaded from Coinbase.com. I do not accept this excuse, because this is in direct contradiction to his other oral reply to this court that there is “no difficulty” of providing the value to the wife, by providing the screen shot from the website. Yet, such screen shot is not forthcoming in his 3^rd Form E. It is finally but belatedly provided to the wife by his solicitors’ letter dated 28 November 2022, merely 2 weeks before the commencement of the trial;

(4)  strangely and unlike his disclosure about Coinbase.com, he provides a “wallet overview” in relation to his investments with Binance.com; but there is no transaction report attached. The “wallet overview” does not show his name, user ID or email address to identify that this is really his portfolio with Binance.com;

(5)  he provides, inter alia, something like a transaction report at [B12/2861] to [B12/2865] which seem to be of one set of documents. However, there is no letterhead showing which crypto investment it is. There is nothing, such as his name, or his user ID, or his email address, which can readily identify that these are his crypto accounts. It is only said during the trial that these documents belong to his account with Crypto.com. Again, these documents do not and cannot show that he has a balance of USD21,458.52 with Crypto.com as per alleged in his 3^rd Form E;

(6)  the documents at [B12/2866] to [B12/2969] are even more incomprehensible. Each page contains one line or a few lines of incomprehensible and meaningless codes of alphabets and numerals. There is no letterhead showing which crypto investments it is, nor is there his name, or email, or user ID. Simply put, I do not think any person can have a clue of what is meant by these incomprehensible codes, let alone to relate them to any of his crypto investments. It is only during the trial that the husband, for the first time, reveals that [B12/2866] to [B12/2969] are a continuation to and/or part of [B12/2862] to [B12/2865];

(7)  on the whole, the documents provided by him in his 3^rd Form E in relation to his crypto investments do not meet the requirement of “on its own meaningfully assist in informing others” as to his investment in crypto products (See: L v L (supra)), nor are they presented in the way that “is immediately understandable by a solicitor of average financial sophistication” (See: Katherine Ching Yip v Horst Joachim Franz Geicke (supra)).

69.  Not only is the husband’s disclosure not full and complete, but his disclosure about Yieldnodes.com is also not correct. He says in his 3^rd Form E that he held “Allcoins” with Yieldnodes.com, but it turns out from his oral evidence that his asset with Yieldnodes.com is something like a term or fixed deposit. Further, when asked by the court to identify “the term” in the relevant document[16], he has to accept that this is not provided in the document.[17]

70.  Due to his failure to provide timely, full, complete and correct material on his crypto investments, the wife, and more importantly the court, is unable to readily ascertain from his Form Es and attached documents the true position and value of his crypto investments.

71.  It is then suggested by the husband during his oral evidence that the wife could have googled into “Allcoins” and “Coinbase.com”, or could have administered questionnaires to request him to provide further information.

72.  In my view, this is an unhelpful explanation and is in total disregard of his “positive” duty on disclosure. Plainly, the duty of full and frank disclosure of his crypto investments lies squarely on him. Any attempt to try to play a “hide and seek game” and/or to adopt a “wait and see approach” should be deplored (See: L v L (supra)).

73.  Lastly, I need to mention that he has attempted to make some voluntary discovery of his crypto investments by way of his solicitors’ letters:

(1)  In the letter dated 4 November 2022, the husband, for the first time, provides a more comprehensible table setting his crypto investments, including the initial investments and current value as at 28 October 2022. He attempts to clarify the source of money for his crypto investments, namely from his accounts with Bank of China, FirstTech and HSBC, and provides 2 further crypto investments that he has inadvertently omitted to provide in his Form Es. Yet, no further supporting document is provided, for example, documents to support his claim on the current value of the crypto investments (which value has dropped significantly since the initial investment);

(2)  In the letter dated 28 November 2022 (which is in response to the wife’s letter dated 11 November 2022), the husband discloses further supporting documents which should have been disclosed long ago and together with his 3^rd Form E. For the first time, he discloses the transaction report of Binance.com. He finally provides the screen shots of various websites in order to show the current value of the crypto investments. However, most of these screen shots do not bear sufficient information to show that these are his crypto accounts. The wife is thus dubious of whether the withdrawals from his various bank accounts were applied to crypto investments as alleged;

(3)  In the letter of 14 December 2022 (ie Day 2 of the trial and was received by the wife’s solicitors at around 7 pm), the husband clarifies his spending and provides further explanation on the “transaction flow” of his crypto investments, in order to show that there is no dissipation of assets or non-disclosure.[18]

74.  In my judgment, the above 3 letters are very telling of the insufficiency of disclosure of his crypto investments in his 3^rd Form E and before the trial. I agree with Mr Shaphan Marwah, counsel for the wife, that the husband “drip-fed” only fragments of the documents and material that should have been disclosed by him long ago together with his 2^nd or 3^rd Form E (as the case may be). His very belated disclosure by way of letter dated 14 December 2022, ie in the middle of the trial, should also be condemned. By then, the wife was already in the witness box giving her oral evidence, which means that her legal team would not be able to take instructions from her on this letter until she finished her oral evidence by the end of 15 December 2022.

75.  All these would be duly taken into account by the court if the question of costs of the ancillary relief including this trial would have to be argued and ruled.

76.  To complete the records, Mr Shaphan Marwah, counsel for the wife, informed the court on 16 December 2022 that upon taking instructions from the wife on the letter of 14 December 2022, she was prepared to accept that only USD 255,000 and $120,000 (totalling $2,121,750) were removed from the husband’s bank accounts for allegedly investing in cryptocurrencies, but she would argue that such investments are “wanton” so that the initial investment sum of $2,121,750, but not the current value, should be added back, which will bring me to the next issue of whether the crypto investments are “wanton” spending.

77.  However, before leaving this topic, I attempt to express my view as to what the trial judge on ancillary relief matters would expect from a party on disclosure in relation to crypto currencies. Our Form E has not been designed or updated to include crypto or virtual currencies. But in my view, disclosure of crypto currency should be of no difference to traditional paper money that is kept in our bank accounts. Therefore, a party, at the very least, is expected to provide the following in his Form E (and this is a non-exhaustive list):

(1)  state clearly the account number or user ID or any other identification information that would readily relate him to the relevant crypto account and crypto wallet;

(2)  provide comprehensible transaction report for the period required by Form E, namely 12 months prior to his/her Form E. The said transaction report shall bear the information stated in (1) above;

(3)  provide a colour photograph of the crypto wallet depicting the balance or current value of each crypto account. The said photograph should be duly dated. A screen shot without a date or any identification information is not sufficient and helpful; and

(4)  (as there is no central authority to determine/manage the value of crypto currencies) explain briefly the basis of valuation of each crypto account.

78.  In times, I hope that our Form E can be duly updated to reflect the development of virtual or crypto products.

Are the crypto investments “wanton” spending?

79.  The law on add-backs should by now be well-settled.

80.  The court may be asked to “add back” to the matrimonial pool before division the expenditure complained of, but such a course required the Court to be satisfied that such expenditure was “wanton”, “reckless” or “extravagant” (See: ARAV v VP [2011] 3 HKLRD 759; MKKWH v RKSH [2013] HKFLR 540). However, the mere fact that the matrimonial pot has been depleted by unilateral expenses and reduces the share of the spouse who has not benefited from such expenditure alone does not justify an add-back order (See: MKKWH v RKSH (supra) at §4). Reattribution of assets by way of add back has to be conducted cautiously by reference only to clear evidence of dissipation (See: ARAV v VP (supra) at §§58-61).

81.  Whether a conduct is regarded as “wanton” or “reckless”, as explained by Fok JA (as he then was) in ARAV (supra) at §55-§56 is “highly fact sensitive” and “depend on the judge’s view of the evidence”.

82.  Besides, a recent judgment by Queeny Au-Yeung J in LCC v LTLA, HCMC 4/2019, [2022] HKCFI 1922 provides a very succinct summary of the legal principles on “add-back” and “conduct” at §104 - §117:

“104. Having considered the authorities cited on both sides, I have distilled the principles as follows:

105. Firstly, a spouse cannot take advantage of all the good characteristics of his or her partner whilst disavowing the bad ones. One has to take the spouse as he/she finds her or him: MAP v MFP [2015] EWHC 627 (Fam) at §69, Moor J; AP v ALP [2018] EWHC 2758 (Fam) Moor J, §119.

106. In MAP v MFP, the husband spent £259,559 on rebuilding works (at §89), and £250,000 on prostitutes, cocaine and treating his addiction. The court found it wrong for the wife to take advantage of the husband’s great abilities that enabled him to make such a success of the company while not taking the financial hit from his personality flaw that led to his cocaine addiction and his inability to rid himself of the habit. The husband may have been morally culpable and, overall, irresponsible. However, those expenses were found not be deliberate or wanton dissipation and the wife must take the husband as she finds him (§§86 & 91). The total spending of £509,559 was less than 2.03% of the matrimonial pot worth £25,139,445. No add back order was made.

107. In AP v ALP (also decided by Moor J and followed MAP v MFP), the investment loss was US$172 million (§18) suffered by the husband who was an entrepreneur. He made enormous sums from 2 companies through risk taking and reinvestment in further businesses. Moor J was of the view that if that had not been the husband’s approach, he would never have made the money in the first place. The husband did not deliberately go out to lose his money. No add-back order was made. It was held that the wife should take the husband as he was (§§118-119).

108. Secondly, the fact that a spouse has always known from the outset that the other was of a certain character or liked to engage in certain activities, yet continued to condone or indulge the other in such acts would militate against any add-back: AG v VD [2021] EWFC 9, §§105 & 112, Cohen J. In that case, Cohen J refused to add back the wife’s overspending of at least £4.7 million, as the husband knew from the outset that the wife was a big spender, yet he continued to provide her with the funds, had not asked her to account for them at any time and had not sought to limit her expenditure. He was happy to indulge her.

109. Thirdly, the mere fact that the matrimonial pot has been depleted by unilateral expenses (such as substantial legal costs) and reduces the share of the spouse who has not benefited from such expenditure alone does not justify an add-back order: MKKWH v RKSH [2013] HKFLR 540 (CA) at §4, Lam VP (as he then was). Reattribution of assets by way of add back has to be conducted cautiously by reference only to clear evidence of dissipation: ARAV v VP [2011] 3 HKLRD 759, Cheung JA, §7 and Fok JA (as he then was), §§58-61.

110. Fourthly, a distinction should be drawn between wanton, reckless or extravagant dissipation on the one hand, and irresponsible expenditure or morally culpable conduct on the other. It is only the former type of conduct that would justify an add back order. See MKKWH v RKSH, §11, Lam VP; ARAV v VP, at §11, Lam VP (as he then was), at §53 & 58, Fok JA (as he then was); Martin v Martin [1976] Fam 335, (at pp.342G-H).

111. The guiding principle is one of fairness and it depends on global assessment: MKKWH, at §66, Cheung JA; and §4, Lam VP:

“The Court is of course not a court of morals. If the husband chose to be a philanderer and have mistresses and children born from these relationships, it is not for the Court to condemn his behaviour as being immoral. But when these activities caused funds (which would be in the matrimonial pot) to be depleted, then clearly the Court is entitled to ask whether unfairness has been caused to the other spouse because of the non-marital expenditure. If this matter is considered under the ambit of conduct, then one has to examine whether the financial misconduct by way of depletion of the matrimonial funds (and not the husband’s moral conduct in respect of his association with other women) is obvious and gross or inequitable to disregard.” (MKKWH, at §66, Cheung JA)

112. Fifthly, specifically, on gambling loss, a distinction should be drawn between recreation or entertainment which involves gambling and indulgent gambling.

113. Playing mahjong with friends, going to horse races from time to time, occasional cruises to play a few games of baccarat are examples of entertainment. It is different from daily gambling or frittering away of substantial sums ending up in gambling debts. It is always a matter of degree: L v T, FCMC 2250/2000, 2 September 2002, HH Judge Bruno Chan, §§104-105.

114. Indulgent gambling or speculation is an archetypal form of reckless dissipation that would attract an add-back order:

(1) In C v C [1990] 2 HKLR 183, over about a 12-month period after separation, the wife lost more than $1 million in Macau and between $0.5 million to $1 million speculating on futures. The trial judge added back HK$1 million of the Macau losses. In the Court of Appeal, Hunter JA further ordered an add back of $0.4 million of the futures losses (at p.190C).

(2) In Vaughan v Vaughan [2008] 1 FLR 1108, the husband accepted that he had spent large sums of money by gambling or engaging in other improvidence, which the trial judge found to be “profoundly irresponsible”, although “largely attributable to his [serious depressive] illness and no moral culpability attached to it” (at §§13&14). The circuit judge held that the dissipation was a fact without satisfactory explanation (at §28). The Court of Appeal added back the dissipated amount (§46).

(3) In A v A [2018] 7 WLUK 147, the husband accepted that he had lost a considerable portion of over £1 million in spread betting and incurred gambling losses of more than £600,000 (at §48). His Honour Judge Booth held that the husband was entitled to gamble his own money or money lent to him specifically for the purpose. However, most of the money “lost” had been raised by taking further borrowings on the property portfolio and, in the case of the Hyde Project, on the family home. The learned judge attributed to the husband several hundred thousand pounds to lie on his side of the balance sheet (at §§66-68).

115. Sixthly, mental incapacities of a sufficient severity may render re-attribution unfair: Vaughan v Vaughan, at §28. In that case, following the breakdown of the marriage, the husband suffered from a serious depressive illness, leading to his suspension as a pilot and loss of his pilot’s licence. Despite warning itself that notional reattribution had to be conducted very cautiously by reference only to clear evidence of dissipation with a wanton element (§14), the Court ordered an add back of £100,000 dissipated by the husband.

116. Seventhly, it is clear from these authorities that where a spouse engages in wanton, reckless or extravagant dissipation, the courts have never expected the other spouse to take that spouse as she/he is.

117. Eighthly, there are 2 alternative ways to achieve a fair result in dealing with non-marital expenses: by adding back specific sums or by departure from equal distribution. Either way, the ultimate goal is to achieve fairness. See MKKWH v. RKSH, Lam VP, §1; Cheung JA, §54.”

83.  I shall first of all reiterate that in the trial, the wife accepts that the husband invested a total sum of $2,121,750 into crypto currencies. However, she proffers that the husband gains insight from his father’s past experience in stock investment causing him a huge loss, and thus it is never the husband’s investment pattern to invest in anything which is of high risk; he always invests in properties or low-risk stock, as reflected from his 1^st Form E. His 2^nd Form E shows that he held a small amount of USD 380.49 Allcoins with Coinbase.com. His decision to allegedly invest a large amount of money into crypto products since February 2022 when he has no gainful employment is “wanton” and “reckless”.

84.  Much as the wife would like to paint a picture that the husband is a conservative investor who is not of the character of taking up risky investment such as the crypto products, her affirmation evidence tells a different story. In her affirmation in respect of section 7 of the MPPO, she describes the husband like this:

“9. H has an electrical and computer engineering degree, as well as an executive MBA qualification. His expertise is diverse. He has worked in sales, business development, venture capital and executive search across multiple different industries…He has 20+ years’ work and business experience…

10. H has a higher earning capacity, and from multiple sources: employment, rental, business and investments.

…

16. H is very resourceful and business savvy….

17. In addition to rental income, H enjoyed passive income from his side businesses…

18. H said he had always been entrepreneurial since his university days. He founded PxxxSxxxxxx.com in 2000. H was involved in a number of start ups during the marriage….

19. H is an opportunist….

…

22. I understand H is also an early-stage cryptocurrency investor.”

85.  The overall impression that the court receives from the above affirmation is that since his university days, he had a keen interest in investing in new but not very traditional areas of businesses. Probably due to his expertise in computers, his businesses are somehow related to websites or online services, such as the online coupons business. And it is clear that before the hard-struck of the Covid-19 pandemic, the husband was able to gain, and thus the whole family was able to be benefited financially, from these online businesses. It thus comes as no surprise to the court that he would be interested in the new area of crypto products. As the case law suggests, the wife “cannot take advantage of all the good characteristics of the husband while disavowing the bad ones”.

86.  The wife attempts to clarify the above affirmation evidence in the trial. She explains that actually she has no knowledge herself that the husband has invested in cryptocurrencies; she merely hears this from the children. I do not believe this mere say-so. Notably, the husband has started crypto investment as at his 2^nd Form E (dated 9 February 2022).

87.  According to his oral evidence, he did try out at the beginning by investing just a small amount of money into crypto products via his credit card, his BOC account and ZA Bank account. He described this as the “learning phrase”, before he decided to invest more into this field. This part of his oral evidence is not seriously challenged by the wife. Although it turns out that the investment now suffers a loss, such that the matrimonial pot has been depleted, it is due to the volatility of the real market. A distinction should be drawn between making a bona fide bad investment decision with wanton and reckless dissipation of the assets.

88.  It is thus my conclusion that the husband is not “reckless” in the crypto investments.

Conclusion on their assets

89.  As explained at §71 in LKW (supra), the court is not required to distinguish between matrimonial and non-matrimonial assets at the stage of identification of the parties’ assets, that being an exercise best undertaken (if necessary) when considering distribution of the assets.

90.  Due to the matters aforesaid, I conclude that the parties’ respective assets in their net value are tabulated as follows (the figures are rounded up/down to the last decimal):

	Husband	Wife
Matrimonial home (agreed value at $18.9 million and subject to mortgage)	---	$12,655,765
Luen Tak Building (agreed value at $6.85 million and subject to mortgage)	$3,860,538	---
Hoi Sing Building (agreed value at $5.7 million and subject to mortgage)	$3,486,715	---
Wo Yick Building (agreed value at $6.74 million and subject to mortgage)	$3,991,348	---
Bank accounts (HKD)	$1,129,212	$2,174,946
Bank accounts (AUD)	---	$2,328,931
Bank accounts (USD)	$1,480,282	---
ZA Bank + Payme	$83,266	---
Stocks and investments (excluding crypto currency)	$1,883,458	$1,401,409
MPF (Hong Kong)	$888,871	$432,822
MPF (Canada)	$33,493	---
MPF (Australia)	---	$208,618
Philippines fast food business	$250,000	---
XXfare.com	$22,292	---
XXXXXXkids.com	$20,000	---
Ferrari car	$1,000,000	---
Rolex Daytona	$180,000	---
Engagement ring	---	$95,000
Cash	$5,500	---
Debt owed by wife’s brother to her	---	$1,500,000
Add
Section 17 Sums	---	$5,343,137
Withdrawal of AUD125,000 from HSBC advance account on 2/7/2019	---	$681,250[19]
Crypto currencies[20]	$1,119,158
Net total:	$19,434,133	$26,821,878

91.  It is a common ground of the parties that the court does not need to consider their liabilities and legal costs incurred so far, as they are not asking the same to be shared by the other side.

92.  The total assets of the parties come to about $46,256,011.

The wife’s income and needs

93.  The background and income of the wife are already set out at [15]. The issue to determine if she has suffered a reduced earning capacity, due to (i) the stress and trauma of the alleged domestic violence in May 2019, (ii) her health condition, and (iii) her inability to speak/write Mandarin/Chinese, such that her earning capacity would be significantly reduced from about $240,000 per month to about $90,000 per month.

94.  I am not allured to the wife’s allegation of reduced earning capacity for the following reasons/observation:

(1)  The wife is highly educated, with a Master Degree. She has vast working experience of 16 years in Hong Kong, working for various international law firms. She was promoted to directorate grade as early as 2011;

(2)  Although both parties touch on the alleged incident of May 2019 in their affirmations, neither of them have been cross-examined on it during the trial. There is thus insufficient evidence as to what actually happened in May 2019 inside the car of the husband. However, it is noted in the social investigation report that after the alleged incident, both parties were arrested by the police who subsequently took no further action because both parties did not pursue the matter any further.[21] It is thus more likely than not that the alleged conflict is not a very serious one, so that neither party decided to pursue it. Further, there is no or not sufficient evidence to prove the causation of the alleged incident, if any, and the wife’s alleged stress and trauma, and to prove that she has drastic reduction in working ability as a result of the alleged incident;

(3)  There is no dispute that the wife was diagnosed with Sjogren Syndrome since 2006. However, despite this illness, she is not required to take any medication or attend regular/frequent follow-up consultation. She has been able to work continuously since 2006, and her earnings were on a rising path, which would not have been possible if her illness has affected her earning ability significantly. There is no or not sufficient evidence to show that her medical condition has significantly deteriorated since she lost her job in March 2021. Quite on the contrary, she says in her own documents that both of them are “relatively fit and healthy”, and that her existing medical condition only needs to be “monitor(ed)”;[22]

(4)  The wife claims that during recent job interviews, she was asked if she could write Chinese. This is the kind of questions which have seldom been asked before in her previous jobs, and thus she senses that there is very likely to be a change in the job requirement in the market. She says in her oral evidence that she can speak Cantonese but not Mandarin; she can read only some Chinese characters but no to the extent of a full sentence. A few points are to be taken here. Firstly, the wife tells in her oral evidence that it is her intention and plan to work for USA companies, which means that English would likely to be the preferred language. I have reservation if knowing Chinese is a pre-requisite to get the job that she intends to work. Secondly, I hold the impression that she may have downplayed the standard of her Chinese. Importantly, she says in her Form J that her Chinese is “limited”, but would still be able to help the children (2 of them are in local schools) with “Chinese”.[23] Thirdly and in any event, she may learn how to write Chinese by taking up some part-time courses to equip herself, as well as to assist the two younger children of the family who are now studying in local schools. It is understood that Chinese language is a mandatory subject in local schools.

95.  That said, however, I am unable to take on board the submission of Mr Li that the wife intentionally gave no effort in job seeking since March 2021. It is common knowledge of how the economy of the world (including that of Hong Kong) was affected by the Covid-19 pandemic, which is beyond the control of the wife. It is fair to point out chronologically speaking, the husband has been out of his regular job for a longer period of time than the wife.

96.  It is my view that with the conclusion of this ancillary relief trial and the society’s returning to normality after the Covid-19 pandemic, the wife would be able to resume working in similar position. On a broad brush, I hold the view that she would be able to earn similar income of about $230,000 per month, inclusive of basic pay, double pay and bonus.

97.  Upon considering the claimed expenses in her Form Es, and even taking her claimed expenses in her 3^rd Form E to the highest, her income would be able to meet her own needs at about $77,000-$78,000 per month.[24] There is thus no need for me to go into details of each and every item of her expenses.

The husband’s income and needs

98.  The background and income of the husband is set out at [16] to [18] above, which I would not repeat again.

99.  In this trial, the husband’s primary position is that he earned and will earn less than the wife, but in so far as sharing of the children’s expenses is concerned, he accepts to proceed on the basis that he has similar or equal income as the wife from his regular job. As to his side businesses, he is adamant to say that the travel websites business has suffered loss or closed down, and that his other side businesses, such as online tutoring, are either no longer in operation or not making profits. The net rental income he receives by renting out the cubicles of the 3 properties is merely $7,400 per month.

100.  The wife, on the other hand, advances that the husband has an earning capacity of about $280,000 per month from his regular job and side businesses.

101.  I only need to make the following points on his future income.

102.  First, the husband, like the wife, is highly educated, and used to hold senior roles at leading travel and technology companies. From May 2018 to March 2019, he earned $200,000 per month from T Ltd.[25] Before he left his last job, his net monthly income was about $180,143.50.[26] It is his plan to return to the travel industry. And with the resurgence of world travel, he should be able to return to similar senior post in the travel company, earning similar income of at least $180,000 per month. I see no basis for him to play down his likely future salary to $120,000 - $150,000 per month.

103.  Second, although the disclosure on his online tutoring business is not satisfactorily, the overall evidence does not show that he has or will have any significant income from this tutoring business,[27] which will have a material impact on the ancillary relief order to be given in this judgment.

104.  Further, I am not able to accept the wife’s argument that the husband has and will have any meaningful and regular monetary rewards on referring recruitment contracts to his friend, Mr Hon.

105.  Third, as to his side businesses relating to renting out cubicles and travel websites, I must remind myself that the husband failed to comply with an unless order made by me on 3 March 2022 which provides, inter alia, that he should disclose (i) information requested by the wife in her questionnaire in respect to Homeaway.com, and (ii) a schedule of rental income and expenses of the 3 properties rented out by him for 12 months prior to his 1^st Form E. His application for relief against sanction was dismissed by me on 7 October 2022.[28] Plainly, the husband has failed to fulfil his duty on disclosure in relation to his rental income and income about the travel websites.

106.  During his oral evidence, the husband claims that the net rental income he receives is about $7,400 per month. He concedes that the revenue he received from the travel websites was almost $2,800,000 in 2019.

107.  It is accepted that the husband’s income from the renting out his 3 properties and the travel websites hinges very much on the recovery of the economy and/or travel industry. Such income may be low during the Covid-19 pandemic, but should not be now, as there is no more travel restriction over the world. On the other hand, it is fair to take into account that the 3 properties for renting out are still subject to mortgage and other expenses, such as government rates.

108.  Looking all these matters in the round, the court is entitled to find that the husband is more likely than not to receive regular income from his renting business and travel websites business way forward. It is not satisfactory that the husband has not made full disclosure of such income. Doing the best I can, I would accept the wife’s submission and deem that his total monthly income way forward is at least $280,000 per month.

109.  His deemed income will be more than sufficient to satisfy his needs (said to be $65,115 per month according to his most updated 3^rd Form E). There is thus no need for me to go into details of each item of his expenses.

Reasons for departure from equal sharing principle

110.  As said, the husband advances that the parties should share their assets equally. The wife does not agree and insists that she should get 60% of the total assets on 3 grounds which I will now discuss in the following.

(i)   Conduct

111.  Mr Marwah submits on the behalf of the wife that if the husband was found to have lost significant sums in crypto investments, that is a reason for departure from equal sharing of their assets. Counsel refers me to 2 cases. In C v C [1990] 2 HKLR 183, the trial judge ruled that the wife’s loss of more than $1,000,000 by gambling in Macau over a period of 12 months after separation was “financial irresponsibility” and should be added back, but refused to add back a sum between $500,000 and $1,000,000 which she lost over speculating in Hang Seng futures exchange. On appeal, Hunter JA ruled that a proportion of $400,000 loss on future exchanges should be added back. In LCC v LTLA (supra), Queeny Au Yeung J added back the husband’s gambling losses, the stake of which had “raised considerably post separation”.

112.  As a starting point, section 7 of the MPPO gives the court a discretion to take into account the conduct of a party, if that conduct is such that it would in the opinion of the court be inequitable to disregard it. Whether a certain “conduct” is to be taken into account and viewed as “wanton” is within the very wide discretion of the court. The exercise is very fact-sensitive.

113.  Further, in LKW (supra), Riberio PJ warned at §100 that the court have recoiled from permitting the parties to indulge in a post mortem of their marriage in order to find fault with each other or to air their mutual recriminations and go into their petty squabbles for days on end. The court should “avoid costly, indecent and time-wasting investigations regarding conduct in relation to ancillary relief proceedings”. His Lordship went on to say that conduct was only relevant to financial provision if it was both “obvious and gross”.

114.  Very often, “conduct” in ancillary relief proceedings is categorised into 3 types, namely: (i) matrimonial conduct; (ii) financial conduct; and (iii) litigation conduct.

115.  However, in OG v AG [2020] EWFC 52, Mostyn J summarised that “conduct” is relevant in financial remedy cases in 4 distinct scenarios, which in my view, provides a handy and useful summary:

“[34] …. First, there is gross and obvious personal misconduct meted out by one party against the other, normally, but not necessarily, during the marriage [matrimonial conduct]. The House of Lords in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618, [2006] 1 FLR 1186 confirmed that such conduct will only be taken into account in very rare circumstances. The authorities clearly indicate that such conduct would only be reflected where there is a financial consequence to its impact. In one case the husband had stabbed the wife and the wound had impaired her earning capacity. The impact of such conduct was properly reflected in the discretionary disposition made in the wife's favour. Mrs Miller alleged that Mr Miller had unjustifiably ended the marriage discarding her in favour of another woman. Therefore, she argued that Mr Miller should not be permitted to argue that their marriage was short. This argument was rejected by the House of Lords which held that the conduct in question, although greatly distressing to Mrs Miller, should not find independent reflection in the court's decision.

[35] The conduct under this head, can extend, obviously, to economic misconduct such as is alleged in this case. If one party economically oppresses the other for selfish or malicious reasons then, provided the high standard of 'inequitable to disregard' is met, it may be reflected in the substantive award.

[36] Secondly, there is the 'add-back' jurisprudence [financial conduct]. This arises where one party has wantonly and recklessly dissipated assets which would otherwise have formed part of the divisible matrimonial property. Again, it will only be in a clear and obvious, and therefore rare, case that this principle is applied. In M v M (financial provision: party incurring excessive costs) [1995] 3 FCR 321 Thorpe J found that the husband had dissipated his capital by his obsessive approach to the litigation, which had included starting completely unnecessary proceedings in the Chancery Division. That dissipation was reflected in the substantive award. Properly analysed, that decision can be seen as a harbinger of the add-back doctrine rather than a sanction reflecting a moral judicial condemnation.

[37] In this case the sums loaned by the husband to TT will all be added back to the matrimonial pot at full value. The husband does not resist this.

[38] Thirdly, there is litigation misconduct. Where proved, this should be severely penalised in costs. However, it is very difficult to conceive of any circumstances where litigation misconduct should affect the substantive disposition.

[39] Fourthly, there is the evidential technique of drawing inferences as to the existence of assets from a party's conduct in failing to give full and frank disclosure. The taking of account of such conduct is part of the process of computation rather than distribution. I endeavoured to summarise the relevant principles in NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 (Fam), [2012] 1 FLR 1211, which was generally upheld by the Court of Appeal in Moher v Moher [2019] EWCA Civ 1482, [2020] Fam 160, [2020] 1 FLR 225. In that latter case Moylan LJ confirmed that while the court should strive to quantify the scale of undisclosed assets it is not obliged to pluck a figure from the air where even a ballpark figure is in fact evidentially impossible to establish. Plainly, it will only be in a very rare case that the court would be unable even to hazard a ballpark figure for the scale of undisclosed assets. Normally, the court would be able to make the necessary assessment of the approximate scale of the non-visible assets, which is, of course, an indispensable datum when computing the matrimonial property and applying to it the equal sharing principle.” (the underlined is my emphasis)

116.  The wife’s complaint about the crypto investments, as I understand from Mr Marwah’s argument, is related to “financial conduct”. However, I have already found that the crypto investments are not “wanton” spending. Further, the wife should not be allowed to have two bites of the same cherry, by inviting the court to add-back the initial investments of the husband’s crypto currency on one hand, and at the same time invite the court to rule that there should be a departure from equal sharing of the assets to her favour (See: MKKWH v RKSH (supra) at §1 and §54). This will amount to double counting which is against the notion of fairness.

117.  Whether the unsatisfactory disclosure of the crypto investments which is already discussed earlier in this judgment amount to “litigation conduct” should be better left to the question of costs. Suffice it is for me to say that even if (merely assuming that) the lack of full and frank disclosure amounts to “litigation conduct”, this should be reflected in the costs order, rather than on the substantive disposition of assets (See: OG v AG (supra)).

(ii)   Unilateral assets

118.  It is the wife’s case that before she moved to Hong Kong, she earned about $60,000 per month in Australia, which allowed her to save up in her Australian bank accounts, as well as build up her Australian pension, that have been kept separately and untouched over the years, and have not mingled with the family assets. There are 3 items of alleged unilateral assets according to her and oral evidence:

(1)  The moneys as shown in her Australian accounts in the sum of $2,328,931;

(2)  A sum of AUD125,000, the seed money of which came from (i) AUD100,000 transferred from her Australian account(s) for a term deposit with Seaoil Philippines, and (ii) various term deposits with ICBI under her own name. The final amount matured on 13 October 2017 in the sum of AUD122,259.59 which was transferred to her HSBC account;

(3)  her Australian pension worth of $208,618.

119.  I shall firstly deal with the Australian pension. I accept that this is a unilateral asset which should be carved out for sharing for 2 major reasons:

(1)  I believe that the pension was accumulated by the wife well before the marriage. There is no evidence to suggest that the pension is the product of the common endeavour of the parties;

(2)  The parties are still in their 40s, and will have a long way to go before they reach their retirement at usually 60 or 65. Thus, even if it is a long marriage of 10 years with 3 children, the court should take into account the fact that this pension has not yet become capital asset or an income stream until retirement age and is subject to handicap and risk (See: SSLT v SMFC [2019] HKFC 250 at §44 – 48; DGB v SDGK, FCMC 12078 of 2013, date of judgment 12 March 2014 at §54).

120.  That said, I would add that in all fairness to the husband, his Canadian MPF would be carved out for sharing.

121.  Next I come to the sums of AUD 2,328,931 and AUD125,000. Although the wife says that these sums have all along been kept in Australia under her own name and thus have never been mingled with the family assets, she has not provided a single piece of document to substantive this claim that she was already in possession of the Australian Fund or the said AUD125,000 prior to the marriage, apart from her mere say-so. She has to accept that she bears the burden of proof by “clear evidence” that these are non-matrimonial assets (See: LCC v LTLA (supra) at §62). More particularly, the court will not accept her bare oral assertion that the sum of AUD125,000 is pre-marital in nature and has not mingled with other assets. Notably, she cannot provide a plausible explanation as to why when the alleged term deposit with Seaoil Philippines matured, she could not have wired the money back to Australia directly, or via Hong Kong indirectly, within a reasonable time of maturity of the term deposit. The fact that she chose to keep the money in her HSBC Advance account (which was one of the accounts she received her salaries during the marriage) since 2017, and withdrew at no other times but coincidentally shortly after the alleged physical dispute in May 2019 (which she describes was the last straw that triggered their divorce) has tilted the balance of probabilities against her.

122.  To conclude, I am not persuaded that these moneys have no mingling with the family pot at all. The wife simply fails to discharge her burden of proof. In any event, the non-matrimonial or pre-marital nature of any assets will diminish over time, such that the longer the marriage, the less weight would be given to this factor (See: LKW (supra at §92-§93).

123.  It is pertinent for me to point out that the husband has not attempted to argue that his pre-marital bank reserves should be regarded as unilateral assets carved out for sharing. He accepts that his pre-marital bank account(s) should be shared.

(iii)  Needs of the wife and the children

124.  The wife says that she has lost her job as a result of the stress and trauma of the domestic violence incident in May 2019. Her autoimmune disease (Sjogren Syndrome) can further impair her earning capacity. She has substantial monthly deficient of $183,963 per month and is unable to service the mortgage of the matrimonial home at which the children of the family are living with her. Hence, the court needs to take their needs into account in the division of assets.

125.  At the stage of the opening submission, Mr Jeffrey Li for the husband also suggests that this is a “needs” case, in the sense that both parties are now out of job, and their respective needs, including the needs of the children, would already eat into all of the assets, such that there would be nothing left for sharing.

126.  Given my findings on the earning capacity of the husband and the wife, I would bluntly reject the suggestion that this is a “needs” case.

127.  With the conclusion of the final ancillary relief trial, the saga of their divorce would come to an end. Coupled with this, the world is now re-opening and recovering from the Covid-19 pandemic. In so far as Hong Kong is concerned, it is public knowledge that number of Chinese and international travellers visiting Hong Kong is picking up favourably. I thus come to the conclusion that both the husband and the wife are able to return to their previous trade or area of work, earning an income similar to their previous jobs, which would be more than sufficient for them to cater for their own needs and share the expenses of the children.

Deciding on the outcome of ancillary relief between husband and wife

128.  This is a long marriage of about 13 years (if up to the grant of decree nisi), with 3 young children whose care and control rests with the wife.

129.  Both parties are highly educated and high-income earner, though it is ruled by the court that the husband’s income from his regular job and side businesses would be cumulatively more than the wife. Be that as it may, their own income is more than sufficient to satisfy their own needs. This is thus a “sharing” case, but not a “needs” case.

130.  The parties’ respective pension in Canada or Australia may be carved out for sharing. The total assets in the family pot is $46,256,011, of which the husband controls $19,400,640 and the wife has $26,613,260. The wife’s suggested reasons for departing from the equal sharing principle is not accepted by this court. This is a case where they should share the family pot equally, which means that the wife has to pay the husband a sum of $3,606,310 (rounded down to $3,600,000 for easy reference) as equalisation money.

Children expenses

131.  By the direction of the court, the husband and the wife have prepared a joint table of agreed and/or disputed expenses of the children, which is now reduced to the following table for easy discussion:

	Wife’s case	Husband’s response
General Expenses
Monthly mortgage repayment of the matrimonial home	$28,710	NIL
Utilities and eldest daughter’s mobile	$2,227	$1,670
Management fee	$2,394	NIL
Food	$22,500	$7,000
Household expenses, including maintenance and repair	$2,850	NIL
Insurance	$225	NIL
Sub-total:	$58,906	$8,670
Children Expenses
School fee	$12,904	$12,904
Extra tuition	$3,870	$1,800
School books and stationery	$1,500	400
Transport to school	$1,537	$1,537
Medical/dental insurance	$4,000	$3,300
Extra-curricular activities	$6,000	$2,500
Entertainment/presents	$3,500	$1,500
Holidays	$11,750	500
Clothing/shoes, including school uniforms and sports gear	$3,000	$1,000
Lunches/pocket money	$2,658	$1,050
Other transport	$4,146	$1,000
Donation	$440	$440
Eldest daughter’s laptop (purchased every 2 years)	$300	NIL
Domestic helper	$6,500	$5,000
Sub-total:	$62,105	$32,931 (or $15,727 + an undertaking to pay 50% of school fees, extra tuition and extra- curricular activities on production of receipts)[29]
TOTAL:	$121,011	$41,601 (or $24,397 + the aforesaid undertaking)

132.  In the following, I will assess the children’s expenses in the light of the findings on the living standard of the family during their marriage at [36] of this judgment. Also pertinent for me to say that in assessing the children’s expenses, this court is not bound by the broad brush and preliminary assessment of the Interim Maintenance Order. After all, this is about 3 children whose needs would be increasing on a reasonable basis as they grow up.

(i)   Monthly mortgage repayment & management fee

133.  The wife is now living with the children at the matrimonial home serviced by a mortgage with monthly repayment of $28,710 and management fee of $2,394. She asks the husband to share these items of expenses, as the children need a roof over their heads. The husband disagrees and argues that the wife would take the matrimonial home in their capital asset sharing, and thus it is unfair to ask him to finance her capital asset way forward.

134.  The starting point of my consideration is that there are 3 young children of this family and it would be in their best interest if there is the least disruption to their accommodation arrangement following the divorce of their parents. There is consensus that the wife is going to keep the matrimonial home (which is subject to mortgage). While I acknowledge that the husband may not be made to financially contribute to the capital asset of the wife following divorce, it must be equally true that, for the best interest of the children, he has a duty to contribute to the housing needs of the children according to his financial ability by reference to the rental expenses of an accommodation similar to the standard of the matrimonial home. And in this regard, his latest oral evidence in court is that the rental expenses of similar accommodation would be around $40,000 - $50,000 per month. It thus becomes very clear that his suggested rental expenses are much higher than the current mortgage repayment each month.

135.  In such circumstances, I think it is fair to adopt the monthly mortgage repayment of $28,710 and the related management fee of $2,394 as the benchmark to compute the husband’s contribution towards the accommodation needs of the children, instead of the notional rental expenses, on the basis that rented accommodation is used by the wife and the 3 children; I shall disregard the maid as she would be occupying minimal space. The children’s accommodation needs are thus $23,328 [($28,710+$2,394) x ¾ ].

(ii)  Utilities and mobile of eldest daughter

136.  The husband is not actually disputing the wife’s claimed amount of $2,227 per month under this item; he is saying that the wife’s portion should be carved out: $2,227 x ¾ = $1,670. I accept his calculation.

(iii)  Food

137.  Despite that the wife may not be able to provide all receipts on food, the husband’s suggestion of merely $7,000 per month to feed 2 adults (including the maid) and 3 growing-up children is very much on the low side and does not sit well with the average middle class living standard. Bearing also in mind that not all the children would be eating lunch at home during school days, I am of the view that a fairer sum should be around $15,000, which should cover purchases from wet market and supermarkets. The children’s share (the maid’s food would also be counted under children’s expenses) would be $12,000 ($15,000 x ⅘).

(iv)  Household expenses, including maintenance and repair

138.  I am not able to agree with the wife that the husband should be held to contribute to the maintenance and repair of her capital asset, namely the matrimonial home, following the divorce.

(v)  Insurance premia

139.  For the same rationale mentioned in the preceding paragraph, I am not persuaded by the wife that this item should be regarded as children’s expenses.

(v)  Extra-tuition and extra-curricular activities

140.  I take note of the husband’s complaint of the lack of receipts and exaggeration of the expenses of the extra tuition and extra-curricular activities received by the children.

141.  Despite that the wife may not be able to provide all the receipts, I am of the view that this is not fatal to her claim. Importantly, both parties have provided information about the lessons and activities arranged for the children in their respective Form Js filed way back in 2020. The husband says in his Form J that a number of “regular” extra-curricular activities were signed up or arranged by him for the last 11 years. One can see from the lists provided by him that the child or the children attended a lot of activities or lessons, such as speech and drama classes, taekwondo classes, piano lessons, swimming lessons, gymnastic lessons, Chinese and Mandarin private tutoring classes. It thus does not make any logical sense, nor does it conform with the very high education background of both parties, that as the 3 children grow older and with all of them now either entering into secondary or primary schooling, such expenses would be as low as the husband’s suggested sum of $4,300 per month.

142.  Upon due consideration, I accept the wife’s figure in the total sum of $9,870 per month.

(vi)  School books, stationary and computer/laptop

143.  All I need to say is that the husband’s suggestion of $400 per month for all 3 children, ie $4,800 per annum for 3 children, to cover their school books and stationary is unreasonable and mean. It is common knowledge that school books in Hong Kong are rather expensive. I am of the view that an average sum of $3,500 per year per child would be about right to settle the children’s school books and stationery. Computers are nowadays indispensable items in the school works of the students, especially students of more senior grades. I agree with the wife’s suggestion that a sum of $300 per month be allowed for the elder daughter’s laptop. All these add up to $1,175 per month for 3 children on average.

(vii)  Medical/dental insurance

144.  The wife asks for $4,000 in the above joint table, but in her oral evidence agrees to accept the husband’s proposal of $3,300.

(viii)  Entertainment/presents and holidays

145.  This is a family where both parties have high earning capacities. In my view, they should each cover the expenses which they wish to spend on the children as to their entertainment and holidays, without asking the other side to share out the same.

(ix)  Clothing/shoes, school uniform and sports gear

146.  There are 3 growing-up children, with the elder daughter and elder son entering into their adolescences. I am thus unable to agree with the husband that a mere $1,000 per month for 3 children is sufficient to cover their clothing, shoes and school uniforms. I accept the wife’s figure, which in my view is more reflective of the living standard of an average middle class.

(x)  Lunches and pocket money

147.  The husband has again complained the lack of receipts of this item. But the hard fact remains that the children need to be fed for their lunches. Further, it is impossible to ask the wife to provide receipts showing pocket money being given to the children, unless she asks them to sign receipts, which is totally unacceptable nor advisable. I have already said earlier in this judgment, the elder daughter and elder son are now teenagers. It is just natural and reasonable for them to receive some pocket money from the parents. I thus accept the wife’s figure but reject the husband’s.

(xi)  Other transport

148.  The husband says that this item is an exaggeration and lacks receipts. The wife however explains that the increase in other transport costs is due to the fact that the children no longer have access to the family car; the children have to take taxi or uber rides to attend the extra-curricular activities.[30]

149.  There cannot be of dispute that the children no longer have the benefit of the use of the family car. It is equally indisputable that the children have quite a number of extra tuition or extra-curricular activities to attend which should be covered by extra transport costs. It is not true that the wife has failed to provide receipts; she has provided some taxi receipts for the months of November and December 2020.[31] However, the total monthly amount shown in these receipts are around $1,000 per month. Even the court takes into account that she gives $2,000 a month to the maid to cover taxi/transport costs when the maid travels with the children, that would at the most bring the extra transport costs to around $3,000 per month, but not as much as $4,146 as suggested by the wife.

(xii)  Maid

150.  The minimum monthly salary of a foreign domestic helper is fixed by the government. It is indisputable that this amounts to $4,730 per month as at the date of trial. It is also beyond dispute that there are associated costs for hiring a foreign domestic helper, such as agency fees, return air tickets, insurance, paid annual leave and long term service payment (if applicable). If the husband’s suggested amount of $5,000 per month can stand, it would mean the associated costs for every 2 years’ of contract are $6,480[32], which is clearly not sufficient to cover all the items of associated costs mentioned above.

151.  However, on the other hand, the claimed monthly amount of $6,500 by the wife includes gifts and loans to the maid, which in my view is not a contract term and thus should be disregarded.

152.  I would thus give a broad brush figure of $6,000 per month to cover the maid’s salaries and associated costs.

(xiii)  Summary

153.  For the matters aforesaid, it is my findings that the children’s monthly expenses, generously interpreted as at the dates of the trial, have come to about $81,000 per month (rounded up) which are tabulated as below:

Items	Monthly expenses
Accommodation needs	$23,328
Utilities and eldest daughter’s mobile	$1,670
Food	$12,000
Household expenses, including maintenance and repair	NIL
Insurance	NIL
School fee	$12,904
Extra tuition + extra-curricular activities	$9,870
School books and stationery + laptop	$1,175
Transport to school	$1,537
Medical/dental insurance	$3,300
Entertainment/presents )	Each to bear
Holidays                      )	own share
Clothing/shoes, including school uniforms and sports gear	$3,000
Lunches/pocket money	$2,658
Other transport	$3,000
Donation	$440
Domestic helper	$6,000
TOTAL:	$80,882 (rounded up to $81,000)

Sharing ratio & backdating

154.  The wife asks that the husband shall share 60% of the children’s expenses. The husband says that such expenses shall be equally shared.

155.  Two matters are important in my deliberation on the sharing ratio, namely:

(1)  The husband is regarded as having higher income than the wife, when the income from his side businesses is taken into account;

(2)  More importantly, the husband was in breach of the unless order, as a result of which adverse inference shall be drawn to the effect that “he shall have the financial resources and financial means to pay whatever maintenance for the children of the family as ordered by the Court”. In my view, the full force and effect of the unless order should carry great weight and be duly reflected in the children’s maintenance order to be made in this judgment.

156.  Hence, I come to the conclusion that the husband should bear 60% of the children’s expenses assessed to be $81,000 by this court, which means that he is to pay the wife $48,600 per month for the 3 children (or $16,200 each child per month).

157.  On the question of backdating the maintenance for the children, the wife seeks to back-date the same to the date of the petition. According to her opening submission, this would amount to $1,069,569 (up to April 2021) and thereafter at the shortfall of $32,771 per month[33]. On the other hand, the husband objects to back-date the children maintenance, arguing that the wife’s reserve is part and partial of the family pot and thus allowing back-dating would lead to double-counting.

158.  In my view, the following matters should be taken into account:

(1)  It is not the duty of the court to dwell into a forensic calculation in respect of the back-dating of the monthly maintenance for the children. The court will take only a broad brush approach;

(2)  The wife did not take out her application for interim maintenance at or around the time when she filed her petition for divorce. Her application was taken out in October 2020, which was almost 12 months after she had filed her petition for divorce in November 2019;

(3)  From the date of the petition to the commencement date of the Interim Maintenance Order (for about 18 months), the husband had paid, according to Table C, merely $47,310 into the joint Citibank account for the maintenance of the children. This is clearly and grossly insufficient;

(4)  The wife had to pay out of her own reserve for the maintenance of the children in the interim period, such that the court have ruled that the husband’s argument of adding back the sum of $1,080,100 is rejected;

(5)  But even when the above $1,080,100 is taken into account to avoid the suggestion of double counting, I am of the view that the gross insufficiency of financial contribution from the husband for the children during this interim period should be addressed to.

159.  Balancing all the above factors and in the overall circumstances of the case, I conclude that fairness demands that the husband, if he is a loving father, shall pay back the shortfall of children maintenance back-dated to the commencement date of the Interim Maintenance Order. According to my calculation, this would amount to $513,000 covering the period from 1 May 2021 to 31 October 2023.[34]

Order

160.  Due to the matters set out aforesaid, I will make the following order:

(1)  The husband shall pay the wife for the maintenance of the children of the family (names of the children to be inserted into the draft order for approval) in the sum of $48,600 per month, ie $16,200 each child per month, back-dated to 1 May 2021 and thereafter on or before the 1^st day of each succeeding month, until each of the children reaches their respective age of 18 or completes their respective full time education, whichever is the later. Such payment shall be made into the designated bank account of the wife (details to be inserted into the draft order);

(2)  Credit shall be given to any payment made by the husband pursuant to the Interim Maintenance Order commencing from 1 May 2021. The husband shall pay the shortfall to the wife within 3 months upon the grant of the decree absolute;

(3)  The Interim Maintenance Order be discharged forthwith;

(4)  The wife shall pay the husband a lump sum of $3,600,000 within 3 months upon the grant of the decree absolute;

(5)  The husband and the wife are to retain their respective assets, including but not limited to the wife’s retaining of the matrimonial home;

(6)  All other ancillary relief claims between the parties, if any, do stand dismissed on the grant of the decree absolute;

(7)  There be liberty to apply in respect of the implementation of this order.

161.  I shall make a declaration pursuant to section 18 of the Ordinance to the effect that I am satisfied with the arrangement of the children of the family.

Costs

162.  On the parties’ request, I reserve the question of costs of the ancillary relief matters, including this trial, for further argument if necessary. However, I do urge the parties to exercise their good sense and take into account the observations of this court made in this judgment, to see they can come to an amicable solution on the costs, without expending further time and costs on the argument of the costs issue itself. Such moneys should be better saved for the benefit of the children of the family.

163.  I thus allow the parties (ie the husband, the wife and her parents) 28 days to attempt to agree on the issue of costs of the ancillary relief proceedings. They shall then report to the court by way of a joint letter on their agreement on costs, or alternatively, their respective stance on costs, upon which the court will give further directions.

164.  This court order shall be drawn up by the wife’s solicitors for approval. I also remind them to apply for decree absolute forthwith and without delay.