GREHAN MARTYN MURPHY v. DEREK JAMES MURTAGH MURPHY

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Judgment handed down: 1st October 1992

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J U D G M E N T

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Fuad, V.-P.:

1. This is an appeal, with the leave of the judge, by a wife against orders made by Judge Gould on 20th and 29th June 1991 directing her husband to make certain financial provision for her and for the children of the family.

2. I shall continue to refer to the parties as husband and wife although they are now divorced. They were married in Australia on 3rd August 1974. The husband is now 46 years of age and the wife is just 40. They set up home in Australia and their eldest son was born there in September 1977; he is now just 15 years of age. When first married, the husband was working as a stockbroker but he later began to practice as a barrister, having qualified some four years before the marriage. Until the boy was born, the wife had worked as a nurse for about three years.

3. The parties came with their son to Hong Kong in March 1978 and the husband took up an appointment in the Government Legal Department. Their second son, now nearly 14, was born in December 1978. Their daughter, now 12 1/2 Was born in February 1980 and their third son, now 10, was born in September 1982. The two elder children are being educated in boarding schools in Australia.

4. The wife helped out with the family finances for six months or so in 1980 by working as a private nurse. She started a business with a woman friend in March 1984. She became the sole owner of the business two years later and sold it in September 1990.

5. Meanwhile, the husband had transferred from the Legal Department to the Securities Commission in April 1979. He left the Commission at the beginning of 1988 and went to Australia for two months before taking up an appointment with Wardleys. On 1st September 1989 he began to work for First Pacific.

6. It seems that the parties' matrimonial problems came to a head during that month, and on 12th October 1989 the wife filed her petition for the dissolution of her marriage on the ground that it had broken down irretrievably - the "fact" relied upon was that her husband had behaved in such a way that she could not reasonably be expected to live with him. She claimed the usual ancillary relief and custody, care and control of the children.

7. The husband filed an answer and cross-petition on 27th December 1989. The cross-petition was founded on the "fact" of the wife's adultery with the Party Cited. He asked for custody, etc. of the children and a measure of ancillary relief.

8. Early in October 1990, by leave, the wife amended her petition, and the husband his answer and cross-petition. The respective petitions, with reduced and modified allegations, were based on the original grounds. They both ultimately went forward upon an undefended basis and were both granted. The decree nisi was pronounced by Judge Rattigan on 30th November 1990. On the same day the .same judge made an order that the children of the family remain in the joint custody of the parties, with care and control to the wife until further order, with reasonable access being granted to the husband. All questions relating to ancillary relief were adjourned to be heard in chambers.

9. The decree was made absolute on 19th March 1992.

10. Judge Gould's formal order dated, I note, 29th October 1991 records the husband's undertaking to pay certain expenses of the children of the family for so long as he resides in Hong Kong and remains in his present employment, or until further order (the parties acknowledging that in any event these arrangements should be reviewed in April 1993). The following is the list of the children's expenses the husband undertook to pay:

               (a)     Accommodation in a three or four bedroom flat;

11. The parties gave a joint undertaking not to take the children on holiday out of Hong Kong without the other's consent in writing or an order of the court.

12. The wife in turn, is recorded as having given the following undertakings:

"(a)     If applicable, to deliver to the Respondent, promptly and on demand, all invoices and or debit notes in respect of the above listed expenses which the Respondent undertakes to pay; and

(b)     Not to use the Respondent's motor car and or driver for any purpose whatsoever save and except for the purpose of accompanying the said children of the family to and from school or for their other activities and without the knowledge of the Respondent and in any event not to allow the Party Cited to use and/or be a passenger in the Respondent's motor car."

13. After reciting these undertakings the judge's order continued:

    "IT IS ORDERED THAT-

               (a)     HK$400,000 on or before the 15th day of July 1991

               (b)     HK$400,000 on or before the 15th day of January 1992

               (c)     HK$400,000 on or before the 15th day of May 1992

               (d)     HK$430,000 on or before the 15th day of April 1993

               (e)     HK$430,000 on or before the 15th day of April 1994

    but subject always to the following conditions:-

(i)     In the event of the Petitioner being obliged by the Respondent and/or his employer to vacate her present accommodation prior to the 15th day of April 1992 the Respondent shall within one month of her vacating the same pay to her in one lump sum the outstanding balance of the sum of HK$1,200,000.00 and under (a), (b) and (c) above;

(ii)    While any part of the HK$1,200,000.00 under (a), (b) and (c) above is outstanding the Respondent shall pay to her maintenance for her sole benefit of HK$5,000.00 per month on the 15th day of each calendar month commencing on the 15th day of July 1991; and

(iii)    In the event of the Respondent selling the property known as House E, Kamala Beach Estate, Phuket, Thailand prior to the 15th day of May 1994 the Respondent shall forthwith apply the net proceeds of sale thereof (calculated after the repayment of all secured and unsecured debts and loans relating to the said property inclusive of interest) in discharge or reduction of the outstanding balance of the sum of HK$860,000.00 under (d) and (e) above  then due and owing to the Petitioner.

2.    All other assets in the custody or control of the Petitioner and the Respondent shall belong to that party absolutely.

3    Subject to paragraph 5 hereinbelow the Respondent shall pay or cause to be paid to the Petitioner for the benefit of the children of the family, namely [the 4 children] periodical payments in the sum of HK$3,750.00 per month each payable monthly in advance and commencing on the 1st day of January 1991 and thereafter on the first day of each succeeding. month and until each child shall respectively attain majority (18) or complete his or her full time secondary education, whichever is the later, or further order, with credit to be given for all sums paid to heron their behalf since the said 1st day of January 1991.

4    The periodical payments referred to in paragraph 3 hereinabove shall be increased by 10% on the 1st day of May1992 and thereafter on the 1st day of May each subsequent year.

5    The periodical payments referred to in paragraph 3 hereof shall be reduced by the sum of HK$2,000.00 per child for each month (or a pro rata proportion if less than a month) that such child or children maybe at boarding school and or on holiday with the Respondent. The said sum of HK$2,000.00 shall likewise be adjusted upwards on 1st day of May 1992 and the 1st day of may in each subsequent year by 10%.

6.    Save and except for the provisions of paragraph 1 (ii) hereinabove which shall be subject to variation upon grounds being shown the terms of this Order shall be in full and final settlement of all claims that each party has for present and future ancillary relief against the other.

7.    Upon payment by the Respondent of all sums due under paragraph 1 of this Order, the Petitioner's claims for periodical payments, secured periodical payments, lump sum, transfer of property or variation of settlement orders do stand dismissed.

8.    There shall be liberty to apply as to the implementation of the terms of this Order

9.    That the arrangements for the children of the family as to their welfare namely (the 4 children) are declared to be satisfactory."

14. The judge ordered each party to bear his/her own costs in relation to the dissolution of the marriage and various other interlocutory applications. However, he ordered the husband to pay the wife's costs in respect of the ancillary relief hearing, failing agreement, such costs to be taxed in accordance with Legal Aid regulations, with a certificate for two Counsel.

15. I mention here that since September 1990 the wife has been legally aided. During the ancillary relief proceedings, she was represented, as she was before us, by leading counsel (Miss Jacqueline Leong). The husband also had the services of leading counsel in the lower court but he acted in person at the hearing of the appeal.

16. By bringing this appeal, the wife seeks orders from this court (in substitution for or in addition to those made by the judge) (a) that the husband pay the lump sum of $2,060,000 forthwith or by expedited instalments with interest upon any outstanding amount due at the rate applicable to judgment debts (b) that her husband make further provision for her by way of periodical payments until her remarriage or death and (c) that her husband pay the costs of all the proceedings in the court below in respect of which the judge ordered that each party should bear his/her own costs.

17. As regards the lump sum payment, we were told by Miss Leong that the first three instalments were paid by the due dates (they total $1,200,000). This leaves two instalments of $430,000 each to be paid respectively on or before the 15th April in the years 1993 and 1994. The husband has also paid the $5,000 per month due under condition (ii) of paragraph 1 of the judge's order. We were also told that the husband has, at the wife's request, voluntarily continued to pay her $5,000 per month from the date such payments were due to cease under the order (15th May 1992) until the first day of the hearing of this appeal. In addition, the husband has maintained the children in accordance with the terms of the order.

18. I think it is as well, early in this judgment, to advert to the proper approach of an appellate court in an appeal of the kind before us. I gratefully adopt what Balcombe L.J. had to say in Whiting v. Whiting [1988] 1 WLR 565 at p.575:

"     The principles upon which an appellate court will interfere with the exercise of a judicial discretion by a judge of first instance are well known.' The following passage from the judgment of Asquith L.J. in Bellenden '(formerly Satterthwaite) v. Satterthwaite [1948] 1 All E.R. 343, 345 was cited with approval by Lord Fraser of Tullybelton in G. v. G. (Minors: Custody Appeal) [1985] 1 W.L.R  647, 651-652:

'It is, or course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.'

In the same speech Lord Fraser also cited with approval the following passage from the speech of Lord Scarman in B. v. W. (Wardship: Appeal) [1979] 1 W.L.R. 1041, 1055:

'But at the end of the day the court may not intervene unless it is satisfied either that the judge exercised his discretion upon a wrong principle or that, the judge's decision being so plainly wrong, he must have exercised his discretion wrongly.'"

19. As Whiting itself shows, these principles apply as well to financial provision cases. A local case, applying the same principles is C. v. C. [1990] 2 HKLR 183, at p.187, per Hunter, J.A.

20. In view of the nature of this appeal and the grounds upon which it is based, it is necessary to review what the judge said in his judgment dated 20th June 1991 in some detail. After a brief introductory passage he indicated that he had disregarded any suggestions of relevant matrimonial conduct. He concluded that on the facts the present was not a case where a "fractional Wachtel-type approach" was desirable, for reasons which he gave. He explained that his approach would be to have regard to the approximate of each of the "matrimonial resources" under section 7(1)(a) of the Matrimonial Proceedings and Property Ordinance, Cap. 192 ("the Ordinance"). He would then apply the considerations in section 7(1)(g), but ultimately, he would have regard to all the matters in section 7.

21. The judge explained how he reached the figure of $37,000 as the present value of the husband's provident fund (from his employment with First Pacific). As regards the share options available to the husband by virtue of his employment, the judge put a net value of $200,000 upon the first option and $180,000 upon the second. The remaining options, he felt, were too far in the future to be considered under section 7(1)(a) of the Ordinance but their existence would be taken into account when section 7(1)(g) came to be applied.

22. The judge then gave these reasons for deciding to disregard altogether the discretionary family trust:

"     The Respondent, the Petitioner and their children are all beneficiaries under the Murphy Family Trust, a discretionary trust of which the trustee is Larrakeyah Investments Limited. It is assumed by all parties, and surely it must be right, that the Petitioner will never receive any income or capital from the Trust in future. The children's possible income from this source will be taken into account in fixing the maintenance payable by the Respondent for the children. But what of the Respondent? What is the value of his interest in the Trust?

    Upon reflection, I can disregard the Trust altogether. The Trust is discretionary. The Respondent has no control over the trustee. He has no lawful way of obtaining control of the trustee company or of influencing the selection of beneficiaries. When the Trust was formed 15 years ago, the Respondent had not yet come to Hong Kong, nor had he established his career. It was fitting that the Respondent and his siblings should be named amongst the possible beneficiaries of the Trust, to maintain flexibility if nothing else. As time goes by, the emphasis of such a Trust changes. I accept that the intention of the trustee is now to make provision for the settlor's grandchildren. That would be consistent with the original purpose of establishing the Trust: the legitimate avoidance of estate duties or similar taxes, by jumping a generation."

As to the family private investment companies (Cambuskenneth and Levuka) formed in 1960 for estate planning purposes and to minimise death duties, the judge, for reasons which he gave, accepted figures given by Price Waterhouse (in preference to those provided by Calabro) and assessed the present value of the husband's interests in the two companies at $1,422,000.

23. The judge noted that there was "less contention" about the remaining material assets: a car valued at $50,000; certain debentures valued at $30,000; securities in Hong Kong and Australia valued at $108,000, insurance polices with present surrender values of $51,000 and Golf Club debentures valued at $56,000.

24. As for currency and savings accounts deposits, if I understand the judge's figures correctly, he found the value of the credit balance to be $76,000.

25. The judge assessed the present net value of two family holiday homes as follows:

a.    the Phuket property: $1,231,000;

b.    the Val d'Isere property: $187,000.

He did not accept the wife's submissions that these properties were "extravagancies". Neither property was, in his view, an "utter waste" in the Martin v. Martin sense.

26. The judge put the assets and resources thus far referred to at $3.6 million, without seeking to be arithmetically precise. His judgment was on the assumption that the husband would waive business debts owed to him by the. wife of $386,000.

27. The judge found the husband's income from his employment as "a healthy" $103,500 per month, subject to annual review, plus a variable annual bonus, working out, on average, at about $30,000 per month. The judge went on to say this about the resources available to the husband:

"[He] has over the years had access to cheap 'family' money when he has needed it. That fund is not bottomless, of course, but there is a good prospect that his ability to tap that money will continue. With those earnings and access to borrowings, I have no doubt that the Respondent will be able to provide for his own reasonable requirements, even after the award embodied in this judgment."

28. Turning to the wife's needs, the judge observed basic requirement was that she should have for herself and the children. At present, the problem was solved because the husband's that her most accommodation accommodation housing allowance from his employer was split, so that flats were rented one for the wife and the children. This arrangement could not be relied upon to last very much longer. The wife had told the court that if she had to vacate the present flat, she would like to stay on in Hong Kong if she could afford it. Since it was not possible to say what the future might hold for her, it was better to adopt a fall-back position which assumed that the wife would have to house herself ultimately in her native country, Australia. Her evidence (and there was no other) was that a house of the required standard in Australia would cost her between $1.2 million and $1.5 million. The judge said that he would take a figure at the middle of the range, and assume that $1.5 million would be sufficient to house the wife and her children to the appropriate standard in Australia, and that such a sum would also cover the legal and other costs, extra furniture if necessary, and relocation costs. Whether the wife used that fund for housing directly or indirectly was up to her.

29. The judge went on to say that once the wife's accommodation was arranged or paid for, her remaining expenses (i.e., excluding expenses for and on behalf of the children) amounted to approximately $10,000 per month. Her expenses as described in her affirmation of 11th October 1990 were higher than that, but he felt that $10,000 should be sufficient for the future.

30. The judge then noted that the wife had an earning capacity as a trained nurse, possessing skills which seemed to be always and universally in demand. Moreover, since 1984 she had demonstrated an entrepreneurial potential. She had chosen to work when there was no economic necessity for her to do so, and when the children were younger and all of them at home. He expected the wife to earn an income.

31. In his view, the wife could well earn the full $10,000 she needed per month, but she might not be able to achieve that immediately, and in any event during the marriage she had never been expected to be entirely self-sufficient from her earnings. He concluded that she should now be responsible for 50% of her non-accommodation needs, which left $5,000 per month to be provided. The capital fund needed to produce that sum @ 8% p.a. was $750,000. The wife's earning capacity would improve as the years went by, there was therefore no need for a fund of $750,000 to be kept intact forever. In other words, part of the fund should be consumed for income purposes. A fund of $500,000 should, he felt, be sufficient for the purpose of supplementing the wife's earned income. That sum, when added to the value of the household items already possessed and the housing fund of $1,350,000, would allow the wife to be self-sufficient, on the clean break principle.

32. The judge then said that he would regard the sum of $70,000 already advanced to the wife as being on account of her entitlement. Disregarding the household items, the assessments so far would result in a figure of $1,780,000 and this would be adequate for the wife's reasonable requirements. The judge then asked himself whether that sum, was a fair and proper award for the wife:

".... in view of all the circumstances of the case (including - but not limited to - the approximate aggregate present net value of the resources, the standard of living of the parties during the marriage, the respective financial conduct of the parties, the Petitioner's contributions, both affirmative and negative, to the marriage, and the significance of lost benefits)".

33. The judge indicated that he felt it would be proper to allow for the fact that payment of part of the award would have to be deferred by augmenting the wife's entitlement by $300,000 "beyond her reasonable requirements", making a lump sum of $2,080,000 [It will have been seen that the total of the lump sum in the formal order has been adjusted to be $2,060,000].

34. The judge found that the husband was not able to pay the $2,060,000 immediately although he had "a rich variety of ways" in which to finance a programme of payments. He would leave the details to the husband while providing a framework for him to work within? He would also make some provision to give added protection to the wife.

35. On behalf of the wife, Miss Leong submitted that the husband had the means to pay the lump sum all in one or at least by earlier instalments. With the 15% increase of his salary after his first year with First Pacific, and his bonus, his total monthly income from him employment was $140,125 per month. It was also contended that the judge had ignored the husband's capital asset in the Phuket property, the equity of which was worth $1,231,000. Moreover, the value of the husband's share options had been conservatively estimated and there was no reason why the options which could have been exercised in the Septembers of the years 1992 and 1993 (while the lump sum instalments had not finally been paid off) should have been ignored. It was also suggested that the judge had paid insufficient regard to the husband's access to funds from the family companies and the family Trust. The husband and his brothers and sisters had had access to these funds for some years - the loans were interest free and of indeterminate length. We were taken through the evidence to show what property the husband had bought, and other expenses he had met, from these funds.

36. Miss Leong referred us to the proposals the husband had made before the hearing about what he should pay his wife, and when, in correspondence during the months of July and August 1990 which, she submitted, demonstrated his ability to pay the instalments ordered by the judge at an accelerated rate. In reaching the conclusion that the husband did not have the ability to make immediate payment [of the lump sum], the judge had overlooked the evidence provided by this correspondence.

37. It was further contended on behalf of the wife that if the judge's decision not to order the lump sum award to be paid in one sum could be justified, then interest should have been awarded on the unpaid instalments. The judge had made it clear that $500,000 of the capital sum was intended to be invested at 8% to form part of the wife's maintenance needs - this came to $3,333 per month. In view of the fact that she was not paid the first instalment of $400,000 until 15th January 1991 and she had to wait another year for the second instalment, she had not been able to generate the income by way of interest that had been intended for her.

38. As for the $1,350,000 for the house in Australia, she would not receive the full amount until May 1994 (she had to date received only 36% of the lump sum due to her under the order) and so she faced the risk of fluctuating property prices and fluctuating interest rates if she wished to raise a mortgage. It is argued that the judge should have ordered interest at say 8% to be paid until all the sums due had been paid.

39. In respect of the $1,350,000 awarded to the wife for the house in Australia, it was submitted for the wife that since the judge had selected the median figure of those put forward by the parties as being the appropriate sum to allow, and since neither figure put forward had taken into account the expenses mentioned by the judge (legal and other costs, extra furniture and relocation costs) and since these expenses were likely to be considerable, the judge should have allowed a higher figure - the one suggested by the wife.

40. I am quite unable to conclude that the judge erred in arriving at the figure he awarded. House prices and exchange rates go up and down. The judge's figure seems entirely reasonable and has not been falsified by events.

41. I do not accept that the judge has been shown to have erred in deciding, on the evidence and material before him, that the husband did not have the means to pay the total lump sum of $2,060,000 all at once. I can see no indication that he overlooked or misunderstood any of the evidence.

42. Nor do I accept that the valuation of the equity in the Phuket property was conservative "because it was out of date". Who can say with any certainty precisely what that property is worth?

43. It seems to me that the judge dealt with the value of the husband's share options in a practical and sensible way. I would observe, in passing, that the figures given to us by the husband, without objection, showed that if he had exercised the first three options when they vested and had sold the shares at the date of the hearing of this appeal, they would have realised $243,000, whereas the judge had assigned a value of $380,000 to the rights accorded by the first two options.

44. In my view, the judge's approach to the husband's access to the family funds, under the companies and the Trust cannot be faulted. I think he looked at the ralities of the position both in relation to the companies and to the Trust.

45. As to the submission that the husband's earlier proposals revealed his ability to pay the lump sum at an accelerate rate, in my judgment the husband was right to stress that his offer of the 18th July 1990 (extended to 25th July, the 28th July, 31st July and then to 10th August) was to provide $1.2 million inclusive of costs and not $2.06 million plus costs - it was an offer to pay in three instalments spread over eight months. The fact that he was prepared to raise and pay over the sum offered in that way and within that time frame does not mean that he remained in the same financial position after enormous costs (to which I will later refer) had been incurred.

46. On the matter of the interest which it is said should have been awarded on the unpaid instalments of the lump sum, in my view, as a matter of law, the court had no power to award interest. The statutory provision allowing such an award in England which was introduced in 1982 (section 23(6) of the Matrimonial Causes Act 1973) has no parallel in Hong Kong. Before the law was amended, applying legislation similar to that still in force in Hong Kong, in Preston v. Preston [1982] Fam 17, Brandon, L.J., as he then was (and Ormrod, L.J. agreed with him) said, at p.38:

"     So far as interest on instalments of the lump sum is concerned I am of opinion that the judge had no power to impose this additional liability on the husband in that form. The power to award a lump sum to a wife is entirely statutory, and is to be found in sub-ss (1)(c) and (3)(c) of s 23 of the 1973 Act. Nothing in those provisions can be construed as conferring on the court, expressly or impliedly, the power to order the payment of interest on instalments in respect of periods before they become due for payment, as the judge has seen fit to do in this case.

    The position is that, once any instalment falls due and remains unpaid, it is a judgment debt on which statutory interest is payable in the normal way. But, until any instalment becomes payable, the payment of interest on it cannot be awarded. It is right to point out however, that, in any case where payment of a lump sum by instalments over a period is ordered, the same result as the judge sought to achieve in this case can be achieved by increasing the total amount of the instalments so payable. The use of this method of achieving the end desired is in any case preferable, since, if the additional sums to be paid were to be paid in the form of interest, the wife would be liable to pay tax on such interest."

47. The judge was obviously aware of the disadvantage to the wife that the lump sum was not to be paid at once and in one sum because the $300,000 "boost" was partially to compensate her for that fact as was the $5,000 allowance per month payable while any part of the first $1,200,000 of the lump sum remained outstanding.

48. By her notice of appeal, the wife complains of that part of the costs order made by the judge whereby he ordered each party to bear his/her own costs in respect of the petition and of various applications. The following is a summary of the conclusions and findings in his judgment of 29th June 1991:

(a)    since the decree nisi had been granted on both of the grounds presented to the court, and both parties had been successful, each party should bear its own costs arising from the dissolution of the marriage. The same ruling would apply to the consent order made on September 5th 1990 (by Judge Rattigan, in effect, giving discretions for the conduct of the proceedings) and the consent order made on 28th September 1990 (by Deputy Judge  Beeson, as she then was) allowing the petition to be amended);

(b)     he did not accept that the husband's offer in his letter of 21st October 1989 was a package deal, incapable of negotiation as to its parts. The delay between that letter and 11th August 1990 was attributable to the wife. She was perhaps fortunate that the husband had not pressed for payment of his costs in that period. In one sense, however, the wife had paid for her delays, for if she had accepted the husband's suggestion at once, in October 1989, she would very probably have had her costs on the divorce paid by the husband. She could have accepted the husband's suggestion at any time, even though he had launched a cross-petition. His letter of 30th January 1990 made it clear that the deal could have been resurrected;

(c)     as to the summons for ouster (dated 31st August 1990) taken out by the husband (which the judge dismissed), the wife had argued that she should have the costs as the issue of the summons was an unjustifiable response to her return to the matrimonial home. However, her action was sudden and unexpected. There would be no order for costs;

(d)    in respect of issues concerning the children (custody, care and control, and access) both parties had done no more than was to be expected of a concerned parent who had the interests of the children at heart. At times, the wife had claimed to be acting in the interests of the children when such was not the case. But that did not mean that she had done anything contrary to the interests of the children. There would be no order for costs in relation to the summonses dated 20th August, 23rd August and  28th September, 1990.

49. There is no cross-appeal about the judge's order regarding the costs of the ancillary relief hearing in the wife's favour and therefore there is no need to state the judge's reasoning about that aspect of his order.

50. As Miss Leong recognised, the court has a very wide discretion over the award of costs, and an appellate court is very slow to interfere, particularly where, as here, the judge has given careful reasons for his decision. Of course, there must be a genuine exercise of discretion and not a blind adherence to a supposed general rule. Miss Leong submitted that the judge's decision had beenbased on a misapprehension of the facts and the evidence. I mean no disrespect when I content myself by saying that a review of the evidence and material before the judge against counsel's detailed skeleton submissions on this point renders it impossible for me to hold that the judge's discretion was wrongly exercised.

51. In relation to costs, another complaint made on behalf of the wife is that in making the financial provision order appealed against, the judge failed to consider the impact of costs upon his award. Nor had the judge, counsel submitted, taken into account the effect of the statutory charge for which provision is made by section 18A of the Legal Aid Ordinance, Cap. 91.

52. Miss Leong accepted that the court was not given full details relating to the statutory charge in this case, but pointed out that the judge did know that the wife was legally aided and therefore should have realised that even if costs were awarded in the wife's favour, the difference between party and party taxation and her actual costs (following legal aid taxation) would be subject to the statutory charge.

53. The position about the statutory legal aid charge is this. As we know, so far, the husband has paid the first three instalments of $400,000 each. The Director of Legal Aid has released to the wife $30,000 of each of the first two instalments, retaining the balance, and has released the whole of the third instalment. Thus out of a total of $1,200,000 he has kept back $740,000 and released $460,000.

54. We were told that the wife has $72,500 costs to pay (incurred when she was privately represented) and about $36,000 to pay (incurred while she was legally aided) totalling $108,500.

55. As for the husband, who had to pay his wife's costs in the ancillary relief proceedings, agreement has been reached with the Legal Aid Department that he pays $338,000 in respect of his wife's party and party costs. He tells us that, in addition, he owes over $500,000 for his own costs. He let it be known that he was appearing unrepresented because he simply could not afford lawyers any more.

56. It seems plain to me that the judge was not informed in sufficient detail as to the costs already incurred, and those likely to be incurred by the parties. I do not think it is enough' simply for the judge to be aware that a party is legally aided. It seems to me that he should be addressed by counsel about the likely amount of the statutory charge and its possible impact. In this case, could the judge possibly have appreciated that as much as $740,000 would be retained from the amount due to the wife on account of the statutory charge? I doubt it. Moreover, the judge was unlikely to have realised that the husband would be facing such a huge bill for his legal costs. Perhaps, if anyone has cause to complain about the judge's lack of information about the likely incidence of costs in this case, it is the husband.

57. I would not vary any part of the judge's order on account of any alleged failure by him to have regard to the impact of costs under the legal aid scheme or otherwise on the arrangements he had in mind.

58. I now turn to the final and perhaps most important part of this appeal. At the conclusion of the six-day ancillary relief hearing, on behalf of the wife it was stated that she was agreeable to the husband's proposal that there should be a clean break provided she received half the capital assets which she put at between about $13,200,000 and $14,500,000. In his judgment of 29th June 1991 the judge described these claims as "fanciful". The husband had proposed to give his wife approximately half of $2,900,000. It there was to be no clean break, the wife suggested, she should be given not less than one third of the capital and. one third of the income.

59. Of course, as several cases recognise, the object of ordering a clean break cannot fully be achieved if there are children of the family in view of the continuing parental responsibility of both spouses and the need for them to co-operate with each other in making suitable arrangements for the children. However, there will be cases where the court feels that there should be a financial clean break as between husband and wife, assuming that proper financial provision is also made for the children.

60. I will interpolate here that I am not able to accept the proposition that the judge assessed the wife's reasonable needs on the basis solely of her immediate financial requirements so that these became determinative of her claim. The whole tenor of the judgment suggests otherwise. It is, in my view, impossible to read the judgment as a whole and reach the conclusion that the judge was paying mere lip-service to all the requirements of section 7(1) of the Ordinance when he made express reference to them on pages 4 and 13 of his 20th June 1991 judgment.

61. The wife does not, by her appeal, challenge the judge's assessment of $3.6 million as the value of the family's capital assets but contends that in view of its size and the share she was awarded, periodical payments as well should have been awarded in her favour.

62. In the context of the division of the capital assets, the figures show that the wife's share was approximately 578 and, notionally, even more when the $386,000 business debt not claimed by the husband is taken into account as it should be out of fairness to him.

63. It is, of course, not right to address the matters raised by this appeal without appreciating the extent of the financial obligations assumed by the husband in relation to the maintenance and education of the children of the family and the comfortable life he has arranged for them. Nor can the fact be ignored that the wife has been living rent free in a flat in Tregunter Mansions and will continue to do so until April 1993 by which time, as the husband points out, she will have received $1.63 million in cash. It must also be very helpful to the wife that the husband provides a car to take the two children still in Hong Kong to and from school every day and that she has the full-time services of a maid also provided for her.

64. In considering the overall assets of the family and therefore the means at the disposal of the husband to make the periodical payments sought by this appeal, it is contended, for one reason or another, that various items of the husband's expenditure cannot legitimately be allowed to affect the wife's entitlement. I will refer only to some of them.

65. It is argued on the wife's behalf that, contrary to the judge's finding, the purchase of the Val d'Isere property was an utter waste so that on the principles applied in Martinv. Martin [1976] Fam 335, the $9,000 per month the husband pays for the mortgage on the property should be ignored as an expense reducing the husband's capacity to make appropriate provision for his wife. Miss Leong emphasised that this property was bought after the commencement of the present proceedings and without prior consultation with the wife or her solicitors. She submitted that the value to the family of the property was very little indeed; the purchase was completely unnecessary and although there might well be prospects of capital appreciation (a factor taken into account by the judge) the husband had unnecessarily committed part of his income.

66. The rationale upon which the relevant part of the decision in Martin v. Martin is founded is that where a spouse has acted recklessly or has frittered away part of the financial resources of the family, the court will, if and to the extent that it is possible, ensure that the other party does not suffer as a result of such financial misconduct (see the observations of Cairns, L.J. in Martin v. Martin, at p.342)

67. The judge had all the relevant evidence before him. It is clear that he had the principles to be applied well in mind and gave reasons for rejecting the wife's submissions relating (at the hearing) both the phuket and the Val d'Isere properties. In my view, this court is not entitled to disturb his finding. Surely it can only be in the plainest cases that a claim of this kind by an aggrieved spouse can be maintained. I permit myself to ask whether it was such a bad idea for this family to have a stake, however small, in a property in a pleasant part of Europe.

68. It is clear that the children's extra curricular activities must keep changing as they get older and embrace different interests. I think it would be quite wrong to assume that the expenses of these activities met by the husband have necessarily diminished. As for the husband's club expenses, there can be no doubt that two of them provide facilities for the children which they must greatly value and are much sought after in crowded Hong Kong.

69. The learned judge had the benefit of very full and able submissions from Miss Leong on behalf of the wife, as we have had, and for which I express my appreciation. The judge obviously dealt with these proceedings (sadly conducted, and I blame no one, with great acrimony and bitterness) with anxious care. He gave full consideration to all the matters raised and argued before him, and supplied cogent reasons for all his findings and decisions.

70. This was not an easy case. But in my judgment it has not been demonstrated that the judge failed to make a fair and just award to the wife in all the circumstances, at the end of this 18 year marriage. Certainly, I have not been persuaded that grounds have been shown which would entitle this court to intervene.

71. For these reasons I would dismiss this appeal.

Mayo, J.:

72. I have had the advantage of seeing the judgment of the learned Vice-President.

73. I am in entire agreement with the views he has expressed.

74. This is a difficult case. The main argument being advanced by Miss Leong was that one way or another the wife should have received far more than was awarded to her by the learned judge.

75. She emphasised the very high salary being received by the husband and the fact that this enabled him to enjoy a very luxurious life style. This needed to be contrasted with the financial situation of the wife. Even proceeding upon the assumption that the wife would be able to buy a house from the capital sums ordered by the judge it was still manifestly the case that she would be unable to enjoy a life style in any way comparable with that enjoyed by the husband.

76. At first glance there would appear to be considerable merit in this contention. On more detailed examination this criticism cannot in my view be sustained.

77. It overlooks a number of the realities of the husband's financial position. My Lord the Vice-President has already commented at some length on the either illusory or nebulous nature of some of the husbands assets. The learned judge was almost certainly right in adopting the approach he did to the husband's Family Trusts and his future entitlements from his employer. So far as the Trusts were concerned there could be no certainty that the husband would definitely be a substantial beneficiary under the Trusts in the foreseeable future.

78. As to his entitlements from his present employer there was also a large measure of uncertainty. There was no certainty that he would in fact receive comparable bonuses to those he received in the past. Also the value of the option to purchase shares in the Company would be entirely dependent upon the price of shares in the Company when the time came to exercise the options. It was by no means certain that the exercise of these options would result in the husband receiving the sort of sums of money which had been referred to by the wife.

79. The other substantial asset in this connection which had been referred to by the wife was the amounts which would be receivable under the husband's Provident Fund. The important point to be borne in mind in connection with this asset was the necessity for the husband to serve the Company for a protracted period of time before substantial amounts would become payable to him. Having regard to the particular situation of the husband, and perhaps more importantly the uncertainty in the future of Companies carrying on business in Hong Kong, the learned judge certainly had good reason to exercise a measure of caution in attaching substantial values to these assets.

80. The next matter I would refer to in relation to the husband's financial position is the fact that in addition to paying a large part of the wife's legal costs he also has to pay his own. These apparently will amount to a sum in excess of $500,000.

81. Undoubtedly significant appropriations will have to be made from the husband's income to fund these payments. It also needs to be borne in mind that the husband has agreed to defray substantial expenses in respect of the 4 children and that these expenses will continue to be incurred over a number of years as the children are still young.

82. Having made some observations concerning the husband's financial position it would now seem to be appropriate to make comment upon the wife's position.

83. I do not consider it to be realistic to simply confine attention to the relatively small amount received by the wife in isolation to the overall context of the situation.

84. Prior to the hearing before the learned judge it had been agreed by the parties that the husband had paid to the wife $70,000 to enable her to set up home with the party cited at accommodation at Castle Steps. The husband had also paid to the wife $386,000 in relation to her business Wicker Express. I have no doubt that the learned judge would have been mindful of these payments when assessing the appropriate amount of the capital sum to be paid to the wife.

85. I consider that these payments are quite substantial in the context of the limited capital assets which were available for distribution between the husband and wife. When these payments are considered in conjunction with the additional payments ordered by the judge to "top up" the amount to be received by the wife I do not think that the judge can properly be faulted in the exercise of his discretion.

86. It is fairly clear from the learned judge's judgment that it was in his contemplation that the wife would in due course be returning to Australia. If credit is given to her earning capacity and the capital payments she has received from the husband it is likely that she will be able to enjoy a fairly high standard of living.

87. The important matter for a Court of Appeal is not to just consider the amount which it considers might be appropriate. It has to decide in accordance with the principles referred to in Whiting whether the judge has exercised the discretion reposed in him in an incorrect manner or that he is plainly wrong. I do not think that the wife has been able to establish this. I, too, would dismiss this appeal.

Godfrey, J.:

88. I have had the advantage of reading in draft the judgment of my Lord Mr. Justice Fuad V.P. I agree with it; and for the reasons he gives I too would dismiss this appeal.

89. The judge fell into no error of principle; indeed I did not understand the wife's counsel to suggest that she did. If I am wrong, then I have to say that at the end of her argument I was left for myself with no idea as to what (if any) the principle was which it was said the judge had failed to follow. Nor was the judge plainly wrong; by which I mean so wrong as to affront reason, and thus compel this court to interfere.

90. It is the function of this court to correct any error of principle made by the judge. And it is the function of this court to interfere when it is satisfied that the judge's decision was plainly wrong, so that he must have exercised his discretion wrongly.

91. But it is certainly not the function of this court to afford a second bite at the cherry to a wife (it will the judge structured if this usually be the wife) who as in this case believes should have given her rather more, or should have rather differently what he did give her; not even court agrees with her.

92. In fact, as my Lord the Vice-President has pointed out, the judge awarded the wife here some 57% of the family's capital assets. This was surely a generous award, not a stingy one. I would not myself have been inclined to award the wife more, though I might have been disposed to reduce the capital provision and to have made some modest increase in the income provision if I had felt entitled to interfere with the judge's award, which, for the reasons I have given I certainly do not.

Fuad, V.-P.:

93. In handing down these judgments dismissing this appeal, we make an order nisi that the husband shall have his costs (including the costs of the wife's application for leave to appeal) and that there be legal aid taxation of the wife's own costs.