BCJ v. RCS

FCMC 14020 /2017

[2021] HKFC 180

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 14020 OF 2017

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____________________

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

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Background

1.  This is the trial of the parties’ claim for ancillary relief.

2.  The parties were married in 2010 in Hong Kong. The Petitioner Husband (‘H’) is an airline pilot and the Respondent Wife (‘W’) was a manager and a director of her 50% owned business (‘SLAC’), a start-up company supplying baby and children products online. There are two children of the family (the ‘Children’). The older boy was born in November 2010 and the younger boy was born in September 2012. According to the separation agreement dated 21 June 2016 signed by the parties, the parties were separated in June 2016. H petitioned for divorce on behaviour on 27 October 2017. Both parties have re-partnered since separation.

3.  The parties have been entangled in protracted interlocutory applications and numerous disputes on children as well as finance since the commencement of these proceedings.

4.  On 13 February 2018, upon H’s ex-parte application and upon W’s undertaking not to molest the Children, the domestic helper and H, by consent it was ordered that interim care and control be granted to H with alternate day access to W, and H do pay W interim-interim maintenance at HK$30,000 per month until further order. On 10 May 2018, upon the parties agreeing that they do receive HK$100,000 per month each for legal costs from the monies held by H’s then solicitors until further order or agreement, and that H do continue paying all children expenses, by consent it was ordered that by way of interim maintenance (‘MPS’) H do pay W HK$35,000 on 10 May 2018 and thereafter HK$60,000 per month from 1 June 2018 until further order. The Decree Nisi was granted on 20 June 2018. By Recital D of the order made by HHJ Molley on 24 January 2019, H undertook that he would not seek to vary the order dated 10 May 2018 in respect of the MPS of HK$60,000 per month.

5.  Since around the end of 2019, H has been paying less than what is required under the MPS. By the summons dated 6 February 2020, H applied for the variation down of the MPS. By an injunction order made by Deputy District Judge D To dated 14 April 2020, it was ordered that H be restrained from dealing with a company (‘BR LLC’) controlled by H and three properties held by that company and situated in the US (the ‘US Properties’). By the summons dated 15 April 2020, H applied for the leave that he be released from his undertaking dated 24 January 2019.

6.  By the consent order made by HHJ Molley on 27 April 2020, joint custody and shared care and control of the Children were granted to the parties.

7.  Financial Disputes Resolution hearings were held before HHJ Melloy on 14 October 2019, 25 November 2019 and 27 April 2020 respectively and were unfortunately unsuccessful.

8.  W took out the summons dated 4 May 2020 for leave to temporarily remove the children to Melbourne as soon as she was given leave until the reopening of the children’s school in Hong Kong for the Autumn term on the proviso that the school was operating in person rather than by remote learning. By the order made by HHJ K.K. Pang on 18 June 2020, it was ordered that W’s summons dated 4 May 2020 be dismissed with costs reserved.

9.  By the order made by HHJ K.K. Pang on 21 May 2020, it was ordered that the question of ancillary relief be set down for trial before Deputy District Judge Thelma Kwan commencing on 17 November 2020, with 18 to 20 November 2020 reserved and the pre-trial-review (‘PTR’) hearing be held on 5 October 2020, and that the hearing of H’s summonses dated 6 February 2020 and 15 April 2020 be adjourned sine die.

10.  By the summons dated 28 August 2020, H applied for the discharge of the paragraph 1 of the injunction order made by Deputy District Judge D. To on 14 April 2020 so that he would be allowed to put the US Properties on the market for sale. On the same day, he filed his 15^th Affirmation in support of the above application. On 9 September 2020, it was ordered that the hearing of the summons dated 28 August 2020 be adjourned to 16 October 2020 for argument.

11.  On 23 September 2020, W filed her 13^th Affidavit in opposition of the above application.

12.  The Memorandum of Notification of W’s Application for Legal Aid was lodged with the court on 24 September 2020 and accordingly these proceedings were automatically stayed until 4 November 2020. By the order made by HHJ K.K. Pang dated 29 September 2020, it was ordered that the PTR hearing dated 5 October 2020 being a milestone date be proceeded as scheduled and the adjourned hearing dated 16 October 2020 be vacated and adjourned to a date to be fixed.

13.  On 12 November 2020, W filed the Notice to Act in Person.

14.  On 13 November 2020, H filed the Notice to Act in Person.

15.  On 16 November 2020, H filed his 17th Affirmation being the narrative affirmation in relation to ancillary relief.

16.  W was reportedly collapsed in the morning on 17 November 2020 and was sent to the Accident and Emergency Department of a hospital. The trial before Deputy District Judge Thelma Kwan was consequently fallen through. By the order made by Deputy District Judge Thelma Kwan on 17 November 2020, it was ordered that leave be granted to H to restore two summonses respectively dated 6 February 2020 and 15 April 2020 and PTR (Ancillary Relief) be held on 15 January 2021. On 20 November 2020, H filed his 18^th Affirmation in furtherance of the summons dated 28 August 2020.

17.  Apart from ongoing disputes on ancillary relief, the parties continue having sharp disagreements on access. By ex-parte summons on notice dated 16 December 2020, W applied for further directions on access. By the order made by HHJ K.K. Pang on 17 December 2020, it was directed that Child Disputes Resolution hearing be fixed to take place on 30 April 2020 and an updated Social Welfare Report on access be called for.

18.  By the order made by HHJ K.K. Pang on 15 January 2021, it was ordered that the question of ancillary relief and H’s summonses dated 6 February 2020 and 15 April 2020 be set down for trial together commencing on 7 July 2021, with 8 to 9 July 2021 reserved, and PTR hearing be held on 26 April 2021, and that the summons dated 28 August 2020 be disposed of by way of paper disposal. W filed her 15^th Affidavit on 20 January 2021 and H filed his 19^th Affirmation on 16 February 2021.

19.  On 18 February 2021, both parties sent letters to the court requesting urgent hearings on access. By the summons dated 7 April 2021, H made another application for directions on access.

20.  By the order made by HHJ K.K. Pang on 1 March 2021, it was ordered that H’s summons dated 28 August 2020 be dismissed.

21.  On 30 April 2021, by consent it was ordered that access as provided by the consent order dated 27 April 2020 remain unchanged, save that modest changes were made in regard to the parties’ access on Christmas holiday, Easter holiday, Mother’s day, Father’s day and the Children’s birthday.

22.  By the summons dated 30 April 2021, W made an application for leave to remove the Children permanently from Hong Kong to Sydney, Australia after their school mid-term break, leaving Hong Kong between 1 to 10 November 2021, subject to flight availability. Given that the parties professed that they were in dire financial situation, W proposed to relocate the Children to live with her in Australia. By the order made by HHJ K.K. Pang dated 23 July 2021, it was directed that W’s summons dated 30 April 2021 be set down for trial commencing on 22 February 2022, with 23 and 24 February 2022 reserved and that PTR be held on 3 January 2022.

H’s case and open proposal

23.  H said: -

a.  W knowingly obstructed H’s access with the intent to cause distress and harm to him.

b.  W refused to contribute fairly towards family expenses during marriage.

c.  The valuation and genuineness of W’s sale of her 50% share in SLAC in January 2021, that SLAC made no repayment of W’s loan to the company, were questionable.

d.  The valuation of the three US Properties were USD212,763, USD210,043 and UDS216,911 respectively.

e.  W lived a wasteful lifestyle and at the same time refused to make frank disclosure of her means and income.

f.  His current salary was less than half of what he earned pre-Covid. No way that he could afford the current MPS figure.

g.  H did not have the support of a wealthy partner as W alleged.

24.  H proposed that: -

a.  There be a claw back of HK$1.6 million of family funds used and paid back to W through her improper conduct during the purchase, sale and valuation of SLAC;

b.  There be a deduction of overpayment of MPS by HK$20,000 per month;

c.  There be a 100% deduction for the value of his Australian superannuation;

d.  There be a 50% deduction for the current value of his CPAPF provident fund;

e.  There be no spousal support;

f.  There be a level of Children’s maintenance order that considers his current income and significant debts, that W should be earning by now;

g.  Any liabilities be for each party’s account;

h.  Any legal fee liabilities be mutualized with any remainder being for each party’s own account;

i.  An opportunity to retain BR LLC and the US Properties by refinancing or seeking investment in the company;

j.  There be an order for balancing cash payment be made for settlement with assets to remain in respective parties’ names.

W’s case and open proposal

25.  W said: -

(1) W did not have undisclosed means or assets.

(2) W rejected H’s queries about the purchase and sell of her 50% share in SLAC.

(3) W strongly believed that H had the financial support of a wealthy partner.

(4) She was willing to work but she was unable to get work in Hong Kong, though she was offered a full time job in Australia. To live in Hong Kong and she could not secure a job, H would need to maintain nothing less than current level of maintenance whilst she tried to establish herself independently.

(5) She needed H to continue supporting the Children, including schooling, medical and travel.

(6) The parties were not separated in June 2016.

26.  W proposed that: -

(1) The US Properties be sold and the sale proceeds added to the family pot;

(2) The 1973 Royal Enfield Bullet 350 and 2018 Volkswagen Tiguan be sold and the proceeds of sale of the same and the 1983 Mercedes 280SL that was already sold be added to the family pot;

(3) The 1956 Airstream Overlander Trailer be transferred to W;

(4) The Conduit Road property be considered an asset that she brought into the marriage;

(5) The Mui Wo property be considered non-family money for the two years prior to their marriage;

(6) None of the proceeds of the sale of SLAC be taken into account as the sale took place after the parties’ separation;

(7) The two Breitling watchesbe held for the Children until the age of 18 as previously agreed between the parties and one to be kept by W and one to be kept by H for each child until the ages of 18;

(8) The 2013 BMW X3 be remained with W and be taken into account as a family asset for the split;

(9) All liabilities be taken into account;

(10) Once all assets are valued and sold the amount be deemed as family funds be split on 60/40 basis with 60% to W;

(11) Child support to be HK$15,000 per month per child with 2% yearly increase until each child reaches the age of 18;

(12) Spousal support of HK$20,000 per month for a maximum 12-month period;

(13) MPS be remained at HK$60,000 per month until final settlement;

(14) 60/40 split was fair considering H would keep most of his CPAPF provident fund and Australian superannuation.

Applicable legal principles

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

6A. Orders for sale of property

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

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

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

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

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

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

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

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

28.  Section 5 of the MPPO provides that the Family Court may make any one or more of an order for periodical payments, secured periodical payments, lump sum payment, secured lump sum payment for the benefit of the children of the family.

29.  Section 7 of the MPPO provides that: -

“(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.”

30.  In LKW v DD (2010) 13 HKCFAR 537, the Court of Final Appeal sets out the steps to be taken by the courts in undertaking a s 7 exercise.  They are:

(i)    The ascertainment of the financial resources of the parties (paragraphs 71 to 73 of the Judgment);

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

(iii)   If surplus assets would remain after the parties’ needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division (paragraphs 80 to 82 of the Judgment);

(iv)   In considering whether good reasons exist for departing from equal division, factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations (paragraphs 83 to 130 of the Judgment);

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

My view

Ascertainment of the parties’ financial resources

31.  According to W’s Form E dated 12 September 2019, the total value of her assets was HK$692,019.22, including HK$37,219.22 in banks, personal items including a 2013 BMW X3, an engagement ring, 1956 Airstream Overlander Trailer totally HK$654,800, Breitling watch of unknown value, life insurance policy of unknown value, Australian superannuation of unknown value, 50% holding of SLAC of unknown value. She had liabilities of HK$1,893,487.75. Apart from the above, a sum of was HK$334,817 held on account by her solicitors for her therapy and the children’s therapy,

32.  According to H’s Form E dated 24 September 2019, the total value of his assets was HK$8,897,234 including value of the US Properties of HK$4,744,101, HK$213,912 in banks, stocks of HK$78,665, valuable personal items including a 1985 Mercedes Benz 280SL, a 1956 Airstream Overlander Trailer, a 1973 Royal Enfield Bullet 350, a 2018 Volkswagen Tiguan, two Breitling watches valued at HK$467,603, an Australian superannuation of HK$209,189, CPAPF provident fund of HK$3,183,764 and life insurance policies of unknown value, and he had liabilities of HK$1,172,390.

33.  According to H’s Form E dated 13 November 2020, the total value of his assets was HK$8,847,423 including the US Properties of HK$4,959,419, HK$141,068.33 in banks, valuable personal items including a 1956 Airstream Overlander Trailer, 1973 Royal Enfield Bullet 350, 2018 Volkswagen Tiguan totally HK$320,900, Australian superannuation as of 11 November 2020 HK$242,272, CPAPF provident fund as of 13 September 2019 HK$3,183,764 and life insurance policies of unknown value. He had liabilities of HK$1,540,668.

34.  According to H’s updated Form E dated 2 July 2021, the value of his assets was reduced to HK$7,623,460 including the US properties of HK$3,819,791, HK$70,299 in banks, valuable personal items including a 1956 Airstream Overlander Trailer, 1973 Royal Enfield Bullet 350, 2018 Volkswagen Tiguan totally HK$300,900, Australian superannuation as of 11 November 2020 of HK$248,706 (AUD42,880), CPAPF provident fund as of 13 September 2019 of HK$3,183,764 and life insurance policies of unknown value. He had liabilities of HK$1,397,650. The value of his Australian superannuation as of 22 July 2021 was HK$265,256,97 (AUD47,198.75 X 5.62) and CPAPF provident fund as of 31 December 2020 was HK$4,142,796.83.

35.  According to W’s updated Form E dated 13 January 2021, the total value of her assets was HK$660,390.65, including HK$390.65 in banks, a 2013 BMW X3 of HK$100,000 and the net sale proceeds of 50% holding of SLAC estimated at approximately HK$560,000 to HK$580,000. She had liabilities of HK$3,285,133.68.

36.  By the Order dated 21 May 2020, expert directions were given for the valuation of SLAC. By the Order dated 29 July 2020, directions for a new timetable for the appointment of a single joint expert and the valuation of SLAC were given. Despite that the parties take issue over the value of W’s 50% interest in SLAC, neither party has taken any step for the valuation of SLAC.

37.  W purchased 50% share in SLAC for HK$1,600,000 in or about 2016, and she and her partner sold SLAC for HK$2,800,000 in January 2021. W said her net position as 50% owner after the sale was likely to be approximately HK$560,000 to HK$580,000. H disapproved W’s purchase and the subsequent sale of her interests in SLAC. He said her valuation of SLAC and genuineness of the sale were questionable. In his 17^th Affirmation, H proposed the valuation of SLAC to be at least HK$8 million, with W’s 50% share considered at not less than HK$4 million. He queried why SLAC made no repayment of the W’s director’s loan. H said W used SLAC as a vehicle to absorb family cash investment and create personal liabilities, only to be redistributed to W at a later date.

38.  W said, after she left the job that she was in for 17 years in or about 2015, she became involved in SLAC so as to look for other ways to earn money. However, the stress, the strain, the trauma of the ongoing litigation put her in a position that she was unable to concentrate on properly working. W said that business expenses that came through her credit card were reimbursed. W said, in the summer of 2020, W and her partner decided to look to sell SLAC for the following reasons: -

(1) The business was extremely inventory intensive, and as a result constantly suffered from cash flow issue that became worse the more the business grew;

(2) The cash flow shortage meant that they were unable to pay themselves fixed salaries, something that was causing immense personal problems;

(3) They tried to raise capital. However, they were unable to commit the necessary time to do this given that she was running the business day to day with a skeleton staff and W was too preoccupied by her divorce proceedings to contribute;

(4) W became more and more concerned about not being able to pay her lawyers’ fees and was keen to liquidate SLAC’s assets.

39.  W and her partner received three different offers to purchase and they chose the highest bidder. W said that the way that the buyer assessed what the company was worth was by how much profit SLAC actually made, and even though the company had pretty good turnover but the profit margin was terrible, and that was why they chose the company that eventually bought SLAC as well as the fact that they offered them the best price was because they were a distributer of baby goods in Hong Kong, so it meant that they would be able to take on the company and actually to make the bigger margins that everyone always wanted and to make it a viable business to continue. W produced the Audited Accounts of SLAC from 2016 to 2020 and the calculation of how she arrived the estimate of her net position as 50% owner after the sale to be approximately HK$560,000 to HK$580,000.[1]

40.  I take the view that W’s evidence in the above is plausible and hold that: -

(1) W’s purchase of 50% interest in SLAC is a positive move for her to look for other ways to earn money;

(2) The sale and valuation of SLAC is genuine;

(3) In view of SLAC’s cash flow shortage, it is conceivable that the company was unable to remit the directors’ loan.

41.  Accordingly, I do not agree that W used SLAC as a vehicle to absorb family cash investment and create personal liabilities and reject that there be a claw back of HK$1.6 million.

42.  Inasmuch as W’s purchase of the 50% interest in SLAC was funded by family money, I see no reason why the net proceedings of the sale of her 50% interest in SLAC should not be counted in the matrimonial pot.

43.  It is not in dispute that the US Properties are part of the matrimonial pot. H valued BR LLC at HK$3,819,791, to be arrived by the rateable value of the US Properties HK$4,989,791 less the liabilities and costs of sale estimated at HK$1,170,000. By the Order dated 21 May 2020, expert directions were given for the valuation of BR LLC and the US Properties. By the Order dated 29 July 2020, directions for a new timetable for the appointment of a single joint expert and the valuation of BR LLC and the US Properties were given. Despite that the parties have not been able to reach an agreement over the value of BR LLC and the US Properties, neither party has taken any step for the valuation of BR LLC and the US Properties. In the circumstance, I am prepared to adopt the rateable value as market value of the US Properties. H set out his calculation of the liabilities and costs of sale in the Form E dated 2 July 2021. In view of the parties’ disagreement, however, I consider that an account will need to be taken in order to ascertain the liabilities and costs of sale upon the completion of the sale of the US Properties, if and when an order for sale is eventually granted and executed.

44.  I accept that H’s Australian superannuation, to which all contributions were made before the parties’ marriage, should not be counted in the matrimonial pot.

45.  I accept that there be a deduction for the value of his CPAPF provident fund contributions made prior to marriage and after separation, i.e. around 50% of the current value of the fund being HK$4,142,796.83 ÷ 2 = HK$2,071,398.41.

46.  Neither party has taken issue on the value of the other party’s insurance policies or W’s Australian superannuation. As the value of the life insurance policies and W’s Australian superannuation is unknown, I do not count the same in the matrimonial pot.

47.  As neither party has sought to adduce evidence on the current value of the parties’ valuable personal items, including a ring, several vehicles and two Breitling watches, I adopt their values as shown in the parties’ Form E.

48.  He complained that W kept her salary offshore in Australia during the marriage, that W unilaterally withdrew around HK$639,800 from the family funds, including AUD44,000 from the joint ANZ account to her ANZ account in April 2014 and HK$400,000 from H’s HSBC account to her brother’s account in April 2017. He said money was shuffled to W’s family members as it was allegedly unaccounted for and his requests for W’s ANZ bank account statement were ignored. W sworn that she did not have secret bank accounts in Australia. She clarified that her ANZ account was laid dormant and was closed a long time ago. So no account statement was produced. She vigorously denied that she had undisclosed means and assets. After having carefully considered all evidence, I find that W’s testimony is not inherently implausible, or in any material way contradicted by other evidence that is undisputed or indisputable. Accordingly, I do not accept that W has unclosed means or assets.

49.  In the premises, the matrimonial pot consists of: -

(a)     Under H – HK$7,432,388.4 including the value of the US Properties of HK$4,989,791 (liabilities and costs of sale not acertained), HK$70,299 in bank accounts, valuable personal items valued at HK$300,900, 50% of CPAPF provident fund as of 31 December 2020 at HK$2,071,398.4;

(b)    Under W – HK$660,390.65, including HK$390.65 in bank accounts, a 2013 BMW X3 at HK$100,000 and the net sale proceeds of 50% holding of SLAC at approximately HK$560,000 to HK$580,000.

Assessment of the parties’ financial needs

50.  As the MPS of HK$60,000 per month was agreed between the parties at a time when his basic salary was around double what it is now, H said the MPS of HK$60,000 per month was clearly unsustainable and would have to be significantly reduced.

51.  According to H’s Form E dated 24 September 2019, his income was HK$243,722 per month and the monthly expenses were HK$444,956 including general expenses of HK$161,684 per month, personal expenses of HK$228,184 per month and children expenses of HK$55,088 per month. According to the Form E dated 13 November 2020, his income was HK$144,749 per month plus housing allowance of HK$88,200 per month and in addition he had HK$13,720 per month of rental income from the US properties. The monthly expenses were HK$202,451 including general expenses of HK$47,184 per month (rent of HK$88,200 per month paid directly by employer), personal expenses of HK$116,180 per month (including the MPS of HK$60,000 per month) and Children expenses of HK$39,087 per month. According to the Form E dated 2 July 2021, his average total income was HK$90,986 per month (excluding housing allowance of HK$68,000 per month), plus HK$13,720 per month of rental income from the US Properties. The monthly expenses were HK$156,545, including general expenses of HK$41,652 per month (excluding rent), personal expenses of HK$69,148 per month (excluding the MPS of HK$60,000 per month) and Children expenses of HK$45,745 per month. Of the rent of HK$80,000 per month, HK$68,000 per month was paid directly by his employer and the remaining HK$12,000 per month was covered by his partner, and that his partner shared some of the household costs and food costs. Currently, H has a monthly deficit of HK$156,545 – (90,986 + 13,720) = HK$51,839 per month (excluding the MPS of HK$60,000 per month).

52.  W set out her comments on H’s monthly expenses in her Scott Schedule. W’s position was that he could cut down his monthly expenses including MPS payment to HK$154,494.

53.  W adduced land search records and Company Registry record showing that H’s partner holds directorship in several companies in Hong Kong and is interested in several companies, at least one of which holds a landed property in Hong Kong, and that she is one of the two joint owners of another landed property in Hong Kong.[2] W argued that H had the financial support of a wealthy partner. H said after discussion with his partner, she advised him that just one of her directorships was associated with a company that provided her meagre income. The others were either dormant, her role as a director was as a trusted signatory, or they were not income producing. Her partner said she did not own any income producing property in Hong Kong. She and her brother however housed a dependent elder family member. All in all, I take the view that the evidence shows that his partner is a businesswoman of means and she is capable of contributing more to his monthly expenses. She should be required to contribute an amount equivalent to not less than half of the rent of HK$80,000 per month, on top of her share of some of the other household expenses, i.e. an increase by HK$28,000 per month.

54.  Despite that it seems indisputable to me that the parties have lived a comfortable living standard, both parties have to face the grim reality that once the divorce process starts, the standard of living will drop. Many factors combine to lower the parties’ living standard after their divorce. Legal fees, new living expenses and myriads of other costs will mushroom and drain their financial resources. Money previously used to support one household must now stretch to support two. In the present case, the drop in H’s income only exacerbated the problem. It is clear that H lives well beyond his means. I take the view that that it is not unreasonable to require him to save as much as 50% of general expenses (excluding rent that 85% was paid directly by his employer) and personal expenses, i.e. saving of HK$20,826 + 34,574 = HK$55,400 per month. Fox example, H should consider giving up one of his two family his cars and letting go one of the two of the home helpers. I have not lost sight that tax payment and personal loan repayment are fixed expenses. In the longer term, these expenses will be cut down. Being generous with the Children expenses, I accept that generally speaking the Children expenses are reasonable. With the above notable increase of contribution from his partner and cutting backs, hopefully H will make a surplus of as much as HK$30,000 per month.

55.  According to the Form E dated 27 March 2018, W’s total monthly expenses were HK$61,025. According to W’s Form E dated 12 September 2019, her income was between HK$20,000 to 30,000 per month and the monthly expenses were HK$126,600 including general expenses of HK$90,400 per month, personal expenses of HK$24,000 per month and children expenses of HK$12,200 per month. The increase was largely due to the new costs of rent in HK$60,000 per month, to which W accepted that the choice of a HK$60,000 per month rental apartment in Belair was criticizable. According to W’s Form E dated 13 January 2021, her monthly expenses were HK$81,500 including general expenses of HK$67,500 per month (including rent of HK$40,000 per month and home helper of HK$7,000 per month), personal expenses of HK$10,500 per month and children expenses of HK$3,500 per month. W said she had been in a worse financial position since the sale of SLAC as she was no longer receiving any income from SLAC. To address her bleak financial situation, she downsized her apartment in order to cut down on rent.

56.  H set out his comments on W’s monthly expenses in his Scott Schedule. H’s position was that she should cut down her monthly expenses to HK$49,637.

57.  W needs an apartment with 3 bedrooms to accommodate the Children when they spend time with her. I accept the rent of HK$40,000 per month. When she works, W will need home helper, the costs of which are about $7,000 per month. As said in the above paragraph 54, however, W needs to cut down on expenses. I take the view that that it is not unreasonable to require her to save as much as 50% of general expenses (excluding rent and home helper) and personal expenses, i.e. saving of HK$10,250 + 5,250 = HK$15,500 per month. I accept that W’s reasonable monthly expenses are around HK$81,500 – 15,500 = HK$66,000.

58.  H criticized that W did not fully utilize her earning capacity. W is aged 48. She has a Bachelor’s degree in business. She has worked as an operations manager with a trading company for 17 years. She ran SLAC from about 2016 to 2020, during which she learnt new skills that she needed such as how to build website, graphic design, how to market on social media, etc. She cannot read or write Chinese so that she is cut out of jobs that requires reading and writing Chinese. W is looking for jobs in digital market or graphic, advertising at the salary of around HK$50,000 per month. W expects that she probably needs up to to 1 years to re-enter the job market.

59.  By the time when W and her partner decided to sell SLAC in the Summer of 2020, obviously, W should start to actively look for jobs. Even assuming that she needs up to 12 months to re-establish herself in the workforce, in this way she should already be earning. She should be able to earn a reasonable income of around HK$50,000 per month. As her reasonable monthly expenses are HK$66,000, she has a deficit of around HK$16,000 per month. Accordingly, I take the view that there should be a maintenance payment of HK$16,000 per month to W for the benefit of the Children. This is conditional on that H continues to be responsible to the Children’s schooling. I have not lost sight that at present around 85% of the monthly rent and 75% of the Children’s school fees are paid via allowance. The Covid 19 situation required H signed on to a new contract in order to remain employed. By December 2022, his housing and education allowance will be reduced to around HK$22,000 per month and he will need to allocate a portion of his salary to cover these expenses. In due course, variation of the maintenance payment commensurate to the Children’s needs and the parties’ ensuing abilities may be called for.

60.  Despite that, by the order made by HHJ Molley dated 24 January 2019, H undertook that he would not seek to vary the MPS of HK$60,000 per month, H proposed that there be a deduction of overpayment of MPS by HK$20,000 per month, allegedly resulting from a significant reduction in his monthly income and significant increase in W’s means since the MPS agreement. By the summons dated 6 February 2020, H applied for the variation down of the MPS. By the summons dated 15 April 2020, H applied for the discharge of his undertaking dated 24 January 2019. The court may set off any under provision or over provision in the MPS order if it is fair and just so to do. In the present case, the primary question to answer is whether the undertaking dated 24 January 2019 should be discharged.

61.  My view is as follows: -

(1) It is apparent that W needed the MPS to cover her reasonable monthly expenses after separation;

(2) H castigated W that she allegedly lived wastefully. As it happened, both parties have lived well beyond their means.

(3) It is worthy of noting that W’s current financial situation is not in any way better than H’s, if not worse.;

(4) As such, I do not regard that it is fair to have any retrospective deduction of the MPS;

(5) By reason of the matters aforesaid, I reject H’s application for the discharge of the undertaking dated 24 January 2019 or retrospective deduction of the MPS.  

Liabilities

62.  According to the Form E dated 13 January 2021, W had liabilities of totally HK$3.285,133.68, including credit card debt of HK$276,372.07, indebtedness to a close friend and a close relative of HK$1,885,350 and outstanding legal fees of HK$1,123,411.61. According to the Form E dated 2 July 2021, H had bank loan, credit card debts, outstanding legal fees, indebtedness to his parents and tax liabilities of totally HK$1,397.650. H proposed that any liabilities should be for each party’s account on the grounds that W lived a wasteful lifestyle, that any legal fees liabilities should be for each party’s own account. W disagreed. W said that a vast majority of her funds were spent out of necessity on legal fees and living costs.

63.  My view is as follows: -

(1) W’s reasonable monthly expenses should be around HK$66,000. By the order made by HHJ K K Pang on 13 February 2018, it was ordered that H to pay W MPS at HK$30,000 per month and, by the Order made by HHJ Molloy on 10 May 2018, it was ordered that H to pay W MPS HK$60,000 from June 2018. Additionally, W received about HK$600,000 from SLAC from 2019. Under these conditions, the MPS and the income from SLAC together should be enough to meet W’s reasonable living costs; it was unnecessary for W going into debt to cover her reasonable living costs.

(2) By the order made by HHJ Molloy on 10 May 2018, the parties received HK$100,000 per month each for legal costs from the family money of HK$5,064,785 held in escrow by solicitors. While the legal costs the parties incurred are substantial, a considerable extent of the parties’ legal costs was already funded by family money.

(3) Notwithstanding that both parties put the blame squarely on the other side’s litigation conduct that led to protracted proceedings and increased costs, both initiated numerous legal exchanges as well as unsuccessful applications to the court. Despite both parties have stated their wishes to resolve matters out of court, nothing has come out of these intentions and various proceedings are ongoing. It seems both parties are responsible for the shocking drain on family resources on legal fees.

(4) A party’s own legal costs are usually considered his or her personal liabilities. The corollary is that any own legal fee liabilities generally are for each party’s own account. I see no reason why this should not apply in the present case.

(5) Neither party has any significant liabilities during marriage or prior to the parties’ separation.

(6) It appears that the parties’ indebtedness to close friend and relative is “soft loan”;

(7) All things considered, I accept that the parties’ liabilities should be for each party’s account.

Applying the sharing principle

64.  Most of the properties in the matrimonial pot were acquired during marriage. With that said, I take the view that it is appropriate to approach this case on the sharing principle. The next step will be for the court to apply the sharing principle to the assets in the matrimonial pot, with a yardstick of equal division as part of that principle. This means the assets should be divided equally between the parties unless there is good reason for departing from an equal division.

Any good reasons exist for departing from equal division

65.  H said this was a short marriage with time frames of 5 years from marriage to W’s extra marital affair, 6 years from marriage to separation and 7 years from marriage to the date of the petition. W maintained that the parties were not separated until she left the matrimonial home in 2018. In any case, this is not a long marriage. Despite that, I regard that there should be no departing from an equal division in the present case, weighing the various factors and striking a balance of fairness as follows: -

(1) Both parties brought pre-marital assets to the family. W brought into this marriage the Conduit Road property come from her first marriage, and H brought in the Mui Wo property he purchased in 2008.

(2) This marriage has two Children. Despite having unremitting disagreements on children matter, the parties are both caring and loving parents and are always ready to provide good nurture to the Children and are actively involved in the Children’s affairs.

(3) Generally speaking, both parties work and contribute financially during marriage.

(4) Most of the properties in the matrimonial pot were acquired during marriage

(5) By reason of matters aforesaid, both parties have made significant financial and non-financial contributions to the family.

(6) Both parties have earning capacity that is enough to take care of own needs.

(7) As to the Australian superannuation and 50% CPAPF provident fund that H exclusively keeps, I take notice that they are illiquid and are non-matrimonial assets.

(8) There is no “obvious and gross” conduct of the parties that the court should have to regard to in deciding whether there are any good reasons exist for departing from equal division.

Disposal

66.  W said it was agreed between the parties the two Breitling watches were held for the Children until the age of 18. She sought an order that one to be held by her and one to be held by H for each child until 18. No matter what W said, to which H disagreed, it is trite that equity will not complete an imperfect gift. I do not accept W’s proposal on the disposal of the two Breitling watches.

67.  Taking into consideration H does not gainsay W’s proposal on the 1956 Airstream Overlander Trailer, which allegedly has huge sentimental value to her, I accept that the 1956 Airstream Overlander Trailer be transferred to her at the value of HK$109,200 as per H’s Form E.

68.  It appears to be common ground that this matter should be dealt with on a clean beak basis and this is clearly the sensible way to proceed.

69.  On the whole, I take the view that the following is a fair and just disposal of the parties’ claim for ancillary relief: -

(a) H do pay W HK$16,000 per month for the maintenance of the Children;

(b) There be no order as to the summons dated 15 April 2020;

(c) The MPS dated 10 May 2019 be discharged;

(d) There be an order for the sale of the US Properties, the net proceeds of sale be equally distributed between the parties;

(e) There be opportunity for the parties to bid for the US Properties at market price;

(f) There be a balancing cash payment to H in the sum of HK$ ((660,390.65 + 109,200) – (70,299 + 300,900 – 109,200)) ÷ 2 = HK$253,795.82;

(g) Upon receiving his CPAPF provident fund, H do pay W the sum of HK$2,071,398.4 ÷ 2 = HK$1,035,699,2;

(h) There be a clean break between the parties.

70.  The end result is an order that: -

(1) The US Properties be sold at market price within 2 months of the date of this order, or upon the making of the Decree Absolute, whichever is the later;

(2) There be liberty to the parties to bid for the US Properties;

(3) H do provide W an account of the costs and liabilities of the sale upon the completion of the sale of the US Properties;

(4) The net proceeds of sale be equally distributed between the parties;

(5) W do pay H the sum of HK$253,795.82 upon the completion of the sale of the US Properties;

(6) The 1956 Airstream Overlander Trailer be transferred to W within 2 months of the date of this order, or upon the making of the Decree Absolute, whichever is the later, the costs of the transfer be paid by W;

(7) Upon receiving his CPAPF provident fund, or upon the making of the Decree Nisi Absolute, whichever is the later, H do pay W the sum of HK$1,035,699,2;

(8) H shall pay HK$16,000 per month to W as maintenance for the Children i.e. HK$8,000 per month per child, the first payment to be made on 1 October 2021 and subsequent payments on the 1st day of each succeeding month until the Children attain the age of 18 or cease to receive full time education, whichever is the later, the periodical payments be paid into W’s designated bank account;

(9) The MPS order dated 10 May 2018 be discharged;

(10) There be no order as to the summons dated 15 April 2020;

(11) Upon the compliance of the above paragraphs (1) to (7), the parties’ claim for ancillary relief against the other be dismissed;

(12) There be liberty to apply;

(13) There be s.18 declaration.

Costs

71.  Broadly speaking, neither party is wholly successfully. It is ordered nisi that there be no order as to costs of the ancillary relief matter, the summons dated 6 February 2020 and the summons dated 15 April 2020, including reserved costs. The costs order nisi becomes absolute 14

days after the order is made, unless a party has applied to the court for varying the order.