YN also known as YN(A) v. NA

CACV 236/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 236 OF 2013

(ON APPEAL FROM FCMC NO. 11910 OF 2011)

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BETWEEN

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Hon Cheung JA :

I. The appeal

1.1   This is an appeal by the petitioner wife (‘wife’) against the judgment of Deputy District Judge Carlson who, upon the wife’s application for ancillary relief, ordered the respondent husband (‘husband’) to pay the wife a lump sum of JPY113,580,000 (HK$9 million at the exchange rate of JPY12.62 to HK$1) together with periodical payment of JPY416,460 (HK$33,000) per month for ten years.  In addition, the husband is to have sole ownership of a flat in London, England (‘the London property’) registered in the parties’ joint names and the wife is to keep a property in Yokohama, Japan (‘the Japanese property’) registered in her sole name and valued by the Judge at HK$2.8 million. 

1.2   As will be elaborated later on, the total value of the parties’ assets is HK$17.3 million.  The wife’s entitlement of HK$11.8 million (represented by the lump sum of HK$9 million and the Japanese property of HK$2.8 million) is about 70% of the total assets of HK$17.3 million. The value of the husband’s entitlement from the total assets is HK$5.5 million or about 30%.

II. The parties

2.1   The wife is Japanese and the husband is English.  The wife is older than the husband by about ten years.  The wife is now 57 years of age.  They met in Tokyo when the husband was working there as an engineer.  The wife was by then the Head of the English department of a prestigious private Christian high school in Tokyo.  The couple started dating in about 1997/1998. The husband was assigned to work in Hong Kong in January 1999 but the parties maintained their relationship and were married in August 1999 in England.  In November 1999 the husband was assigned to work on a project in Japan for seven months and the parties resided in the Japanese property during this period.  The property was inherited by the wife from her parents before her marriage. 

2.2   The husband then returned to Hong Kong in May 2000 and the wife left her job and joined the husband in Hong Kong soon afterwards.  By then the wife had worked at her school for 16 years.  They lived in Hong Kong until 2008.

2.3   In 2008 the husband was promoted to a senior post in Mumbai, India.  He became the managing director of his company’s office in India.  The wife joined him in India shortly afterwards.

2.4   In 2009 the parties encountered marital problems and towards the end of that year the husband wanted a separation.  In June 2011 the wife discovered the husband had maintained an affair in Hong Kong.  In September 2011 the parties formally separated when the wife left India and returned to Japan.  The husband remained in India.  The break-up caused the wife great stress.

2.5   On 29 August 2011 the wife petitioned for divorce in Hong Kong.  Decree nisi was granted on 12 January 2012.  Decree absolute was granted on 19 May 2014.

2.6   The wife is a highly qualified person.  She has three university degrees.  One from Tokai University in Japan where she read English literature.  She also has a master’s degree from Columbia University in New York and whilst in Hong Kong, she obtained by distance-learning a law degree from Trent Nottingham University, England. 

2.7   While the wife was in Hong Kong she found employment with a firm of solicitors as an interpreter and translator.  She was with them for two years and then she became a freelance interpreter and translator, gradually building up a solid list of clients.  She did this work at the same time as she was studying for her law degree.

2.8   When the wife was in India she worked as a legal consultant earning an insubstantial salary.

2.9   When the wife eventually returned to Japan she worked with a well-known recruitment agency earning a base salary of HK$28,064 a month with a monthly commuting allowance of HK$2,377 plus a bonus based on performance up to HK$3,000 a month.  The retirement age with the current employer is 60. She is now 57.

2.10   The Judge found her monthly expenses to be at HK$27,000.

2.11   The husband has a successful career.  His present salary is HK$146,000 made up of a monthly salary of HK$127,597 and a discretionary bonus which averaged out at HK$18,311 per month.  He is now married to the lady with whom he had conducted the affair during his marriage. He lives with his new wife and daughter in a very large flat which is rent free and has the benefit of the use of a car and driver.  The new family will soon have another child.

2.12   The Judge found the husband’s monthly expenses are HK$85,834.  The Judge accepted that this is a reasonable amount.

III. Total Assets

3.1   There is some confusion in the judgment on the value of the joint assets, the husband’s assets, the wife’s assets and the total assets.  The Judge stated at paragraph 14 of the judgment that he accepted the husband’s evidence that the value of total assets of the parties is HK$16,816,463.33 which is made up as follows :

 3.2   However, it is apparent from the subsequent parts of the judgment dealing with the total assets, the Judge used round figures and had not adopted the figures identified in paragraph 14 of the judgment but chosen some figures which although not identical are quite near to those figures.  Hence at paragraphs 17 to 19, the Judge identified the value of the total assets as follows :

Joint Assets	Value
(The London property, valued at HK$1.9 million; 4 joint bank accounts of HK$1.5 million; Joint investment funds of HK$3.5 million)	HK$6.9 million
The husband’s Assets
(4 bank accounts of HK$700,000; 5 investment accounts of HK$1.4 million; pension funds of HK$4.7 million, liability of HK$33,000)	‘in the order of HK$4.25 million’ (In arriving at this figure the Judge expressly referred to the changing nature of bank balances and stock valuation)
The wife’s Assets
(20 bank accounts; 4 investment accounts; 3 insurance policies; 2 pension funds and the Japanese property)	‘just over HK$6 million’

3.3   The Judge then said at paragraph 20 that the value of the total assets, excluding the Japanese property, is ‘in the order of HK$14.7 million’.

3.4   Finally when the Judge discussed the ‘total asset pool’, he said at paragraph 37 that ‘by ring-fencing the wife’s house….. I cannot be more precise than this, about HK$14.5 million’.  The ‘ring-fencing’ was in respect of the wife’s Japanese property and at paragraph 35, the Judge said ‘[the wife] will have the equivalent to HK$2.8 million from the proceeds of sale [of] her house.’  The HK$2.8 million was clearly a round figure of the appraised market value of the Japanese property.  This was confirmed by the Judge by the letter dated 30 October 2013 issued before his untimely death.

3.5   It is apparent from this review the Judge had ultimately adopted by way of round figures, HK$17.3 million (i.e. HK$14.5 million plus HK$2.8 million) as the value of the total asset of the parties.  If from this sum one deducts HK$6.9 million being the joint assets, HK$4.25 million being the husband’s assets and HK$2.8 million being the Japanese property, this leaves HK$3.35 million.  This in my view is the balance of the wife’s assets.  In other words the Judge must have treated the assets of the wife at HK$6.15 million (HK$2.8 million plus HK$3.35 million).  This is just a bit higher than the figures identified by the husband as the wife’s assets.

3.6   In my view having considered the judgment as a whole that must be what the Judge had intended to find.  I do not consider that this figure of HK$17,300,000 can be criticised.  The wife’s calculation at the trial was HK$17,537,278.  As the Judge recognized that in respect of the total assets, there had been withdrawals of funds, revaluation of the pension policies and fluctuation of the investments, a precise figure cannot be identified and HK$17,300,000 clearly comes within the range of figures that the Judge as the trial judge was entitled to arrive at.

IV. Matrimonial litigation

4.1   There are two matters I need to address first before I deal with the grounds of appeal. 

1) A sense of proportion

4.2   The Judge was critical of the time taken by the wife’s lawyers in dealing with this case and also of their approach.  In my view the criticism is well justified.  Let me say at the beginning that the role of the Family Court in making financial provisions for a divorced couple is to ensure that the parties will receive a fair share of their entitlement.  It is concerned that the ultimate award complies with the established principles now laid down by the Court of Final Appeal in LKW v. DD (2010) 13 HKCFAR 537 and the award can be satisfied from the available pool of assets.  The Court is, however, not required to comb through every fine detail of the matrimonial history and financial information to arrive at a precise mathematical figure.  A sense of proportion must be recognised by the parties and their lawyers having regard to the size of the available pool of assets and the costs of litigation.  If there is an attempt by the parties to dwell on the minutiae then the trial judge will have to stop this from happening.  The Court will not countenance any unhealthy trend in matrimonial litigation where a substantial portion of the parties’ available fund are unnecessarily spent on costs.  Likewise the Court of Appeal will not be expected to review all the details that had been canvassed below as if it is trying the case afresh.  The fact finding role of a trial judge will be given proper respect in accordance with the well-established principles.  Any attempt to sidestep this demarcation will not be entertained.  After all the whole ethos of the Civil Justice Reform is to ensure that the case is to be efficiently disposed of.

4.3   In the present case, it is an excessive use of judicial time to have a 10-day hearing where the marriage lasted only about ten years, the financial picture is not overly complicated and the resources are by no means high.  This has a direct impact on the costs which ultimately eats into the available fund for distribution.  The parties spent over HK$4 million below by way of costs in respect of a matrimonial pot of HK$17 million. This amounts to about 25% of the total assets.  More costs will be incurred for the appeal.  The parties are well off financially but they are not rich litigants.  As examples of the extravagance, the wife actually obtained the whole of the transcript of the ten-day hearing below where her lawyers would be expected to have taken notes of the proceedings.  The transcripts were hardly referred to on appeal.  Numerous bundles are prepared for this appeal when another division of this Court in dealing with a related matter had already commented on the excessive waste of paper.  Family lawyers, particularly like the present case where the wife is represented by a firm of experienced specialist solicitors, are duty bound to ensure that the sense of proportion is observed.  While I do not underestimate the difficulties of handling clients who may be highly emotional in a contested matrimonial dispute, lawyers should not let themselves be dictated to by what their clients may perceive to be their entitlement, to the extent that they cannot give proper assistance to the Court.

2) Jurisdiction

4.4   The other matter concerns the jurisdiction of the Court.  The wife stated in her petition that she invoked the Hong Kong divorce jurisdiction on the basis that the husband had a substantial connection with Hong Kong because he regularly ‘travels and works in Hong Kong and has an apartment here.’

4.5   The Judge expressed his doubts on the parties founding jurisdiction in Hong Kong as the facts revealed that the wife returned to Japan after the marital breakdown while the husband remained in India.  The Judge then stated that :

‘ 2. ….. both parties ….. agreed this Court had jurisdiction in this matter by virtue of their substantial, albeit past, connection with Hong Kong.’

4.6   With respect, this cannot be the basis for invoking the jurisdiction of Hong Kong because the relevant time for considering whether either of the parties had substantial connection with Hong Kong is at the time of the petition (section 3 of Matrimonial Causes Ordinance).  Neither can what the wife said in her petition be sufficient to found jurisdiction.  As revealed in the wife’s second affidavit, the husband only stayed with his then mistress in an apartment and hotel on his weekend or business trips to Hong Kong.  This cannot possibly be the basis of a substantial connection with Hong Kong because by then the husband was already working and living in India where he had done so since 2008.  As pointed out by this Court in ZC v CN (CACV 255/2013), the Court discourages divorce of convenience in Hong Kong.  Practitioners should not attempt to invoke the Hong Kong jurisdiction when none exists just because it may suit the parties to do so.  To be fair to the Judge, by the time he dealt with this case in April 2013, the decree nisi had already been pronounced on 12 January 2012. In the present case, apart from being half way between India and Japan, the parties’ assets are not in Hong Kong.  This creates problems with enforcement.  The Judge had expressed the view that he was handicapped in his task because he was not familiar with the locations and specific living requirements in Japan where the wife has begun a new life since the separation in 2009 and also on matters such as retirement age and pension rights in Japan.  Parties should not choose Hong Kong to litigate their disputes simply because it has an enlightened regime on division of matrimonial assets.

V. Grounds of appeal

1)  Overview

5.1   A wide-range of grounds of appeal are advanced by the wife.  The starting point in matrimonial property division upon divorce is based on equality.  In the present case not only has the wife received more than her half share of the total assets when she received a 70% portion from the total assets, she is further given a periodical payment of HK$33,000 per month for a duration of ten years.  She is a single woman without any child. As a result of the award, she will keep her assets of slightly above HK$6.1 million which consists of money in bank and investment and also the Japanese property valued at HK$2.8 million.  On top of that she will receive a lump sum of about slightly less than HK$5.65 million (see  paragraph 5.41) making a total entitlement of HK$11.8 million.

2) Further capital payment?

5.2   At the outset of the appeal, the Court asked Mr Lynn, counsel for the wife, what he wished to achieve by this appeal. Rightly he abandoned any claim for a further capital payment despite such a claim being contained in the amended notice of appeal.  The Judge below was critical of the wife’s claim for a larger capital sum when the matrimonial pot simply does not support such a claim.  The wife’s claim was based on the joint Duxbury calculations jointly obtained by the parties.

5.3   The wife’s case was that if the husband wanted a clean break, based on the Duxbury calculation, the husband has to pay her between about HK$28 million and HK$23 million.  The alternative is by a smaller capital sum and periodical payment.

5.4   A Duxbury calculation is, no doubt, useful as a guide in assessing the amount of money required to provide for a person’s financial needs.  It is a means of capitalising an income requirement. But that is all: per Lord Nicholls in White v White [2001] 1 AC 596 at 609C.  What is important is to recognize the size of the pot.  It is meaningless to talk about the capitalised sum if this sum cannot be funded from the pot. 

5.5   Mr Lynn submitted that the Judge misunderstood the wife’s claim on the capitalised sum which was only on the basis that if available funds are available, for example, by means of loans.  In my view the Judge had not misunderstood the wife’s claim at all.  Is it seriously suggested that the husband who now only receives 30% of the pot will have to raise loans to provide for the wife’s claim?  How are the loans to be serviced?  The suggestion is simply not realistic.  It is important to recognize that even under the new regime of matrimonial property distribution, the basic premise is that there must be sufficient assets to be distributed.  For the Court to require the husband to incur additional financial burden where the funds are lacking is simply contrary to the principle of fairness.  The matter should never have been pursued.  This unnecessarily prolonged the trial.

3) Compensation

(3.1)  The wife’s case

5.6   Mr Lynn argued that the Judge had misunderstood and failed to address the wife’s claim for compensation.  The wife’s case is that she gave up a respectable long term career in Japan in order to accommodate the husband’s new employment opportunity in Hong Kong and India. After the breakdown of marriage, she is entitled to be compensated accordingly.

(3.2)  The principle

5.7   Compensation, together with need and sharing are the guiding principles to the Court in making financial provisions on divorce. Baroness Hale in Miller v Miller; McFarlane v McFarlane [2006] UKHL 24 at paragraph 140 said in relation to compensation :

‘ A second rationale, which is closely related to need, is compensation for relationship-generated disadvantage. Indeed, some consider that provision for need is compensation for relationship-generated disadvantage. But the economic disadvantage generated by the relationship may go beyond need, however generously interpreted. The best example is a wife, like Mrs McFarlane, who has given up what would very probably have been a lucrative and successful career. If the other party, who has been the beneficiary of the choices made during the marriage, is a high earner with a substantial surplus over what is required to meet both parties’ needs, then a premium above needs can reflect that relationship-generated disadvantage.’

5.8   Compensation is a feature of the concept of fairness and there are different ways to give effect to the compensation principle.  In VB v JP [2008] 2 FCR 682 Sir Mark Potter P considered the principle of compensation identified in Miller v Miller; McFarlane v McFarlane and reviewed the post-Miller, McFarlane cases dealing with this principle.  At paragraph 59, he identified ‘compensation’ as a feature of the concept of fairness and not as a claim in its own right and that on divorce a wife has no right of continuing sharing unless her needs or compensation for relationship disadvantage so require.  He then discussed the method of using equal distribution and periodical payments to compensate for the disadvantaged spouse in big money cases and in non-big money cases : 

‘ [59] ……Third, in big money cases, where the matrimonial assets are sufficient for a clean break to be achieved, a wife with ordinary career prospects is likely to have been compensated by an equal division of the assets and consideration of how the wife's career might have progressed is unnecessary and should be avoided. Where, however, that is not the case and the parties accept or the court decides that fairness can only be achieved by an award of continuing periodical payments in respect of a wife’s maintenance, then the matter of compensation in respect of relationship-generated disadvantage requires consideration, again as a strand or element of fairness. Fourth, in cases other than big money cases, where a continuing award of periodic payments is necessary and the wife has plainly sacrificed her own earning capacity, compensation will rarely be amenable to consideration as a separate element in the sense of a premium susceptible of calculation with any precision. Where it is necessary to provide ongoing periodical payments for the wife after the division of capital assets insufficient to cover her future maintenance needs, any element of compensation is best dealt with by a generous assessment of her continuing needs unrestricted by purely budgetary considerations, in the light of the contribution of the wife to the marriage and the broad effect of the sacrifice of her own earning capacity upon her ability to provide for her own needs following the end of the matrimonial partnership. These considerations are of course inherent in s 25(a)(b)(d) and (f) of the 1973 Act.’

(3.3)  My view

5.9   In my view the amount awarded to the wife by the Judge clearly included an elementary of compensation although the Judge had not expressly mentioned it.  This is reflected both in the wife’s entitlement and in the periodical payment award.  When Baroness Hale referred to the ‘premium above needs to reflect the relationship generated disadvantage’, she said this in the context of a high earner with a substantial surplus over what is required to meet both parties’ needs.  Again the contextual requirement must be recognised.  The emphasis is on the surplus where the needs of both parties are satisfied.  The discussion in the present case must be looked at from both the wife’s and the husband’s needs.  The flaw of the wife’s arguments which permeates throughout her quest for more is that she has completely ignored the needs of the husband who is already put in an unequal position in terms of asset distribution.  Further the size of the pot seems to have been completely ignored. 

5.10   In the present case the Judge was prepared to go beyond equality and the discussion must proceed on this basis.  The ultimate question in this appeal is whether the 70% distribution together with the ten-year periodical payment to the wife satisfies the principles of need, compensation and sharing.  The answer must be a resounding yes.  The level of departure from equality which is the cornerstone of the new regime of fairness is so high that there must be a justifiable basis for it. 

(3.3.i)  Japanese property

5.11   To start with, the wife’s Japanese property was not even treated as a matrimonial asset.  In my view, the Judge had adopted a generous view on the nature of this property.  This is of course not a property acquired by the joint contribution of the parties.  The wife had inherited it before marriage and brought it to the marriage.  Ribeiro PJ reviewed this type of asset in paragraphs 90 to 94 of LKW v DD and concluded that after a long marriage the importance of the source of the asset will diminish over time.  In this case the marriage lasted for about ten years.  In my view the Japanese property ought to have been treated as a matrimonial property.  But as the order granting the husband leave to appeal had been set aside by another division of this Court, there is no need to revisit this topic.  The real issue is that in the overall scheme of distribution, the wife is allowed to treat this property as her own.  The wife already has had an enhanced share of the pot.

(3.3.ii)  Accommodation for the wife

5.12   The first priority in matrimonial property distribution is to provide the wife with a roof over her head.  She is now living with her sister and her brother-in-law in the suburbs of Tokyo and commutes to work in Tokyo.

5.13   The Judge found that the wife would be able to purchase a suitable flat for herself in a perfectly respectable location in the general vicinity of which she is currently residing for JPY63 million which is about HK$5 million.

5.14   The wife listed seven Tokyo properties of the size of 1,000 to 1,200 sq ft with the price ranging from HK$6,400,000 to HK$12,860,000.

5.15   The evidence shows that rent is between 39.79% and 63.41% cheaper in Tokyo compared with Hong Kong and the purchase price for a flat is between 44.38% and 63.65% cheaper in Tokyo than Hong Kong. 

5.16   The evidence further showed that the 1,000 sq ft flat in Yokohama (a suburb in the Greater Tokyo area) where the inherited property is situated is worth about HK$5 million. 

5.17   In my view the HK$5 million provision which is intended to cover the wife’s costs of accommodation is generous.  This provision is made in the context of a single woman without child and approaching senior age.  While the parties might have had the benefit of a more luxurious accommodation in India, the proper context of comparison is between Hong Kong and Japan in terms of size and costs.  As submitted by Mr Surman, counsel for the husband, in his closing submission to the Judge, the wife wanted a large flat in the Tokyo equivalent of Mid-levels when she had always lived in the Tokyo equivalent of Sha Tin and when the parties actually lived in Hong Kong they lived in Taikoo Shing on Mt. Parker Road / Grieg Road at HK$18,000 per month.

5.18   As mentioned by this Court during the hearing, there are smaller size flats in Hong Kong in respectable residential areas at the costs of HK$3 to 4 million.  And as the costs of purchasing an accommodation in Tokyo is at least 40% cheaper than in Hong Kong, the HK$5 million provision for the wife’s accommodation is indeed a generous one and is supported by evidence.

5.19   The wife does not even have to resort to the balance of the lump sum i.e. HK$9 million less HK$5 million and her own assets at this stage because of her current earning and the provision of periodical payment by the husband. 

(3.3.iii)  The wife’s expenses

5.20   The wife claimed that her expenses are HK$37,535 per month which represents HK$10,000 overspend on her income.  The Judge found there has been exaggeration by the wife on her expenses and her expenses are assessed at HK$27,000. 

5.21   It is said that the Judge was factually wrong on the wife living beyond her means because she had to take out funds from the joint bank account in order to maintain herself.  In my view it has not been shown that the Judge was plainly wrong on the issue of the wife’s expenses.

(3.3.iv) The husband’s expenses

5.22   Mr Lynn submitted that the Judge was wrong to assess the husband’s expenses in India to be about HK$85,000 per month.  This is clearly a finding of fact by the Judge and I cannot see that the Judge was plainly wrong in his assessment.  In any event, the bigger picture is that the husband is only given a 30% portion of the matrimonial pot and he is further required to provide HK$33,000 per month to the wife for ten years.  While he is able to do so now because of his current high income, eventually there will be a time when his corporate income and perks will come to an end.  The principle of fairness which underlines the modern distribution regime clearly means that the husband should also not be left in a disadvantaged position.

(3.3.v)  The lump sum award

5.23   The Judge awarded the wife a lump sum of HK$9 million. This is clearly more than sufficient to meet her accommodation need.  After the provision for accommodation of HK$5 million, the wife will have a further HK$4 million to provide for herself.  On top of that she has the equivalent of the HK$2.8 million to provide for rehousing if she sold the Japanese property.  If the wife does not use the HK$2.8 million for accommodation, she would have this additional sum to provide for herself.  In my view, if her accommodation is taken care of, this sum provides a reasonably comfortable living for a single woman.  It must also not be forgotten that from now to her retirement at age 60, she will continue to receive from her employment the monthly salary of HK$27,000.

(3.3.vi)  Argument misconceived

5.24   Can it really be seriously suggested that the award of HK$11.8 million to the wife has not taken into account all the guiding principles including that of compensation but is confined only to satisfying the needs of the wife?  But that is not all.  The Judge had further granted the wife a periodical payment of ten years.  All in all the idea that the Judge had not properly taken the principle of compensation into account is misconceived in the light of the assets distribution which is tilted so much in favour of the wife.

4)  Periodical payments for a limited time?

(1)  The considerations

5.25   Mr Lynn criticised the Judge to fix the periodical payment for a limited duration of ten years only.  He asked for periodical payments to be fixed by reference to the parties’ lifetime.  He referred to cases including C v C (Financial Relief : Short Marriage) [1997] 2 FLR 26 at 45-46 which addressed the considerations in awarding periodical payment for a limited duration and to Flavell v Flavell [1997] 1 FLR 353 where it is said :

‘ it is not usually appropriate to provide for the termination of periodical payments in the case of a woman in her mid-50s. Such orders would usually only be justified where the wife had her own substantial capital and a significant earning capacity.’

5.26   In C v C the relevant considerations for periodical payment are :

1) it is necessary to consider whether the term would be sufficient to enable the payee to adjust without undue hardship to the termination of financial dependence on the paying party;

2) in doing so the Court ought to have regard to, among other thing,  

a) the duration of the marriage;

b) the effect the marriage and its breakdown has had and will continue to have on the earning capacity of the payee; and  

c) the extent to which the payee is no longer in the position she would have been in but for the marriage, its consequences and its breakdown;

3) facts supported by evidence must justify a reasonable expectation that the payee can and will become self-sufficient;

4) it is necessary for the Court to form an opinion not only that the payee will adjust, but also that the payee will have adjusted within the term that is fixed;

5) if there is doubt about when self-sufficiency will be attained, it is wrong to require the payee to extend the term and that the proper course is to impose no term but leave the payer to seek a variation.

(2)  Purpose of the periodical payment

5.27   In my view, this line of cases must be properly considered in its context.  Whether the periodical payment is for a limited term or during the parties’ lifetime must depend on what purpose it serves.  In this case the periodical payment is clearly not intended to be used in replacement of the lump sum award which is substantial in the first place.  The discussions by Baroness Hale and Sir Mark Potter P must be kept firmly in mind.

5.28   In my view, the wife’s needs are clearly satisfied by the substantial capital and the periodical payment at her disposal.  The ten year period payment further carries with it a compensatory element, it is unjustified to require the periodical payment to last during the lifetime of the parties.  Whilst the requirement of needs is to be generously interpreted, I do not regard the overall financial provision to the wife runs contrary to this view.

5)  The wife’s earning capacity and pension

5.29   Mr Lynn submitted that the Judge was wrong in his assessment of the wife’s earning capacity and her pension entitlement.  The Judge held that the retirement age of the wife is 65 when the evidence pointed towards 60.  The Judge held that the wife is entitled to pension from her previous employment as an educationist when the evidence indicated that she is not entitled to such a pension.

5.30   In my view, even if, for the purpose of argument, the Judge was wrong on these two aspects (and it is not necessary for me to decide that it is indeed the case), it has no impact on the overall award by the Judge which in fact erred on the side of being over generous to the wife.  The judgment does not reveal that the Judge had intended to provide the wife for a higher award but for her continuous employment until 65 and her pension entitlement. 

5.31   It must be borne in mind that the wife is a highly capable person who speaks Japanese and English and equipped with three academic degrees, one of which is a specialized law degree.  She has put her knowledge to practical use in Japan and also in two foreign countries, namely, Hong Kong and India.  When the Judge said the wife has a full earning capacity until she turns 65, he is plainly not referring to a formal, regular employment setting.  Rather, it means that the wife’s knowledge and ability would allow her to continue to work on a temporary or freelance basis until she turns 65 although the income from such employment may be lower.  In respect of the wife’s pension, it is one thing to say that she is not entitled to pension because she had not fulfilled the years of service requirement but it is another thing to say that she is not even entitled to recover the contributions she had made towards the pension scheme.  The latter has not been clarified in the wife’s evidence.  But as I have said earlier, the two matters of retirement age and pension do not have an impact on the overall financial provisions.

6) Value of the Japanese property

(1)  Market value or net sales value?

5.32   Mr Lynn submitted that the Judge was wrong on the value of the Japanese property.  In the Appraisal Report dated 15 March 2013, the ‘Advisory Opinion (Reference)’ of the ‘net sales value of the Japanese property’ is described as follows :

‘ Value of the subject property		Cost of sale*		Net sales value
JPY36,300,000	—	JPY8,422,160	=	JPY27,877,840
(or $2.8 million)				(or $2.2 million)

 * Cost of sale

Brokerage fee: JPY1,206,450 (including consumption tax)

Cost of land survey: JPY700,000

Tax: JPY6,515,710 (Assumption: Non-resident, The original purchase price is unknown, Sale at the appraised value)’

5.33   Mr Lynn submitted that the net value is about HK$2.2 million and not HK$2.8 million as assessed by the Judge which is in fact the value of the property before the costs of sale.

5.34   This issue first depends on what the appraiser was instructed to do.  In paragraph 2.5 of the Appraisal Report, the ‘Purpose of Request of Appraisal’ is stated to be ‘Asset Valuation’.  In paragraph 2.6, the ‘Value to be Appraised’ is stated to be the market value.  In paragraph 1.1, under the heading of ‘Appraised Value’, it is stated ‘Market value as at March 15, 2013 Appraised Value JPY36,300,000.’  This is precisely what the Judge had assessed in this case and not the net value after deducting the costs of sale. 

5.35   The Court order on the provision of valuation of the Japanese property does not help because it ordered for the estimated net sale value of the land together with a newly built house after the existing house has been demolished and rebuilt on the land.  This is not the basis of the current valuation.

5.36   In terms of finding out the value of the total assets of the parties, it must be the market value and not the net value because the property may not end up being sold.  This is how the Judge addressed the issue :

‘ 35. The first thing to determine is the cost of re-housing the wife bearing in mind the fact that she will have the equivalent to $2.8 million from the proceeds of sale her house which I assume she will be selling. If she chooses not to do so that must be a matter for her, but I will be dealing with the case on this basis.’

5.37   In terms of what the wife may actually receive if she chooses to sell it, then one looks to the net value after deducting the costs of sale.  In my view, based on the assumption of sale, the proceeds of sale in the hands of the wife will be less than HK$2.8 million if the costs of sale is taken into consideration.  But at the moment there is no firm indication that the wife will sell it.  The evidence on valuation of the property includes one which recommended the wife to build a new house on the current site as the most cost-effective solution.  I do not consider the Judge’s figure of HK$2.8 million as plainly wrong.

(2)  Tax deduction?

5.38   In any event, the deduction from the proceeds of sale for non-resident tax must be subject to further consideration now that the wife has returned to live in Japan.  Again we were not told that the matter has been clarified at the trial.  If the wife does not have to pay tax, then there will be a saving of the equivalent of HK$516,000 on tax and the net value of the Japanese property will be HK$2,716,000.  This is slightly less than the HK$2.8 million assessed by the Judge and having regard to the overall award, I do not regard that there should be any downward adjustment of this figure.

7) Wrong figure in the sealed order

5.39   Under the sealed order, using an exchange rate of JPY 12.62 to HK$1, the Judge ordered that in satisfaction of the capital division of JPY 113,580,000 (i.e. HK$9 million, which is in addition to the Japanese property that remains with the wife), the husband is to pay the wife a lump sum of JPY 71,911,678 (i.e. HK$5,698,231).

5.40   The husband’s solicitors Hampton, Winter and Glynn, had identified the HK$5,698,231.19 in its letter to Withers, the wife’s solicitors.  The breakdown is as follows :

Particulars

Summary of Lump Sum due to the wife

1.     Court Award 31 July
			HK$
	Total Net Assets		16,816,463.33
a	Joint Assets		6,468,519.54
b	Husband Assets		4,246,174.98
c	Wife Assets		6,101,768.81
	Sub-total		16,816,463.33
Court Award to Petitioner
d	Lump Sum		9,000,000.00
e	Japan House		2,800,000.00
	Sub-total		11,800,000.00
2.      Payment to Petitioner
c	Wife Net Assets		6,101,768.81
e	Less: Japan Property		2,800,000.00
f = c-e	Sub-total		3,301,768.81
d	Lump Sum		9,000,000.00
f	Less: wife’s assets excluding Japanese property		3,301,768.81
g	Balance lump sum payment to wife		5,698,231.19

5.41        The wife now challenges the calculation of the JPY 71,911,678.  The husband maintains the calculation to be correct. In my view both parties have proceeded on a wrong basis : they assumed that the order for distribution by the Judge was still based on the precise figure set out in paragraph 14 of the judgment when, as I have been at pains to point out, the Judge had moved on and used other figures in his judgment on distribution.  In my view the ultimate sum to be paid by the husband to the wife must be based on the figures.  I have stated earlier.  In respect of the wife’s entitlement of HK$11.8 million (i.e. HK$9 million plus HK$2.8 million), since the HK$2.8 million is already in the possession of the wife in the form of the Japanese property, the sum that the husband has to pay to the wife in order to implement the judgment is JPY 71,303,000 which is the equivalent of HK$5.65 million (i.e. HK$11.8 million less HK$2.8 million less the HK$3.35 million which represents the assets of the wife).

8) Exchange rate

5.42   Judgment sum in the Japanese currency was made at the request of the wife and the exchange rate of JPY 12.62 to HK$1 was adopted by the Judge.  Mr Lynn informed the Judge that he had not accepted any exchange rates but he needed to clarify with his solicitors whether they had done so.  Whilst accepting that an exchange rate may have been accepted for the point in time when dealing with a certain problem, he informed the Judge that there was no comprehensive acceptance.

5.43   The wife’s solicitors had by letter dated 7 October 2013 informed the Judge’s clerk about their position on the judgment sum.  There is no challenge in this letter to the exchange rate specified by the Judge.  I do not see how the issue of exchange rate can now be challenged.

VI.  Post judgment events

6.   Mr Lynn has in his written submission referred to the history of the litigation and to post trial events.  I really do not see the relevance of this submission.  In so far it is suggested that the husband had adopted a belligerent approach in the litigation, the Court had made costs orders in respect of these proceedings.  In any event the wife herself had taken a strident approach towards this case as well.  For example, instead of waiting for her husband’s appeal to be heard at the same time of her appeal, she chose to have the order granting the husband leave to appeal set aside.  While she was successful in that application, it means another division of this Court had to hear and addressed issues which plainly could have been addressed in a joint appeal.  So much for arguments on multiple proceedings.

VII.  Conclusion

7.   Subject to the amendment of the judgment sum, the appeal is dismissed.

VIII.  Costs

8.   There will be a costs nisi that the parties are to pay their own costs of the appeal.

Hon Barma JA :

9.  I agree with the Judgment of Cheung JA.

Hon McWalters JA :

10.  I agree entirely with the judgment of Cheung JA.