HEUN SOOK JONG MILLER v. STEPHEN HENRY MILLER

HEADNOTE

Dissolution Proceedings - Interim maintenance for petitioner wife and children - Respondent in receipt of substantial salary - Court satisfied that petitioner a woman of substantial wealth and that she has deliberately concealed the extent of that wealth - Order made with regard to children only.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

DIVORCE JURISDICTION

No. 6 of 1985

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BETWEEN

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JUDGMENT

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1. On the 24th of May 1985, the petitioner, who had been married to the respondent in Korea on 10th October 1979, commenced dissolution proceedings. She asked for custody, care and control of the two children of the marriage namely Jacqueline born on the 15th of January 1980 and Roger born on the 1st of February 1982. She also sought various maintance and property orders. The petitioner described herself in the petition as "a business woman". She said that she came to Hong Kong in 1968 and had been involved in business ventures in Hong Kong since that time and that her business requires her to travel abroad between two to six days each month.

2. The respondent filed an acknowledgement of service on the 28th May 1985 in which he stated that he intended to defend the case. On the 3rd September 1985, Deputy Judge Hansen granted a Decree Nisi for dissolution of the marriage. The application of custody of the children and all questions relating to maintenance were adjourned. On the 22nd November 1985, after the respondent ceased to meet the household expenses, the matter was transferred to the High Court.

3. The respondent filed an affidavit of means on the 5th July 1985. In this he said that he was currently employed as a Chief Executive of Dragonair Hong Kong on a six-month contract at a gross salary of HK$80,000 per month from which he had to provide his own accommodation. He said that up to January 1983 he had been employed by Cargolux Airlines (Hong Kong) Limited on a salary of HK$39,000 per month with rent being paid by his employers and that from July 1983 he was employed part-time as a consultant by Guinness Peat Aviation (Asia) Limited at a monthly salary of US$4,000 and that with effect from August 1983, he was also employed by the Luxembourg Trade Commission at a salary of HK$23,000 per month. He said hat he had been required to find his own flat and pay for it out of his earnings. He said that, with effect from the month of November 1983, his salary with Guinness Peat was increased to US$6,000 per month and with effect from July 1984 up until he left in April 1985, his salary was increased to US$7,000 per month. He said he continued to be paid HK$23,000 per month by the Luxembourg Trade Commission till March of 1985. He said that in April of 1985, he commenced his present employment with Dragonair. His total gross salary income between January 1983 and May 1985 a period of two years and five months was HK$2,004,000. He said that he also, during that period, received commissions from the sale of commercial aircrafts amounting to HK$1,669,200 and that in June of 1985, he received a final commission payment from Guinness Peat in the sum of HK$232,000. He said that he also looked forward to receiving a final payment from the Luxembourg Trade Commission in the near future in the sum of HK$92,000.

4. His total income since the January 1983 up until the time of that affidavit was well in excess of HK$4,000,000. He set out a list of monthly expenses which amounted to HK$83,710. It is to be noted that at this time he was still living in the matrimonial home with his wife and children and was supporting them. He said that he had an current account with the Hongkong & Shanghai Bank which was overdrawn to the extent of HK$200,000 and was secured upon a sum of US$10,000, invested with G.T. Management, and a sum of £10,000, invested with Save & Prosper. He said that since May of 1983 he had made payments to the petitioner totalling HK$1,374,000 and US$20,000 and that since January 1983, he had given her gifts of jewellery to the value HK$189,000. He stated that the petitioner owned, wholly or in part, four shops in Hong Kong and a shop and a restaurant in South Korea. He said that in Hong Kong there were two shops known as Gallery 69 and two known as Charade. He said that the shop in Seoul was also known as Gallery 69 but that he was unable to recall the name of the restaurant. He said finally that he put the petitioner to strict proof of her income and assets.

5. No affidavit had been filed by the petitioner by the 7th of August 1985 when the respondent's solicitors took out a summons asking for an Order that the petitioner file an Affidavit of Means within 14 days. On the 23rd of August, an order was made directing the petitioner so to do without objection from her solicitors. On the 30th of August, an Affidavit of Means was filed by the petitioner. It is to be noted that this affidavit was filed almost two months after the affidavit of the respondent in which he had said that the petitioner owned, wholly or in part, four shops in Hong Kong and a shop and a restaurant in South Korea and had put the petitioner to strict proof of her income and assets.

6. As to the ownership of the shops she said, "I and my family in Korea own 99% of two companies, namely Gallery 69 Limited and Cedona Company Limited. Gallery 69 Limited owns two furniture shops which mainly deal in Korean furniture and antiques. Cedona Company Limited owns two boutiques called Charade, which sell women and children's clothes, some of which are designed by me. The respondent owns 1% of the shares in Gallery 69 Limited and Cedona Company Limited."

7. She went on to say that she drew a monthly salary of HK$5,000 from Gallery 69 Limited but did not receive any salary from Cedona Company Limited. She said that she had requested copies of the accounts for the last three years of Gallery 69 Limited and Cedona Company Limited and that as soon as she received these, they would be made available to this Court and to the respondent's solicitors.

8. I was told during the course of the hearing that the accounts had been made available to the respondent's solicitors but they were not produced to this Court.

9. The petitioner went on to say that she had bank accounts totalling approximately HK$25,000 and US$112,000.  She said, however, as to the US dollar accounts, that they were, for the most part, pledged to secure banking facilities. She said that since she and the respondent were married, he had been solely responsible for the monthly household expenses which she estimated at just under HK$62,000 per month. She said that the respondent also paid her American Express Card and her Lane Crawford Credit Card and that he had, until July 1985, paid her HK$10,000 per month for her own personal expenditure. Although she said that her personal expenditure was HK$10,000 per month she gave an itemised list of expenses which amount to HK$22,000. She said that the jewellery, much of which she acknowledged visa given to her by the respondent, was valued at about HK$150,000 at today's value. She then said that she believed "it would assist this Honourable Court to give brief details of my family's involvement with the businesses in Hong Kong and details of my involvement in looking after various funds belonging to my family on their instructions".

10. The information provided, which I set out below, did very little to assist me, towards an understanding of the overall financial position of the petitioner and her family.

11. She said that when she started Gallery 69, her father paid for one container load of goods. She gave no indication as to when this had been, as to the value of the container load of goods or as to what exactly happened to them. Counsel for the petitioner did inform me that he thought this had been in 1979 and 1980. She said that she did five overseas exhibitions of furniture which produced substantial profits which were remitted to Hong Kong and invested by "me and my family to whom they belonged". It was not clear whether these exhibitions were in any way connected with the original container load of goods. She said that "all goods that were sold at the exhibitions were sent from Korea where my family live". This did little to assist me towards an understanding of the value of the goods, the amount realized, the disposition of that amount and the plaintiff's entitlement, if any, thereto.

12. She went on to say that her "family paid for part of the stock when I started the two Charade boutique shops". She gave no indication as to the amount of money involved or as to how large a part of the stock was paid for by her family.

13. She went on to say that Gallery 69 Limited and Cedona Company Limited "both belong to my family". She then said, "I would estimate that the family funds referred to above were worth in the region of HK$3 million at the time that I got married." It would seem, although this was not expressly stated, that whatever moneys had been provided by her family had, in a manner which was not specified, by 1979 produced a sum in the region of HK$3 million. This was the only indication in this affidavit as to the value of the family funds. There was no indication as to their value at the time of the swearing of the affidavit.

14. The petitioner went on to say "unfortunately the business carried on by Gallery 69 Limited and Cedona Company Limited has not been successful this year and I fully expect that profit will be well down on last year. I have asked my accountants to prepare management accounts to date and I verily believe that these accounts will effect (sic) the deterioration that has taken place". The petitioner said that her husband had spent HK$120,000 on jewellery for her prior to the marriage and that they both were directors of a company called Jarona International Limited from which he derived no income. This affidavit was wholly unsatisfactory. The petitioner is clearly entitled to a share of the family funds. She gave no indication of the extent of that entitlement and gave no indication either as to the size of her share of the 99%, family ownership of the 2 companies, Gallery 69 and Cedona, or as to their value. She also failed to address the suggestion from the respondent that she has an interest in a shop and a restaurant in Seoul.

15. There was no application for an order for interim maintenance until after the 18th November when Master Betts gave the petitioner judgment against the respondent on a dishonoured cheque in the sum of HK$800,000. It seems that the respondent reacted both by appealing against that judgment and by ceasing to provide the maintenance and support for the petitioner and the children which he had furnished up until that time. This response precipitated the present application.

16. The petitioner on 25th November 1985 filed a further affidavit in which she said that, upon the advice of her solicitors; she would "give full particulars of the funds which I manage and look after for the family ....." It will be remembered that these funds in 1979 stood, according to her first affidavit, at a figure of HK$3 million. The further affidavit revealed that these funds now stand at US$611,000 and Australian $1,038,000. The total of these sums exceeds HK$10.3 million. It would seem that the family funds have grown since 1979 from HK$3 to over HK$10 million. I looked in vain for information as to how this had been accomplished. Had it been because further monies were sent from Korea or had it been because the Hong Kong companies were profitable? There was again no information as to the extent of the petitioner's entitlement to share in the family funds. The petitioner did, it is true, "stress that these funds are not my funds, but family funds that I have been entrusted to hold as nominee as I have been resident in Hong Kong for a number of years, and my father and the rest of the family regarded Hong Kong as being a better place for the family funds to be invested than Korea."

17. She said that her account with the Hang Seng Bank was now overdrawn to an extent of approximately HK$55,000. The petitioner finally stated that she wished "to stress that I am not at liberty to draw on the family funds for my own benefit as the money is not mine to use for my own personal purposes." She said "I do not have available funds to use for my own support and that of the children and I am dependent on the Respondent continuing to make the payments which he has made in the past." The petitioner also in the affidavit stated that US$100,000 from the family fund had been used to obtain a bank guarantee for Cedona Limited in order for that company to have an agency agreement with a company known as Jindo Fur for the sale of furs in Hong Kong. She said that the family, and not her, would be entitled to any profits that resulted from the running of this agency.

18. The petitioner annexed to this affidavit a schedule showing payments in and out of the respondent's account with the Hong Kong & Shanghai Banking Corporation which indicated that very large sums of money were regularly being paid in and out of the respondent's account. She said that this showed that "the respondent has had very large sums going in and out of the accounts, and is clearly a man of substance and high income earning capacity."

19. There was a further affidavit from the respondent filed on the 25th of November in which he said that he was still employed by Hong Kong Dragon Airlines Limited at the salary HK$80,000 per month and in which he set out his monthly outgoings at HK$77,596. Except for HK$3,000 which are related to fees and the holiday fund for the two children, the rest of this amount was expenses unrelated to the petitioner and the children of the marriage. The respondent said that his account with the Hongkong Shanghai Bank was presently overdrawn in the sum of about HK$250,000. The respondent went to say that the petitioner had "informed me on a number of occasions that she is worth between HK$15 million and HK$20 million and I believe that there are further funds on fixed deposit either with the Standard Chartered Bank or the Hang Seng Bank or elsewhere."

20. Such was the evidence placed before this Court in the application for maintenance pending suit. Mr. Payne, for the Petitioner, did announce to the Court that the respondent's solicitors had now been furnished with the accounts of Gallery 69 Limited and Cedona Company Limited and stated that these were in accord with the suggestion from the plaintiff that profits were down. They were not, however, produced to the Court and there was no information forthcoming as to the profit realized in former years or as to that presently being realized.

21. It is clear from the evidence that the respondent was generous to the petitioner both before and during the marriage. Not only did he support her at a high standard of living but he also paid whatever income tax was due on the HK$5,000 per month which she was drawing from Gallery 69 Limited. The respondent is now, according to the evidence before me, in receipt of a salary of HK$80,000 per month and he has no other incomings.

22. In V v. V 12 H.K.L.J. 83 the Appeal Court of Hong Kong dealing with the question of maintenance pending suit held that:-

"(1)     Section (7) of Matrimonial, Proceedings and Property Ordinance doss not apply to a case of maintenance pending suit and it is not, therefore, appropriate for the Court to make a detail investigation of the financial position of the Parties. The sole criteria in making an award are "reasonableness" (Section 3 of Cap. 192) and the needs of the parties.

 

(2)     In awarding interim relief, the Court should not take a long term view. Thus the potential earning capacity and future capital prospect of the parties should be ignored. Nor should consideration be given to an expense allowance except to the extent that other income might thereby be free for the purpose of paying maintenance pending suit, since the recipient could not plead his actual earnings."

23. When commenting upon this decision in H v. H No. 19 of 1983, I said "this Court is not called upon to make a detail investigation of the financial position of the parties but must make its award in accordance with what reasonable given the needs of the parties. It is true that the capital assets of the parties must not be ignored; however, the Court is primarily concerned with income".

24. It is then for the Court, in accordance with the terms of Section 3 of the Matrimonial of Proceedings and Property Ordinance, to make such order for maintenance as it considers, in the light of the evidence before it, to be reasonable. The evidence before this Court established that the respondent presently earns HK$80,000 per month. He had during the years immediately proceeding this hearing earned substantially more than that each month. He had, during the period of the marriage before the parties' relations began to deteriorate, been generous towards his wife giving her gifts both of jewellery and of money. He paid the income tax due on the HK$5,000 per month which she earned from Gallery 69 Limited. He had fully supported the family and given her a generous allowance.

25. I am satisfied, as a matter of common sense, that the HK$5,000 a month which she has been drawing from Gallery 69 Limited can be properly regarded as little more than token remuneration for the work which she does managing Gallery 69 Limited, managing and designing for Cedona Limited and managing the very substantial family investments in Hong Kong. She was, it seems to me clear, able to live at a very high standard without drawing more from the family enterprises because of the generous financial support of the respondent. I am satisfied that some measure of the prosperity of the family enterprises can be fairly attributed to the generosity of the respondent. Indeed, to an extent, the petitioner acknowledged this when she said, in her first affidavit, "the respondent has always been aware that I managed these funds and throughout our marriage he has maintained me including paying my salary tax payable on my income which I have drawn from Gallery 69 Limited".

26. The petitioner has failed to give any indication of the extent of her wealth. The only indication in this regard comes from the respondent who said, in his second affidavit, that she informed him "on a number of occasions that her wealth is between HK$15 million and HK$20 million ....". The petitioner has, it is true, not been able, as the affidavit was filed only one day before this hearing and as the petitioner is, I am told, out of the colony on a business trip, to make any reply to this suggestion. What she will say when she does I do not know.

27. However that may be the evidence before me indicates that she is a woman of substantial wealth and that she has deliberately concealed the extent of that wealth from this Court.

28. We have then, on one hand, a woman of substantial wealth, which has been achieved, to some extent, with the help of the respondent, drawing a salary of HK$5,000 per month from family concerns which is, on its face a token renumeration for the work which she does and, on the other hand, a respondent who earns HK$80,000 per month.

29. The respondent in his second affidavit suggested that almost every penny of this amount was spent on his monthly outgoings. While it must be acknowledged that the respondent has substantial outgoings I am satisfied that savings could properly be made in a number of areas which would substantially reduce the figure of HK$77,596 said to be being presently outlaid.

30. On the material before me I am satisfied that it would not be reasonable to make any order for payment by the respondent to the petitioner of interim maintenance.

31. The same does not apply to the 2 children. Clearly the respondent should be called upon to make some provisions in this regard. The children continued to reside with the petitioner in the former matrimonial home for which a rent of HK$22,000 per month and the management fee of HK$1,100 per month is paid. I am satisfied that the respondent should make a contribution towards the upkeep of the residence in which the children reside in the sum of HK$12,000 per month. I am satisfied further that he should be ordered to contribute HK$2,000 per month towards the upkeep of each child. The respondent is ordered to pay to the petitioner a sum of HK$16,000 per month as a contribution towards the upkeep of the two children. Costs reserved.