NG AU YUEN NGAR PAMELA v. NG KIT LING AND ANOTHER

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

DIVORCE JURISDICTION

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JUDGMENT

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1. This is an application by the Petitioner for financial relief from her former husband, the 1st Respondent (the Respondent). They will be 45 and 44 respectively this year.

2. The parties married in July 1975. They have one child, a son Benny, born in November 1976. In 1983, they were divorced. It was, however, an amicable arrangement. The Respondent then married a friend of the Petitioner's. The friend was an American citizen. The general idea was for the Respondent, the Petitioner and Benny to obtain United States citizenship. Whose idea it was is a matter of dispute.

3. The idea was not realized. The Respondent divorced his 2nd wife in 1985. The Respondent and the Petitioner then cohabited in Hong Kong until 1987 when the Petitioner went to Canada to qualify for citizenship. Again, it is in dispute whose idea it was. In 1989 the parties remarried in Canada. The Respondent visited the Petitioner in Canada each year until the Petitioner returned to Hong Kong in October 1991.

4. Upon her return to Hong Kong, the Petitioner found a letter from the Respondent saying that he was leaving her. Until August or September 1992, however, the Respondent returned to the flat where the Petitioner was living for dinner every night. He did not stay the night. He went out with her at weekends.

5. The Petitioner commenced divorce proceedings in June 1993. A decree nisi was granted on 13th October 1993 and made absolute on 15th December 1994. In the meantime, on 28th March 1994 the Respondent was ordered to pay maintenance pending suit at the rate of HK$120,000 per month which he has paid to date.

6. The parties are far apart on the appropriate financial provision for the Petitioner. It is the Petitioner's case that she reasonably requires HK$125,000 per month and accommodation; that the Respondent is worth in excess of HK$100,000,000; and that the Respondent can afford to pay her a lump sum of HK$38.5m. calculated on a "Duxbury" basis. That sum would be in addition to a sum in the region of HK$10,000.000 to enable her to buy, furnish and decorate a flat in Hong Kong to live.

7. The Respondent asserts that he has net assets of only HK$7.7m. In addition, he has an income of $200,000 per month from his practice as solicitor, an income which has dropped from over $300,000 per month because of the decline in the property market and business generally in 1994. He estimates his monthly expenses, including provision for Benny's education and mortgage payments, at about $230,000. He is prepared to pay the Petitioner $60,000 per month or a lump sum of $2,000,000.

8. There was evidence of the history of the marriage or marriages. Conduct as such is not an issue. What is in dispute is whether there was effectively one continuing relationship between the parties or whether there was a series of clearly defined episodes.

9. Each party blames the other for the excursions to USA and, later, Canada. The object each time was to secure a retreat from Hong Kong if necessary having regard to the problems likely to arise in 1997. I am satisfied on balance that the Respondent was responsible. Apart from reading his affidavits, I had the opportunity of seeing and hearing the Respondent in the witness box under cross-examination for sometime. He sought to portray himself as a man of high morale principle, conservative and prudent in his professional and business dealings. That sits ill with being pushed into a sham marriage by the Petitioner. Further, there would be no point in re-marrying the Petitioner when he had no interest in going to Canada, which was his case, and when he had already a developing relationship with the 2nd Respondent (Miss Chan).

10. When the Respondent married the Petitioner's friend, the Petitioner herself went to USA to further the citizenship project. The Respondent said he did not want the Petitioner to go there. He said that the Petitioner's business there did not work out and that the Petitioner could not cope with Benny who missed his father. That, he said, was consistent with the project being her idea. Further, the Respondent said there was no reason why he should want to prejudice his business and contacts in Hong Kong by leaving.

11. In my view, the Petitioner's failure in USA was equally if not more consistent with her being obliged to comply with the Respondent's wishes. I see no reason why the Respondent's concern for the future of Hong Kong should not outweigh his business pretentions. It is also difficult to see why the Respondent should so quickly resume cohabitation with the Petitioner after the Respondent's marriage to the Petitioner's friend had failed. Why should he go back to someone who was clearly making a mess of his life?

12. Next, the Respondent said the Petitioner went to Canada against his will. It was the Respondent's case that she would not even take Benny and look after him. Even so, he re-married her after 2 year's separation. He explained that he still had a certain loving feeling and wanted a wife and a whole family. He hoped the Petitioner would return to Hong Kong.

13. I find it difficult to reconcile this with his repeatedly expressed opinion of the Petitioner as "stupid and lazy". I am quite satisfied that, as long as it suited him, the Respondent was happy to retain his relationship with the Petitioner. Only when an intimate relationship developed with Miss Chan in 1991 did it suit him to abandon the Petitioner.

14. I am satisfied that, despite the Respondent's intervening marriage to another, the parties remained de facto husband and wife. Effectively, there was one marriage that lasted until about 1991. At the beginning of that marriage, the Respondent was still in the process of qualifying as a solicitor. The Petitioner was and remained employed as a secretary until 1983. She earned more than the Respondent for much of that period. She made a substantial and significant financial contribution to the marriage. There after, the Petitioner was dependant financially upon the Respondent for what became an increasingly generous life style. Although the Petitioner obtained employment again as a secretary for a few months in Canada and for a short period after returning to Hong Kong, this was to occupy herself rather than out of financial necessity.

15. I find that the Petitioner made as much contribution to the marriage, financially or otherwise, as she was permitted by the circumstances dictated by the Respondent.

16. Each party has certain undisputed assets. The Petitioner has, in her own name, a house in Canada. It is worth approximately C$350,000 if sold urgently, perhaps C$410,000 if the sale is allowed to take its time. It is worth about HK$2,000,000.

17. The Respondent owns a flat at 3209, Convention Plaza, Hong Kong. It is worth about HK$7,000,000 subject to an outstanding mortgage of HK$1.8m. He has HK$2.63m. in a current account. He has three investments in China:-

18. There is also a sum of HK$838,277.68 in court, being the proceeds of sale by the Respondent of a flat at Dragon Fair Gardens.

19. There is a number of bank accounts held by both parties containing small sums, some shares and items of jewellery whose value is too small to be worth consideration.

20. Total joint assets are therefore, approximately HKS21,000,000. Liabilities are HK$5.8m. Net assets are HK$15.2m.

21. Apart from his current drawings of HK$200,000 per month from his practice as a solicitor, the Respondent also receives dividends from his various investments.

22. The real issue between the parties is whether the Respondent has substantial assets other than those disclosed. There is no positive evidence. Miss Leung for the Petitioner relied upon adverse inferences which, she said, should be drawn having regard to the Respondent's conduct of these proceedings. In J. v. J. (1955) p.215 Sachs J. said at p.228:

"For a husband in maintenance proceedings simply to wait and hope that certain questions may not be asked in cross-examination is wholly wrong. In the light of this apparent misapprehension it is as well to state expressly something which underlies the procedure by which husbands are required in such proceedings to disclose their means to the court. Whether that disclosure is by affidavit of facts, by affidavit of documents or by evidence on oath (not least when that evidence is led by those representing the husband) the obligation of the husband is to be full, frank and clear in that disclosure. Any shortcomings of the husband from the requisite standard can and normally should be visited at least by the court drawing inferences against the husband on matters the subject of the shortcomings - in so far as such inferences can properly be drawn."

23. That principle has been followed both in England and Hong Kong.

24. On this issue, Miss Leung's submission fell effectively into three parts:

25. As to discovery, the Respondent filed his affidavit of means on 20th August 1993. Since then, he has made a number of affidavits, the last on 6th March 1995, and responded to a number of questionnaires. Throughout the hearing, a stream of financial documents was produced. The Respondent's explanation was in general that he had not been asked about the particular accounts or statements, or that he thought that in relation to bank accounts he did not have to discover accounts already closed. Further, he said that he expected the matter to settle and not go to court. He was frustrated because he thought that he had done justice to the Petitioner. Consequently, his affidavits and discovery left a great deal to be desired and were full of errors for which he repeatedly apologised during the hearing.

26. In another case, I might have some sympathy with such explanations. In this case, where the Petitioner had pleaded in her petition that the Respondent had boasted "he was extremely rich" and that "he had transferred all his millions to various accounts and places where they could not be found", it was clear that settlement was unlikely and that the Respondent needed to be meticulous in his approach to discovery and disclosure.

27. Since the late 1980's, the Respondent has had business or financial interests outside his practice as solicitor. He became director and shareholder in a number of private companies; he indulged in considerable buying and selling of shares; he promoted business in China for his firm and made substantial private investments there; he earned commission by promoting property deals; and he and his partners took part in a short-lived but legitimate business of selling passports in about 1989.

28. In his original affidavit of means, the Respondent disclosed his interest in 6 private companies. Following questionnaires and evidence, that number has increased to 19. In relation to two of these, the Respondent had executed a declaration of trust of his shares in favour of a fellow director. Two companies with the name Brightford the Respondent did not disclose at all, they being introduced by the Petitioner in an affidavit. It is fair to say that some of these companies have done little or no business; or that the purpose for which some were set up has now been served. Throughout the hearing, however, the Respondent demonstrated that he has a careful filing system for his personal affairs and keeps records meticulously. There is no reason why he could not have provided a complete list of these companies from the outset, coupled where appropriate with an explanation that they were defunct or inoperative. As it is, for most of these companies, there is little information beyond their names and the identity of the shareholders. There are no proper financial statements. There are some rather unsatisfactory letters from accountants purporting to certify that most of the companies have little or no value.

29. The most important of these companies is Koko Ltd, the Respondent's personal service company and a tax avoidance vehicle. Through this, the Respondent put most of his and his family's expenditure. In his 1st affidavit, he described it as an investment company. Asked to be more forthcoming, he provided the information that he had received no dividends, no emoluments and that the only pecuniary benefit was the use of a car for business purposes. Whilst the first two statements are correct, the 3rd was wholly misleading, the Respondent agreeing cross-examination that he received rather more than the use of a car.

30. There are no audited financial statements for Koko after 91/92. There were available trial balances for June 1992 and 1993. There was also the manuscript ledger of expenditure for the period June 91 to April 94 on which the trial balances in part were based. According to Respondent, Koko has not operated since April 1994.

31. Koko's income derived from the purchase and sale of flats at St. Louis and Fair View Mansions; the renting of a tractor/trailer unit, commission derived from the Respondent effecting property deals; and when necessary, from injections of capital or loans by the Respondent.

32. Between May 91 and June 92, income was HK$4.6m. and expenditure HK$4.2m. $384,000 was spent on a pleasure boat registered in the Respondent's name. It had been purchased for about $200,000. It was rented to Koko which paid the Respondent $20,000 per month for hire, together with repairs and other outgoings. $103,000 was for motor cars expenses. $96,000 was for travelling for the Respondent and Benny. $20,000 was subscriptions for clubs. $125,000 was for sundry expenses including the boat. $87,000 was for the boat boy. $546,000 was for credit cards.

33. For 92/93 expenditure was similar. There are, however, no documents to show Koko's income for that year. In 93/94 the trial balance shows income of $2.28m. and expenditure of $2.27m. The bulk of the income was injected by the Respondent. According to the Respondent, because of the down turn in the property market and the economy, other income dried up. It is, however, to be noted that lack of activity in Koko coincides with the filing of the petition in June 93.

34. Another company is Front Kingdom Ltd. The Respondent explained that it was a one transaction company in which he had a 33% share and which was formed to take 10% in Karomachi Ltd, a joint venture that purchased a car park in Bank of America Tower. The Respondent disclosed that he received $373,337 by way of dividend for 92/93. In cross-examination, it finally transpired that the car park was sold for about $3m. giving rise to a profit of $12m. After taking into account a reserve fund for tax, the Respondent agreed that he received another $500,000.

35. In his 1st affidavit of means, the Respondent disclosed ownership of a flat at Dragon Fair which he purchased in June 1992 and which at the time of his affidavit he intended using as his home. It was eventually sold and the proceeds paid into court. In his last affidavit the Respondent exhibited the unaudited balance sheet, profit and loss account and directors' accounts of Over Talent Ltd. In this company, the Respondent and one Aeneas Ho each held 50% of the shares. Again, it appears to have been a one transaction company in 91/92 which acquired 10 units at Dragon Fair Gardens. 8 units were sold. Each shareholder obtained a profit of approximately $400,000 and each took one of the unsold units.

36. During the hearing, the Petitioner's advisers drew up a schedule of deposits in the Respondent's principal bank account with Hong Kong Bank at the branch in Tai Yau Street. One of these deposits was for $2.4m. in October 1994. The Respondent explained that this was the return by China National Aviation Corporation (CNAC) on 18th October 1994 of his investment in a joint venture which did not mature. He made the investment "some time age". It was a significant investment and should, of course, have been disclosed.

37. In a questionnaire put to the Respondent during preparation for the hearing, the Respondent was asked about an account with National Republic Bank of New York. He replied that it was an account in his name already closed. He was then asked for details and also asked whether he had an account in the name "NUT". The Respondent replied that he had such an account and purported to produce copy statements relating to it. In fact, these statements did not relate to the NUT account. The relevant documents were only produced during the hearing in what Miss Leung described as "haphazard and unhelpful form". I agree entirely with that description. Absent the Respondent's verbal explanation, the documents defy sensible analysis and, even with explanation, are difficult to understand.

38. The NUT account was important. It was operated by the Respondent to receive funds from the passport venture to which I have referred. At the time, one of the Respondent's partners was honorary consul for Belize. Immediately before and after the events of June 1989, that partner sold passports to persons from China wishing to leave that country (it appears that there was nothing illegal about the venture although it must be said that it seems highly undesirable for a solicitor and officer of this court to indulge in such business). The Respondent identified in the relevant accounts four credits totalling something over US$400,000. He said his share of the venture brought him something between HK$3 and 4 m. The documents show a bewildering series of other entries where credits appear to exceed HK$13m. The Respondent explained that he used the account inter alia to fund the purchase of foreign exchange and to provide for the purchase of property in Canada where the Plaintiff then was. Consequently, there were many debit and credit entries.

39. The matters which I have just discussed are but examples of the unsatisfactory nature of the Respondent's disclosure and discovery. They are not exhaustive. But nothing is to be gained by setting out the whole catalogue.

40. Miss Leung's 2nd point was that the Respondent's life style and business was not matched by his income.

41. Since 1990, the Respondent's income appears to have been:

42. These are only the more substantial and identifiable expenses during the period, totalling $21.5m. Already they appear to exceed the Respondent's income. They take no account of other activities of the Respondent during the period. For example, he bought and sold shares totalling $13,000,000 and $15,000,000 respectively. On the records available, these sums cannot be matched. However, the shares pump clearly had to be primed at some stage and that priming would not have been insubstantial. The Respondent also exchanged sums of money totalling several hundred thousand dollars with Miss Chan when they bought and sold shares for each other.

43. The 3rd limb of Miss Leung's submission concerned the relationship between the Respondent and Miss Chan. According to the Respondent, Miss Chan came to Hong Kong in 1980's. She worked hard and developed a successful business selling electronic and other goods from China to USA. By about 1992, she was, in the Respondent's view, rich The Respondent himself had been going out with Miss Chan since 1985 and in about 1991 began a serious relationship with her. The Respondent said that Miss Chan is now expecting their baby. Because of possible complications at birth, a Miss Chan went to Hawaii shortly before the hearing commenced because medical facilities are thought to be better there. Miss Chan was, therefore, not available to throw any light upon her business affairs and means.

44. Miss Chan is involved in two companies, Joy Fine Ltd. and Jannock Ltd. The Respondent accepted that Miss Chan controls Joy Fine but was not certain about Jannock. Of Joy Fine's 10,000 shares, 9,900 are held by a company called Inter Marine Exports Ltd, which is incorporated in the Channel Islands, and 100 by Miss Chan's sister. In cross-examination, the Respondent said he knew nothing of Inter Marine and that his firm had never acted for it. His memory, however, was jogged when a declaration of trust dated 1st March 1993 by Miss Chan's sister in favour of Inter Marine was produced to the Respondent. The declaration was prepared by the Respondent's firm and witnessed by the Respondent himself.

45. Joy Fine owns a flat at 3404, Convention Plaza. According to the Respondent, the flat was purchased by Miss Chan through Joy Fine at the Respondent's suggestion because he already had his flat at 3209, Convention Plaza. The Respondent said that they would be able to look after each other and that the location was good for Miss Chan to entertain her business contacts.

46. The purchase price of this flat was $9.7m. with a mortgage of $6.8m. The difference of $2.9m, together with stamp duty, left $3.2m. to be paid. Miss Chan paid $200,000 on 16th February 1993. Joy Fine paid $267,000 stamp duty and $773,000 on 2nd March 1993 on execution on the sale and purchase agreement. Joy Fine paid a further $1.96m. on 30th March 1993 on completion.

47. At about this time, the Respondent made payments totalling $3.4m. to Miss Chan. The payments were $300,000 on 21st May 1992 and $100,000 and $200,000 each on 28th November 1992. Then $1m. on 27th February 1993, $800,000 on 25th March 1993 and $1m. on 29th March 1993. The first three payments are perhaps a little remote at first sight. The other three payments, however, are very suggestive of a connection with the purchase in view of the timing and the amounts.

48. The Respondent said that there was no connection and that the payments were mere coincidence. He explained that apart from the payment on 21st May 1992, he was repaying a total of $3.171m. paid to him by Miss Chan between February 1990 and June 1992 for the purchase of shares and gave details of cheque numbers. He also gave details of cheques by which Joy Fine made appropriate payments to its vendor on the purchase of the flat.

49. I note also the curious coincidence that Miss Chan's sister executed the declaration of trust, to which I have already referred, on the day before the sale and purchase agreement was signed. Further, the Respondent said that he has now put the flat on the market for $23m, albeit on the instructions of Miss Chan and her family.

50. Miss Chan previously purchased two other properties. In 1988, she bought a flat at Elizabeth House for $1.35m. The Respondent admitted lending her money to help with the purchase but said that it was less than $1m. There was a mortgage. That flat had since been sold.

51. In September 1991, Miss Chan bought a flat at Paterson Building for $1.56m. According to the Respondent, it was for her family. It was, however, sold in January 1992 for $2.5m and only occupied by the Respondent rent free during Miss Chan's ownership. On 26th March 1992, the Respondent received 3 cheques from Miss Chan, cheques which he admitted that he made out. He explained that he often did this in order to help Miss Chan. Of the 3 cheques, one was for $400,000 to Koko Ltd. for commission, that is, for the Respondent effecting sale. Another for $1.1m. to the Respondent was suggested to be part of the sale proceeds and the 3rd for $410,620 was suggested to be costs and disbursements. The Respondent, of course, denied these suggestions.

52. Jannock until recently had the same registered office as Joy Fine at Elizabeth House. In fact, it acquired a new office at Centre Mark, Queen's Road Central, for $3.3m. in 1993. The Respondent denied any connection with Jannock. During the hearing, however, while Miss Chan was not in Hong Kong, the Respondent was able to obtain certain records and private bank information of Jannock, as well as Joy Fine.

53. On 20th October 1994, the Respondent's principal bank account was credited with $2,400,000 being the refund by CNAC of the investment in the failed joint venture. The Respondent said Miss Chan had no connection with this matter. The cheque dated 18th October 1994 from CNAC, however, had originally been made out to Joy Fine. The Respondent said he pointed out the mistake and it was corrected by staff of CNAC. He attributed the mistake to CNAC knowing that Miss Chan and he were friends and doing business together. Although directions for repayment came from CNAC head office in Beijing, repayment was effected by the Hong Kong office which was more familiar with Miss Chan and so the cheque was made out to Joy Fine. The Respondent said the Chinese way of business is based on trust and word of mouth. The Hong Kong office of CNAC mistook the Respondent and Joy Fine as the same.

54. I am bound to say that, as an explanation, it is difficult to accept. It is significant that while the Respondent, throughout long cross-examination, was at pains to look me in the eye while answering difficult questions, he failed to look up at all while dealing with this point and was plainly much discomfited. It is hardly surprising that he should be. Even assuming that the business methods used in or by China institutions are more informal than is the case with other companies, it is difficult to see how a substantial investment made by an individual should be refunded to a limited company unless, of course, there is a real connection between the individual and that company.

55. There are two other matters I take into account when considering the Respondent's position. First, at the time when this hearing was pending, the Respondent decided to sell his flat in Convention Plaza and buy a flat at Monmouth Terrace in which to live with Miss Chan. He signed a sale and purchase agreement on 6th May 1994 for $12,300,000. He did not inform the Petitioner or her solicitors. The Petitioner discovered through friends and on 15th July registered these proceedings against it. In the event, the Respondent could not find finance to complete the purchase and forfeited the deposit. The value of this flat is now much diminished, being possibly worth $8,000,000. The Respondent admitted that he is on good terms with the vendors who allowed completion to be deferred several times. He has not been asked to cancel the sale and purchase agreement registered in the Land Registry. He could still proceed with the purchase if he wished and save his deposit. Because of the circumstances, however, he has lost interest in the flat.

56. Second, in December 1994, the Respondent pledged his shares in Guangdong Trust for $4,000,000. The net loan was $3,800,000 which, on 25th February, he took to China in cash to invest in Xin Ya which he considered to have good prospects. He produced a receipt dated 26th February. He explained that this company makes leather shoes, a type of business in which he has been interested in investing for some time. Capital was urgently required and, unless he had produced the cash immediately, he would have lost the opportunity. I have to say that I find this transaction, assuming it took place at all, to be wholly unacceptable on the part of an officer of this court who was on 2nd March about to embark on a hearing involving his financial affairs.

57. Having regard to all the factors I have set out above, on the balance of probabilities I find that:

          (1) the Respondent has not made full and frank disclosure of his financial affairs as required.

          (2) the Respondent and not Miss Chan is behind Joy Fine Jannock and Inter Marine and is the beneficial owner of these companies, their properties and also of properties in Miss Chan's name.

          (3) while I draw the inference that the Respondent is disposed of assets substantially in excess of those he admits, the Respondent is not among that class of person who has virtually unlimited assets enabling him to meet any award that the court might make against him. He is a him to meet any award that the court might make against him. He is a solicitor and entrepreneur of modest means and ability. Nothing in the evidence suggests the Respondent to be a man in control of over $100,000,000. I am confident something would have emerged to suggest that if it be the case but it did not.

58. What award then should be made against the Respondent? The Petitioner said that she now intends to live in Hong Kong and wishes to buy a flat to live in. At present, she is living at 3C Union Apartments, 11 MacDonnell Road. This is an old block. The flat is under licence to the Respondent from the New World Group which requires its return. The Petitioner will have to move out. The flat has 3 bedrooms and is of 1,600 sq. ft. but has no car park. The cost of a flat of similar age and location is in the region of $7,500,000. A more modem flat would be about $10,000,000. The Petitioner estimates that the cost of furnishing and decoration would be a further $1,000,000.

59. Until December 1992, the Petitioner had the use of a Mercedes Benz car and driver provided by the Respondent through one of his companies. The cost of a similar car on the road would be about $1,250,000. A driver's salary would be $130,000 per annum plus bonus. Running costs would be about $450,000 per month.

60. At present, the Petitioner's monthly expenses are:-

61. Because of the peculiar history of the marriage, the Petitioner has no established pattern of spending or life style. It is clear, however, that the Petitioner has never spent anything approaching $30,000 per month on clothing and accessories. A total of $13,600 per month for toiletries and face, body and hair treatment also seems high as does $6,000 for bird's nest and ginseng, the need for which will no doubt diminish once these proceedings are behind the Petitioner. Benny is already generously provided for by the Respondent. He comes to Hong Kong only three times a year. A provision of $38,000 per annum for Benny's purposes seems unreasonable. As the Petitioner intends to stay in Hong Kong, the house in Canada will have to be sold, so expenditure on that will cease.

62. In the circumstances, I consider that the Petitioner's reasonable monthly expenses to be $85,000. According to a further Duxbury calculation, the capital sum required to provide for such expenses together with a car and driver is approximately $19,700,000. Add to that the cost of a flat, decoration and furnishing amounting to, say, $10,000,000 and the sum required of the Respondent is about $30,000,000.

63. I do not accept, however, that the Respondent has assets of which $30,000,000 would be a reasonable proportion or from which he can make such a sum available. That would suggest that the Respondent has assets or asset earning capacity in excess of $60,000,000. In my judgment, on the basis of the material before me, I estimate the Respondent's assets at between $30 and 40 million. On that basis, I make an order that the Respondent pay the Petitioner a lump sum of $16,000,000. Additionally, the Petitioner will keep and enjoy the proceeds of the house in Canada.

64. I will hear the parties as to any further order or directions that may be needed for working out my order.

65. I make an order nisi that the Petitioner should have the costs of her application.