KMD v. PIB

FCMC 14665 / 2007

   IN THE DISTRICT COURT OF THE

   HONG KONG SPECIAL ADMINISTRATIVE REGION

   MATRIMONIAL CAUSES

   NUMBER 14665 OF 2007

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

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Introduction

1.  This is an application by a petitioner wife for a lump sum payment pursuant to s. 4 (1) (c) Matrimonial proceedings and Property Ordinance, Cap. 192.

2.  Central themes throughout this case have included the length of the marriage and whether or not the parties maintained separate finances and if so how that impacts on the issue of ancillary relief. The husband also maintains that certain assets are pre marital assets and that as such they should not be included within the pool of matrimonial assets available for distribution. The wife also alleges that the husband is guilty of “reckless overspending”, including very high cost of living expenditure. Reference is made to his interest in flying and in particular to the purchase of a share in a second helicopter (a smaller helicopter having been purchased during the course of the marriage). This has, on the wife’s case, led to a corresponding dramatic increase in the husband’s levels of debt. She therefore seeks an order that does not allow a deduction for the husband’s liabilities.

3.  The litigation has been fairly protracted, the wife having first issued proceedings in November 2007. Agreement was eventually reached on a number of matters including the basis for the divorce and the original arrangements for the child of the family, a little girl called O. Further litigation ensued when the wife decided that she wished to return to Australia, having decided previously to stay in Hong Kong. The wife subsequently issued an application for leave to remove O permanently out of the jurisdiction of Hong Kong. Other agreements were eventually reached. These have mainly centred on arrangements for O following the relocation. Unfortunately the issue of financial relief was not capable of resolution, despite the assistance of a very able mediator and specialist matrimonial lawyers. It is that matter that now falls to be determined by the court.

4.  The wife seeks a relatively modest lump sum payment, whereas the husband proposes that there be a clean break between the parties, with each of them retaining what they now have. Consensus has been reached in relation to maintenance for O in Australia and this is not an issue that I need be concerned with.

Issues

5.  It seems to me that the following issues now fall to be determined by this court:

To what extent, if at all, should the two periods of cohabitation prior to the marriage be taken into account?

Should this be regarded as a short marriage?

Did the parties maintain separate finances?

Should LS be regarded as a pre marital asset?

How, if at all, should LS be included in the computation of assets available for distribution?

Is the husband guilty of reckless overspending? Has he dissipated funds that would otherwise have been available for distribution? If so should funds be “added back” into the computation of available assets? If so how much should be added back?

What then is the computation of assets available for distribution?

How should those assets be divided bearing in mind my findings above and the principles of need, compensation, sharing and the s.7 factors?

To what extent if at all is the concept of the marital acquest engaged in this case?

Background to the marriage

6.  The parties married on the XX May 2004 and separated in September 2006. Their daughter, O was born on the XX September 2004 and is now almost 5 years of age. Prior to the marriage the parties cohabited for two periods of time; there is a dispute between them over how those periods of cohabitation should properly be regarded by the court.

7.  The parties originally met in January 1997, when the petitioner wife was nearly 26 and the respondent husband 27 years of age. The relationship developed and in December of the same year the wife moved in with the husband, into a property (PS) owned by the husband and his twin brother. PS had been inherited due to the untimely death of the husband’s parents in a road traffic accident, shortly before the parties met in November 1996. The relationship came to an end in February 2000 and the wife left both the husband and Brisbane, which is where they were then living and relocated to Melbourne. It seems to be accepted that for the next couple of years that although the parties kept in touch, that they were both involved in other relationships, the wife cohabiting with someone else for a short period of time. At some point, in or about January 2002 they resumed contact and by all accounts quickly resumed an intimate relationship, although the husband now seeks to paint this as more of a friendship. The wife says that it was immediately a serious relationship. In June 2002 they both visited Hong Kong together. The husband wished to obtain some international exposure in the legal field and was keen to look into possible job opportunities in Hong Kong. In August 2002 the husband relocated to Hong Kong, followed by the wife in November 2002. They began cohabiting together in Hong Kong from that time. Prior to relocating the husband sold PS and purchased LS in his sole name. The wife acted as his enduring power of attorney in that purchase and indeed continued in that role until separation. In June 2003 they became engaged and in May of the following year they were married. O was born 4 months later.

8.  Although both parties are lawyers that had not always been the case. When they first met, the wife was employed as a legal secretary. In 1998, whilst they were together, the husband resigned from full time employment in order to take the part time legal practice course and to renovate PS.

9.  The parties were recently each employed in the legal profession, the wife as in house counsel with A and the husband as a junior partner with B. The wife has since resigned in order to move back to Australia with O. She is now engaged to be married to a barrister in Brisbane and does not intend to work in the short term. The husband wishes to also relocate to Brisbane in order to be close to O. The decree absolute was pronounced on the 30 July 2009. The husband remains in Hong Kong for the time being and is said to also be involved with someone else. He is not cohabiting for the moment. He said in the witness box that he plans to have further children. The wife does not.

The litigation to date

10.  As indicated, the litigation between the parties has been somewhat protracted, due in part to their attempts, quite properly, to settle matters through mediation and negotiation. They have been largely successful in that respect. In so far as O is concerned, an order was made on the 9 December 2008 for joint custody with care and control to the wife and liberal and flexible access to the husband. It was envisaged under the terms of that order, that the husband would have overnight staying access to O on 6 out of every 14 nights on a fortnightly cycle. The agreement between the parties is comprehensive and clearly envisages that both parents would continue to be actively involved in O’s life going forward. Agreements were also reached in relation to holidays. In so far as finances were concerned, it was agreed that they would share school fees, medical insurance and prior agreed extra-curricular activities on a 50:50 basis, reimbursement to be made by the husband to the wife within 28 days of the production of receipts. In addition it was agreed that the husband would contribute HK$12,000 per month as maintenance for O, being the costs associated with her upbringing, whilst she was living with the wife.

11.  Although admirable it seems that despite everyone’s best intentions the husband was not always able to exercise this level of access. This led to a letter from the wife’s solicitors being written on the 27 February 2009 in the following terms

We are instructed that there have been occasions (mostly recently last Friday evening when your client emailed our client to inform her that he would be in Europe from 27 February 2009 to 10 March 2009 inclusive) where your client has been unable to exercise his access with O and has contacted our client asking whether or not she wishes to spend this time with O and in the event that she is unable to that he will make other arrangements. Whilst our client thinks it is in O’s best interests for your client to routinely and consistently exercise all of his access with her, she is also more than willing and able to have O be with her on the times this is not possible for your client. We trust that you client also considers it to be in O’s best interest to be spending time with our client and not a third party in the event your client cannot exercise his access.

In any event pursuant to the Orders, our client has the sole care and control of the child and as the primary carer for O she considers it is O’s best interests for her to spend the access that your client cannot exercise with our client.

In all of the circumstances, our client does not agree with your client making alternative arrangements for O’s care with a third party on the occasions that he cannot exercise his access and requests that he cease making such suggestions and that he inform her with as much notice as possible that he is unable to exercise his access so that our client can then proceed in making all of the necessary arrangements at her end.

12.  Since then it appears that although the husband has seen O frequently that this was not always as regularly as had originally been envisaged.

13.  This was a point of some dispute between the parties during the trial, with the wife complaining that although she accepted that on occasion access could not be exercised by the husband because of work commitments including overseas business travel, that on others he simply chose not to put O first, whereas she did. Evidence, inter alia, of non related business travel was referred to in support of that contention. (Please see para 65 above)

14.  On the 22 December 2009 the parties entered into a further agreement in relation to O, whereby the husband consented to her permanent removal from Hong Kong. On the 1 July 2010 the wife relocated with O to Brisbane, Australia. The wife acknowledges in that agreement that the husband intends to take up permanent residence in Brisbane once he finds suitable employment there and that O will then live with each of them in Brisbane once that happens along the lines of the order previously agreed. Regular contact by telephone, skype and e-mail is also envisaged. It was also a term of the order that until the 31 December 2011 the mother will take O to Hong Kong once every six months in order to enable the husband to have easy access to her.

15.  Maintenance was subsequently agreed at AU$1,137 per month. This is calculated in accordance with the Australian Child Support Agency guidelines. A formal assessment can be obtained by the wife once she is residing in Australia. Apparently it is not possible to obtain such an assessment until she has actually taken up permanent residence.

16.  In so far as the ancillary relief is concerned, the parties filed up dated Form E’s and narrative affidavits of means shortly prior to the trial.

Open Proposals

17.  The parties have each filed open proposals as follows:

The wife’s open proposals

13.  The Petitioner submits that there should be an equal division of the Matrimonial Pool as between the Petitioner and the Respondent, but that the Respondent’s debts should not be allowed for.  Otherwise a simple equal division of the net value of the Matrimonial Pool would be inequitable and unjust.

14.  On this basis, the Matrimonial Pool should be valued at HK$1,381,532 in the Petitioner’s name and HK$3,322,908 in the Respondent’s name, (net of his liabilities) being a total of HK$4,704,440.  50% equals HK$2,352,220.  Deducting the Petitioner’s own assets, this results in payment to her of HK$970,688.  This is based on the Respondent’s own figures which have allowed for a deduction of HK$497,932 for Capital Gains tax on the sale of LS, with no official assessment to support such a deduction.  That being so the Respondent’s asset figure could be considerably higher.

…

Offers to Settle

19.  On 11^th November 2009 the Petitioner offered to settle this matter on payment of a sun of HK$750,000 in full and final settlement of her claims, with the condition that each party would pay the sum of HK$250,000 into a trust fund for O’s future education. [C/319] The Respondent did not agree, saying he could not agree until the removal application had been dealt with.

20.  Thereafter, in anticipation of trial, and in the knowledge that the LS property had increased in value, an offer was made to settle at HK$800,000, without setting aside of funds for O. This offer has not been accepted.

18.  In her closing submission the wife sought the sum of HK$895,688 on the following premise:

85．  The proposal put forward for the Petitioner is that the Respondent’s liabilities be ignored for the purposes of the distribution between the parties, as he acknowledges there are lifestyle debts.  Whereas he says that HK$400,000 of the liabilities went towards the purchase of M, he purchased a reducing asset that is now worth HK$250,000 less on his schedule of assets than he paid for it.  Therefore the very most that should be taken into account as a liability should be the HK$400,000 towards M less the HK$250,000 by which it has reduced in value, being the sum of HK$150,000.  The Petitioner should not be funding his expensive hobbies.

86．  The calculation would therefore be:

Assets	Amounts	Total
Respondent’s gross assets: A4/1560	HK$3,322,908 – HK$150,000	HK$3,172,908
Petitioner’s assets: Exhibited to P’s Opening Submission	HK$1,381,532	HK$4,554,440
	HK$4,554,440 divided by 2	HK$2,277,220
	Deduct Petitioner’s assets	HK$1,381,532
	Sum to the Petitioner:	HK$895,688

The husband’s open proposals

19.   The husband filed his open proposals shortly before the trial as follows:

1.  The parties do retain their respective assets and that there be no further ancillary relief provision between the parties.  The Husband’s reasons for this proposal are as follows:-

(i)  The distribution of capital between the parties is already fair and already balanced in favour of the Wife.

(ii)  The Husband’s property at X LS (“the LS Property”) is a premarital asset which should not be included in the matrimonial pool for reasons already explained.

(iii)  The Wife’s assertion that there should be add back to the matrimonial asset pool is unwarranted.

(iv)  The Wife intends to remarry which is a factor that can be taken into account by the Court.

(v)  The Husband’s financial circumstances are likely to be significantly worsened by his move to Australia.

Maintenance

2.  All maintenance claims between the Husband and the Wife be dismissed.

3.  The Husband to pay the Wife maintenance for and on behalf of O in a +sum calculated according to the formula prescribed by the Australian Child Support Agency for the assessment of child support.

Costs

4.  Each party to bear their own costs.

Generally

5.  Each party will retain their assets currently in their custody and/or control.

The law – general principles

20.  I have been taken to a number of cases on cohabitation, pre marital assets and conduct in so far as it applies to reckless overspending and the dissipation of assets.  I will refer to some of these cases and others in the body of this judgment, when I discuss each of these issues in turn.  In the meantime, I think it might be helpful to the parties if I repeat here, for the avoidance of doubt, the pertinent sections of DD v LKW (CACV no 91 of 2007).  This sets out the approach that the court currently takes when determining final ancillary relief.

(3)  The inquiry should be conducted in two stages:

1)  First, computation of the available assets of the parties such as property, income (including earning capacity) and other financial resources which the parties have and the parties have and are likely to have in the foreseeable future (Charman [67]).

2)  Second, distribution of the assets by reference to the three principles of need (generously interpreted), compensation and sharing. These principles can be gleaned from section 7(1) and each of the matters set out in section 7(1)(a)-(g) can be assigned to one or another of the three principles (Charman [68]).

(4)  The principle of need requires consideration of

1)  the financial needs, obligations and responsibilities of the parties (section 7(1)(b));

2)  the standard of living enjoyed by the family before the breakdown of the marriage (section 7(1)(c));

3)  the age of the parties (section 7(1)(d)); and

4)  any physical or mental disability (section 7(1)(e))  (Charman [70]).

(5)  The principle of compensation relates to, among others,

1)  the prospective financial disadvantage which upon divorce some parties face as a result of decisions which they took for the benefit of family during marriage.

2)  in short marriage the financial disadvantage a party suffered, if any, on entering into the marriage.

3)  Any loss of possible pension rights: section 7(1) (g) (Charmin [71]).

(6)  The relevant factors for the principle of sharing are,

1)  The contributions of each of the party to the welfare of the family (section 7(1) (f)).

2)  The duration of the marriage (section 7(1) (e)).  (But see below)

3)  Conduct of the parties, which it would be inequitable to disregard (Miller [65]; Charman [72]).

(7)  As to any conflict between these three principles,

1)  The criterion of fairness is to apply in irreconcilable conflicts between the three principles [Charman 73].

2)  when the result suggested by the needs principle is an award of property less than the result suggested by the sharing principle, the latter result should in principle prevail (Miller [28], [29], [139]; Charman [73].

3)  When the result suggested by the needs principle is greater than the result suggested by the sharing principle, the former result should in principle prevail (Miller [142], [144]; Charman [73]).

(8)  The principle of fairness is to apply to all properties of the parties both ‘matrimonial’ (i.e. the product of both parties which also include the matrimonial home, even if this was brought into the marriage by one of parties) and ‘non-matrimonial’ (i.e.  By inheritance and gift) (Miller [22]).

(9)  The equal sharing principle applies to both long and short marriages but in case of short marriage, the non-matrimonial property may be a good reason for departing from equality (Miller [24]; Charman [66]).

(10)  The concept of ‘special contribution’ i.e. exceptional income generated by only one party, may be regarded as a factor pointing away from equality of division when, but only when, it would be inequitable to proceed otherwise (Miller [68]).

(11)  Where a spouse has given up a lucrative career for the benefit of the family, this may justify an award for compensation (Miller [90-93]).

The principles are not exhaustive

70.  It would not be practicable to list each and every principle that one may extract from White and Miller. As Charman observed, the House of Lords after laying down the guidelines has left much to be developed by courts. What I have done here is to set out those principles, which I believe would be most frequently encountered in ancillary relief applications.

21.  Reference will also be made to the s.7 factors which are identified in the judgment under the headings of need, compensation and sharing.

22.  Overall the court is charged with dividing the assets in a fair and equitable manner.

23.  I must now turn to consider the issues, the law and the parties’ evidence as set out in their Form E’s,together with their supporting affidavits and in their answers to the questionnaires raised. Further I will rely on each party’s oral testimony.

Discussion

To what extent, if at all, should the two periods of cohabitation prior to the marriage be taken into account?

The law

24.  Both counsel have referred me to the relevant law on cohabitation. For a summary of the Hong Kong position reference was made to Hartmann J’s (as he then was) reference in F v F CFI 836. At paragraph 117 he states:

117.  The nature of cohabitation will therefore dictate whether it should or should not be taken into account in the exercise of a court’s discretion under s.7(1) of the MPPO.  Cohabitation per se is not sufficient.  In this regard, see for example Foley v Foley [1981] Fam 160, in which the Court of Appeal in England held that it was quite proper to differentiate between the period of marriage and the period of cohabitation as the two periods were not the same.

118.  During the course of his submissions, Mr Griffiths emphasised the fact that notoriously today more couples are living together, often for extended periods, before marriage.  That may well be the case.  If so, it may mean that there will be more instances where the courts consider it appropriate to take into account the period of cohabitation as a relevant consideration.  But, whatever the drift of social change, marriage and cohabitation remain separate states.

25.  Ms Irving for the wife argues that I should take into account both periods of cohabitation

68.  The period of cohabitation prior to marriage and the fact of there being a committed relationship, covering the time when LS was purchased, should be taken into account as part of the duration of marriage.  This is appropriate in the circumstances of this case.

“…where a relationship moves seamlessly from cohabitation to marriage without any major alteration in the way the couple live, it is unreal and artificial to treat the periods differently”.

GW v RW [2003]2 FLR 108

69.  The parties had a 2 ½ year relationship which included a 2 year period of cohabitation from late 1997 to late 1999.  This should be taken into account as one of the circumstances of the case.

26.  Although I do of course accept the fact that the parties lived together from 1997 – 1999 and that this is clearly one of the circumstances of the case, I do not intend to attach any great weight to that fact. Both parties were involved with other people during the intervening period. They were young; they lived together for a short period and then parted company. I believe it would be artificial in those circumstances to use that situation in order to somehow lengthen the period of the relationship when considering the duration of the marriage overall.

27.  The husband states that the parties began to live together in November 2002 when they came to Hong Kong. He seeks to distance himself from the possibility of a serious relationship before that time, probably because of the property transactions that took place during that period. He says that he and the wife were just friends. The wife’s evidence was that they recommenced a serious, but long distance relationship in January 2002 and that they came to Hong Kong in June 2002 in order primarily for the husband to explore employment opportunities in the Territory.

28.  I do not accept the husband’s oral evidence namely that this was simply a casual relationship and that they wife “tagged” along with him, although I do accept that he intended to come to Hong Kong come what may. As Ms Irving put it in her closing:

The Respondent says that this was still just a very casual relationship, and that whereas she came to look at Hong Kong with him, this was not because it was any sort of joint endeavour or commitment, but since he had decided to come to HK anyway, she might as well go along with him for the trip. When he came to live here, he would have come without her, but she decided to tag along, which is how he presents his case. He would have been disappointed if she had not come, but he was coming regardless.

29.  In his 1^st affidavit the husband states at paragraph 19 that:

In or around November 2002, the petitioner moved to Hong Kong to be with me.

30.  I think the tenure of the husband’s own evidence in his affidavit is probably closer to the truth, than how he has subsequently sought to portray the situation in court. He and the wife were serious about each other. He wanted to come to Hong Kong. The wife agreed to come to be with him. It is inconceivable that this would have happened had the parties not been in a relatively serious and committed relationship beforehand. The wife gave up a good job to come to an uncertain future. The parties subsequently lived together and O was conceived prior to marriage. There is no suggestion by that stage that this was anything other than a committed relationship.

31.  Consequently it seems to me given these circumstances that it would only be right and proper for me to take into account the second period of cohabitation, when looking at the length of the marriage, given that that moved “seamlessly into marriage”. In so far as the period immediately prior to the parties relocating to Hong Kong i.e. from about January – August 2002, I will take that into account under the general catch all of “all the other circumstances of the case”, when considering the issue of ancillary relief overall.

Should this be regarded as a short marriage?

32.  This is then a short marriage of some 27 months or so (date of marriage XX May 2004 – September 2006). The parties did however cohabit from November 2002 and this lengthens the relationship to one of approximately 4 years. I have also taken into account the period immediately before then i.e. from January 2002 as being relevant in the overall scheme of things. There is also O to consider, which in any event moves this away from a being a short marriage in the classic sense of that term (i.e. short in length and childless).

Did the parties maintain separate finances?

The law

33.  The issue of separate finances is not something that the court is required to take into account by virtue of s.7 MPPO. It is however a concept that often goes hand in hand with other arguments relating to pre marital assets, the length of the marriage and the possibility of a marital acquest and how that is to be regarded.

34.  Counsel for the husband has referred to a useful summary of these and other factors as set out in Rossi v Rossi [2007] 1 FLR. In that judgment Nicholas Mostyn QC as he then was, sitting as a Deputy Judge said as follows:

“[24]  Doing the best I can to draw the various threads together I think that the following principles can be deduced:

24.1  The statute requires all the assets to be valued at the date of trial.

24.2  For the purposes of establishing the matrimonial property in respect of which the yardstick of equality will ‘forcefully’ apply the value of assets brought into the marriage by gift and inheritance (other than the former matrimonial home), together with passive economic growth on those assets, should be excluded as non-matrimonial property.

24.3  Assets acquired or created by one party after (or during a period of) separation may qualify as non-matrimonial property if it can be said that the property in question was acquired or created by a party by virtue of his personal industry and not by use (other than incidental use) of an asset which has been created during the marriage and in respect of which the other party can validly assert an unascertained share.  Obviously, passive economic growth on matrimonial property that arises after separation will not qualify as non-matrimonial property.

24.4  If the post-separation asset is a bonus or other earned income then it is obvious that if the payment relates to a period when the parties were cohabiting then the earner cannot claim it to be non-matrimonial.  Even if the payment relates to a period immediately following separation I would myself say that it is too close to the marriage to justify categorisation as non-matrimonial.  Moreover, I entirely agree with Coleridge J when he points out that during the period of separation the domestic party carries on making her non-financial contribution but cannot attribute a value thereto which justifies adjustment in her favour.  Although there is an element of arbitrariness here, I myself would not allow a post-separation bonus to be classed as non-matrimonial unless it related to a period which commenced at least 12 months after the separation.

24.5  By this process the court should, without great difficulty, be able to separate the matrimonial and non-matrimonial property.  The matrimonial property will in all likelihood be divided equally although there may be deviation from equal division: (a) if the marriage is short; and (b) part of the matrimonial property is ‘non-business partnership, non-family assets’ (or if the matrimonial property is represented by autonomous funds accumulated by dual earners).

24.6  The non-matrimonial property is not quarantined and excluded from the court’s dispositive powers.  It represents an unmatched contribution by the party who brings it to the marriage.  The court will decide whether it should be shared and, if so, in what proportions.  In so deciding it will have regard to the reality that the longer the marriage the more likely non-matrimonial property will become merged or entangled with matrimonial property.  By contract, in a short marriage case non-matrimonial assets are not likely to be shared unless needs require this.

24.7  In deciding whether a non-matrimonial post-separation accrual should be shared and, if so, in what proportions, the court will proceeded diligently with the claim; whether the party who has the benefit of the accrual has treated the other party fairly during the period of separation; and whether the money-making party has the prospect of making further gains or earnings after the division of the assets and, if so, whether the other party will be sharing in such future income or gains and if so in what proportions, for what period, and by what means.”

35.  In a discussion relating to these and other matters in Miller v Mcfarlane Baroness Hale put it thus, in what are essentially obiter comments:

152 My Lords, while I do not think that these arguments can be ignored, I think that they are irrelevant in the great majority of cases. In the very small number of cases where they might make a difference, of which Miller may be one, the answer is the same as that given in White v White [2001]1 AC 596 in connection with premarital property, inheritance and gifts. The source of the assets may be taken into account but its importance will diminish over time. Put the other way round, the court is expressly required to take into account the duration of the marriage: section 25(2)(d). If the assets are not "family assets", or not generated by the joint efforts of the parties, then the duration of the marriage may justify a departure from H the yardstick of equality of division. As we are talking here of a departure from that yardstick, I would prefer to put this in terms of a reduction to reflect the period of time over which the domestic contribution has or will continue (see Bailey-Harris, "Comment on GW v RW (Financial Provision: Departure from Equality)" [2003] Fam Law 386, 388) rather than in terms of accrual over time (see Eekelaar, "Asset Distribution on Divorce-Time and Property" [2003] Fam Law 828). This avoids the complexities of devising a formula for such accruals.

153 This is simply to recognise that in a matrimonial property regime which still starts with the premise of separate property, there is still some scope for one party to acquire and retain separate property which is not automatically to be shared equally between them. The nature and the source of the property and the way the couple have run their lives may be taken into account in deciding how it should be shared. There may be other examples. Take, for example, a genuine dual career family where each party has worked throughout the marriage and certain assets have been pooled for the benefit of the family but others have not. There may be no relationship-generated needs or other disadvantages for which compensation is warranted. We can assume that the family assets, in the sense discussed earlier, should be divided equally. But it might well be fair to leave undisturbed whatever additional surplus each has accumulated during his or her working life. However, one should be careful not to take this approach too far. What seems fair and sensible at the outset of a relationship may seem much less fair and sensible when it ends. And there could well be a sense of injustice if a dual career spouse who had worked outside as well as inside the home throughout the marriage ended up less well off than one who had only or mainly worked inside the home.

36.  In this case the husband has argued that the parties always maintained separate finances. He said in the witness box that each had maintained their own separate accounts and that there was an understanding between them that they would each contribute about the same amount to the household – i.e. a sum of approximately HK$30,000 per month. (This sum is of itself indicative of a fairly modest standard of living by ex pat standards). Indeed he claimed to keep a spread sheet to that effect – just to make sure than neither party spent more than the other. He said that he would reimburse the wife in the event of an imbalance in his favour. He maintained that any funds earned over and above that amount were for each of them to spend as they saw fit.

37.  The wife for her part maintained that although they each held separate bank accounts that each paid bills as and when they came in and that there was no “plan” as such. Indeed when they first came to Hong Kong the husband effectively maintained her because she was earning so little.

38.  Ms Irving summarized the wife’s position on this as follows:

25.  The Petitioner said that they both paid towards expenses, but on an ad hoc basis, with this being more a matter of chance than design.  While they did not have joint accounts, the Respondent would transfer money to her, especially initially when her salary was much lower than his and it was hard for her to manage financially.  P.5 shows funds being transferred into her account by the Respondent, especially at times when the balance of her account was getting perilously low.  He says this was him paying back to her his share of common expenses when she had paid more than her share, and was not him giving money to her to meet her expenses.  This cannot be right.

26.  For many years the Petitioner earned a fraction of the Respondent’s income and was in no position to contribute at the same level.  There is evidence of funds going into her account from him, and at a time when her income was low, how could she possibly have matched his HK$30,000 as he alleges and paid further expenses of his such that he was required to reimburse her?

27.  The Petitioner’s salary is seen on the bank statements produced in P.5 and in all of these months transfers were made to the Petitioner by the Respondent.

April 2004	HK$32,270 a month
June 2004	HK$33,665
August 2004	HK$38,225
September 2004	HK$37,694
November 2004	HK$11,128
January 2005	HK$20,781
February 2005	HK$22,341
April 2005	HK$20,929

28.  Thereafter, in June 2005, the Petitioner started working for UBS and the savings account started to increase until payment of the Respondent’s tax.

29.  Not only could the Petitioner not afford HK$30,000 to common expenses, she certainly was never in a position to pay that and then pay an extra HK$23,000 or HK$13,000 or even HK$42,000 as seen in the bank statements that the Respondent said he was refunding her.  There is no evidence in those bank statements of a balance anywhere near what would be required if what the Respondent says is true.  His evidence cannot be correct.

39.  I agree. I have also taken into account the fact that in December 2005 the wife paid the husband’s tax from the savings that she had accumulated by working for X. The husband said in evidence that he must have paid her back for this – or paid other expenses in lieu. No evidence was produced in support of his assertion. I did not find the husband at all credible in this respect. Although the parties had separate accounts they were living in a common household for which they were both responsible. I agree that just because they maintained separate bank account’s does not necessarily mean that there was no mingling of funds or that finances were kept wholly separate. On the facts of this case I do not find

that the parties maintained wholly separate finances.

Should LS be regarded as a pre or post marital asset?

The law

40.  This is referred to in Rossi v Rossi above and in Baroness Hale’s comments in Miller v McFarlane. Lord Nicholls of Birkenhead similarly discussed the issue of matrimonial and non matrimonial property in Miller v McFarlane. Similar arguments were raised before me in SDY v KSLS (Ancillary Relief) [2008] HKFLR 266. In that case although I accepted that property held by the wife could properly be regarded as a non matrimonial asset I said that

that does not mean necessarily that they should be deducted from the asset base at source. Fairness may dictate that recourse will need to be made to these assets, or some of these assets, in any event, when assessing how to distribute the parties’ assets.

How then should LS be regarded?

41.  There was some difficulty over the husband’s evidence with respect to LS. Initially the husband stated in his first Form E dated the 13 May 2008 that the down payment for LS was AU$20,000 and that he had paid an additional AU$20,000 for other expenses. The purchase price was AU$485,000 and the mortgage was stated as AU$465,000. This basic information was repeated in the husband’s second Form E dated the 25 March 2010. He also included a reference to other expenses including a capital tax liability computation of AU$76,605.

42.  In his examination-in-chief the husband’s evidence changed. He said that the total cost of purchase had been AU$508,366, of which AU$430,584 was the loan amount. The remaining figure of AU$77,782 he said had been provided by him from the proceeds of sale from PS. There was no evidence produced on the sale of PS – i.e. no completion statement or anything of that nature. When asked, the husband was unable to say how much money he had realized from that sale. However it was clear from the documents produced that the original loan amount (i.e. loan account 2218) had been for AU$430,584 and not AU$465,000 as stated in his Form E.

43.  It then transpired that the husband had infact drawn down an additional sum of approximately AU$57,598 against that property (i.e. loan account no 6707), despite not revealing that when specifically asked if there had been any additional draw down’s against the property in the wife’s questionnaire (see Answers to the Questionnaire of the 21 July 2008).

44.  Ms Irving for the wife put it to the husband that infact this additional loan had been used to help purchase the property and that therefore the original deposit figure of AU$20,000 as given in both Form E’s was correct.

45.  The difficulty with this is that it did not really stand up to closer examination. The husband was given time to consider the matter overnight. His explanation was that the additional loan of c AU$57,000 could not have been used in the initial purchase of the property because the Commonwealth Bank of Australia would only generally lend 80% of the purchase price. They would lend 90% if the borrower had mortgage insurance. He had such insurance and in any event it was clear that he had borrowed AU$430,584 i.e. approximately 89% of the value of the property.

46.  He believed that he had drawn down the additional funds later in order to purchase his share in the first helicopter for HK$200,000 and to pay for his pilot’s licence in the sum of HK$120,000. I agree that this seems more feasible in the circumstances.

47.  On the face of it then the husband paid for the deposit of LS i.e. c 11% of the purchase price together with the other costs of purchase from the proceeds of sale from PS. Given that PS was inherited by the husband I would accept that to that extent LS could be regarded as a pre marital asset. Therefore 11% of LS could quite properly be regarded as a pre marital asset, the remaining 89% to be regarded prima facie as a marital asset.

How, if at all, should LS be included in the computation of assets available for distribution?

48.  In any event I am conscious of the fact that needs may dictate that recourse should be had to the LS property. As in SDY v KSLS the fact that an asset has been defined in part as a pre marital asset does not necessarily mean that it should be deducted from the parties’ asset base at source. Fairness may dictate that recourse will need to be made to the LS property and consequently I will prima facie include it in the computation of assets available for redistribution between the parties.

Is the husband guilty of reckless overspending? Has he dissipated funds that would otherwise have been available for distribution? If so should some funds be “added back” into the computation of available assets? If so how much should be added back?

The law

Financial conduct

The law

49.  The law on financial misconduct is well established.

If one or both of the parties have by their dealings with the assets enjoyed by the family severely depreciated or destroyed those assets, this is a matter to which the court might properly have regard… in the award that is made. It might be appropriate to add back the value of the asset lost or diminished in value to the balance sheet of the defaulter’s assets. (Rayden 18^th edition, para 16.80)

50.  The wife referred to the case of Norris v Norris [2003] 1FLR 1142. In that case reference is made to a careful analysis of the husband’s spending and to the extent to which he “overspent”. As in this case the husband funded any overspending by “dipping into his capital”.

51.  At paragraph 77 of his judgment Bennett J said as follows:

The overspend, i.e. the expenditure over income of £350,000 in a little over two years, at a time when he was about to and then did enter into protracted litigation with the wife, can only be classified as reckless, and particularly at a time later on when the dot.com and the stock market collapsed. A modest overspend in the context of a rich man would be understandable and could not be classified as reckless. But in the circumstances of this case, as I have set them out, in my judgment the scale and extent of the overspend was reckless. I do not think it appropriate to add back the entire overspend, but I do not consider it unfair to add back into the husband’s assets the figure of £250,000. In my judgment there is no answer that the husband can sensibly give to the question, ‘Why should the wife be disadvantaged in the split of the assets by the husband’s reckless expenditure?’ A spouse can, of course, spend his or her money as he or she chooses, but it is only fair to add back in to that spouse’s assets the amount by which he or she recklessly depletes the assets and thus potentially disadvantages the other spouse within ancillary relief proceedings.

52.  I agree. One of the difficulties here however is the extent to which the husband can be said to have “overspent”, given that there has been no analysis as such of what might quite rightly fall into that category and what one might be regarded as more acceptable expenditure.

53.  In the Court of Appeal decision of Vaughan v Vaughan [2008] 1 FLR 1108 the same point was discussed by reference also to Martin v Martin [1976] 3 All ER 623

Such was a rare legal error on the part of the district judge. Miss Ward tells us that it was curious that he should refer to an absence of legal principles in that she and counsel for the husband had referred him to a recent example of such reattribution, namely Norris v Norris [2002] EWHC 2996 (Fam), [2003] 1 FLR 1142. Although such was a decision at first instance, it is the last in a line of authority which stretches back to the decision of this court in Martin v Martin [1976] Fam 335 that, in the words of Cairns LJ, at 342H:

‘a spouse cannot be allowed to fritter away the assets by extravagant living or reckless speculation and then to claim as great a share of what was left as he would have been entitled to if he had behaved reasonably.’

The only obvious caveats are that a notional reattribution has to be conducted very cautiously, by reference only to clear evidence of dissipation (in which there is a wanton element) and that the fiction does not extend to treatment of the sums reattributed to a spouse as cash which he can deploy in meeting his needs, for example in the purchase of accommodation.  At all events the district judge’s failure to despatch the issue by reference to the relevant legal principle, in my view, conferred upon the circuit judge an entitlement, at any rate in principle, to despatch it differently.

54.  Reference has been made to both cases in the wife’s submissions.

Discussion

55.  The husband’s case is that he has always applied the majority of his surplus funds to the pursuit of his hobbies albeit fast cars or the flying helicopters. He was not interested beyond that in accumulating assets save that he said that he always ensured that his borrowings were covered and that he was in “the black”,

56.  The husband’s stance was not entirely obvious from his pleadings. All became clear during his examination-in-chief when he produced a detailed chronology, unsupported by any documentary evidence, in which he sets out his financial history with particular reference to the purchase of expensive cars and the like. I accept, as urged upon me by the wife’s counsel that he gave oral evidence of matters not raised previously, without proper documentary evidence in support, leaving the wife with little opportunity to properly respond. Given that I do not intend to attach a great deal of weight to this part of the husband’s evidence.

57.  The fact is that this did not entirely stand up to proof in any event. The wife’s evidence was that although the parties had enjoyed a comfortable lifestyle during the marriage that they did not live significantly beyond their means. This is supported by the husband’s revolving credit facility statement for the 25 September 2006, which shows that as at the date of separation the husband had paid off the debt completely. (As at the end of August 2006). Further by the end of September there was an outstanding amount of HK$30,888 owed. This was paid off at the end of the month. Likewise debt accumulated in October and November 2006 was paid off in its entirety at the end of those months. The statements produced show this pattern. From January 2005 the balance fluctuated but did not exceed HK$90,000 in the period until September 2006. The facility was for HK$250,000. In January 2007 the debt level increased significantly to just under its maximum. This level was maintained until April 2007 when it was paid off. It then increased again. As at the date of trial it was almost at its maximum level.

58.  All in all I accept that the parties generally enjoyed a comfortable standard of living whilst living in Hong Kong – but not an excessive one. Generally they lived within their means and without significant levels of debt. The husband drew down against the capital in LS to fund his passion for flying.

Helicopters and flying

59.  The husband has an interest in flying helicopters. In the context of this case could it be said that this interest and the amount of money spent on it should be regarded as excessive?

60.  The husband purchased his first share in a helicopter during the course of the marriage (April 2004) for HK$200,000. He also spends money on obtaining his pilot’s licence.

61.  Although it wasn’t initially clear from the evidence it now seems likely that the husband drew down on LS in the sum of c AU$57,000 to pay for this. In addition it was the wife’s evidence that he generally spent about HK$10,000 per month on flying. The wife had no difficulty with this as it could clearly be paid for from income. Following the parties separation the husband sold his interest in this helicopter. It is not clear where the proceeds of sale were deposited. In any event he told the wife at this time that he did not intend to purchase another helicopter. (E-mail of the 4 December 2006 “have not purchased a share (in another helicopter) and have no intention to purchase a share in the immediate future”. Despite this clear and unequivocal statement in May 2007 the husband did purchase a share in M Empire for a bigger second helicopter in the sum of HK$2 million.

62.  In October 2006 the husband had increased the loan facility on LS (similar to a remortgage) for AU$550,000. Both previous loans were rolled into this one (i.e. the original purchase loan for LS and the second loan to partly finance the purchase of the first helicopter). AU$123,687 was initially transferred to an OM Financial account for trading purposes. AU$120,000 was returned to the loan account on the 26 October 2006. The husband then drew down an additional AU$100,000 in November 2006.

63.  The details of how the husband financed the purchase of M are not completely clear – nor are they fully supported by evidence. I would however accept that the majority of the funds were originally sourced from the draw down on LS. The husband maintains, and the wife appears to accept, that HK$632,954.84 came from the OM Financial Account, an additional HK$1,002,861.72 from the LS loan account and that the husband made up the balance by taking out a personal loan of c HK$407,120 with Hong Kong bank. It is not clear if the proceeds of sale from the first helicopter also went towards this second purchase. The husband’s point is that this purchase is supported by an asset. He is right in this. It is a depreciating asset, but an asset nonetheless. M has been valued in the schedule of assets at HK$1.75 million.

64.  The difficulty though is that this marks the point when the husband began to spend significantly beyond his means. The refinancing of LS meant that the repayments rose to AU$5,000 per month (HK$36,900 at that time). In addition he had the loan to repay (c HK$8,400 per month), not to mention other debts to service. The cost of running a larger helicopter had increased as had the amount the husband spent on flying. The statement summaries provided for M by the husband show that from June 2007 – November 2008 the husband spent on average HK$22,700 per month if spread over 18 months and HK$24,000 if spread over 17 months. (The helicopter was out of commission for one month so the latter figure is probably more realistic). Thus the husband was spending simply on the basics relating to LS and the helicopter somewhere in the region of HK$70,000 per month at a time when according to his Form E he was earning in the region of HK$138,250 per month. He was also he was not contributing towards O’s maintenance. (He contributed HK$50,000 in January 2008 and began to pay HK$12,000 per month from the 1 June 2008). This figure of c HK$70,000 does not include any savings for tax or basic living expenditure.

Cost of living expenditure

65.  As at the date of separation in September 2006 the parties had very little debt. By the 13 May 2008, c 20 months later the husband had stated liabilities of HK$787,777 made up of the revolving credit facility, (HK$249,230), the personal loan account (HK$349,676) and a credit card (HK$188,870). We know that the personal loan was taken out for the purchase of M. The husband also alleged that a further sum of HK$75,000 was drawn down from his credit card to pay for expenses associated with M. If I accept that for the moment that leaves the sum of HK$363,100 in debt spent on other things.

66.  In March 2010 the husband’s stated debt levels had increased to an alarming HK$2,127,984, at a time when there had been no corresponding asset purchase. This includes a loan from his brother on the 6 July 2009 for HK$971,454, which was subsequently used to pay off some of the debt. During the course of the trial it became apparent that initially these funds had been borrowed for use partly in contemplation of a settlement. When asked, the husband said that these funds were still there. Clearly this was not the case and the husband’s statement appeared to me to be somewhat disingenuous. Had the husband not almost immediately built up a similar level of debt again then his position might have been more tenable. Instead the evidence shows that debt was cleared and then almost immediately rose again. At a time when the husband was earning a reasonable salary, he was spending huge amounts on himself in addition to the cost of repaying LS and running the helicopter. In particular there are references in the credit card statements to hotel bills and frequent long haul flights. He confirmed that he went on holidays in Europe on three consecutive months in early 2009 - in February he was in Italy, in March he was in Frankfurt and in April he went Poland – all for pleasure. On the 14 September 2009 he spent an additional HK$21,889.73 at the Westin Paris. Again he was on holiday. He also spent extensively in restaurants and otherwise on himself. For example in September he spent HK$18,860 on suits. He agreed during cross examination that he spent more money than he earned. That is very clear. I also accept that in the circumstances this level of expenditure was reckless and that the husband has dissipated sums for his own enjoyment that would otherwise have been available for the wife and perhaps more importantly for O.

Given that, how much should be added back into the computation of available assets?

67.  The wife argues that the sum of HK$1.727 million should be added back – i.e. the husband’s present level of debts (HK$2.127 million) less the personal loan of HK$400,000 that went towards the purchase of M. She says that the husband accepts that these are “lifestyle expenses”.

68.  The difficulty with that approach is that it does not take into account what might be described as other more legitimate expenditure – including payment of legal costs, mediation fees etc. Without the benefit of a detailed analysis it is hard to do anything other than take a fairly broad brush approach, always erring, as the authorities point out, on the side of caution.

69.  In the circumstances it seems to me appropriate to add back HK$1.2 million into the computation of available assets. In doing so I have allowed for the personal loan account to be deducted in its entirety (i.e. HK$288,000), plus payment of legal costs (HK$410,000), plus other legitimate expenses such as mediation fees (say HK$100,000) and provisional tax (HK$65,000) to be accounted for. The remainder it seems to me the husband has chosen to spend excessively on himself and to indulge his passion for helicopters at a time when he knew that a divorce was imminent. In that way the wife should not be unfairly disadvantaged in the split of assets because of her husband’s reckless expenditure.

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

What is the computation of assets available for distribution?

The wife’s assets

			Sub totals
Bank accounts	HSBC savings	123,927.00
	HSBC Current	146,045.00
		1.50
Westpac	A$25,020	162,630
			432,603.50
Shares
UBS Ag Shares		103,536.72	103,536.72
Debts		36,000.00
Monies owed to the wife		400.00 700.00
		1,600.00
			38,700.00
Art	A$12,000	78,000.00
	A$3,300	21,450.00
			99,450.00
Pensions
BHP Super	A$57,188	371,722.00
MPF		87,572.00
USB AG ORSO		418,123.14
			877,417.14
				1,551,707.36
Less Liabilities
		-
Balance of tax		107,777.00
Art	A$9,600	62,400.00
				170,177.00
			Total	1,381,530.36
A$1 = HK$6.5

Legal costs

70.  The wife’s estimate of costs filed shortly before the trial showed that she had paid HK$398,038.80 to date in legal costs. On the basis of a three day trial counsel’s fees were estimated at HK$190,000, plus an additional HK$74,745 for solicitor’s costs, making a total of an additional HK$264,745 still to be paid. I will also take into account an additional HK$35,000 spent by the wife since the conclusion of the trial making a total of HK$299,745 outstanding.

71.  In so far as other financial resources are concerned, clearly the wife has an earning capacity, but one that she doesn’t intend to utilize in the short term through choice. Understandably she wishes to settle O down in her new environment and for all concerned to make the necessary adjustments to living together under one roof. (Her fiancée also has a child with whom he spends significant periods of time and who will live with them from time to time). Longer term she says that she wishes to work, but probably in a part time capacity only.

72.  The husband has suggested that the wife also has another resource in the shape of her fiancée. Although that is true up to a point, the wife has no call against anything held in her fiancée’s name and clearly the only benefit to her at present is the fact that she will immediately have a home to go to. She says that she will contribute financially towards the household pending returning to some form of employment, from her own savings. She will need to buy her own car.

The husband’s assets

73.  I have found the husband’s figures difficult to reconcile with Counsel’s figures and his Form E. Consequently I sought clarification from his solicitors. I also asked for a schedule of assets which was not forthcoming. I have based the figures for LS on the letters from Haldane’s dated the 20 and 21 July. Other figures have been taken from the husband’s updated Form E.

			AU$	HK$
Net proceeds of			228,906.94
LS			13,580
			242,486.94
Less provision for Capital Gains tax			76,605
Net proceeds of sale			165,881.94	1,078,232.61
Bank accounts				3,048.94
Shares				1,750,000.00
Debts				66,700.00
Pensions
Standard Chartered MPF				136,679.91
AMP Super Plan			33,883.35	220,241.78
Total				3,254,903.24
Less Liabilities
HSBC – Revolving Credit Facility – XXX-XXXXXX-XXX				244,817.58
HSBC – Personal Instalment Loan – XXX-XXXXXX-XXX				288,896.17
Citibank – Credit Card – XXXX XXXX XXXX XXXX				92,709.65
Citibank Loan (through Credit Card)				338,402.46
NAB – Credit Card – XXXX XXXX XXXX XXXX				33,367.95
AMEX Credit Card – XXXX XXXXXX XXXXX				1,967.13 CR
Citibank – Ready Credit - XXXXXXXX				60,500.00
Standard Chartered Bank Loan				35,000.00
Loan from Lance Borg				971,454.25
Provisional Tax Liability 2009/10				64,804.00
Total of Liabilities				2,127,984.93
Total				1,126,918.31
ADD BACK				1,200,000.00
TOTAL ASSETS				2,326,918.31
A$1 = HK$6.5

Legal costs

74.  The husband’s estimate of costs showed that he had paid HK$410,233 to date in legal costs. A further HK$315,000 is still to be paid. He also asks for a further HK$40,000 to be taken into account making a total of HK$355,000 outstanding.

LS

75.  The wife does not appear to accept the value placed on LS. The property was sold for AU$950,000 (HK$6,175,000). The net figure is identified at HK$1,131,241 in the husband’s Form E, although on the figures provided by the husband’s solicitors in their letter of the 20 July, the net figure comes in at the slightly lower figure of HK$1,078,232.61. This includes a notional amount for capital gains tax in the sum of HK$497,000. No evidence was produced by either side to assist the court in ascertaining whether or not this is the correct figure save for an internet ready reckoner produced by the husband. The wife does not accept that the figure is correct and says that they should not be accepted carte blanche. The difficulty is that the court has nothing else upon which to base a finding. No evidence has been produced. In particular it is not known whether upon returning to Australia the husband will be able to off-set the capital gains as a tax credit or indeed whether or not any accumulated tax losses would reduce capital gains tax liability. The husband was not able to assist with respect to which allowances could be taken into account and which could not. All in all I found the husband to be quite evasive on the issue. In his e-mail of the 3 December 2007 he anticipated seeking professional advice on this point. This was not provided for the trial.

76.  In terms of other financial resources, the husband continues to have a significant earning capacity, although it is accepted that this will be reduced in the event that he relocates to Brisbane. It is not sure when that will be. He confirmed in the witness box that he was actively pursuing other job opportunities. From the consent summons filed in relation to the relocation it is clear that arrangements are in place for access should the husband not relocate until December 2011 i.e. a period as at the trial of approximately 18-months. It is accepted that the cost of living will be much reduced in Brisbane.

How should the assets be divided bearing in mind my findings above and the principles of need, compensation, sharing and the s.7 factors?

Need

(b)  the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

77.  The husband argues that he needs to retain everything in his name partly because he will need those funds in order to re establish himself in Brisbane. The difficulty with that argument is that the husband’s financial predicament is wholly of his own choosing.

78.  The wife for her part says that she needs funds for a car.

79.  More importantly the wife initially sought funds for O’s future education. She wishes O to go to a private school in Australia – at least for High School and initially proposed to the husband that each should put aside HK$250,000 for that purpose. She says that this was something that was very important to her.

80.  It seems that initially at least the husband was of the same opinion. In his first Form E dated the 13 May 2008 he said

“It is the Respondent’s intention that she (O) attend private high school in Brisbane”.

81.  By the time that he came to court the husband’s opinion had changed. He said that he intended to have more children and that he wished to treat them all the same. Given that he did not know whether he would be able to afford to send all his children to private school, he was now of the view that O should not attend a private High school in Brisbane.

82.  Given the amounts of money spent by the husband on himself, this seems to be a rather strange approach to take.

83.  For the avoidance of doubt I accept that the wife’s concern’s in this respect are valid and that this is both an obligation and a responsibility of both parents – i.e. to try to provide the best education possible for O going forward and to make sensible provision for that.

(c)   the standard of living enjoyed by the family before the breakdown of the marriage;

(d)   the age of each party to the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

84.  (c) and (d) have all been dealt with in the body of the judgment. I do not intend to comment further. Thankfully (e) is not something that I have had to take into account.

Compensation

The prospective financial disadvantage which upon divorce some parties face as a result of decisions which they took for the benefit of the family during marriage

85.  The wife has argued that the issue of compensation is engaged in this case given that she has of necessity been the primary care giver of O, which has meant that she has been unable to pursue her career with the same vigour as the husband. I accept this to be the case.

Sharing

(f)      the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

86.  The wife wishes her non financial contribution to be acknowledged. I accept that given her ability to care for O more consistently since separation than the husband, that that has allowed the husband to develop his career and to achieve partnership relatively quickly.

The duration of the marriage

Conduct of the parties

87.  Both of these factors have been discussed at length above.

Division of Assets – conclusion

88.  In conclusion then I intend to make an order that the husband do pay the wife a lump sum of HK$500,000 in full and final settlement of her claims for ancillary relief within the next 28 days. This achieves a division of the assets, which gives the wife slightly in excess of 50% once an add back of HK$1.2 million has been allowed for. In doing so I am conscious of the fact that the wife wishes to put some money aside for O’s future education. Whilst I am not making an order specifically that that should be done, this order is made with the wife’s initial settlement proposal in mind (i.e. that each party do contribute HK$250,000 towards O’s future education). I am also conscious of the fact that the husband does have a significantly higher earning capacity than the wife, certainly in the short term. Thus if he should so choose, he does have the ability to make up this loss relatively quickly. At the end of the day that is a matter for him. I have also taken into account the fact that most of his debts could be paid back over time. For the avoidance of doubt I have taken into account the whole of the net value of LS given that needs dictate that there is really no other alternative.

To what extent if at all is the concept of the marital acquest engaged in this case?

89.  I asked both sides to give this concept some thought in their written closings. I have read what both have said and I have taken this into account when reaching my decision. On reflection however and on the facts of this case, it does not seem to me that the concept of a marital acquest takes the case very much further.

Costs

90.  Although neither party has entirely won nor entirely lost I am conscious of the fact that the wife has had no alternative but to go to trial given the stance taken by the husband. I will therefore make an order nisi to be made absolute in 14 days time that the husband do pay 1/3 of the wife's costs to be taxed on a party and party basis if not agreed.