LYH v. YHKB

FCMC 2164/2009

[2022] HKFC 81

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 2164 OF 2009

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DECISION

( Leave to appeal & Stay of execution )

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Introduction

1.  The petitioner of this case is the wife. The respondent is the husband. They were married in 1988. In 2009, the wife petitioned for divorce. Decree absolute was granted in 2010.

2.  The parties settled their ancillary relief pursuant to the Consent Order made on 14 June 2010 (and varied by the Varied Consent Order made on 22 September 2010), under which the parties were to share equally their net assets (valued at $60,185,420 by the Tact Report), with the wife receiving $30 million (comprising of the former matrimonial home and various lump sum payments), whereas the husband was to keep various family companies, including EEL and the E Group.

3.  However, on the wife’s application, the Consent Order and the Varied Consent Order was subsequently set aside by consent for non-disclosure by B Chu J in 2018 under HCA 1430/2017.[1] The non-disclosure is on the part of the husband concerning the deal between him/EEL with Avnet (whose parent company is a US-listed company)  to sell the “Assets” of the “Business” of EEL in relation to the distribution of products of its suppliers and provision of related technical services in Hong Kong and the PRC to Avnet, pursuant to an Asset and Purchase Agreement (APA). At the same time, the husband signed the Employment Agreement with Avnet under which he shall work for Avnet for a term of 3 years which might be further renewed.

4.  The husband/EEL received 3 sums from Avnet arising out of the deal, totalling $135,161,000 (the Sum), as follows:

5.  It needs to be pointed out that although the Consent Order/Varied Consent Order were set aside in whole by B Chu J, it was so ordered on the common understanding, as it is so reflected at the recital paragraphs of the Set Aside Order, that they were agreeable not to interrupt with what had already been performed and that the wife was at liberty to make “further application for ancillary relief”.

6.  The wife subsequently filed her summons dated 6 April 2019 to make further ancillary relief claim.  She sought to share half of the Sum and be compensated for the loss of chance to invest had she received the moneys earlier. After a 5 days’ trial, I handed down my judgment dated 28 December 2021 (“Judgment”)  ordering:

(1)  the husband shall pay her a lump sum of $79.5 million, comprising half of the Sum and a further sum of $12 million to compensate her for the loss of chance to invest had she received the moneys 11 years ago, to be paid within 60 days;

(2)  upon payment of the said lump sum, any other ancillary relief claims between the parties do stand dismissed;

(3)  the husband shall pay the wife’s costs of her application, including the trial and all costs reserved, with certificate for 2 counsel.

7.  This is the husband’s application by summons dated 24 January 2022 for leave to appeal from the Judgment, and stay of execution of the Judgment pending his appeal.

8.  In this Decision, I shall adopt the abbreviations and defined terms used in the Judgment, unless stated the otherwise.

The Judgment

9.  For obvious reason, this case has a long history with a lot of facts spanning over for more than a decade. An overview of this case is set out at §1-16 of the Judgment, whereas the background of the parties and their divorce are described in §21-29. A gist of their respective case and open offer are at §17-18 of the Judgment.

10.  The issues for trial are summarised at §48-49 of the Judgment, which I shall repeat below for easy reference:

“48.  The parties have agreed a list of issues to try, which in my view, should boil down to one fundamental issue, namely whether the wife is entitled to share the Sum or any part of it, having regard to the relevant factors under section 7, the MPPO and the overall circumstances of the case; and if yes, what further ancillary relief should be made.

49.  To determine this fundamental issue, the court needs to decide on the following major factual issues:

(1)  When did the negotiation for the sale of the business of EEL start to take place? This issue has bearing on the question of non-disclosure on the part of the husband and the fairness of Consent Order/Varied Consent Order;

(2)  Whether the Sum were non-martial assets or post-separation acquests, and whether the wife is entitled to any portion of it;

(3)  Whether the value of the companies held by Madam D or any part thereof should be taken into account in computing the size of the husband’s current assets and/or his financial resources.”

11.  There is also the issue of whether the wife should be compensated for the loss in investment had she received the moneys earlier.

12.  On the factual issue of when the negotiation with Avnet on the sale and purchase of EEL first took place, I have given a detailed analysis at §72-112 of the Judgment. Essentially, I do not believe the husband’s allegation/chronology (set out at §69 of the Judgment)  that the preliminary negotiation with Avnet first took place “after” the Consent Order.  My findings on this factual issue are:

(1)  it is more likely than not that Avnet first approached the husband, or vice versa, “before 8 June 2010” (ie the date that the husband made proposed for settlement to the wife by referring to the Tact Report), but he “intentionally” failed to make full and frank disclosure of the same to the wife and to the court (Judgment at §113 and 115);

(2)  Even worse, since 8 June 2010, he suddenly pushed hard to conclude, after more than 2 months’ silence, the settlement of the wife’s ancillary relief, as well as the divorce, urgently or as soon as possible, so that “it could chronologically fit well with his artificial and wishful thinking that since the deal with Avnet was concluded after the Consent Order and/or decree absolute, the consideration received by him/EEL from Avnet was post-separation/post-divorce non-marital assets that the wife could not lay her hands on” (Judgment at §112);

(3)  had full and frank disclosure been made by him before the consent summons leading to the Consent Order was signed, it is more likely than not that the wife “would not have accepted the methodology of valuating EEL and the E Group by assessing the net asset value as in the Tact Report”, and/or “would probably not have agreed the settlement on her ancillary relief without making further discovery” on the negotiation with Avnet (Judgment at §114);

(4)  due to his another non-disclosure as to his interest in Fusion Fuzion (Greater China)  Limited since 2007, the substantial value of this company was not included in the Tact Report in the computation of the net asset value of the parties (Judgment at §67). The wife was unfairly deprived of her entitlement to share the value of this company when they reached a global settlement on ancillary relief.

13.  Importantly, there is no appeal against the aforesaid factual findings of the Judgment by the husband in this application.

14.  On the factual issue of whether the Sum is a non-marital asset or post-separation acquest, I approach the issue in 2 folds.

15.  Firstly, and put it simply, I am of the view that “a broad brush view of the Sum altogether” should be taken (Judgment at §152), in the light of the legal principles set out at §128-131 of the Judgment and having taken into account the overall circumstance of this case, in particularly the undisputed/indisputable facts listed out below:

(1)  EEL and the E Group were set up during their marriage. As the flagship company, EEL carried on its business as a distributor of high-end electronic components providing general purpose invertors for wind and solar power applications (Judgment at §3);

(2)  the parties were directors and shareholders of the EEL, though it was the husband who was responsible for its running and management (Judgment at §26);

(3)  with division of their marital roles, ie the husband focused on business and market development of EEL/the E Group especially into China, whereas the wife took care of the household and the children in Hong Kong (with the assistance of a maid), EEL and the E Group flourished during their marriage. In particularly, EEL was able to establish a solid connection in China, and became one of the 2 authorised distributors of Infineon products for the China market at the material times (Judgment at §139-143). This unique status of EEL as one of the only 2 authorised distributors of Infineon products for the China market, which was the result of the joint efforts of the parties by the aforesaid division of martial roles, was something which Avnet aimed at and thus the assets and business of EEL was subsequently sold at substantial price (Judgment at §156-157).

(4)  apart from taking care of the children and the household, the wife was required to sign company documents and provided personal guarantees in order to secure loans that were enjoyed by EEL and the other companies of the E Group from time to time (Judgment at §144-147);

(5)  of vital importance in this case is the fact that pursuant to the Consent Order (as varied by the Varied Consent Order), she was required to continue to pledge her own assets already distributed to her pursuant to the Consent Order (ie the former matrimonial home and her AUD fixed deposit), as well as to maintain her personal guarantees, for the benefit of EEL and the E Group (which were distributed to/kept by the husband pursuant to their settlement)  in the post-separation or post-divorce period for a period of 6 months from the date of decree absolute, namely up to January 2011, which went beyond the date of the APA (Judgment at §57-58 and §148);

(6)  it is thus plain and clear that the wife’s support and contribution to the husband/EEL/the E Group continued in the post-separation/post-divorce period, and to deprive her of her entitlement to the fruits of the sale of the assets of EEL would not be regarded as fair (Judgment at §152);

(7)  given my findings that the husband’s negotiation with Avnet on the sale and purchase of EEL first took place “before” the Consent Order was made and that he “intentionally” failed to make full and frank disclosure of the same to the wife and to the court, it is not fair to merely adopt the date of the decree absolute as the dividing line to categorise the Sum as a non-matrimonial asset (Judgment at §135);

(8)  even if the APA was concluded and the Sum received by him/EEL after the grant of the decree absolute, the long length of their marriage of over 20 years should be given “huge weight” (Judgment at §137-138).

16.  Although I have ruled that a broad brush view should be adopted to the Sum altogether, I have also given an analysis on each of the 3 components of the Sum (Judgment at §150-161).

17.  The overall conclusion on the Sum is that it is a “matrimonial asset” that should be shared “equally” by the parties, subject to the husband’s ability to pay (Judgment at §163).

18.  On the question of his financial resources, I am of the view that the husband has committed another “obvious and deliberate failure” to fulfill his duty on the disclosure in relation to his present wife, Madam D and her companies, which raises a “real and serious doubt” that he has “close connection with and/or interest in” Madam D’s businesses, as a conclusion of which adverse inference will be drawn against him that he has the financial ability to pay whatever further ancillary relief order made by me in the Judgment (Judgment at §168-169). This finding is not challenged by the husband in this application.

Applicable legal principles on leave to apply

19.  Section 63A(2)  of the District Court Ordinance provides that leave to appeal shall not be granted unless:

(1)  the intended appeal has a reasonable prospect of success; or

(2)  there is some other reason in the interests of justice that the appeal should be heard.

20.  The husband relies on the first limb of section 63A(2)  in this application. The relevant test of whether an appeal has a reasonable prospect of success is whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal.  A reasonable prospect of success therefore means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”: SMSE v KL [2009] 4 HKLRD 125; KNM v HTF, HCMP 288/2011.

21.  In respect of an appeal against findings of fact made by the trial judge, the appellant has to overcome a very high threshold in order to succeed.  The Court of Appeal would not set aside the factual findings made by the trial judge unless the findings are plainly wrong or are tainted with errors of law (See: WJT v YATM, CAMP 226/2020, [2021] HKCA 1267 at §22).

22.  In another case of China Gold Finance Limited v CIL Holdings Ltd (CACV 11/2015, date of judgment 27 November 2015), the Court of Appeal explained the concept of “plainly wrong” in this way:

“11.  It is well settled that in respect of findings of fact, this court can only intervene when we are satisfied that the findings by the primary judge is plainly wrong: Ting Kwok Keung v Tam Dick Yuen (2002)  5 HKCFAR 336 is often cited and applied in this court.

…………

17.  We respectfully agree with the judgment of the Privy Council in Beacon Insurance Co Ltd v Maharaj Bookstore Ltd, supra, where Lord Hodge explained at paragraph 12 the phrase “plainly wrong” in the context of an appeal against a finding of fact:-

“This phrase does not address the degree of certainty of the appellate judges that they would have reached a different conclusion on the facts … Rather it directs the appellate court to consider whether it was permissible for the judge at first instance to make the findings of fact which he did in the face of the evidence as a whole. That is a judgment that the appellate court has to make in the knowledge that it has only the printed record of the evidence. The court is required to identify a mistake in the judge’s evaluation of the evidence that is sufficiently material to undermine his conclusions.”

…………

19.  The kinds of mistake which could engage an appellate court’s power of intervention were recently explained by Lord Neuberger in In re B (A Child) [2013] 1 WLR 1911, at paragraph 53:-

“ …where a trial judge has reached a conclusion on the primary facts, it is only in a rare case, such as where that conclusion was one (i)  which there was no evidence to support, (ii)  which was based on a misunderstanding of the evidence, or (iii)  which no reasonable judge could have reached, that an appellate tribunal will interfere with it.”

Proposed Grounds of Appeal

23.  In his draft Notice of Appeal, the husband asks that the orders in the Judgment (set out at [6] above)  be set aside, and propose that the following orders be made instead:

(1)  he shall within 60 days make a lump sum to the wife of “no more than $10,000,000” or “such sum to be assessed” by remitting the case to a different judge of the High Court for re-assessment;

(2)  upon payment of the aforesaid lump sum, any other ancillary relief claims between the parties do stand dismissed;

(3)  the wife do pay him costs of and incidental to her application filed on 6 April 2019, including the trial and all costs reserved, the husband’s costs of the application for leave to appeal and all costs of the appeal, with certificate for 2 counsel.

24.  The proposed order shows that the husband is no longer disputing that the wife is entitled to share the Sum but seeks to appeal against the amount of ancillary relief that the court has awarded to her. He provides 4 grounds of appeal in his draft Notice of Appeal, which are summarized and dealt with in the following.

Ground (1): Failure to take into account or give credit to certain factors

25.  The husband avers that in awarding the wife $67.5 million, being half of the Sum, I erred in not taking into account or in not giving credit to certain matters/factors in respect of each of 3 portions of the Sum. I shall come to each of these portions later in this Decision.

26.  But at this juncture, I wish to reiterate the 2-fold approach I have adopted in the Judgment (See: §[14]-[17] above).  And as rightly observed by Mr Richard Khaw, senior counsel for the wife, there is no express challenge by the husband in this application as to the broad brush approach taken by me in the Judgment, nor does he dispute the legal principles that are set out by me in the Judgment to support my view that a broad brush view to the Sum altogether should be adopted.

(i)   Ground 1A – Upfront price of $77 million

27.  In his draft Notice of Appeal, the husband says that in respect of the upfront price of $77 million, I failed to give credit to the facts that:

(a)  he had to give up the E Group business which was his share of the matrimonial assets distributed to him under the Consent Order;

(b)  the upfront price included the consideration for the transfer of many employees in the E Group to work for the Avnet business, which was not part of the matrimonial assets;

(c)  the upfront price included the consideration for a 3-year employment contract for the husband to work for the new Avnet business after the clean break in the Consent Order;

(d)  the upfront price included the consideration for the terms in the APA which included protective covenants or guarantees for the new Avnet business after the clean break in the Consent Order

28.  These points are already taken by him in the trial proper (Judgment at §124). I have duly considered but rejected his case (Judgment at §154-157 and §162). He fails to identify that any part of my analysis is “plainly wrong”.

29.  In the written submission of this application, the husband seeks to argue that in granting the wife half of the Sum, I failed to “compare like with like”, as the valuation date in the Consent Order was 31 December 2009 and the APA is based on “a different valuation date”.  First of all, it is pertinent to point out that this point is not expressly contained in Ground 1A of the draft Notice of Appeal.  Putting this aside, one has to take note that in the trial proper, neither party, especially the husband, had taken issue with the difference in the valuation date in the Consent Order and the APA. Nor had he made any application to the court before the commencement of the trial proper that the valuation dates should be aligned and/or some other valuation dates should be adopted. As such, my hands were tied in the trial proper; there is simply no basis or material before me to “compare like with like”.

30.  Further, at §8(i)-(iv)  and (vi)  of his written submission, the husband seeks to advance a different valuation mechanism to arrive at the “extra value” of the E Group “not yet shared” with the wife.  For example, the “extra value” should be the price received from Avnet “less” the valuation that was already distributed under the Consent Order. Again, this point is not expressly mentioned in his draft Notice of Appeal, nor was it raised by him in the trial proper. I accept the submission of Mr Khaw SC that the husband should be barred from running any new point which was not taken at trial (See: Ricoh Hong Kong Ltd v Wallbanck Brothers Securities (Hong Kong)  Ltd [2016] 3 HKLRD 134 at §4).  However, merely for the sake of argument but not the otherwise, I have to stress that in the husband’s own closing submission, he has accepted that except inventory, these ‘assets’ sold to Avnet under clause 2.2 of the APA were “not” part of the net asset value of the E Group as valued in the Tact Report”. [3] Hence, prima facie, there is possibly no overlapping between the net asset value and the sale value of EEL, such that any deduction as submitted by the husband should be made.

(ii)  Ground 1B – Inventory cost of $20,761,000

31.  In respect of the inventory costs of $20,761,000, the husband submits in his draft Notice of Appeal that I failed to take into account or give credit to the following:

(a)  the inventory price paid by Avnet was based on a different valuation date after the clean break in the Consent Order;

(b)  the Aged Inventory and the Old Inventory were already included in the Tact Report and thus were already shared by/distributed to the wife under the Consent Order;[4]

(c)  no credit was given for $17,567,975.75 which was admitted by the wife to be the inventory valuation as at the aforesaid valuation date that have been taken into account in the Consent Order;

(d)  no account was given to the fact that under the APA, the Aged and Old Inventory had to be discounted;

(e)  the New Inventory was acquired after 1 April 2010, ie after the clean break arrangement in the Consent Order, and the wife was not entitled to share;

(f)  I erred in finding that the husband/EEL could not possibly have substantial money to purchase new inventory after the Consent Order;

(g)  the wife is not entitled to any share of the inventory costs when there was no evidence of any non-disclosure.

32.  Hence, the husband says in his written submission that the inventory costs that should be shared with the wife would at most be the extra amount of the inventory costs received from Avnet ($20,761,000)  less the valuation of inventory in the Tact Report ($17,567,945.75), namely $3,193,054.25, half of which should be $1,596,527.

33.  To these arguments, I would say the following.

34.  Firstly, most if not all the points set out at §31 are a rehash of the points already made by the husband in the trial, which have been considered but rejected by me (Judgment at §124, 151 and 158).

35.  Secondly, I essentially find in the Judgment that the value of the inventory formed “part and parcel” of the value of EEL. The husband, as the key person running EEL, was not able to provide any stock records to show that most of the inventory purchased by Avnet under the APA was received after June 2010. But yet, it is his own affirmation evidence that he was facing “tremendous financial pressure” to make payment to the wife under the Consent Order and that EEL was “in severe financial difficulty with 85% liability over assets” (Judgment at §158).  

36.  Clearly, unlike what the husband has submitted, there is sufficient basis for the court to find that the husband/EEL did not have substantial financial means to purchase the New Inventory after the Consent Order was made up to the date of the Inventory Completion Date. I fail to see how he is able to persuade the Court of Appeal to set aside such factual findings made by me, in light of the relevant legal principles (See: §21-22 above).

37.  Thirdly, it is not correct for the husband to say that the value of the Aged Inventory has already been taken into account in the Tact Report, because the valuation date of the Tact Report is as at 31 December 2009 which mainly based on the 2009 management accounts. Thus, the Tact Report does not take into account the Aged Inventory or the New Inventory but only the Old Inventory. [5]

38.  Fourth, it needs to be reiterate that the wife continued to provide her tangible support to EEL/the E Group, even after the Consent Order was made and/or after the grant of the decree absolute, by providing personal guarantees, pledging her own AUD deposit and providing the former matrimonial home as security for loans enjoyed by EEL/the E Group (Judgment at §148 and 152), such that it would be an affront to fairness if to deprive her of her entitlement to share the moneys received for the Aged Inventory or New Inventory, if any.

39.  Finally, the calculation now put forward by the husband in his written submission is a new point which has not been taken by him at the trial. He should be barred from making this new point now (See: Ricoh Hong Kong Ltd v Wallbanck Brothers (supra)).

(iii)  Ground 1C – Net Settlement Sum of $37.4 million

40.  In respect of the Settlement Sum net to $37.4 million, the husband says that I failed to take into account that the Settlement Sum represented the Earn-out Payment and Earn-out Bonus under the APA, which were future profits or projected future profits/bonus after the clean break of the Consent Order to which the wife was not entitled to share. Further, I erred in giving no account of the fact that the settlement was partly due to the husband’s wrongful dismissal claim against Avnet.

41.  Again, these arguments are merely a re-run of the points already made by him in the trial, which have been considered but rejected by me (Judgment at §159-161). Importantly, it is the husband’s own affirmation evidence, given without any reservation that the Settlement Sum “can be taken as the Earn-out Payments and Earn-out Bonus” and “which should be paid to [him] under the APA”.  There is no mentioning that this sum or any part thereof was or might be related to his employment claim (Judgment at §161).

42.  Further, it remains pertinent for me to point out that the Settlement Sum concerned a period of time which was about 18 months from the date of the APA (ie from 4 October 2010 to 11 April 2012), which was insignificant in the light of the long marriage of almost 20 years and the division of marital roles between the parties so that the husband could focus on developing his career and business into the China market, which subsequently made EEL one of the only 2 distributors of Infineon products for the China market (Judgment at §142 and 156-157).

Ground 2: Wrong adoption of the equal sharing principle

43.  The husband argues that I wrongly adopted the equal sharing principle to the Sum which was a “post separation accrual” when:

(1)  The bulk of the Sum was “post clean break accrual” and based on the sale of the E Group which had already been distributed to the husband under the Consent Order;

(2)  This was contrary to my approach stated at §43-45 of the Judgment;

(3)  Future profit or bonus depended on better prospects of the new Avnet business under a new holding company after the clean break in the Consent Order;

(4)  I took into account irrelevant matters, such as the wife’s provision of personal guarantees and allowance of the former matrimonial home to secure banking facilities enjoyed by EEL/the E Group; her contribution to the initial capital of EEL, when these had already been taken into account in the equal distribution under the Consent Order.

44.  To this line of argument, I only need to point out that the fundamental findings in the Judgment are that the husband committed “intentional” non-disclosure of his negotiation with Avnet which first took place “before” the Consent Order was made, and that but for his intentional non-disclosure, the wife would not have agreed to the Consent Order (Judgment at §113-114), and that the length of the long marriage (of almost 20 years)  in this case carries great weight in deciding that the equal sharing principle shall be applied to the assets of EEL, to which the wife had made contributions before and/or after the Consent Order was made, which were sold only about 2.5 years after the alleged separation (Judgment at §137-149 and 163).  I shall also reiterate §12-17 of this Decision.

Ground 3: Incorrect premise for $12 million

45.  The husband argues that the further award of $12 million to the wife as compensation for loss of chance to invest had she received the moneys earlier was wrongly based on half of the Sum for reasons set out in Grounds 1 and 2.  But in view of my conclusion to the aforesaid Grounds 1 and 2, this Ground 3 is not able to take flight.

Ground 4: Wrong adoption of 2% per annum

46.  In the trial, the wife originally asked to be compensated in the total sums of $26,192,557, based on her allegation that she would have invested in various landed properties in Hong Kong and China and would have earned investment gains, had she received the moneys earlier (Judgment at §182). I rejected such allegation and accepted the submission of Mr CY Li, senior counsel acting for the husband, that the wife is a very conservative investor, and that even if she had received the moneys earlier, she would not have embarked in the alleged investment in the property markets in Hong Kong or China (Judgment at §184 and §186-197). I also accept the argument of Mr Li SC that the wife’s valuation method in assessing the growth in the value of the properties to be invested and the rental income is “extremely basic” and “unreliable”. Having ruled that the wife is not a risk-taker in investment, I concluded that it would be more likely than not that she would have placed the moneys in a fixed deposit. As Mr Li SC has not expressly challenged the interest rate of 2% per annum per se, I awarded the wife a further sum of $12 million by adopting a 2% return rate (Judgment at §201-202).

47.  The husband now says that I erred in adopting this interest rate of 2% per annum, as the wife has never presented evidence that she could have placed the additional award into a fixed deposit account with 2% interest per annum. It is submitted on his behalf in this application that it is more appropriate to adopt the rate of 1% per annum.

48.  As a starting point, the husband has acknowledged in his reply closing submission that the issue of compensation is “one of the discretion” under section 4 of the MPPO, and that the concept of “fairness” is “central” to the exercise of the discretion.[6]

49.  In adopting the interest rate of 2% per annum, the court, as it is required under section 7 of the MPPO, had to take into account “all the circumstances” of the case, in order to achieve “fairness”.  Important it is for me to reiterate that it is the finding of this court that the husband had “intentionally” failed to disclose the negotiation with Avnet, and that it is more likely than not that such negotiation first commenced “before” 8 June 2010, ie before the Consent Order was made (Judgment at §200). Also important is the fact that he had also failed to disclose his interest in Fusion Fuzion (Greater China)  Limited which carried substantial value in the Tact Report, as a result of which the wife is unfairly deprived of her entitlement to share it under the Consent Order (Judgment at §67).

50.  Plainly, I have taken into account all the relevant circumstances of the case in arriving at this 2% return rate by taking a broad brush approach. The husband cannot demonstrate how I have exercised my discretion wrongly.

Conclusion on the intended leave to appeal application

51.  For all the matters set out above, I conclude that there is no reasonable prospect of success in any of the intended grounds of appeal of the husband. His leave application must be dismissed with costs to the wife.

Application for stay of execution

52.  The law on stay of execution is well-settled and is recapped by Ma J (as he then was)  in Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84 at §9(6). The existence of an arguable appeal (that is, one with reasonable prospects of success)  is the minimum requirement before a court would even consider granting a stay.  If there is no arguable appeal, no stay would be granted, however exceptional the circumstances may be otherwise justifying a stay of execution.

53.  Since I have concluded that there is no reasonable prospect of success in any of the intended grounds of appeal put forward by the husband, his application for stay must be refused. But merely to complete the picture, I will briefly address his application for stay as follows.

54.  Broadly, the husband proffers 3 major reasons that there should be stay of execution:

(1)  his intended appeal has reasonable prospect of success (which I have already dealt with in the above and thus will not repeat myself);

(2)  there is a clear and appreciable risk that once the Judgment sum of $79.5 million with costs is paid over to the wife, it is unlikely that he would be able to recover the same from her if his appeal is successful, because it is her case in the trial that she has the habit of investing her money in landed properties, insurance and bonds and it is not certain if an equivalent sum could be recouped when required;

(3)  the wife has already sufficient security for payment because she has registered a notice for ancillary relief against 5 properties registered in his name or in the name of companies of which he is the sole director and shareholder. These properties are worth about $55.6 million. On top of this, he also holds shares in various companies, including those of EEL, the value of which are $18,897,000. Hence, the total value of landed properties and companies under his ownership/control is $74,497,000 which is very close to the amount of the Judgment sum.

55.  I do not accept that there is any risk that he is not able to recoup the Judgment sum from the wife if his intended appeal is successful. I am of the further view that the husband is cherry-picking.  In the trial, he adamantly argues that the wife would not have invested in the property markets in Hong Kong or China even if she had received the moneys earlier, and that she is “a very conservative investor”, [7] which is accepted by me in the Judgment. Yet, when the argument fits him, he allows himself to say in this application that due to the wife’s investment habit, it is unlikely that he would be able to recover the Judgment sum if his intended appeal is allowed.

56.  In response to the husband’s application for the stay, the wife points out that there is double counting on the part of the husband. He should not have counted the value of those landed properties held by his companies and the value of these companies separately, because the latter’s value already included the value of the former. The wife further points out that it is wrong of the husband to say that the value of his companies is $18,897,000. According to the Joint Table of Assets and Liabilities dated 16 March 2021 and filed for the purpose of the trial, this sum of $18,897,000 is the money owed by his companies to him.  According to the wife’s calculation, the husband has net assets of about $53.98 million in Hong Kong and about $27.89 million in China. His assets in Hong Kong are insufficient to satisfy the Judgment sum. Upon due consideration, I accept what the wife says and rejects the husband’s claim that she already has the security for payment of the Judgement sum.

Order

57.  Due to the matters set out above, the husband’s summons should be dismissed and I so ordered.  Further, he shall bear the costs of the wife, to be taxed if not agreed, with certificate for 2 counsel.