Case Detail

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO.2348OF 2002

_________________

BETWEEN

	W	Petitioner
	and
	W	Respondent

_________________

Coram : H.H. Judge Bruno Chan in Chambers

Date of Hearing : 16 April 2004

Date of Ruling : 29 April 2004

___________

R U L I N G

___________

1. This is my ruling as to the costs of the Petitioner Wife’s application for ancillary relief, arising from a judgment of mine which was handed down on 5^th November 2003 in which I awarded her approximately 53% of the parties’ matrimonial assets plus a nominal sum of $1.00 per annum, and an order nisi that each party to bear his / her own costs. She now seeks an order that the Respondent Husband should bear all her costs of the application, which is opposed by the Husband who maintains that there should be no order as to costs.

2. At very early stage following the dissolution of their 30 years marriage, the parties were able to agree in principle that their assets should be distributed equally between them, which consisted of real properties, investments and pensions, and cash in the total value of slightly over £910,000, but there were major disagreement over the Wife’s needs for continuing monthly maintenance as the Husband happened to lose his well-paid job as a managing director of a big electrical chain-store during the proceedings and offered to pay her a nominal sum of $1.00 per annum to preserve her right to seek variation in the event of him finding employment in future, but the Wife insisted that he should continue to pay her substantive periodical payment from his share of the matrimonial assets, and relying on his high earning capacity.

3. The trial itself lasted for 4 days with an additional day for submission, with the question of whether substantive periodical payments were to be paid in the face of the Husband’s unemployment as essentially the main issue, and the bulk of the time was spent on the Wife’s needs and expenditure and the Husband’s earning capacity. At the start of the trial, the Wife’s legal costs were estimated to be about HK$500,000 up to its conclusion, whilst the Husband’s were close to HK$400,000. He had also contributed HK$45,000 towards the Wife’s costs.

4. The Husband’s main argument in his opposition to the Wife’s application for costs is that it was her refusal to take a realistic view of his unemployment and to move from her firm stance of “he will find employment” coupled with “as long as I get what I want it does not matter where it comes from” which led to the necessity for trial, and that as the judgment giving her only nominal maintenance instead of substantive periodical payment was clearly in his favour, it should be reflected in an order that she should bear her own costs.

5. The Wife, on the other hand, argues that the offers of the Husband of equal division of matrimonial assets as a clean-break without any periodical payments for her were unreasonable and unacceptable, whereas his offer of 22^nd May 2003 again failed to offer her periodical payments other than her right to apply for nominal maintenance, or to offer her costs, was again unreasonable and incapable of being accepted by the Wife.

6. It is further submitted by the Wife, that as she was eventually awarded 53% of the assets, she was therefore able to achieve a larger capital award than was offered, and that the Husband’s failure to recognise her need for periodical payments or the level thereof is fundamental, although she was only awarded a nominal maintenance order at the end of the trial, she submits that the time taken in establishing her entitlement was time well spent as it will greatly assist any future application for periodical payments after the Husband has obtained employment and / or an income from his business.

The Principles

7. The general rules and principles as to costs in civil proceedings have been stated in In re Elgindata Ltd. (No. 2) [1992] 1 WLR 1207 where Nourse LJ said as follows : -

“The principles are these. (i) Costs are in the discretion of the court. (ii) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (iii) The general rule does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or a part of his costs. (iv) Where the successful party raises issues or makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or a part of the unsuccessful party’s costs. Of these principles the first, second and fourth are expressly recognised or provided for by rules 2 (4), 3 (3) and 10 respectively. The third depends on well established practice. Moreover, the fourth implies that a successful party who neither improperly nor unreasonably raises issues or makes allegations on which he fails ought not to be ordered to pay any part of the unsuccessful party’s costs”.

8. While I agree that these principles apply equally in this jurisdiction, it is also true that costs in contested Family matters, in which the court has wide discretion, do not necessarily follow the event. There is, of course, the necessity for some starting point, which was discussed in the judgment of Butler-Sloss L.J. in Gojkovic v Gojkovic [1992] Fam 40 at 54, in which she said :

“That starting point, in my judgment, is that costs prima facie follow the event (see per Cumming-Bruce L.J. in Singer (formerly Sharegin) v Sharegin [1984] F.L.R. 114, 119) but may be displaced much more easily than, and in circumstances which would not apply, in other Divisions of the High Court. One important example is, as the judge pointed out, that it is unusual to order costs in children cases. In applications for financial relief the applicant (usually the wife) has to make the application in order to obtain an order by consent; and if money is available and in the absence of special circumstances, such an agreement would usually include the applicant’s costs of the application. If the application is contested and the applicant succeeds, in practice in the Divorce Registries around the country where most ancillary relief applications are tried, if there is money available and no special factors, the applicant spouse is prima facie entitled to, and likely to obtain, an order for costs against the respondent. The behaviour of one party, such as in material non-disclosure of documents, will be a material factor in the exercise of the court’s discretion in making a decision as to who pays the costs”.

9. In the vast majority of cases, according to the Lord Justice (as she then was), where one party is or both parties are legally aided, and where the assets are insubstantial or at least inadequate for the needs of the family, the question of who pays the costs may be academic. But in cases where the assets are substantial, as in the present case, an order for costs can if appropriate be made. Butler-Sloss L.J. said in the same judgment :

“In such cases the parties are likely to negotiate, and such negotiation, which may lead to a settlement, is much encouraged by the courts. The Calderbank offer – a letter containing an offer only revealed after the order is made – bears some resemblance to, but is not identical with, a payment into court. It takes its name from Calderbank v Calderbank [1976] Fam. 93 (a claim by a husband) in which Cairns L.J. referred to an apportionment offer in Admiralty proceedings, and said, at p. 106:

“If that is not accepted no reference is made to that offer in the course of the hearing until it comes to costs, and then if the court’s apportionment is as favourable to the party who made the offer as what was offered, or more favourable to him, then costs will be awarded on the same basis as if there had been a payment in. I see no reason why some similar practice should not be adopted in relation to such matrimonial proceedings in relation to finances as we have been concerned with”.

This useful practice has since been followed in the Family Division, and has now been extended to the other divisions of the High Court by R.S.C., Ord. 22, r. 14 – a written offer “without prejudice save as to costs”. Ord. 62, r. 9 states : “(1) The court in exercising its discretion as to costs shall take into account …… - (d) any written offer made under Ord. 22, r. 14 ……”.

Later decisions referring to the effect of a Calderbank offer have accepted, in my view, the basic assumption as expressed by Cairns L.J. that if an applicant spouse failed to exceed the sum offered, prima facie she / he would pay the costs after the date of communication of the offer. For example, in McDonnell v McDonnell [1977] 1 W.L.R. 34, this court applied Calderbank’s case to a legal aid case subject to the limitation on her legal aid certificate, on the basis that the offer in the letter should have been accepted by the wife”.

10. This practice was referred to by Oliver L.J. in Cuttsv Head [1984] Ch. 290 in which he explained the nature of the public policy upon which the rule rests, when he added :

“As a practical matter, a consciousness of a risk as to costs if reasonable offers are refused can only encourage settlement whilst, on the other hand, it is hard to imagine anything more calculated to encourage obstinacy and unreasonableness than the comfortable knowledge that a litigant can refuse with impunity whatever may be offered to him even if it is as much or more than everything to which he is entitled in the action”.

11. Butler-Sloss L.J., having considered the various decisions on costs, went on to reach the following conclusion in Gojkovic v Gojkovic :-

“It is therefore clear that Calderbank offers require to have teeth in order for them to be effective. This is recognised by the requirement in Ord. 62, r. 9 (and the equivalent Ord. 11, r. 10 of the County Court Rules 1981 (S.I. 1981 No. 1687 (L.20)), as amended, for the court to take account of Calderbank offers, and by analogy open offers, in exercising its discretion as to costs. There are certain preconditions. Both parties must make full and frank disclosure of all relevant assets, and put their cards on the table. Thereafter the respondent to an application must make a serious offer worthy of consideration. If he does so, then it is incumbent on the applicant to accept or reject the offer and, if the latter, to make her / his position clear and indicate in figures what she / he is asking for (a counter-offer). It is incumbent on both parties to negotiate if possible and at least to make the attempt to settle the case. This can be done either by open offers or by Calderbank offers, both adopted by the husband in this case. It is a matter for the parties which procedure they prefer. There is a very wide discretion in the court in awarding costs, and as Ormrod L.J. said in McDonnell v McDonnell [1977] 1 W.L.R. 34, 38, THE Calderbank offer should influence but not govern the exercise of discretion.

There are many reasons which may affect the court in considering costs, such as culpability in the conduct of the litigation : for instance (as I have already indicated earlier) material non-disclosure of documents. Delay or excessive zeal in seeking disclosure are other examples. The absence of an offer or of a counter-offer may well be reflected in costs – or an offer made too late to be effective. The need to use all the available money to house the spouse and children of the family may also affect the exercise of the court’s discretion. It would, however, be inappropriate, and indeed unhelpful, to seek to enumerate and possibly be thought to constrain in any way, that wide exercise of discretion. But the starting point in a case where there has been an offer is that, prima facie, if the application receives no more or less than the offer made, she / he is at risk not only of not being awarded costs, but also of paying the costs of the other party after communication of the offer and a reasonable time to consider it. That seems clear from the decided cases and is in accord with the Rules of the Supreme Court and the County Court Rules 1981 requiring the court to have regard to the offer. I cannot, for my part, see why there is any difference in principle between the position of a party who fails to obtain an order equal to the offer made and pays the costs, and a party who fails by the offer to meet the award made by the court. In the latter case prima facie costs should follow the event, as they would do in a payment into court, with the proviso that other factors in the Family Division may alter that prima facie position”.

12. In the more recent case of C v C (Costs : Ancillary Relief) [2004] 1 FLR 291, Charles J having considered all the above principles in details, arrived at a practical approach in many cases as follows : -

“ (1) To ask who would, or should, have paid the costs if agreement had been reached at an early stage and why this was so. Often this will be reflected in the common ground and the offers made. The answer to this question will often identify who should be regarded as the paying party or the person who should prima facie be liable for costs and thus, in terms of the starting point referred to in Gojkovic v Gojkovic and Another, the event. Also the answer to this may often support the view that up to a certain pint prima facie one party should pay the costs of the other.

(2) To identify :

(a) the issues that are not in dispute at trial; and
(b) the issues that have prevented an agreement being reached and placed before the court for its approval and to consider their impact on the question of costs and thus, for example :

(i) their nature and whether the reality is that one party is going to be paying the other or whether there is a division of assets; (ii) the time taken in resolving the disputed issues; and (iii) who won on such issues.

This may strengthen or weaken the starting point referred to in Gojkovic v Gojkovic and Another [1992] Fam 40, sub nom Gojkovic v Gojkovic (No 2) [1991] 2 FLR 233 and will be relevant to the question whether issues and offers made on them should be treated separately when assessing the ability for costs.

(3) Consider the Calderbank offers and therefore apply FPR 1991 r 2.69 to the costs it covers.

(4) Consider the matters referred to in CPR r 44.3 (which include open offers).

(5) Consider how the costs of both parties have been affected by the disputed issues.

(6) Remember that the court has, and is exercising, a broad judicial discretion by applying the rules and earlier judicial guidance.

The above list is not intended to be exhaustive or one that should be applied in all cases. Also there will be overlap between the points listed”.

Background of Settlement Negotiations including Calderbank offers

13. The history of the settlement negotiations is set out in the correspondence, which the Wife’s solicitors have very helpfully condensed in a Schedule handed up at the hearing. Correspondence between solicitors over the financial issue started at the very early stage of the proceedings in April 2002 and in June 2002 the Husband proposed directly to the Wife to divide equally, on a monetary basis, the family assets and to pay her the sum of £250,000 from her share over a period of 4½years in full and final settlement of her claims, which proposal was however rejected by the Wife as clearly inadequate.

14. After the Husband had served his Affidavit of Means, his solicitors on 22^nd October 2002 made another proposal of clean break settlement by way of 50% of the total assets, in 6 instalments over 4 years, with an additional payment of £20,000 upon acceptance, plus payment of her reasonable legal costs.

15. The Husband’s offer was again rejected by the Wife who found it simply a repeat of his earlier offer, the “carrot” being the additional £20,000, which would be withdrawn if the offer was not accepted, and which she argues was a pressure tactic which jeopardised the climate for negotiation, and that his approach to settlement was fundamentally flawed.

16. I agree that this offer was inadequate to constitute a clean-break settlement, a fact actually conceded by the Husband during cross-examination, and that the Wife was right to reject it.

17. On 10^th March 2003 the Wife through her solicitors put forward her 1^st Calderbank offer, proposing basically 50% division of assets plus periodical payments of £4,250 per moth up to the Husband’s retirement in 2015, and legal costs on party and party basis.

18. It was at about this same time when the Husband’s employment was terminated and so on 22^nd April 2003 he informed the Wife accordingly and counter-offered to give her £20,000 plus her legal costs in additional to her 50% of the total assets, which was essentially the same as his previous offer, although it was not clear whether the payment of capital were still by instalments over 4 years as before.

19. Not surprising his counter-offer was rejected by the Wife who, although did not dispute the fact of his unemployment, regarded it unacceptable due to the fact that he was still proposing a clean break settlement without any provision for periodical payments.

20. On 22^nd May 2003 the Husband revised his said proposal by offering, for the first time, a nominal maintenance order, and that her then legal costs of £7,297 (HK$190,000 costs to date in Hong Kong together with £1,300 in UK costs) was to be deducted from the gross family assets before division.

21. This revised offer was again rejected by the Wife as she saw no reason why her costs should be paid from the gross assets instead of by the Husband, and that it also failed to recognise her entitlement to substantive periodical payments, as she had been subsisting on a greatly reduced standard of living than she was entitled to, and that with his excellent employment record, the Husband could obtain gainful employment in HK or UK if her chose to use his best endeavours to do so.

22. By that time, if not earlier, it was clear that substantive periodical payment had become the major issue between the parties and on 10^th June 2003 the Wife proposed a further settlement for periodical payment of £3,700 per month up to 2015 plus her legal costs. The terms were basically the same as her last offer save that she had come down from £4,250 to £3,700 per month for periodical payments.

23. This offer was not accepted by the Husband who instead proposed on 2^nd August 2003 that in addition to a 50 / 50 division of the assets, he would pay the Wife a further £75,000 in full and final settlement of her claims and without any nominal maintenance. This proposal was again rejected by the Wife in view of her age, that the additional payment of £75,000 would not have been sufficient to meet her requirement which, even at £1,000 per month as suggested by the Husband, would have lasted for only 6 or 7 years, or as the Wife now argues, applying the rate of the Wife’s requirement of £3,000 per month, which was supported by the Court’s finding, this offer of the Husband was far short of what she ought to have received, even if the payments went on until the Husband was 60 and the £75,000 additional lump sum was taken into account, as he may well be in a healthy financial position and able to continue to earn a good salary up until the age of 65 or over.

24. On 9^th August 2003, the Wife made one final Calderbank offer to propose a division of 50% of the assets and periodical payments at a reduced rate of £2,700 per month until the Husband reaches the age of 65 plus legal costs. This was the offer with which the Wife went to trial on 18^th September 2003 and which was not accepted. It is submitted by the Wife that this periodical payment proposal was in fact £300 less than the figure the Court found would be appropriate and, ultimately, her capital award was also 3% greater than the capital offered by the Husband prior to the hearing. So in applying the principle that as a starting point, costs should prima facie follow the event, who was in reality the successful party ? Or in the words of Counsel for the Husband, what was the event in this case, and what were the issues that caused this matter to go to a four day trial ?

The Trial Issue

25. According to the Husband’s submission, when the trial began, asset division at 50% had been proposed and that the Wife was seeking only 50% of the assets. She did not go to the Court seeking more than 50% of the assets. She had never proposed this, and the fact that she was awarded slightly more than 50% was clearly a benefit to her, but not the issue which caused her to go to trial.

26. The issue was, the Husband submits, the question of periodical payments, substantive or nominal. If it were found that substantive periodical payments should be made, then quantum was an issue that fell to be determined. Had it been agreed from the outset that a nominal maintenance order was appropriate, then no hearing to determine quantum, in the absence of any income on the part of the Husband, would have been necessary. The fact is that after trial, the Wife was awarded a nominal order only, as offered by the Husband some 4 months previously in May 2003. It was therefore her refusal to consider a nominal maintenance order which led to the necessity for trial and to costs being incurred, and hence she cannot now be entitled to her costs.

27. There is no question in my mind that the main trial issue was whether periodical payments should be substantive or nominal. It was the issue from the very beginning of the proceedings up to the trial. It was clearly so identified in the correspondence and amply reflected in the affidavits and the evidence at the trial, as well as in the parties’ final submission. It would therefore be correct to say that the Husband was in fact the “winner” or successful party in the main trial issue when I ordered nominal maintenance for the Wife instead of substantive periodical payments, and although she was awarded slightly more assets in 53% instead of 50% as proposed by the Husband, it was not what she had asked for, and, as submitted by Counsel for the Husband, was not the issue which caused her to go to trial.

28. So with the Wife not being the successful party on the main issue, should costs therefore follow the event to deprive her thereof, or that in the circumstances of this case, some other order should be made, i.e. she should nevertheless still be awarded costs ?

29. It is submitted on behalf of the Wife that the Husband’s earlier offers for clean-break settlement were not reasonable and did not comply with the principles enunciated in Gojkovic, in that he had failed to make a serious offer worthy of consideration, a fact already conceded by the Husband in his evidence, and which I have accepted. I do not, however, agree with the Wife’s argument that the Husband’s failure to include provision for her costs in his subsequent offer of 22^nd May 2003, in which he proposed a nominal maintenance order for the first time, rendered the offer incapable of acceptance by her.

30. Although it is true that the Wife did not agree to the Husband’s proposal to pay her costs out of the gross family assets before the 50% division, insisting instead that he should bear her costs, it is clear from her solicitors’ letter of 10^th June 2003 in reply that the main reason that his offer was not acceptable to her was the absence of substantive periodical payment and not over her costs, otherwise she could have accepted his offer except as to her costs to be further negotiated or argued in court an exercise which certainly would not require 4 days for trial.

31. Nor do I agree with her submission that the Husband’s said offer had failed to recognise her need for periodical payments. He clearly recognised it in the same letter of 22^nd May 2003 when his solicitors stated : “In view of the termination of our client’s employment and the uncertain future for our client, your client shall be entitled to seek a nominal maintenance order against our client in respect of her claims for future periodical payments, in case our client is able to secure gainful employment in future”. It was because of his unemployment situation that he did not offer substantive periodical payments, not because of his failure to recognise her needs, which might have appeared to be the case before, but not anymore at that stage.

32. This recognition by the Husband was in fact acknowledged by the Wife in her reply through her solicitors’ letter of 10^th June 2003 when it stated on p. 105 of the Correspondence Bundle : It was not until your client had had the benefit of advice from Counsel that he included an up front settlement of the capital division and at least a recognition that our client is entitled to on going periodical payments”. And on p. 107 : “ …… following advice from Counsel, your client now appears to have accepted the need for periodical payments”.

33. The Wife’s argument that due to the Husband’s failure to recognise her needs for periodical payments, she had to come to Court to establish her need cannot therefore stand on firm ground.

34. It is however also submitted on her behalf that it is not correct to say that the only question to be decided at the hearing was whether or not the Husband should pay periodical payments while he is unemployed, but the level of maintenance also fell to be determined, as when he obtains new employment, it should be a simple matter to arrange on-going periodical payments without the need of incurring the very considerable costs of a new hearing which would be necessary had there not been the recent trial and had the Husband not challenged her right to periodical payments. In these circumstances, it is submitted that the time taken in establishing the Wife’s entitlement was time well spent as it will greatly assist any application for periodical payments in the future after the Husband has obtained employment and / or obtained an income from his business.

35. I find this submission, attractive though on the face, ultimately too simplistic and unrealistic. There is no telling whether the future application may come only some 6 – 9 months later when the Wife’s established claims or the Court’s finding of the level of her needs in UK will probably still be relevant, or whether it turns out to be much farther down the road before the Husband’s income situation has improved, in which case the needs of both parties will no doubt have to be reassessed at another hearing which may not require 4 days, but it would be naïve to think that significant time in Court would have been saved or rendered unnecessary.

36. The Wife has also tried to justify her entitlement to pursue her claim for substantive periodical payments by submitting that she was made suspicious by the Husband’s conduct of : -

(a) lying about his affair with his girlfriend;

(b) drawing funds from the parties’ joint accounts;

(c) cutting off her source of income including cancelling her credit cards;

(d) paying her insufficient maintenance of only £1,400 per month;

(e) bullying her on the telephone for settlement;

(f) putting forward unacceptable terms even when he was still having a good job;

(g) never acknowledging until trial that she had a justified, bona fide claim for periodical payments.

37. I have already dealt with the last point raised by the Wife, as for the other conducts of the Husband, some of which he has admitted with explanation and denied they were relevant, but even if they were all true, it was never the Wife’s case that as a result of these conducts, she was suspicious that the Husband had failed to make full or frank disclosure of his means, or about his unemployment that caused her to have to take her claims to trial.

38. I also do not agree that the Husband was “playing games”. As submitted by Counsel on his behalf, his reply to the question eliciting the “games” response clearly meant that the various offers and counter-offers were based on legal advice and formed part of the process of negotiation, and that his evidence and demeanour in Court do not in any way support the Wife’s submission.

39. As I have said, the main issue was her insistence of substantive periodical payments, which can in fact be accurately summed up in her view expressed in the same letter of her solicitors on page 108 of the Correspondence Bundle : -

“Whilst your client is at present unemployed, the reality is that your client still has a full income until October 2003 and in any event our client is not prepared to accept his current status as a permanent situation. Our client views this as a temporary situation only. Your client still has ongoing responsibilities to our client and these will extend beyond October 2003. We and Counsel have advised our client that the Court will deem your client to have the ability to continue to earn at a rate commensurate with his qualifications and past earning capacity. Furthermore, our client has been advised that your client’s choice of pursuing the option of starting his own business is a matter for your client and in the circumstances the Court will not reflect his choice as necessarily being his maximum earning capacity if such a business does not generate equivalent resources. In such circumstances, the Court will deem your client to have an income based on his past earning capacity”.

And on p. 110 :

“Given your client’s continued income until October 2003 and his earning capacity going forward, our client does not accept your client’s proposal for her periodical payments to be nominal only. We have already set out our client’s position on your client’s choice to pursue starting his own business. Our client maintains her need for ongoing periodical payments and we and Counsel have advised her that the Court will award her such. However, without prejudice to her assertions as to the level of her required maintenance and in order to reflect your client’s change of circumstances and his comments in respect of her need to support herself and in order to try and reach a settlement our client proposes that your client pay her a reduced periodical payment of £3,700 per month. Such periodical payments to continue for a period of 12 years until your client retires in 2015. For the purpose of this settlement offer our client does not seek a backdated payment in this respect”.

40. It was with this position that the Wife had gone to trial and which she had maintained during cross-examination when she was asked if she had given thought as to how he would fund his retirement if he could not find a job, she answered “no”, when asked if she was prepared to have him pay her out of his savings, she answered “yes”, and when asked if this was fair, she replied “I’ve no comment to make, I’m sorry”.

41. So was the Wife culpable in her conduct for, as submitted by the Husband, taking a blinkered approach, and while rationally understanding the difficulties facing the Husband, she doggedly refused to move from her “he will get a job” stance, so as to deprive her of her costs ?

42. I have in my judgment found that the breakdown of their 30 years marriage caused by the Husband’s affair with another woman, with whom he had later taken up cohabitation, and then demanded a divorce from the Wife, must have come as a terrible shock to her and caused her great anguish. His lying about his affair and his failure to include substantive periodical payments in his initial offers of clean-break settlement when he was still gainfully employed certainly did not help to maintain whatever trust that the Wife might still have on him in the circumstances, and when she learnt of his sudden unemployment in the middle of their negotiations over her request for substantive periodical payments, I can well understand why she felt she was entitled to assume that the Husband, who had been gainfully employed for the whole marriage, would be able to obtain employment soon, and hence to put his case to the test in Court when negotiations finally failed. She might have been unsuccessful with this issue, but one cannot say, however, that it was improper or unreasonable for her to raise it in the circumstances. After all, the parties’ earning capacity is one of the factors which the Court is required to consider by statute.

Conclusion

43. In applying the principles of In re Elgindata Ltd. that the general rule that costs follow the event does not cease to apply simply because the successful party raises issues or makes allegations on which he fails, but where that has caused a significant increase in the length or costs of the proceedings he may be deprived of the whole or a part of his costs, here even if the Wife were to be considered as a successful party overall having obtained slightly more in the total assets, there is no question that she has failed in the main issue of substantive periodical payments. With the parties’ financial and assets positions having ended up more or less equal, and with the Husband having remained unemployed, the ultimate question for me in the exercise of my discretion, is that in the circumstances of this case when neither party has been found to have acted improperly or unreasonably in the proceedings, is it fair or just to hold the Husband wholly responsible for the Wife’s costs, which he would have to pay out of his share of the assets, when he was in fact the successful party on the main issue ? The answer must be clearly no. He should however be liable to her costs up to the start of the trial on 18^th September 2003 when he renewed his offer of nominal maintenance on top of the equal division of assets. It is true that this offer was first made on 22^nd May 2003 which was not accepted by the Wife who was then entitled to seek, and did seek, further disclosure of the Husband’s efforts to find employment and, after they were provided by his solicitors’ letter of 17^th July 2003, to consider the same and to seek legal advice, but which offer was subsequently replaced by another clean-break offer from the Husband on 6^th August 2003 and the nominal maintenance order was only formally offered again shortly before the start of the trial. It would therefore be fair that she gets her costs up to then.

44. All these go to show the importance of proper negotiations referred to in the judgment of Cumming-Bruce J in Singer v Sharegin (1984) FLR 114 in which he said : -

“The proceedings also demonstrate the immense importance of careful and critical attention being given by the legal representatives on each side to the question whether a reasonable offer should be made and, if so, what it should be; and, if it is decided to make an offer, the respondent’s legal advisers should then decide whether to incorporate the offer in a Calderbank letter, because if that is not done, then the judge may find, following the ordinary principles relating to the judicial discretion as to costs, if he makes even a relatively small order, it will carry with it against the respondent the whole burden of paying the party costs. And when considering when to make an offer, the legal advisors will frequently be in a better position than their lay clients to appreciate the importance of compromise, because they will understand, which the lay clients cannot do without such assistance and advice what the impact of costs, if the dispute goes the distance, is likely to be”.

45. If agreement had been reached at an early stage in this case, costs of both parties would most probably have come out of the gross assets before division, and which would no doubt be much less. There was no agreement partly because of the Husband’s failure to make a proper offer until trial, and partly because of the Wife’s insistence in substantive periodical payments regardless of the realistic situation of the Husband’s unemployment, with the unfortunate result that both time and costs have been spent way over the parties’ anticipation to the serious depletion of their assets. This is a situation that all practitioners in this jurisdiction should strive to avoid and to warn their clients of such dire consequences.

46. In conclusion, for the reasons aforesaid, my order is for the Wife to have her costs of the ancillary relief application up to the day of the trial on 18^th September 2003 to be taxed on party and party basis with Certificate for Counsel to be paid by the Husband, with credit to be given for the contribution already made by him, and that there be no order as to costs thereafter, including the hearing on costs.

	Bruno Chan
	District Judge

Representation :

David Glynn of Hampton Winter and Glynn for the Petitioner

Francis Irving, instructed by Stevenson Wong & Co for the Respondent

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO.2348OF 2002

_________________

BETWEEN

	W	Petitioner
	and
	W	Respondent

_________________

Coram : H.H. Judge Bruno Chan in Chambers

Date of Hearing : 18, 23 – 25 September & 6 October 2003

Date of Judgment : 5 November 2003

_________________

J U D G M E N T

_________________

1. This is the Petitioner Wife’s application for ancillary relief against the Respondent Husband upon the dissolution of their lengthly marriage of almost 30 years. For convenience purpose I shall refer to the parties as Husband and Wife in this judgment.

2. The parties were married in 1973 in United Kingdom when the Husband was 23 and the Wife 20. The Husband was then a college student studying for a degree in Textile Marketing sponsored by his employer, whereas the Wife was then a laboratory technician and later a clerical officer and executive officer at the Department of Health and Social Security until 1977 when their first child, J, was born and thereafter the Wife became a full-time housewife and mother. A second child, D was soon to follow in 1979. Both of them are now over 21 and are self-supporting.

3. Following his graduation, the Husband’s career had been successful working for a large retail electronics company in United Kingdom where he rose to the position of managing director in 1990, and in 1991 he assumed the position of marketing vice-president of an associated company based in Belgium for one year before the family was relocated back to United Kingdom where they had a 5 bedroom house in Sutton Coldfield.

4. In 1995 the Husband was head-hunted to Hong Kong to join a large electrical company as a manager at a salary of initially HK$55,000 per month plus expatriate package including accommodation, bonus, company car, medical and leave allowance as well as provident fund. In 1998 he became managing director and in 2001 his salary was increased to HK$110,000 per month. During his employment in Hong Kong the parties enjoyed a well-to-do lifestyle including accommodation in a 3 bedroom apartment in MacDonnell Road, membership at the Aberdeen Boat Club, holidays in Asia and UK, and frequent dinings in restaurants.

5. When the Wife was first relocated to Hong Kong, she initially volunteered to work in a church bookstore but later became a part-time bookstore assistant in October 1996 until April 2000 when she resigned due to health problem and family commitments. At about this time the parties sold their joint property in Sutton Coldfield, and used the proceeds to finance the purchase of a small flat in London in their joint names, and another flat in Huddersfield, also in their joint names, for their son’s use during his tertiary education.

6. In early 2001 the Husband suddenly asked for a separation and admitted that he had formed a relationship with a younger woman. After discussing the matter with the Wife, he agreed to end the affair and the parties spent some time in United Kingdom and later went together on a holiday in Australia in October 2001. However upon their return to Hong Kong, the Husband again asked for a separation and announced that he had resumed his relationship with the said woman.

7. In November 2001 the Wife moved back to United Kingdom and the following arrangements were made between the parties in respect of their properties : -

(a) The Wife’s interest in the 2 properties in London and Huddersfield were transferred to the Husband, with an outstanding mortgage of approximately￡47,000 still on the London property;

(b) A property in York was purchased in the sole name of the Wife as her residence while in UK by means of a loan of￡160,000 secured on the Husband’s London property.

8. In addition the Husband gave the Wife a sum of￡25,000 for the furnishing of the York property with a promise of a further sum of￡5,000 to be paid later. He also started paying her a monthly sum of￡1,400 for her maintenance in UK.

9. In March 2002 the Wife returned to Hong Kong and met with the Husband when she was told that there was no chance of a reconciliation. When she was unable to gain entry into their former matrimonial home at MacDonnell Road, she decided that the marriage was at an end and therefore instituted these proceedings by issuing a petition for divorce on 8^th March 2002 against the Husband based on his behaviour.

10. In April 2002 the Husband increased his interim maintenance for the Wife to￡2,200 per month and the parties began a series of settlement negotiation. At very early stage the parties were able to agree that in principle their assets should be distributed equally between them, but there were major disagreements over the time for payment and the Wife’s needs for continuing monthly maintenance as the Husband proposed that the equal division of all the assets should be a clean break between the parties with the Wife’s share of the cash assets be payable over a period of 4 years, whereas the Wife insisted in immediate payment plus substantial monthly maintenance to continue after the divorce until the Husband’s retirement at 65.

11. The decree nisi of divorce was eventually granted without opposition on 18^th March 2003 with the question of ancillary relief adjourned for the parties to file their affidavit of means. Unfortunately in April 2003 the Husband was made redundant by his employer and received compensation of about HK$1.2 million including his provident fund and repatriation allowance. He was also paid 6 months of salary up to October 2003 with rental allowance covered up to February 2004. He eventually conceded that there are insufficient assets between the parties to achieve a proper clean break settlement but that in the light of his loss of employment, the Wife should only be entitled to a nominal maintenance, preserving her right to seek substantial maintenance if and when he finds employment or when his financial position improves.

12. The Wife does not dispute the Husband’s unemployment situation, but believes that he should be able to find further employment soon with his substantial earning capacity, and with the available liquid assets at his disposal, he should pay her monthly maintenance up to the year 2015. With neither party willing to compromise on this issue, the matter therefore sent to trial when both of them gave extensive oral evidence, with the Wife having flown in from UK for this purpose.

The law

13. In deciding on the Wife’s claims for ancillary relief, I am required by S. 7 (1) of Matrimonial Proceedings and Property Ordinance to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say : -

(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;

(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;

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

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

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

(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;

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

The Evidence

14. Before considering the evidence of those matters aforesaid, it would be useful to set out in better details the parties’ capital assets from the Schedule of Properties and Assets annexed to the Wife’s submission and their agreed division : -

A. Properties UK￡
(i) London flat in Husband’s sole
name at￡340,000 with house
contents but less outstanding mortgage 195,480.00

(ii) Huddersfield flat in Husband’s
sole name and free of mortgage 55,000.00

(iii) York flat in Wife’s sole
name and free of mortgage 215,000.00
Sub-total : ￡465,480.00
==========

B. Other Investments UK￡

HSBC (553.00)
HSBC Savings 24,060.00
HSBC Combi 167.00
HSBC Combi ($412.00) 256.00
Midland offshore 7,067.00
Northern Rock 60 24,032.00
Friend Provident 9,849.00
Assurance
Equities 1,056.00
Northern Rock 31,330.00
Investment PEPs 30,792.00
Royal & Sun Alliance 67,670.00
Intertan Pension (old) 132,555.00
Towry 24,415.00
Sub-total : ￡352,696.00
==========

C. Termination Package HK$

(i) Pro-rata Bonus for 2003 220,000.00
(ii) Provident Fund 807,395.91
(iii) Extra Payment 330,000.00
(iv) Untaken leave 48,540.00
Less : tax provision (113,631.00)
Sub-total HK$1,292,304.91
=============

Gross Family Assets = ￡465,480 +￡352,696 +HK$1,292,304.91
less Wife’s legal costs =￡915,471

50 / 50 division of Net Family Assets =￡457,735
========

15. It is proposed by the Wife that to achieve a equal division of the above net family assets, the Wife should retain her York property, and that the Husband should transfer to her the following : -

(a) the Huddersfield property;

(b) 50% of the Intertan Pension Fund;

(c) a lump sum equivalent to a 50 / 50 division of the capital assets.

This would leave the parties with the following assets : -
Wife UK￡

(i) York flat 215,000
(ii) Huddersfield flat 55,000
(iii) 50% Intertan Pension 66,277.5
(iv) lump sum equivalent to
50% division of the capital assets 121,457.5
Total ￡457,735
========

Husband UK￡

(i) London flat net 195,480
(ii) 50% Intertan Pension 66,277.5
(iii) balance of capital assets 195,977.5
Total ￡457,735
=========

16. This 50% equal division of assets is agreeable to the Husband in recognising the Wife’s contributions made to the marriage, despite some criticism of her for not acceding to his request to entertain at home in Hong Kong as she did not have the assistance of domestic helper. There is no dispute that all these assets were accumulated with the Husband’s income throughout the marriage, and equally there is no question of the Wife’s contributions to the welfare of the family by looking after the home and caring for the children, and on this it would be relevant to refer to the evaluation of the contribution of the homemaker and child carer by Lord Nicholls in White v White [2000] 2 FLR 981, 989 C :

“Typically, a husband and wife share the activities of earning money, running their home and caring for their children. Traditionally, the husband earned the money and the wife looked after the home and the children. This traditional division of labour is no longer the order of the day. Frequently both parents work. Sometimes it is the wife who is the money earner, and the husband runs the home and cares for the children during the day. But whatever the division of labour chosen by the husband and wife, or forced upon them by circumstances, fairness requires that this should not prejudice or advantage either party when considering paragraph (f), relating to the parties’ contributions. This is implicit in the very language of paragraph (f) : “ …… the contribution which each has made or is likely …… to make to the welfare of the family, including any contribution by looking after the home or caring for the family”. If, in their different spheres, each contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money-earner and against the home-maker and the child-carer. There are cases, of which the Court of Appeal decision in Page v Page (1981) 2 FLR 198 is perhaps an instance where the court may have lost sight of this principle …… The discretionary powers, conferred by Parliament 30 years ago, enable the courts to recognise and respond to developments of this sort. These wide powers enable the courts to make financial provision orders in tune with current perceptions of fairness. Today there is greater awareness of the value of non-financial contributions to the welfare of the family. There is greater awareness of the extent to which one spouse’s business success, achieved by much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over may years. There is increased recognition that, by being at home and having and looking after young children, a wife may lose forever the opportunity to acquire and develop her own money earning qualifications and skills”.

17. While there seems to be no dispute over the division of assets, great issues have been taken over the parties’ needs and expenses. The London flat has been let out with rental income to meet the mortgage instalment, while the Huddersfield property is currently occupied by their son who is paying￡250 per month for its use, but such payments had been irregular in the past. There is no evidence as to the market rental of the property, but the Husband has given a guess at￡300 per month. From the cash capital of￡120,000, the Wife says she needs to purchase a BMW for￡25,000, meet her legal costs in these proceedings and bring her National Insurance contribution up to date. With the Intertan policy an investment envisaged by the parties to be part of their retirement pension not to be realised until the Wife is 62, which will hopefully generate an income of about￡530 per month by that time, the Wife says that what is left of her cash capital will not be able to generate enough income to meet her current needs of at least￡3,336 per month.

18. The Husband believes many of these expenses are exaggerated, such as￡295 for food and supermarket,￡328 on clothings,￡219 for health and personal,￡714 for entertainment and holidays, or unnecessary such as the￡734 for retirement pensions. He argues that in November 2001 when he suggested paying the Wife￡1,400 per month for her living expenses in UK, she accepted it without any objection and had lived on the said amount without any complaint or resorting to a overdraft facility arranged for her by the Husband, until March 2002 after the institution of the divorce proceedings when her spending started to increase, with a new enthusiasm for shopping and her personal expenditure has since soared with multiple visits to the same store sometime in the same day. He says that notwithstanding her view that she is on a limited budget, from July 2002 to July 2003 she spent￡4,268 on clothes,￡2,800 on holidays,￡2,000 on beauty and toiletries, and￡3,200 on entertainment, and that it is not accurate for her to say in her Affidavit of 9^th January 2003 that she could not afford holidays, when in fact 4 holidays had been taken by that time.

19. The Husband’s view is that such spending pattern does not reflect the normal pattern of the Wife in Hong Kong, nor does it truly reflect the UK style where the cost of supermarket items is much lower than in Hong Kong, and that such change in her spending pattern since March 2002 is wholly consistent with his view that she has inflated her expenditure for these proceedings.

20. The Wife says that the figure of￡1,400 was decided on by the Husband, as evidenced by his handwriting of the various estimated items of expenditure that added up to the total sum, and that as she was then hopeful of a reconciliation, she therefore did not dispute the figure. But following the realization that the marriage had definitely broken down, she says she has found the ending of their long marriage very difficult, and therefore goes shopping frequently in order to get out of the house and to meet people. She also has a lot of friends who come to her home often to socialise with her, hence high supermarket costs for her, which she says is no less expensive in England than Hong Kong.

21. It is also pointed out on her behalf that her food expenses at￡295 is in fact less than the￡300 that the Husband estimated in his original budget of￡1,400 for her monthly expenses, while her entertainment expenses of￡714 is no more than his average expenditure on credit cards of about HK$30,000 per month between July 2002 and June 2003, and that his own list of similar expenses, even without holidays, stands at an comparable amount of￡750. It is submitted on her behalf that her spread-sheet of her expenses (Bundle 1 P.881) in fact shows a restraint in the light of her former standard of living.

22. There is no doubt that during their stay in Hong Kong, the parties were able to enjoy a well-to-do lifestyle with membership at the Aberdeen Boat Club, holidays in Asia and UK, and frequent dining in restaurants. The Husband’s credit cards show a typical monthly expenditure in excess of HK$20,000, and sometimes $30,000 or more, for shopping and restaurant meals for the family prior to the breakdown of the marriage. His monthly income had increased from HK$55,000 in 1995, to HK$91,000 in 1998, and finally HK$110,000 in 2001, with bonus and other perks on top. The parties were able to put their 2 children through college and set up 2 properties in UK, with the one in Huddersfield purchased to assist their son while he was in college.

23. However it is argued for the Husband that this period immediately before the breakdown of the marriage was not representative of the bulk of the marriage, that in fact before coming to Hong Kong in 1995, the disposable income of the family was only around￡20,000 in 1994, that their main asset was their matrimonial home, and that there were no cash savings but a credit card debt. It was only due to the Husband’s job in Hong Kong that the family income had gradually increased, and it was in 2001 after their daughter’s marriage and their son in the final year of college, that the parties had no extraordinary expenses and hence there were more funds available from the Husband’s increased salary which was the cause for the increased credit card spending which were mainly on the Wife’s clothing, lunches with friends and beauty treatment, as well as eating out for both of them. This increased spending, the Husband argues, was in response to more disposable cash, and it was not the standard enjoyed through even all the years in Hong Kong, and that in any event this well-to-do lifestyle included club, company car, medical insurance were all terminated in April 2003 by his redundancy.

24. Section 7 (1) (c) requires the court to have regard to “the standard of living enjoyed by the family before the breakdown of the marriage”. It does not refer to the standard throughout the marriage or the bulk of the marriage but that before the breakdown of the marriage. So at what point of time before the breakdown of the marriage should the standard of living be considered? Financial situation changes and standard of living varies, and in my view, it must be the period of a well-settled lifestyle leading up to the time of the breakdown of the marriage that is relevant. In the present case it would be the period after the parties’ relocation to Hong Kong and in particularly from about 2001 when the Husband’s salary was increased to HK$110,000, which shows a lifestyle which was commensurately of a comfortable middle class standard in Hong Kong. This factor must however be taken into account in conjunction with section 7 (1) (b) in particularly in view of the recent changes of circumstances including the Husband’s redundancy and the Wife’s return to reside in UK.

25. While the section does not provide any method of calculating periodical payments, in assessing the Wife’s needs and maintenance, it would be helpful to bear in mind the basic principle enunciated in the case of Kershaw v Kershaw [1996] P. 13, 17 Div Ct :

“If any general principles are to govern the approach to a wife’s maintenance, I think they are as follows: In cohabitation a wife shares with her husband a standard of living appropriate to his income or, if she also is earning, their joint incomes. If cohabitation is destroyed by the wrongful conduct of the husband, the wife’s maintenance should be so assessed that her standard of living does not suffer more than is inherent in the circumstances of separation. Her standard of living may well have to be lower after the breach of cohabitation than it was before, since there may now be two households to be maintained in place of the former one, in which household expenses were shared. Although the standard of living of both parties may therefore have to be lower than it was before there was the breach of cohabitation, in general the wife should not be relegated to a lower standard of living than that which her husband enjoys”.

26. The Wife has been living on the maintenance and lump sum paid by the Husband since November 2001, and there is no question that her spending had indeed increased substantially in 2001 when compared with the previous years of 1999 and 2000 as evidenced by her credit cards statements. The summary of her credit card expenses for that period prepared by the Husband (Bundle 3 p. 1021) shows an increase from an average of about HK$6,400 per month in both 1999 and 2000 to more than HK$12,000 per month in 2001, and from July 2002 to July 2003, she spent more than￡4,000 on clothes,￡2,800 on holidays,￡2,000 on beauty and health, and￡3,200 on entertainments. It is true that the Husband’s salary had also received a substantial raise at that time, and hence more funds were available for spending, I believe the truth of the matter is that after the Wife became aware of the Husband’s relationship in 2001, she found the ending of their long marriage extremely difficult, in particularly when it came at a time when the parties had properly discharged their parental duties towards their children and were looking forward to reaping the financial rewards of the Husband’s successful career, it must have been a terrible shock and traumatic blow to the Wife when the Husband asked for a divorce because of his relation with a younger woman. People deal with their emotion in this situation differently, and I can understand why the Wife has found it necessary to go shopping and, in her own words, just to get out of the house to meet people. I believe this “enthusiasm for shopping” will eventually cease once the Wife has got over the trauma and there are already signs of restraints over spending since her relocation to UK.

27. The Wife has in fact come down from her claim for monthly maintenance from￡4,250 in March 2003, to￡3,700 in June 2003, and finally to￡3,336 at the hearing, the difference being mainly substantial reduction in clothing, health and personal, and entertainment expenses. Comparing with her similar expenses while in Hong Kong prior to the breakdown of the marriage, her present clothing expenses of￡328 still appear high, probably due to the necessity for more winter clothing because of the colder winter in UK, and also some new replacement upon settling in her new home. A somewhat lower sum of￡250 per month in future would appear to be a more realistic and reasonable figure.

28. As for her entertainment expenses of￡714 per month, with her relocation to UK where most of her friends and family are, I do not think her overseas travel will be as much or substantial as before when the parties were staying in Hong Kong, and with the conclusion of these proceedings and with the healing of her emotion over time, the Wife will hopefully no longer find it necessary to get out of the house to socialize as much as before, and therefore it would be appropriate to bring her claimed expenses for this item down to a more realistic sum of￡500.

29. As for the remaining items of the Wife’s expenses, the Husband does not appear to seriously challenge their necessity or amount, and I find them to be generally reasonable and commensurate with her previous lifestyle, save for 2 particular items that need to be examined.

30. Built into to her expenses is a sum of￡734 per month towards her pensions which the Wife says will provide her with a sum of￡1,148 per month when she reaches the age of 65, as the amount of her state pension of￡78.67 per week will not be able to meet her future needs. She says she has been advised by a HSBC financial advisor that if she is to invest￡734 per month being￡234 in a stakeholder pension and￡500 in an ISA, she can safeguard a further pension at retirement age of 65, and depending on the rate at which the investment grows, it is believed that this pension will give her￡1,148 per month which, together with the expected income from Intertan of￡530 per month, and the rental and interest from her other capital assets of￡350 per month, she will hope to have about￡2,000 per month for her retirement, hence, she says, it is not only prudent but also essential that this proposal be put in place now.

31. The other contentious item is the Wife’s claim that she needs a BMW costing￡25,000 which she says she needs for visiting her parents as often as possible. It is pointed out by the Husband that in March 2003 the Wife only mentioned needing a car costing about￡14,000, but in August 2003, notwithstanding the Husband’s redundancy, she now needs a BMW almost twice as expensive, which is based on the assertion that although the family never had a BMW or Mercedes during the marriage, they had hired top of the range cars for use during their holidays. The Husband’s evidence is that he hired an estate car on one holiday as he had furniture to move, and on another holiday he got a good deal on a small Mercedes.

32. I agree with the Husband that the Wife does not really need a BMW which is mainly for visiting her parents, and that in any event it is a capital expense which should be funded by her share of the assets, and hence it is entirely up to her to decide how she should best use her capital and what sort of car she should have. I do however accept that her capital assets will not be able to generate a pension to adequately provide for her retirement and that her proposed investment for a further pension is not unreasonable.

33. In conclusion, with the evidence before me and having heard and seen the Wife in evidence, I do not believe that she has deliberately inflated her expenditure for these proceedings. As I have said, I believe her sudden increased in her spending was partly necessary for the setting up of a new home and new life in UK, and partly the result of the way she dealt with her emotion response to the breakdown of the marriage, and with the adjustments which I have made to her expenditure, I would put her total monthly expenses at a more realistic sum of￡3,000. With rental income and interest from her capital assets of about￡350, she has a need of￡2,650 per month, which she says should come from the Husband by way of periodical payment.

34. Before I deal with the Husband’s financial position and ability, there is one more matter about the Wife that I need to examine, i.e. her earning capacity and whether she should return to work to subsidize her income after the divorce.

35. There is no dispute that although she did work at Unilever and the Department of Health and Social Security early in the marriage, the Wife had not work after the birth of their elder child in 1977 until some 20 years later in 1996 when she started to work part-time at St. John’s Cathedral bookshop, and later on full time basis, not out of necessity but for social reasons, until she ceased work in 2000 due to health problems including migraine, which she says she has had since 16, arthritis of the knee, and a form of vertigo which appears to have been resolved after treatment in June 2003. There is also the stress of these proceedings which she hopes will go away once they are finished.

36. She was also involved in the committees of the club Helena Lee and the Husband says that during her involvement, she appeared to have good administrative skills and turned the club’s finances around. The Wife however says she just relayed messages from the committees to the club manager, and that it would be difficult to find work in York which is a university town with young students snapping up work fast. She has not expected to be able to find work, nor should she be required to work again now at the age of 51, but if she does work and is able to find one, based on her son’s earnings, she agrees that she may be able to earn between￡5,000 and￡8,000 per annum.

37. There is no argument that if a wife earns money, the court is required to take into account of the amount received by her when assessing the amount of periodical payments to be awarded to her. On the other hand, it has been said that a wife should not be expected to go to work to reduce a former husband’s liability towards her. In the case of Ward v Ward [1948] p. 62, 64, Div Ct, Lord Merriman P said this : -

“The justices may think that this wife, having been deserted by her behind and obliged to go out to work instead of being maintained by him in a comfortable home, is entitled at the least to feel that her exertions are not made purely for the husband’s benefit; and might feel obliged in her own interests to put money by against the day when, for example, the husband may remarry or incur other commitments.”

38. The situation of the present case is more difficult to assess when the Wife had not worked during the bulk of the marriage, and has no longer the skills or experience to do the kind of work that she used to do during the early years. The matter was expressed in the case of Rose v Rose [1951] p. 29, 30 – 31, CA when Somervell LJ said : -

“I do not propose to lay down any general rule or to consider whether or in what circumstances a wife’s earning capacity ought to be brought into the calculation of maintenance in the case of a wife who has not been required to earn any money during the matrimonial life. But, in my view, where during the matrimonial life the means of (in this case) the husband (it is not suggested that the wife had any means) are such that the wife has not been required to go out and earn money, then I should say that, in considering the proper sum for maintenance, it would prima facie seem to be wrong that the husband should be able to say : “Now you must go out and work, and the only sum that I can be ordered to pay is a sum based on you yourself going out to work, which you were not required to do when you were my wife, and which you would not have had to do, if I had not committed adultery and broken up the home”, as in this case. That prima facie approach seems to me to be plainly right in a case such as this, where the marriage had lasted for some twenty years; the wife is a woman of forty-one years of age, who has no normal trade or calling, though no doubt she is capable of doing domestic work, and where there is a child of some four-and-a-half years of age for her to look after”.

In the same case, it was also said by Denning LJ : -

“I agree …… that no general rule can be laid down on the matter, but this wife is certainly under no legal duty to go out to work in order to reduce the maintenance that her husband should pay. It would be quite unreasonable to expect her to do so. She cannot be expected to do it when she has a young child to look after. Of course, if a wife does earn, then her earnings must be taken into account : or if she is a young woman with no children, and obviously ought to go out to work in her own interest, but does not, then her potential earning capacity ought to be taken into account; or if she had worked regularly during the married life, and might reasonably be expected to work after the divorce, her potential earnings ought to be taken into account. Except in cases such as these it does not as a rule lie in the mouth of a wrong-doing husband to say that she ought to go out to work simply in order to relieve him from paying maintenance”.

And in Le-Roy Lewis v Le-Roy Lewis [1951] p. 29, 31 – 32, CA, Barnard J said : -

“It has been suggested that because she was working before the marriage and is still young, and as there are no child of the marriage, she ought at once to go back into the position she was in before the marriage and start earning her living, with as far as I can see only one object, to reduce the amount of money which the husband should pay to her, his wife. I do not accept that view. She may have been lucky, or, at any rate thought that she was lucky at the time, in marrying someone who brought about an improvement in her financial and possibly her social position; but it has been through no fault of hers that their married life together has come to an end, and I see no reason whatever, why the wife should go back to earning in order to reduce the husband’s liability to maintain her”.

39. Since the statutory guidelines under s. 7 (1) require the court to have regard to the earning capacity which each of the parties has or is likely to have, the principles enunciated above must now be read in the light of the statutory guidelines, and that the court would now expect a wife who is not encumbered by pre-school age children to take, over a reasonable period of time, such steps as are necessary to acquire or increase an earning capacity in order that she should not be financially dependent on her former husband in perpetuity, as per Singer J in T v T (Financial Relief : Pensions) [1998] 1 FLR 1072, 1080 E :

“W must be encouraged to overcome the apathy which it afflicts her, to put to one side her extremely negative attitude to any suggestion that is made, and to make real attempts to find some reasonably congenial, convenient, interesting and financially rewarding work even if the hours are not ideal, the location is not ideal, the work is not what she would prefer, and she would prefer not to have to do it. For, without for a moment underestimating the difficulties which ladies of her age face in the current employment market, this wife is in my view a lady who, should she wish to do so, would impress a prospective employer with her qualities”.

40. I agree that this Wife does have some earning capacity for jobs like the one she last had working in a bookstore or doing administrative work in a club, and that some employer in York may see the advantage in her over college students who just come and go and change jobs all the time. Beside, as pointed out by counsel for the Husband, it will also help to alleviate her loneliness and give her an opportunity to meet people and socialize. I shall now turn to the Husband’s financial position.

41. The Husband was made redundant in April 2003 and has since been unemployed. He says he has made every effort to find employment and has produced copies of his application for jobs, e-mail exchanges and follow up contact with search firms as evidence. So far it has been unsuccessful because, he says, of his age of 53 and the current difficult economic climate worldwide, in particularly of the fact that there is a restraint of trade clause in his employment contract with his former employer which prohibits him to undertake or carry out similar job or business activity as before within 12 months of the termination of his employment.

42. Furthermore, he fears that an article in the South China Morning Post on 22^nd August 2003 which referred to a substantial inventory write down in his previous company may have damaged his previously good reputation in the retail industry and limited his job prospects.

43. It is also pointed out by the Husband that there are very few electronic retailers in Hong Kong, and only his former company employs expatriate executives, whereas other non-electrical retailers which still employ expatriates, such as Marks and Spencer, train their own executives, while UK retail chains would not be interested in him as he has been away for 8 years, that he is too old and that they also bring up their own executives within the company. The alternative, he says, is to set up his own business which will not contravene the trade restrictive clause.

44. Considering his age, the Husband says that he would like to act cautiously in respect of his available capital and therefore he is not prepared to pursue any business venture aggressively so as to avoid the risks of losing the capital for his old age. He has therefore set up a company named A Ltd offering consultancy services and sourcing goods for other companies since it does not require a substantial amount of investment in the business. He has spent HK$9,810 setting up this company and estimates a monthly commitment of HK$3,000 of his capital to the business until it starts making some money. So far he says he has made 1 business dealing earning only HK$800. He hopes he will break even after one year but if this is not successful, he will have to think of something else. He says in the absence of employment or business profit, he has no other financial resources save his 50% of the assets and hence he is unable to pay any periodical payment to the Wife other than a nominal maintenance.

45. The Husband is now 53 and is living with his lady-friend in an apartment rented at HK$35,000 per month, which is about half of that of his former residence, and as a result he has negotiated from his former employer to meet his rental costs until February 2004. Very little is known about his lady-friend save that she is 31 years old and has her own interior design business. It appears however that apart from occasionally paying for food purchased when she is to cook, she does not contribute financially to any of the expenses of the household. With no income from his business, the Husband has been relying solely on the compensation he received from his former employer and his share of the cash under the division of the capital assets proposed, of about￡200,000, to meet his present expenditure of about HK$74,000 per month which includes the Wife’s interim maintenance payment and legal costs contribution as well as the UK expenses, but to which a sum of HK$35,000 will have to be included towards his rental costs after February 2004.

46. Criticisms have been made against the Husband about his efforts to find work for specifying in his resume that he has worked in the electronic retail industry, thereby limiting his choice given the fact that he is bound by the restraint of trade clause for 12 months from April 2003, and for stating how much his package was worth in his former job, which may affect the availability of any offer of a lower paid position, and lastly for taking a vacation in UK in June 2003 soon after he was made redundant.

47. In reply to the first 2 criticisms, the Husband says that his CV must include such information which cannot be ignored, that he would be asked anyway, and that he did state in his covering letters his willingness to consider jobs outside the electrical trade and at a lower salary despite the fact it has been his field of expertise for 25 years. As for the trip to UK, he says the trip was for 2 weeks after he had sent out his first batch of job enquiries and while awaiting responses to them, and that the copies letters and e-mails produced by him show that he was in contact and continuing with his efforts while he was away.

48. The Husband believes that a nominal maintenance for the Wife at present, with substantive maintenance if he gets a job or makes money in business is a fair and reasonable proposal in the circumstances. To alleviate the Wife’s concern that he may hide his profit in the business, the Husband undertakes to furnish her with his management account of the business so she can see the money-flow every 6 months, and to notify her within 14 days if he finds a job. He says this would allay her fears that he can “cook the books” of the company and lives off the company while denying her any maintenance.

49. It is true that the Court must have regard to not only the income of each of the parties but also their earning capacity. This is clear in the authorities, and is specifically so provided in s. 7 (1) (a) of the Ordinance. As submitted by the Wife, this reflects the serious burden which a Court imposes upon the bread winner to use his or her best endeavours to meet his or her obligations in this regard. The fact that a husband has no immediate income is no sufficient answer to a claim by a wife for periodical payments, as in the case Munt v Munt [1983] Fam Law 81 in which the husband, who had been unemployed for 12 months and was receiving supplementary benefit, was found to be physically capable of undertaking unskilled employment, and was therefore ordered to pay maintenance to the wife for the child of the family. Similarly, in the case of Fowler v Fowler [1981] 2 FLR p 141, an unemployed husband was ordered by the Court to pay periodical payments for his wife and children when he was found to be able to deal in motor cars if he saw it fit to do so and that he was able to make a profit from such activity.

50. Having seen and heard the Husband in evidence, I believe that he has made genuine efforts to look for employment, and accept that the circumstances of his case and the present economic situation have made his search for a job so far unsuccessful. There is simply no evidence to suggest that he is avoiding work to defeat the Wife’ claims, and the criticisms about his efforts are not really justified.

51. It is also not certain how his recent health problems of hypertension and high blood pressure, for which he has sought treatment and is on medication, may have any impact on his future earning capacity. I do however accept that with his qualification and experience in the electronic retail field, the Husband does have substantial earning capacity, despite his present difficulties, although it is not sure when his business will start making money, nor is it possible at this stage to assess its profitability, as it is a new business without any past record upon which one may draw any inference or conclusion.

52. It is however argued by the Wife that, if the Husband’s employment had continued, he would have been obliged to continue to assist her with periodical payments in an appropriate sum as the assets available are clearly insufficient for him to discharge his responsibility to support her for the rest of her life, the question before the Court is therefore whether or not it is fair that the Husband should be relieved of such obligation simply because he has temporarily lost his source of income from his employment, and her case is that, in all the circumstances, the answer to such question should be “no”.

53. It is further argued that in addition to earning capacity, the Court must also look at all the circumstances – a person’s mental and physical resources, his past record, his qualifications, his capital position, his rate of personal expenses and every available financial resource, and that it is essential for the bread winner to manage his resources so as to afford his dependent with an appropriate amount of money to live on as no doubt he would have done if they had continued to live together. The onus, it is argued, lies on the payer, and that he is not allowed to sit back and say he has no income and the dependent should look after herself.

54. It is submitted that this Husband has both the earning capacity and the financial resources to meet his continuing obligation to this Wife, and that it is only fair and reasonable that the Court should require him to live up to his obligation from his resources and give him gentle encouragement to utilize his undoubted earning capacity to achieve the same, as it was said in the case of Linten v Linten (1885) 15 QBD 239, CA :

“One must look at the man’s mental and physical resources, the money at his disposal, however it may be used, his capital position, and the rate of his current personal expenditure. I do not pretend that this list is exhaustive, but it serves to emphasise the point that the ability of a husband to make provision for a wife falls to be determined not by a cash evaluation but by an evaluation of all his circumstances and resources”.

55. And in the case of Thomas v Thomas [1995] 2 FLR p 668 where the husband was a joint managing director of a successful family business. He became a name at Lloyds in 1985. His resources included the family home valued at￡250,000 which secured a mortgage to the bank of￡78,000, a bank guarantee covering contingent liabilities to Lloyds of up to￡100,000 and a Lloyds losses loan of￡43,000. His pension fund was valued at￡394,000 and his shareholding in the company at￡600,000. Its income from the company was￡2791 per month, it being company policy to pay relatively low salaries to the directors and plough back the profits. The wife had no capital and no independent source of income. At the hearing of the wife’s application for financial relief the judge held that the husband had failed to satisfy him that it was beyond his power to free the primary equity in the family home by providing the bank with alternative security. He accordingly ordered the sale of the family home and payment to the wife of￡158,000, which was to extinguish all capital claims, payment to the wife of periodical maintenance at the rate of￡1,500 per month, and payment by the husband of the 2 sons’ school fees. He expressed the view that the deficiency of income thus arising was one that the husband would make good by procuring changes in the company’s policy towards the payment of dividends and / or the remuneration of management. The husband appealed, contending that the lump sum order was improper because it assumed without sufficient evidence that the husband could find substitute security for his liabilities, that it was premature in that if the husband had merely failed to prove a negative, i.e. failed to satisfy the Court that alternative assets were available to support the security, the judge ought to have ordered an adjournment to enable alternatives to be investigated, and the income amend amounted to a breach of the principle of self-imposed restraint on which the Court normally acted, particularly where their parties were involved, when exercising its jurisdiction.

56. On dismissing the appeal, Waite LJJ said : -

“The court was confronted by a husband with immediate liquidity problems but possessing substantial means. He was proposing that the court should make a capital order which would extinguish for ever all claims by the wife to capital relief from him or his estate. The order that he was suggesting was paltry when measured against his total resources and expectations, assessed in the broad terms which the Act requires. On such a husband a heavy onus lay to satisfy the court that all means of access to liquid finds to support suitable outright provision for his wife had been thoroughly explored and found to be impossible. If he failed to demonstrate that, he rank the risk of having the inference drawn against him that ways and means could be found of funding suitable provision for the wife’s capital needs.

The judge was in my view justified in making the order that he did in respect both of capital and of income. The evidence was in a state which entitled him to draw inferences as to the availability of funds to provide alternative security for the guarantee and for the Lloyds losses loan, and thus liberate the primary equity in the family home to provide a lump sum appropriate to the rehousing needs of the wife and children and of sufficient scale to justify shutting her out from any future capital relief. I do not accept the submission that having decided to draw those inferences it was his duty to adjourn the proceedings to provide the husband with an opportunity either of rearranging his affairs or of demonstrating that he was being asked to perform the impossible. It was common ground between the parties that although a final settlement was not yet feasible as regards income payments, any order made by the judge in respect of capital should be a final order extinguishing all future claims on either side. Against that background, and with due regard to the demands of finality in a case where the parties had accumulated costs already on an alarming scale, the judge cannot in my view be faulted for acting as he did on the material presently available to him. He was also entitled to draw the inference that capital relief on the scale he was ordering would not leave the husband homeless. His family circumstances (which it is unnecessary to describe in detail) would justifiably have left the court in no doubt that – during what will undoubtedly be a difficult transitional period for him while he awaits receipt of income from his Lloyds membership and adjusts his affairs generally for the future – he will be at no serious risk of being without a suitable base, even though he may be obliged to live for a time in rented or borrowed accommodation.

The periodic payments order did not leave the husband destitute : it left him with a deficiency of income over expenses only so long as those expenses include the cost of private education for his sons. It is true of course that these parents are united in wishing their sons to attend fee-paying schools, but the judge was in my view fully entitled to regard independent achieve with help from his brother and mother. The judge’s order certainly involved a powerful inducement to the extended family to come to the husband’s assistance, but the provision of that incentive fell, in my judgment, within the bounds of judicious encouragement and lay well short of the kind of order that is condemned in the authorities as placing improper or undue pressure on their parties”.

Glidewell LJ, agreeing with Waite LJ in dismissing the appeal, said this : -

“The two practical difficulties which the husband will need to overcome to enable him to comply with the judge’s order have been described by Waite LJ in the first paragraph of his judgment, which I have had the advantage of reading in draft. I need not repeat them. The question for this court is, was the judge entitled to conclude, on the evidence before him, that the husband probably would, and will, be able in practice so to arrange his financial affairs as to enable him to pay the sums he has been ordered to pay ?

The matters to which the judge was required to have regard in reaching his decision are to be found, first, in s 25 of the 1973 Act. It is not necessary to set them out. It suffices to remind ourselves that, under s 25 (1), first consideration is to be given to the welfare of the two children whilst they are under the age of 18. It is also to be noted that s 25 (2) (a) requires the court to have regard as one of the eight matters listed not merely to a party’s present or likely future income, earning capacity, property and other financial resources, but also to any increase in earning capacity “ …… which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire”.

The judge also had, as we have, the guidance to be derived from the various authorities to which Waite LJ has referred. Those which are the most helpful in this case are, in my view, the decisions of this court in O’D v O’D.

(a) Where a husband can only raise further capital, or additional income, as the result of a decision made at the discretion of trustees, the court should not put improper pressure on the trustees to exercise that discretion for the benefit of the wife.

(b) The court should not, however, be “misled by appearances”; it should “look at the reality of the situation”.

(c) If on the balance of probability the evidence shows that, if trustees exercised their discretion to release more capital or income to a husband, the interests of the trust or of other beneficiaries would not be appreciably damaged, the court can assume that a genuine request for the exercise of such discretion would probably be met by a favourable response. In that situation if the court decides that it would be reasonable for a husband to seek to persuade trustees to release more capital or income to him to enable him to make proper financial provision for his children and his former wife, the court would not in so deciding be putting improper pressure on the trustees.

In relation to the facts of the present case, I would apply these principles to the family company as if it were a trust, and the shareholders (the husband), his mother and brother) the trustees.

On that basis, the judge was in my judgment entitled to reach the conclusion he did”.

57. In the present case there are no trustees controlling other capital or income, and the only resources from which the Husband may have to meet the Wife’s requirement for periodical payment will be his share of the assets, which consists of his London flat with an outstanding mortgage, and his share of the pension investments and cash of about￡260,000 with which, he says, to meet his present monthly expenses until he has income as well as his future needs upon his retirement.

58. The ultimate question for me, and a most difficult one indeed, is therefore whether the Husband should, in the circumstances, have to pay to the Wife substantive periodical payment from these assets of his. It is true that whatever the Wife’s earning capacity may be, the proposed 50% of the assets for her will not be sufficient to meet her future needs and expenses. It is also true that, whatever the real cause for the breakdown of the marriage, and that the decree nisi of divorce was granted on the Husband’s behaviour, it is the Husband who after 30 years of marriage has decided to leave the Wife and to spend possibly the reminder of his years with another woman, who is younger and hopefully will be of support to him in his later years, both emotionally and financially. The fact that this woman has her own business means that if she is not already contributing towards the Husband’s household, she will no doubt be expected to after February 2004 when the housing allowance from his former employer ceases.

59. On the other hand, although the Wife appears to have some assistance in supermarket shopping from time to time from a male friend who has also accompanied her in a recent holiday, there is no evidence suggesting any relationship between them that may lead to the kind of situation that the Husband has with his lady friend.

60. There is no doubt that the Wife is in a much more vulnerable situation, having been out of regular employment for years with no tertiary qualification, and at her age with the stress and effect of the divorce which may have exacerbated her health problems including migraine and arthritis, as well as the demands upon her in caring for her elderly and ailing parents, I accept that her needs have exceeded the proposed 50% of her share of the capital assets.

61. The Husband has recognized this by offering nominal maintenance and then substantive maintenance if and when he has income from his business or new job, arguing that if an order is made for him to pay substantive periodical payment when he is unemployed, and in the absence of income, he will never be able to vary that order as his income position will never be worse. Furthermore, he argues, if he continues to be unsuccessful in finding a job, or fails to make any profit in his business, then what the Wife is asking for now would amount to more than￡900,000 by 2015, thereby exhausting all the family assets leaving him with nothing, which is wholly unacceptable as the court must be fair to both parties.

62. To achieve a fair outcome is indeed what the court is required to do to the parties. In White v White,Lord Nicholls said : -

“As originally enacted in 1970, in section 5 (1) of the Matrimonial Proceedings and Property Act 1970, the list of factors to be taken into account contained a tailpiece. The tailpiece declared what should be the objective of the court when exercising the statutory powers to make financial provision orders and property adjustment orders. The court was so to exercise these powers : “ …… as to place the parties, so far as it is practicable and, having regard to their conduct, just to do so, in the financial position in which they would have been if the marriage had not broken down and each had properly discharged his or her financial obligations and responsibilities towards the other”. This tailpiece was later deleted from the legislation, and nothing inserted in its place. In consequence, the legislation does not state explicitly what is to be the aim of the courts when exercising these wide powers. Implicitly, the objective must be to achieve a fair outcome. The purpose of these powers is to enable the court to make fair financial arrangements on or after divorce in the absence of agreement between the former spouses : see Thorpe LJ in Dart v Dart [1996] 2 FLR 286, 294. The powers must always be exercised with this objective in view, giving first consideration to the welfare of the children.

“Self-evidently, fairness requires the court to take into account all the circumstances of the case. Indeed, the statute so provides. It is also self-evident that the circumstances in which the statutory powers have to be exercised vary widely. As Butler-Sloss LJ said in Dart v Dart [1996] 2 FLR 286, 303, the statutory jurisdiction provides for all applications for ancillary financial relief, from the poverty stricken to the multi-millionaire. But there is one principle of universal application which can be stated with confidence. In seeking to achieve a fair outcome, there is no place for discrimination between husband and wife and their respective roles”.

63. In the general approach to the division of assets that fairness demands, Lord Nicholls further stated inWhite v White : -

“Sometimes, having carried out the statutory exercise, the judge’s conclusion involves a more or less equal division of the available assets. More often, this is not so. More often, having looked at all the circumstances, the judge’s decision means that one party will receive a bigger share than the other. Before reaching a firm conclusion and making an order along these lines, a judge would always be well advised to check his tentative views against the yardstick of equality of division. As a general guide, equality should be departed from only if, and to the extent that, there is good reason for doing so. The need to consider and articulate reasons for departing from equality would help the parties and the court to focus on the need to ensure the absence of discrimination.

This is not to introduce a presumption of equal division under another guise. Generally accepted standards of fairness in a field such as this change and develop”, sometimes quite radically, over comparatively short periods of time. The discretionary powers, conferred by Parliament 30 years ago, enable the courts to recognise and respond to developments of this sort. These wide powers enable the courts to make financial provision orders in tune with current perceptions of fairness. Today there is greater awareness of the value of non-financial contributions to the welfare of the family. There is greater awareness of the extent to which one spouse’s business success, achieved by much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over many years, may have been made possible or enhanced by the family contribution of the other spouse, a contribution which also required much sustained hard work over many years. There is increased recognition that, by being at home and having and looking after young children, a wife may lose for ever the opportunity to acquire and develop her own money-earning qualifications and skills. In Porter v Porter [1969] 3 All ER 640, 643 – 644, Sachs LJ observed that discretionary powers enable the court to take into account “the human outlook of the period in which they make their decisions”. In the exercise of these discretions “the law is a living thing moving with the times and not a creature of dead or moribund ways of thought”.

Despite these changes, a presumption of equal division would go beyond the permissible bounds of interpretation of s 25. In this regard s 25 differs from the applicable law in Scotland. Section 10 of the Family Law (Scotland) Act 1985 provides that the net value of matrimonial property shall be taken to be shared fairly between the parties to the marriage when it is shared equally or in such other proportions as are justified by special circumstances. Unlike s 10 of the Family Law (Scotland) Act 1985, s 25 of the 1973 Act makes no mention of an equal sharing of the parties’ assets, even their marriage-related assets. A presumption of equal division would be an impermissible judicial gloss on the statutory provision. That would be so, even though the presumption in England and Wales, and in respect of what assets, is a matter for Parliament.

It is largely for this reason that I do not accept Mr Turner’s invitation to enunciate a principle that in every case the “starting-point” in relation to a division of the assets of the husband and wife should be equality. He sought to draw a distinction between a presumption and a starting-point. But a staring-point principle of general application would carry a formal consequences regarding the burden of proof. In contrast, it should be possible to use equality as a form of check for the valuable purpose already described without this being treated as a legal presumption of equal division”.

64. This general observation however has to be read bearing that White v White was a clean break case where the available assets substantially exceeded the parties’ financial needs in terms of housing and income. Where there is no clean break and that the parties’ needs exceed their assets, it would be useful to consider what Thorpe LJ said in the subsequent case of Cordle v Cordle [2002] 1 FCR 97, CA : -

“What White v White essentially decides (as this court has emphasised in the more recent decision of Cowan v Cowan [2001] EWCA Civ 679) is that it is the first duty of the court of trial to apply the section 25 criteria in search of the overarching objective of fairness. It seems to me that in search of that overarching objective in the typical ancillary relief case the District judge will always look first to the housing needs of the parties. Homes are of fundamental importance and there is nothing more awful than homelessness. So in the ordinary case the court’s first concern will be to provide a home for the primary carer and the children (whose welfare is the first consideration). Of course in many cases the satisfaction of that need may absorb all that is immediately available. But, as in this case, where there is sufficient to go beyond that, the court’s concern will be to provide the means for the absent parent to rehouse. That was precisely the approach of this District Judge in allowing the husband￡55,000 from the anticipated proceeds of sale. Another factor that should be considered is buttressing the ability of one or other of the parties to work. For just as homes are of primary importance, so is the ability and the opportunity to work. It may be that as a result of the years of marriage, one or other of the parties will need some capital provision to enable him or her to get back into the labour market, or to retrain for a profession, or to modernise a skill which, through the years of marriage, has grown rusty. Beyond that, if there be cash beyond that, then the judge has to look to what in his estimation is the fair result”.

And in Elliott v Elliott [2001] 1 FCR 477, 479A, which was not a big money case, Thorpe LJ said : -

“Although in his speech Lord Nicholls of Birkenhead emphasised that any principle he enunciated was to apply only to those comparatively rare cases where the totality of the assets exceeds the needs of the parties, nevertheless his emphasis upon the need to avoid gender discrimination and the consequential need to treat equality, if not as a starting point, still as a cross-check to be applied to any provisional view formed in a court of trial is valid in a more general sense”.

65. So in the case of S v S (Financial Provision : Departing from Equality) [2001] 2 FLR 246 where the assets did not exceed needs / responsibilities and where the judge in applying the White v White yardstick of equality, left the husband with slightly more assets than the wife, it seems that the resultant inequality was justified by the husband’s greater needs and responsibilities.

66. In the present case the assets similarly do not exceed needs / responsibilities and that both parties will have to rely on their share of the assets while the Husband is without employment or income from his business, and although I agree with him that had the marriage continued, the Wife would have had to share in the vicissitudes of life, and hence in his present difficult situation, it would not be fair that he should have to pay substantive periodical payment for the Wife from his share of the asset, the reality of their divorce is that the Wife has to face a more difficult prospect of a shattered marriage, with little self-confidence and out of the job market for years, with barely￡120,000 in cash and irregular rental income from her son and a hope that there may be some maintenance from her former Husband some 6,000 miles away, I believe a proper approach to the division of the assets that fairness demands is to leave the Wife with a slightly bigger share of the liquid assets of￡150,000, which is about 53% of the total assets, to enable her to meet her immediate needs with perhaps more cushion while waiting for the Husband’s income position to improve. This will still leave the Husband with a substantial amount of about￡165,000 in liquid assets.

67. I am conscious that this is not numerically precisely 50% of the value of the assets as originally proposed by the parties, but in applying the yardstick of equality, I believe that this arrangement will in all the circumstances of the case achieve fairness to the parties. While it may not bring closure to the parties’ dispute by leaving it open to future review of the Husband’s ability to pay substantial maintenance for the Wife in perhaps 12 or 18 months, this is inevitable whenever there is no clean break between the parties, and I honestly believe that this Husband, with his experience and qualification and given time, will be able to turn his present difficult situation around by start bringing in income from his business or landing a new job, in which case I expect him to, and I have no reason to doubt him, inform the Wife and to make a reasonable provision by way of monthly maintenance for her.

68. Lastly there is always the difficult question of costs. Having taken into account of the Husband’s contribution always made to the Wife as to her costs, in the circumstances of this case I believe that it would be appropriate for the parties to bear their own costs. Accordingly and upon the Husband undertaking to furnish to the Wife with the management accounts of his business every 6 months and to notify her within 14 days of his finding employment, I order that : -

1. The Husband shall upon the decree absolute : -

(i)    transfer all his share and interest in the Huddersfield property to the Wife absolutely;
(ii)    transfer or cause to be transferred 50% of the Intertan Pension to the Wife;
(iii)    pay or cause to be paid to the Wife a lump sum of￡150,000 from the capital assets;
(iv)    pay a nominal sum of HK$1.00 per annum to the Wife.

2. There be no order as to cost of and incidental to the ancillary relief proceedings, which is an order nisi to be made absolute at the expiration of 14 day

	Bruno Chan
	District Judge

Representation :

David Pilbrow instructed by M/S Hampton Winter & Glynn for the Petitioner.

Francis Irving instructed by M/S Stevenson Wong & Co. for the Respondent.

W v. W

Related cases with same parties

Files (2)

“	(1)	To ask who would, or should, have paid the costs if agreement had been reached at an early stage and why this was so. Often this will be reflected in the common ground and the offers made. The answer to this question will often identify who should be regarded as the paying party or the person who should prima facie be liable for costs and thus, in terms of the starting point referred to in Gojkovic v Gojkovic and Another, the event. Also the answer to this may often support the view that up to a certain pint prima facie one party should pay the costs of the other.

	(2)	To identify :

		(a)	the issues that are not in dispute at trial; and
		(b)	the issues that have prevented an agreement being reached and placed before the court for its approval and to consider their impact on the question of costs and thus, for example :

			(i) their nature and whether the reality is that one party is going to be paying the other or whether there is a division of assets; (ii) the time taken in resolving the disputed issues; and (iii) who won on such issues.

	(3)	Consider the Calderbank offers and therefore apply FPR 1991 r 2.69 to the costs it covers.

	(4)	Consider the matters referred to in CPR r 44.3 (which include open offers).

	(5)	Consider how the costs of both parties have been affected by the disputed issues.

	(6)	Remember that the court has, and is exercising, a broad judicial discretion by applying the rules and earlier judicial guidance.

A.	Properties		UK￡
	(i)	London flat in Husband’s sole
		name at￡340,000 with house
		contents but less outstanding mortgage	195,480.00

	(ii)	Huddersfield flat in Husband’s
		sole name and free of mortgage	55,000.00

	(iii)	York flat in Wife’s sole
		name and free of mortgage	215,000.00
		Sub-total :	￡465,480.00
			==========

B.	Other Investments	UK￡

	HSBC	(553.00)
	HSBC Savings	24,060.00
	HSBC Combi	167.00
	HSBC Combi ($412.00)	256.00
	Midland offshore	7,067.00
	Northern Rock 60	24,032.00
	Friend Provident	9,849.00
	Assurance
	Equities	1,056.00
	Northern Rock	31,330.00
	Investment PEPs	30,792.00
	Royal & Sun Alliance	67,670.00
	Intertan Pension (old)	132,555.00
	Towry	24,415.00
	Sub-total :	￡352,696.00
		==========

C.	Termination Package		HK$

	(i)	Pro-rata Bonus for 2003	220,000.00
	(ii)	Provident Fund	807,395.91
	(iii)	Extra Payment	330,000.00
	(iv)	Untaken leave	48,540.00
		Less : tax provision	(113,631.00)
		Sub-total	HK$1,292,304.91
			=============

		Gross Family Assets = ￡465,480 +￡352,696 +HK$1,292,304.91
		less Wife’s legal costs	=￡915,471

		50 / 50 division of Net Family Assets	=￡457,735
			========

	Wife	UK￡

(i)	York flat	215,000
(ii)	Huddersfield flat	55,000
(iii)	50% Intertan Pension	66,277.5
(iv)	lump sum equivalent to
	50% division of the capital assets	121,457.5
	Total	￡457,735
		========

	Husband	UK￡

(i)	London flat net	195,480
(ii)	50% Intertan Pension	66,277.5
(iii)	balance of capital assets	195,977.5
	Total	￡457,735
		=========