FCMC 1648 / 2011
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MATRIMONIAL CAUSES
NUMBER 1648 OF 2011
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BETWEEN |
| | LWTC | Petitioner |
and |
| | PTH | 1st Respondent |
| | WYM | 2nd Respondent |
| ---------------------------- |
| Coram: Deputy District Judge S. Lo in Chambers (Not Open to Public) |
| Dates of Hearing: 29 February, 1-2, 6-9 and 14 March 2012 |
| Date of 1st Respondent’s written closing submission: 16 April 2012 |
| Date of Petitioner’s written closing submission: 18 April 2012 |
| Date of Petitioner’s written submission in reply: 25 April 2012 |
| Date of Judgment: 28 May 2012 |
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J U D G M E N T
(Ancillary Relief)
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BACKGROUND
1. This is the application of the Petitioner (“the Wife”) for ancillary relief including 2 children’s maintenance against the 1st Respondent (“the Husband”).
2. By a Summons dated 11 April 2011, the Wife also applies to set aside the disposition of 1,000 shares in a company known as AW Limited (“AW”) made by the Husband to a Madam Wong (“Wong”) on 2 July 2010.
3. By an Order made by this Court on 1 March 2012, Wong was joined as a party to these proceedings as the 2nd Respondent. On 2 March 2012, the Wife served a notice on Wong informing her that she had been joined as a party to these proceedings and had a right to participate in the trial which would continue until 9 March 2012. Wong was absent throughout the trial.
4. The Husband is now 47 years old and the Wife is now 45 years old. They were married in Hong Kong on 23 February 1992.
5. There are 2 children out of this marriage, a daughter and a son. The daughter is aged 17, a Form 5 student at a secondary college. The son is aged 12 studying Form 1 at another school.
6. The Wife petitioned for divorce on the basis of unreasonable behaviour on 27 November 2009, which was subsequently changed to one-year separation with consent by way of a fresh petition dated 14 February 2011. By the Order of Deputy Judge T Chan dated 16 December 2010, the custody of both children was granted to the Wife with reasonable access to the Husband. Decree Nisi was granted on 23 September 2011, bringing an end to a marriage of almost 20 years.
7. The Husband works as a company manager. His present monthly income from such occupation is HK$46,549 according to his updated Form E dated 27 January 2012.
8. The Wife worked as an accounting clerk during the initial years of the marriage and has become a housewife to stay at home to look after the children since 1998.
9. For most of the time during the subsistence of the marriage, the Husband was the sole bread-winner of the family and the Wife has assumed the role as the home-carer and is still unemployed now.
THE LAW
10. The governing principles in relation to the distribution of the family assets in the dissolution of marriage are set out section 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO”), Cap. 192, which states as follows:
(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, 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.
11. The Court of Final Appeal in LKW v DD[1] set out 4 principles as to how MPPO section 7 shall be approached, which are stated briefly as follows:
a. The first is that the implicit objective of a section 7 exercise is to arrive at a distribution of assets which is fair as between the parties[2];
b. The second is that the concept of fairness requires the refutation of any gender or role discrimination[3];
c. The third principle is that, with a view to eliminating insidious discrimination and promoting fairness, judges should check their tentative views on distribution against a “yardstick of equal division” which should be departed from only for good, articulated reasons[4];
d. The fourth principle is that the court should not countenance any attempt to engage in costly and often futile retrospective investigations of the failed marriage which tend to deplete the parties’ (and the courts’) resources and to increase antagonism and discourage settlement[5].
12. The Court of Final Appeal further laid down 5 steps for a section 7 exercise briefly as follows:
a. The first step in the exercise is to ascertain the financial resources of each of the parties calculated as at the date of the hearing[6];
b. The next step is for the court to assess the parties’ financial needs[7];
c. If surplus assets would remain after the parties’ needs have been catered for, the next step in the exercise should generally be for the court to apply the sharing principle to the parties’ total assets, leaving the “needs” question previously considered to be dealt with under that principle[8];
d. The fourth step therefore involves considering whether good reasons exist for departing from the principle of equal division[9];
e. When deciding the outcome, the court is not bound to depart from equality in the division of the parties’ assets even if one or more of the factors considered are engaged on the facts. The weight to be given to such considerations is a matter of discretion for the court[10].
13. Concerning the children’s maintenance, the jurisdiction of the court to make orders for the financial support of the children is found in section 5 of the MPPO. In making orders under section 5, the court shall regard to the matters in section 7(2) of the MPPO, which are set out below:
Without prejudice to subsection (3), it shall be the duty of the court in deciding whether to exercise its powers under section 5, 6 or 6A in relation to a child of the family and, if so, in what manner, to have regard to all the circumstances of the case including the following matters, that is to say-
(a) the financial needs of the child;
(b) the income, earning capacity (if any), property and other financial resources of the child;
(c) any physical or mental disability of the child;
(d) the standard of living enjoyed by the family before the breakdown of the marriage;
(e) the manner in which he was being and in which the parties to the marriage expected him to be educated;
and so to exercise those powers as to place the child, so far as it is practicable and, having regard to the considerations mentioned in relation to the parties to the marriage in paragraphs (a) and (b) of subsection (1), just to do so, in the financial position in which the child would have been if the marriage had not broken down and each of those parties had properly discharged his or her financial obligations and responsibilities towards him.
14. According to section 7(2) of the MPPO, the court has the duty to consider the matters mentioned in section 7(1) (a) and (b) when exercising those powers relating to the children.
Identification of Assets
15. In relation to the distribution of the family assets, the first step is to identify the assets of the parties and the family as at the date of hearing.
16. There are two landed properties owned by the parties. The Wife is prepared to adopt the net value of the two properties stated in the Husband’s updated Form E as follows:-
| Property | Ownership | Net value |
| “the Island Harbourview Property”) | LH Ltd
(each party holds 50% share) | HK$8,670,000[11] |
| (“the Charming Garden Property”) | The parties
holding in joint tenancy | HK$1,620,000[12] |
What is the actual beneficial shareholding of the Husband in AG and its value?
17. The Husband is the registered owner of 50% shares in a private company known as AG Limited (“AG”).
18. In his Form E, the Husband claims that out of the 50% shares in AG, he actually held 40% on trust for one LNY Carina (“Luk”). Luk is Wong’s daughter-in-law. Upon the Wife’s request, the Husband produced a Declaration of Trust and an Instrument of Transfer in favour of Luk to support his allegation in this regard.
19. The Husband testified in court that the Declaration of Trust and the Instrument of Transfer are valid documents showing Luk’s 40% interest in AG, especially as the parties had also executed the Instrument of Transfer which was duly stamped on 18 July 2007. He explained that he held the shares on trust for Luk because Luk did not want to hold the shares in her own name and the purpose of executing the Declaration of Trust and the Instrument of Transfer was to avoid any future dispute regarding ownership of the shares. He also emphasized that the originals of those documents were in the possession of Luk.
20. Mr Yim, Counsel for the Wife, submitted that in these proceedings the Husband has produced similar (in fact, almost identical) declarations of trust/ instruments of transfer in relation to shares in other private companies (which will be further discussed below). The Husband, however, claims that all those other declarations of trust/ instruments of transfer are no longer valid. Mr Yim for the Wife submitted that it is difficult to understand why the declarations of trust/ instruments of transfer in relation to the other companies are invalid whilst the ones for AG are said to be still valid. One obvious difference as submitted by Mr Yim is that the trust documents in respect of AG were made in favour of Luk while all the other ones were made in favour of the Husband. Although Mr Yim makes an attractive submission in this regard, I think that the burden shall be on the part of the Wife to prove the invalidity of the Declaration of Trust and the Instrument of Transfer relating to AG. I consider that she fails to discharge such burden as no evidence is produced to such effect. I find that the Husband holds 10% shares in AG.
21. In his first Form E dated 26 April 2010, the Husband stated the basis of his 10% beneficial interest in AG estimated to worth $200,000. At the time of this Form E, AG was holding a property in City One, Shatin (“City One Property”).
22. In his Updated Form-E dated 27 January 2012, he revealed that the City One Property was sold on 11 March 2011 at $3,080,000 and that the value of 10% shares in AG stated therein is still HK$200,000.
23. I accept that according to its latest financial report as at 31 March 2011, AG had a total equity of $1,832,563 and that the sale of the City One Property has been already reflected and accounted for. Thus, I am of the view that the value of the Husband’s 10% shares in AG shall be $183,256 rounding up to $183,000 instead of $200,000 as estimated by him in his Form E.
The whereabouts of the dividend of $120,000 paid by AG
24. However, according to its latest financial report as at 31 March 2011, $120 per share dividend was declared by AG for the financial year ended 31 March 2011 ie after the sale of the City One Property. Therefore, the Husband shall be entitled to and shall have received $120,000 dividend as he is holding 1000 shares. He certainly has the duty to explain the whereabouts of the money as he has the positive duty to make full and frank disclosure of all his assets.[13]
25. Initially, the Husband said that it was only an accounting exercise (i.e. he did not actually receive the money). Later, he changed to say that money was paid but he was not sure if he did actually receive the money. Finally, he explained that it cannot be reflected in his bank account because most of his share of the dividend was used to settle the outstanding contributions in relation to the decoration and fees for 2 other properties previously purchased by AG. So, he had never received the whole sum of $120,000. I consider that his evidence regarding the dividend of HK$120,000 is confusing and evasive.
26. Besides, I am of the view that his evidence regarding the payment of dividend was contradicted by the evidence of his own witness, MCP (“Ma”). Under cross-examination, Ma who is the other registered shareholder of AG confirmed in unequivocal terms that dividend in the sum of HK$120,000 was paid to the Husband in the financial year ended 2011. Therefore, I reject the Husband’s evidence but accept Ma’s evidence in this regards. In my view, the Husband fails to account for the whereabouts of the dividend in the sum of HK$120,000 which shall form part of the family assets.
Whether AG has repaid 10% of HK$6,440,200 as “amount due to directors” to the Husband
27. According to the respective audited financial statements for the years 2009 and 2011, the sums of HK$6,481,800 and HK$41,600 are respectively stated as “amount due to directors”. Mr Yim, Counsel for the Wife, submitted that it means that during the financial years from 2009 to 2011, AG has repaid to the directors a total sum of HK$6,440,200 (ie HK$6,481,800 - HK$41,600) as “amount due to directors”. In my view, such statements do not show that to which directors AG has actually repaid this total sum of HK$6,440,200 during these 3 years. I cannot understand the Husband’s explanation in court that, although it was termed as “amount due to directors”, the total sum of HK$6,440,200 actually represented return of the investment money to the shareholders. His explanation is simply contrary to the plain meaning of the wording of “amount due to directors” because “director” is not equivalent to “shareholder” under any accounting or legal principles. In my judgment, it has no basis for him to say that, being a 10% shareholder, he had received refund of a total sum of roughly HK$644,000 from AG over the past 3 years under the head of “amount due to directors”. There are several directors in AG although the Husband is one of them. In my view, there is no documentary proof to show that the amount due to directors by AG is proportional to the shareholding of the directors. The most proper way to deal with this issue is to ask the auditor who prepares these financial statements to explain. Accordingly, I reject Mr Yim’s submission to add the sum of HK$644,000 back to the family assets.
AW Development Ltd (“AW”)
28. The Husband’s shareholding in AW is hotly disputed at the trial.
The Wife’s section 17 application in relation to 1,000 shares
29. In his Form E dated 26 April 2010, the Husband disclosed that he had 10% (i.e. 1,000) shares in AW, which in turn held a property known as (“the Mongkok Building Property”). The Husband alleged that the shareholding ratio in AW amongst Ma, Wong and the Husband was respectively 5:4:1. Unbeknown to the Wife, he disposed of these 1,000 shares in AW by transferring the same to Wong on about 2 July 2010.
30. The Husband failed to inform the Wife or the Court (notwithstanding there was a hearing on 14 September 2010 before Deputy Judge Tracy Chan). Such matter only came to light when he answered the Wife’s Questionnaire. The Wife sought further information about AW. In his Answer dated 25 February 2011, the Husband replied that he had sold all his 1,000 shares in AW to Wong on 2nd July 2010. I consider that he has no reason to inform the Wife of the sale of the shares only about 7 months later.
31. It can be seen from the Instrument of Transfer and Bought and Sold Notes attached to his Answer that the Husband transferred his 1,000 shares in AW to Wong for a nominal consideration of HK$1 per share.
32. The Wife then applies to set aside the said transfer of 1,000 shares in AW to Wong under Section 17 of the MPPO which provides:-
(1) Where proceedings for relief under any of the relevant provisions of this Ordinance (hereafter in this section referred to as ‘financial provision’) are brought by a person (hereafter in this section referred to as ‘the applicant’) against any other person (hereafter in this section referred to as ‘the other party’), the court may, on an application by the applicant –
(a) if it is satisfied that the other party is, with the intention of defeating the claim for financial provision, about to make any disposition or to transfer out of the jurisdiction or otherwise deal with any property, make such order as it thinks fit for restraining the other party from so doing or otherwise for protecting the claim;
(b) if it is satisfied that the other party has, with the intention aforesaid, made a disposition to which this paragraph applies and that if the disposition were set aside financial provision or different financial provision would be granted to the applicant, make an order setting aside the disposition and give such consequential directions as it thinks fit for giving effect to the other (including directions requiring the making of any payment or the disposal of any property);
(c) … And an application for the purposes of paragraph (b) shall be made in the proceedings for the financial provision in question.
(2) Paragraphs (b) and (c) of subsection (1) apply respectively to any disposition made by the other party (whether before or after the commencement of the proceedings for financial provision), not being a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, acted in relation to it in good faith and without notice of any such intention as aforesaid on the part of the other party.
(3) Where an application is made under this section with respect to a disposition which took place less than three years before the date of the application or to a disposition or other dealing with property which is about to take place and the court is satisfied
(a) in a case falling within subsection (1)(a) or (b), that the disposition or other dealing would (apart from this section) have the consequence, or
(b) … of defeating the applicant’s claim for financial provision, it shall be presumed, unless the contrary is shown, that the other party disposed of the property with the intention aforesaid or, as the case may be, is, with that intention, about to dispose of or deal with the property. (emphasis added)
33. As the disposition took place less than 3 years before the date of the Wife’s section 17 application, I am of the view that the presumption in section 17(3) of the MPPO applies. Thus, the onus is on the Husband to disprove the requisite intention.
34. In opposition to this section 17 application, the Husband, Ma and Wong filed their respective affirmations in this matter. It turns out that Wong could not attend the trial. The admissibility and/or weight of Wong’s affirmation will be dealt with in the latter part of this judgment.
35. The Husband alleged in his affirmation that the 1,000 shares were sold to Wong for a valuable consideration of HK$1,080,000. At the time of his Form E dated 26 April 2010, he estimated the market value of the Mongkok Building Property worth HK$20,000,000. The Husband produced a valuation report which was done by C.S. Surveyor Limited. According to the report, the property was worth HK$20,800,000 at that time (“the C.S. Valuation”).
36. Concerning the admissibility of the C.S. Valuation, I must emphasise the importance of Order 38 rule 6 RHC which states:
(1) Except with the leave of the Court or where all parties agree, no expert evidence may be adduced at the trial or hearing of any cause or matter unless the party seeking to adduce the evidence-
(a) has applied to the Court to determine whether a direction should be given under rule 37 or 41 (whichever is appropriate) and has complied with any direction given on the application;
37. I consider that the C.S. Surveyor Limited is not an expert appointed by the Court or with the agreement of the Wife. Thus, the C.S. Valuation cannot be adduced as evidence as it is in obvious contravention of Order 38 rule 6 RHC.
38. On the other hand, an independent single joint expert valuation report (“Centaline Report”) was prepared pursuant to the Order dated 17 August 2011. It stated that the Mongkok Building Property was worth HK$35,190,000 as at 21 June 2010. On the face of it, the difference in valuation of the Mongkok Building Property between these 2 reports is about HK$15,000,000 which is very substantial.
39. More important is that on 30 November 2010 (just about few months after the sale of the shares to Wong), AW sold the Mongkok Building Property by way of an assignment to a third party at consideration of HK$41,000,000 which is even much higher in value than that valuated in the Centaline Report. I consider that the C.S. Valuation is totally unreliable.
40. In my view, the Husband’s allegation that the shares were sold to Wong for HK$1,080,000 is also not credible as it contradicted with the relevant Instrument of Transfer and Bought/Sold Note, which stated that the 1,000 shares were transferred to Wong for HK$1,000. Although he explained that the documents were prepared by accountants and he trusted the accountants, I do not believe that if the actual consideration of this transaction is HK$1,080,000, the accountants would advice him to state only HK$1,000 as the consideration in the relevant Instrument of Transfer and Bought/Sold Note. Bearing in mind that these documents were duly stamped on the basis that the shares were transferred for HK$1 per share, it may possibly amount to deception to the Inland Revenue due to the lesser payment of stamp duty.
41. Besides, I consider that there is no sufficient evidence showing that the Husband actually received HK$1,080,000 from Wong. He simply produces his bank passbook and claims that the sums of HK$500,000 and HK$580,000 deposited on 12 and 19 July 2010 respectively represent Wong’s payment for the shares. However, the bank passbook is no proof as to who paid these 2 sums. The payer(s) can be anyone. The 2 sums can be wholly unrelated to the transfer in question. It is also noteworthy that these 2 sums were deposited into the Husband’s bank account only 2 to 3 weeks after the shares were transferred. In my view, no satisfactory explanation was given by the Husband as to why the execution of the relevant Instrument of Transfer and Bought/Sold Note cannot be done at the same time of the payment of HK$1,080,000.
42. Besides, the Husband could in fact easily prove his allegation by producing the relevant cheque or pay-in slip (copies of which are readily available upon request made to his bank). However, he chose not to produce these documents whereas the burden of proof to discharge the statutory presumption is on him.
43. Another important matter that I have to take into account is the value of the alleged consideration for the transfer in the sum of HK$1,080,000. According to the Centaline Report, the market value of the Mongkok Building Property was HK$35,190,000 shortly before the shares in AW were transferred by the Husband to Wong. Ma confirmed in Court that at that time the outstanding mortgage was about HK$10,090,000. The 1,000 shares therefore should be worth about HK$2,510,000 [ie (HK$35,190,000 – HK$10,090,000) x 10%]. So, I am of the view that even if the Husband did transfer the 1,000 shares in AW to Wong, the alleged consideration is grossly undervalued.
44. In his affirmation, the Husband seeks to explain that he had to sell the shares to Wong in around June 2010 because he had a shortage of cash at that time. However, I consider that this is contradicted by his bank passbook. In February 2010, he transferred HK$320,000 into his usual HSBC account from another account. In April 2010, the account showed a balance of HK$350,000. In May 2010, there was HK$300,000 and even in June 2010, the Husband still had HK$200,000 in that account (not to say his financial resources e.g. his monthly income and his securities). It is noteworthy that in March 2010 he was even considering making another property investment by issuing a cheque in the sum of HK$900,000. As a whole, I am of the view that the Husband’s case in this regard is self-contradictory and simply incapable of belief.
The Affirmation of Wong filed 24 May 2011
45. The Husband initially sought to call Wong to give evidence in court in support of his case. There is an Order dated 2 November 2011 made at Pre Trial Review directing that parties are reminded to attend trial with witness(es). However, just 1 day before the trial the Husband informed the Court that Wong was unable to attend Court due to her illness and the Husband wished to rely on the affirmation of Wong filed 24 May 2011 without calling her. In the Husband’s affirmation filed 28 February 2012, a copy of the letter issued by Wong’s psychiatrist one Dr Samson YY Fong was exhibited. A Hearsay Notice was also issued to the Wife on the same day.
46. The Husband applied for the Court’s leave to allow the affirmation of Wong to stand as her evidence at the trial. Mr Kong for the Husband refers me to s.47 of the Evidence Ordinance Cap.8, as summarised in Hong Kong Civil Procedure 2012 at p.743:
...in civil proceedings evidence shall not be excluded on the ground that it is hearsay unless: (a) a party against whom the evidence is to be adduced objects to the admission of the evidence and (b) the court is satisfied, having regard to the circumstances of the case, that the exclusion of the evidence is not prejudicial to the interests of justice.
47. Mr Yim, Counsel for the Wife, submitted that the affirmation of Wong (including exhibit thereto) should be excluded from consideration on the basis that the deponent is unable to attend the hearing for cross-examination. Mr Yim relies on Section 77(5)of the Matrimonial Causes Rules, Cap 179A (“MCR”) which provides:-
At the hearing of an application for ancillary relief the court shall, subject to rules 78, 80 and 80A, investigate the allegations made in support of and in answer to the application and may take evidence orally and may order the attendance of any person for the purpose of being examined or cross-examined, and may at any stage of the proceedings order the discovery and production of any document or require further affidavits.(emphasis added)
48. In Re Chow Kam Fai David[14], the Court of Appeal was asked to consider if an affirmation should be excluded on the basis that the deponent would not attend the hearing for cross-examination. Rogers VP said in the judgment:-
13. I do not see that the judge can be faulted in this conclusion. Whatever might be said of the strengths or weaknesses of the various points which are made for and against the conclusion as to whether the respondent had acquired a domicile of choice, clearly there was material for cross-examination. Looking at it from the point of view of the petitioner, it appears to me that it would have been clearly wrong to have refused cross-examination. Give the fact that subject intention is a highly important ingredient in the question as to whether a domicile of choice has been acquired, and in this case forms the major issue in this regard, if the petitioner were put in the position of having to accept the respondent’s assertions made on affidavit without the possibility of cross-examination, it would be put at an unfair disadvantage, to say the least…
15. In my view, the judge cannot be faulted in coming to the conclusion that this was an appropriate case in which to order the cross-examination. Once it is decided that there should be cross-examination on affidavit, if the person in question fails to attend for cross-examination then the usual order is that his affidavits cannot be used without leave of the court…
28. The judge posed as the final question, the question as to whether the respondent’s affidavit should be excluded at the hearing of the petition if the petitioner failed to attend. In my view this comes, probably, as part of the second question. I have no hesitation in saying that the judge, in any event, came to the correct conclusion. As explained in paragraph 24 of the judgment of Simon Brown LJ in the Polanski case, although it may seem a draconian result that an affidavit should be excluded, itwould be highly undesirable that if the respondent refused to attend the cross-examination his affidavit could be used and read in court. (emphasis added)
49. Mr Kong appearing for the Husband submitted that Re Chow Kam FaiDavid[15]is a bankruptcy petition case and shall be distinguished. I disagree and consider that the same legal principle shall apply in the ancillary relief proceedings. In the light of the above authority, I fully accept Mr Yim’s submission that the Affirmation of Wong (including the exhibit thereto) should be excluded or no weight whatsoever should be attached thereto for the following reasons:-
(1) Similar to the situation facing the Court of Appeal, the intended evidence of Wong is relevant to the subjective intention of an individual. The Husband bears the burden to discharge the statutory presumption as to intention. Naturally, this issue also turns on credibility of witnesses. It is therefore highly undesirable and, in fact, unfair to the Wife, if the evidence of Wong is allowed to be relied upon by the Husband without giving the chance to the Wife to challenge the allegations made by Wong under cross-examination, especially regarding the 2 alleged payments of the respective sums of HK$500,000 and HK$580,000 deposited into the Husband’s account on 12 and 19 July 2010. To borrow the words of Rogers VP, ‘it would be put at an unfair disadvantage, to say the least’.
(2) By his affirmation dated 28 February 2012, the Husband said that the daughter of Wong brought him a letter issued by Wong’s doctor saying that Wong suffered from somatic eye problem possibility due to a relapse of her depression. This latest affirmation of the Husband is completely silent on whether he had made any attempt to contact Wong directly or whether Wong might be available on a later date. Wong is allegedly suffering from eye problem and it is difficult to see how that could prevent a person from attending court. The letter issued by Wong’s doctor exhibited to the Husband’s affirmation is simply a “Referral Letter” and says nothing as to Wong’s suitability to attend court. In my judgment, the Husband’s affirmation has not provided any valid reason for Wong’s absence from the hearing.
(3) In the “Referral Letter” issued by Dr Lo, it is stated that Wong has been suffering from depression and under Dr Lo’s care from Aug 10 to April 11 and Wong defaulted follow up since April 11. Wong’s affirmation was made shortly afterwards on 24 May 2011. Given the alleged medical condition and the relatively old age of Wong (63 years), I cast serious doubt on the reliability of the evidence contained in Wong’s affirmation which, in my judgment, should not be allowed to be relied upon without cross-examination.
50. In the present case, Wong is the transferee of the 1000 shares in AW, transaction of which is sought to be set aside by the Wife. Wong is expected to give material evidence in relation to the Wife’s Section 17 application. There is no satisfactory reason justifying Wong’s absence from court. Having regard to all the circumstances, I am of the view that the Husband has failed to rebut the statutory presumption under section 17(3) of the MPPO and the transfer of the 1,000 shares in AW ought to be set aside and that the value of these 1,000 shares shall be regarded as part of the family assets.
Whether Ma is holding another 2,000 shares in AW on trust for the Husband
51. Apart from the 1,000 shares transferred to Wong, there are Declaration of Trust and Instrument of Transfer executed by Ma showing that the Husband is the beneficial owner of another 2,000 shares in AW, which are being held on trust for the Husband by Ma.
52. In his affirmation, the Husband alleged that the validity of the trust arrangement in relation to those additional 2,000 shares was subject to the successful sub-sale of the Mongkok Building Property within a short period and the sub-sale did not materialize. Although Ma said that he had given the Husband an opportunity to inject more money so as to retain the 20% share, the Husband rejected for lack of resources. Therefore, he and Ma regarded the Declaration of Trust as “voidable and unenforceable”.
53. In my view, the Declaration of Trust which is duly stamped does not state to be subject to any condition as alleged by the Husband. The wording of the Declaration of Trust is very clearly that Ma is holding 2,000 shares in AW for the benefit of the Husband. An Instrument of Transfer in favour of the Husband was also executed at the same time. There is no other ancillary document recording that such trust arrangement was conditional. Nor is there any subsequent document showing that the Declaration of Trust is cancelled. So the Husband is basically alleging a case contrary to the contents of the documents executed and signed by both him and Ma. I am of the view that the Husband fails to discharge the burden of proof to show that the relevant Declaration of Trust and the Instrument of Transfer have no longer effective.
54. The Husband’s case is that if the Mongkok Building Property was successfully sub-sold within a short period of time as a result of his effort and expertise, he would be entitled to an additional 20% profit from the sub-sale and the 20% profit would be paid by Ma. That was a joint investment of 3 people, namely the Husband, Ma and Wong. He alleged that in the event of a successful sub-sale, his entitlement to the additional 20% would be paid by Ma only but not jointly with Wong. It basically means that Wong would be able to benefit the most from the Husband’s effort in securing the sub-sale yet without paying or contributing anything to acknowledge his effort. The Husband, in my view, was unable to provide any satisfactory answer as to why Wong shall benefit the most. I consider that this simply does not make any commercial sense, especially as the Husband and Ma are both experienced investors in the property market whereas Wong is just an old woman suffering from somatic eye problem.
55. The Husband testified at trial that he contributed only 10% to the purchase price of the Mongkok Building Property and therefore he is only entitled to 10% shares in AW. I consider that this is a bare allegation made by him and exactly how much he contributed to AW’s acquisition in the Mongkok Building Property remains unclear. I must emphases that the burden is on him to show that the trust documents in relation to the 2,000 shares in AW should not be given effect to.
56. The Husband has given various versions as to his monetary contribution to the Mongkok Building Property at different times. In his Answer to the Wife’s Questionnaire, he said that he contributed HK$600,000 to the down payment. Then in his affirmation dated 12 May 2011, he said twice that he did not make any contribution to the purchase of the Mongkok Building Property. In his updated Form E, he revised again and said that he contributed HK$600,000 upon completion. He finally maintained at the trial that the version as stated in his updated Form E was the correct one. When he was pointed out under the cross-examination by Mr Yim appearing for the Wife that the matters contained in his affirmation were actually explained to and confirmed by Ma, the only answer he could give was that he had nothing to say. As to the Husband’s inconsistency in his statement as to his contribution to the AW, Mr Kong appearing for the Husband submitted that his statement must be a mistake genuinely made. In my judgment, his statement and answer are confusing and evasive.
57. No documentary evidence has been adduced by the Husband exactly how much he contributed to AW. However, it is extremely clear that according to the relevant trust documents, Ma is holding 2,000 shares in AW on trust for the Husband.
58. The Husband for the first time in these proceedings said at the trial that apart from the “sub-sale” arrangement, he was actually also offered an option by Ma at the beginning to acquire the additional 2,000 shares by “topping up” his monetary contribution. However, had that really been the case, I wonder why the Husband would have failed to mention this “topping up” option at all in his affirmation. His answer at the trial under cross-examination was that he had no comment. It is important to note that such “topping up” option was also not referred to in Ma’s affirmation and in fact Ma confirmed the contents of the Husband’s affirmation. I consider that such “topping up” option is no more than a recent invention by the Husband to rationalize his case.
59. The Husband said at the trial that he only keeps copy of the trust documents in respect of AW. Given his concession that the purpose of executing the trust documents in respect of AW was to protect him, I feel very difficult to understand why he would only keep a copy thereof but not original. In the event that Ma refuses to honour the agreement to pay 20% profit to the Husband after successful re-sale of the Mongkok Building Property as confirmor, it would be extremely difficult for the Husband to sue Ma for this 20% profit without the original trust documents. I consider that the most sensible, simplest and straightforward way to protect the Husband’s interest is to record the agreement between him and Ma in writing rather than executing trust documents.
60. During his examination-in-chief, the Husband explained that the trust arrangement in respect of the 2,000 shares in AW was no longer valid because Ma had already “destroyed” the relevant Declaration of Trust and Instrument of Transfer around the time when the purchase of the Mongkok Building Property was completed without resale. However, the allegation that the trust documents were already destroyed was raised for the first time during examination-in-chief and had never been mentioned in any of the Husband’s previous affirmations. More important is that the contents of his affirmation dated 12 May 2011 in relation to the 2,000 shares in AW were specifically confirmed by Ma in his affirmation, and there is also no mention whatsoever of the trust documents having been destroyed already. In my judgment, the evidence given by the Husband and Ma in this regard are totally unreliable.
61. By reason of the aforesaid, I am of the view that the Husband has failed to discharge the burden to prove that the trust documents in respect of the 2,000 shares in AW should not be given effect to. The relevant Declaration of Trust and the Instrument of Transfer are very clear evidence to prove and I find that Ma is holding 2,000 shares in AW on trust for the Husband.
62. AW sold the Mongkok Building Property in late 2010 for a price of HK$41,000,000. After deducting the outstanding mortgage of about HK$10,090,000 as at June 2010 (as confirmed by Ma in court), AW should have pocketed roughly HK$30,910,000. In my judgment, the Husband’s 30% shares or interests in AW should be worth about HK$9,273,000 (ie HK$30,910,000 X 30%) which shall form part of the family assets.
Whether the Husband holds any beneficial interest in KInvestment Limited (“K”)
63. Mr Yim for the Wife submitted that there is evidence showing that a SSL (“Sham”) is holding 5,000 shares in K on trust for the Husband under a Declaration of Trust and Instrument of Transfer. It was the Husband’s evidence that K should have no bearing in the present law-suit because he had relinquished his 50% interest in 2007 due to unsuccessful negotiation of an intended purchase. He alleged that such trust arrangement was subject to certain condition (i.e. the purchase of a property) which did not materialize. Since then he has no relationship with K and he had not invested any money in this company.
64. Mr Yim for the Wife further submitted that Ma admitted under cross-examination that K is still in active business and holds a property at Lai Chi Kok worth about HK$2,000,000 odd. On such basis, the Husband’s 5,000 shares in K (held on trust by Sham) are worth about HK$1,000,000.
65. After having carefully observed the Husband’ evidence in this regard, I accept his evidence that he has no longer any interest in K since 2007. Even if K is still in active business and presently holds a property at Lai Chi Kok, I consider that the Husband has no interest in it.
Whether the Husband holds any beneficial interest in CFE Limited (“CFE”)
66. CFE is holding the Wonderland Villas Property since June 1997. The net value of Wonderland Villas Property is HK$2,850,000 (as at April 2010). The Husband testified in court that this property is the matrimonial home of Ma and he was holding 1 share (50%) on a verbal trust for KMC (“Kwok “) who is Ma’s mother. On Kwok’s instructions, the Husband transferred this 1 share to Choi who is Kwok’s daughter-in-law in about May 2010.
67. The Husband said that CFE was formed to hold the Wonderland Villas Property, unlike other companies, not for property investment business and that he has no interests in CFE.
68. In my view, the Husband was once the registered owner of 50% shares in CFE. If he alleges an oral trust for the benefit of Kwok, then the burden is naturally upon him to prove the oral trust with cogent evidence. He has confirmed that no written declaration of trust has ever been executed in respect of the said 50% shares in CFE. He chose not to call Kwok or Choi, the daughter-in-law of Kwok to give evidence to support his allegation. The most important question is why Kwok would request the Husband who is just a friend of his son to hold 50% share on trust for her in 1997 without any written document? During cross-examination, he said that it was because Kwok, being an elderly, was unable to obtain mortgage and it was necessary to add the Husband’s name to it. He further said that he also signed the mortgage documents and further executed a personal guarantee for the mortgage loan. He was also a director and secretary of CFE but only resigned until mid-2011[16]. In my view, all these evidence cannot answer the aforesaid question. Instead, they tend to show that the Husband has beneficial interest in CFE. During the period from 1997 to 2003, the property market in Hong Kong was very volatile and in fact drops drastically due to sudden economic downturn. If the market value of the property cannot cover the mortgage loan and Ma is unable to pay the mortgage instalment, the Husband will have to be personally liable for balance after compulsory sale by the bank. It is extremely risky. I can see no reason why the Husband has to take such risk.
69. The transfer from the Husband to Kwok’s daughter-in-law, Choi, is only disclosed when he filed his updated Form E on about 27 January 2012. There is no reason why the Husband cannot transfer the share to Choi earlier but only in May 2010. No explanation is given as to why the share is not transferred back to Kwok who claims to be the real beneficial owner. I consider that the Husband has failed to make out a case for the oral trust. I am of the view that on the basis of the information provided in his Form E, his 50% shares in CFE should be worth about HK$1,425,000 (ie half of the net value of Wonderland Villas Property) which should be “added back” to the family assets.
Whether the Husband holds any beneficial interest in CE Ltd (“CE Ltd”) and CE and Trading Ltd (“CE&T Ltd”)
70. It is the Wife’s case that the Husband is the beneficial owner of both CE Ltd and CE&T Ltd, which is denied by him.
71. To start with, the Wife in §§7 and 8 of her affirmation filed on 12 February 2010 mentioned that CE and Trading Company (“CE&T Co.”) was one of the Husband’s companies. Due to some reasons that could not be recalled by her, CE&T Co. was getting a tax penalty for about $700,000.00. Furthermore, the Wife stated that it was her idea to stop doing accounting tasks for this company after this incident. Mr Yim for the Wife eventually conceded that CE&T Co. is now “dormant” and is not asking the Court to make any finding in respect of CE&T Co.
72. The Wife then in §§4 to 6 of her subsequent affirmation filed 24 June 2010 stated her belief that since Kwok is the mother of Ma and Sham is a nephew of the Husband, they are holding the shares in both CE Ltd and CE&T Ltd on behalf of the Husband so as to allow him to have moonlighting business with Ma.
73. CE Company (“CE Co.”) is a sole proprietorship business of Ma. Its financial statement and Ma’s payment record to IRD for the tax penalty are produced by the Wife. Mr Yim appearing for the Wife asked both the Husband and Ma to explain why these financial documents in relation to CE Co would be in the possession of the Wife. In fact, I consider that it shall be the Wife who shall explain why she is in possession of these documents which is supposed not belonging to her.
74. It is the Wife’s contention that the Husband’s earning of $35,000 per month as stated in his Form-Es and his capital for property investments were originated from his shares in CE Ltd and CE&T Ltd or the C line of companies. I find that her contention is very vague and unsupported by solid evidence.
75. During cross examination, the Wife agreed that after she had ceased from helping Ma in his accounts in or about 1999, she knew nothing about Ma’s companies since then. If that is the case, there may be great change in the structure or shareholding whatsoever relating to all these so-called C line of companies since 1999, which are unknown to her.
76. Ma on the other hand, during cross examination, confirmed most of the Husband’s version of events and in particular that the Husband has no interests in his companies. In this regard, the only dealings with the Husband were purchasing construction/building materials. Furthermore, Ma also testified in a quite detailed way the purchase from the Husband the materials that were stuck in Macau.
77. As to the cooperation with Sham, Ma admitted that the Husband, Sham, himself all knew each other. Sham is over 40 years of age (just a few years younger than the Husband). According to Ma, Sham knew how to draw production diagrams for he had been working in an architectural company. Ma wanted to expand his business, so he joined with Sham and started CE Ltd. In this business, Ma takes care of sales while Sham is responsible for product development and production.
78. Ma testified in court that the financial statement of CE Ltd. (without Sham’s signature) was used for the benefit of AG Ltd. in order to satisfy the bank’s requirement for keeping the credit line for AG. It has been done several times and without any problem.
79. The Husband explained that the $35,000 per month earnings was a rough figure averaged over a few years. The source for this sum of money was from 4 sources being: interests from shares, trading in share stocks, property investment and his private material trading business. He said that it is a complicated exercise and involves his skills earned over the years.
80. Being questioned on the 2 handwritten notes, the Husband can remember that one of the notes was a record of his material trading business but denied having the 2 keys. For another note, it was a record evidencing his dealing with Ma on the Macau construction materials. The Husband was using his own limited company, AP Trading Limited (“AP”) for this transaction. The sum of $1,150,000 was the purchase money.
81. The Wife filed an affirmation denying AP had any construction material trading business. The registered office address was at Lok Fu Estate, Kowloon (former matrimonial home of the parties which is also different to the office address of C line of companies). The Husband was able to further support his evidence by the profit tax demand showing that AP had earned $137,009 for the year 2006/07.
82. In my judgment, the financial documents of these business entities found at the former matrimonial home or otherwise came into the possession of the Wife is neither here nor there.
83. Regarding the audited financial statements of CE Ltd not signed by Sham as the other shareholder and director, even if I disbelieve that Ma or the Husband would have produced such documents to bank to obtain credit facilities, they are insufficient evidence to prove the Wife’s allegation that the Husband is the ultimate beneficial owners of CE Ltd and CE&T Ltd.
84. In my view, the fact that Sham receives no salary whatsoever from CE Ltd does not lend credence to the Wife’s case that Sham is only a nominee for the Husband. I do not accept that the Wife successfully proves on balance of probability that the Husband is the ultimate beneficial owners of CE Ltd and CE&T Ltd based on the evidence before me. In particular, the registered shareholders of CE Ltd are Ma and Sham and that of CE&T Ltd are Ma and Kwok. There is no trust document whatsoever signed by any of these shareholders, namely Sham, Ma and/or Kwok holding the shares for the Husband as a nominee. I consider that it is just a bare case of the Wife and she fails to discharge the necessary burden of proof.
Stocks and securities
85. Mr Yim appearing for the Wife that it is stated in the Husband’s first Form E dated 26 April 2010 that he had shares and securities in the total value of HK$899,720. However, according to his updated Form E dated 27 January 2012 (ie about 21 months later), a substantial part of those shares for about $843,000 (ie HK$899,720 - HK$56,564.8) have been sold. The Husband claims that he was in need of cash to pay for various expenses. During cross-examination, he was shown that he received a total sum of about HK$780,000 from the sale of the securities between August 2011 and December 2011.
86. Mr Yim submitted that the value of his securities in the sum of HK$899,720 (as at his first Form E) (which he had spent without a proper account for the whereabouts) should be “added back” to the family assets.
87. The average monthly income of the Husband is only about $46,000 but he claims to have about $92,000 monthly expenses[17] which are not challenged by the Wife. If that is the case, he needs extra cash of about $46,000 every month to pay for these expenses. In 21 months time (ie from his first Form E dated 26 April 2010 to his updated Form E dated 27 January 2012), he needs to pay $966,000 (ie $46,000 X 21).
88. Furthermore, the Husband explained that he has additional income from sale of stocks and dividend of stocks for about $35,000 per month[18] I therefore accept his explanation that he needs to realise the stocks and securities to pay for various expenses. Hence, Mr Yim’s submission that the value of the Husband’s securities in the sum of HK$899,720 should be “added back” to the family assets is rejected.
Bank Accounts
89. According to his Form E, the Husband has HK$56,855.12 in his bank accounts.
90. He also claims that the sum of HK$346,716.47 in a bank account held in his name with BOC belongs to his mother and sibling. The Wife accepts that the monies in this account are held by the Husband on trust for his family members.
91. The Wife also contends that for the period from December 2003 to September 2006, the Husband has some money stored in his safe-deposit boxes with Bank of East Asia, the amount of which is presently unknown. Under cross-examination, the Husband admitted that he used to keep money in the safe-deposit boxes but he stopped using safe-deposit boxes for keeping money after AP was set up. AP ceased to have active business or income after 31 March 2007 and was deregistered in 2008. The Wife invites the Court to draw inference that either (a) the Husband has undisclosed bank accounts; or (b) he still keeps a lot of cash in his safe deposit boxes. I disagree. Even if I accept that the Husband used to keep some money in his safe-deposit boxes from 2003 to 2006, there is no evidence to show that he is still doing so now. I refuse to draw such adverse inference against him.
92. It is not in dispute that the Wife has HK$25,230.83 in her bank account (as at 1 February 2012).
Other assets
93. According to his Form E, the Husband also has an insurance policy worthHK$140,000, MPF worth HK$965,646.80 and a car with value of HK$45,000.
94. The Wife’s MPF is worth HK$676.45.
Liabilities
95. The Wife owes her mother a total sum of HK$233,288 (which is not disputed by the Husband at the trial or in the written closing submission by the Husband’s Counsel).
96. In the Wife’s Form E dated 4 February 2010, it was her statement that she borrowed $85,000 from the Husband’s mother. The Wife said in her affirmation that the money was initially given to her for various expenses of the Husband’s mother.
97. Furthermore, the Wife explained her withdrawals from the Husband’s mother by saying that she was left with no savings due to the Husband’s default in providing maintenance from 30 April 2009 to 30 April 2010. I consider the Wife is a credible witness and I accept her evidence in this regard. Indeed, I really cannot understand why Mr Kong, Counsel for the Husband, would advise the Husband to trouble his mother to spend few hours in the Court to give evidence and why Mr Kong has to write several paragraphs in his closing submission for this undisputed loan by the Wife from the Husband’s mother.
Summary of family assets
98. Based on my finding as aforesaid, the family assets can be computed as follows:-
| Island Harbourview Property | HK$8,670,000 |
| Charming Garden Property | HK$1,620,000 |
| Husband’s 10% shares in AG | HK$183,000 |
| Dividends received by Husband from AG | HK$120,000 |
| Husband’s 3,000 shares in AW | HK$9,273,000 |
| value of Husband’s 50% shares in CFE | HK$1,425,000 |
| Husband’s cash in bank accounts | HK$56,855 |
| Husband’s car | HK$45,000 |
| Husband’s insurance | HK$140,000 |
| Husband’s MPF | HK$965,646 |
| Wife’s MPF | HK$676 |
| Wife’s cash in bank accounts | HK$25,230 |
| Sub-total | HK$22,524,407 |
| Less: Wife’s total liabilities | HK$318,288 (ie HK$233,288 + HK$85,000). |
| Total: | HK$22,206,119 |
Deciding to apply the sharing principle
99. In my view, there are surplus assets for distribution after the parties’ financial needs have been catered for. The law is clear that unless there are good reasons to depart from the equal sharing principle which is a fact determining exercise, this Court should use this as a yardstick to achieve a fair financial outcome for the parties.
Any good reasons for departing from equal division
Any misconduct to consider
100. Conduct to be considered must be “obvious and gross” which would be in the opinion of the court inequitable to disregard. Both parties Counsel did not make any submissions in this regard. So, I will not consider it.
Financial needs as a material factor
101. The earning capacity of the Husband is much higher than that of the Wife and the Husband has strong financial income to pay the periodical maintenance of the Wife and the 2 children. Since the family has surplus assets for distribution, I am of the view that financial need is not a good reason to depart from equal division.
Duration of the marriage as a material factor
102. As the parties married for more than 19 years, it is definitely not a short marriage to warrant any departure from the equal sharing principle.
Contributions to the welfare of the family as a material factor
103. I consider that the parties’ contributions to the welfare of the family are about the same. The law is clear that there is no place for discrimination between a husband and wife and their respective roles and there should be no bias in favour of the money-earner and against the home-maker and the child-carer. As such, no good reason to deviate from the equal sharing principle.
104. In fact, both parties did not submit that there is any conceivable or good reason for departing from equal division. Half amount of the family assets is in the sum of HK$11,103,059.5 (ie HK$22,206,119/ 2).
105. But the Wife’s liabilities are in the total sum of HK$318,288 (ie HK$233,288 + HK$85,000). In my judgment, the Wife is entitled to HK$11,421,347.5 (ie HK$11,103,059.5 + HK$318,288).
106. By her Amended Open Proposal dated 29 February 2012, the Wife is basically seeking a transfer of Island Harbourview Property and Charming Garden Property to her. The total market value of these two landed properties is HK$13,333,000 with the existing mortgages for the total sum of about HK$1,780,000. However, the Wife did not mention who shall be responsible for paying off the existing mortgages in her Amended Open Proposal. I consider that the family may not have sufficient cash to pay off the existing mortgages for the total sum of about HK$1,780,000 immediately. One of the properties shall be sold.
107. The Wife with the Daughter and the Son are now residing at Charming Garden Property, which is only about 560 sq. ft. However, the Husband is currently living alone at Island Harbourview which is about 1,000 sq. ft.. I think that it is very unfair to the Wife and the 2 children to continue to live in a small house. In the circumstances, I am of the view that Island Harbourview Property shall be transferred to the Wife so that she shall be residing with the 2 children therein and Charming Garden Property shall be sold. The net sale proceeds are about HK$1,620,000, part of which can be used to pay off the existing mortgage of Island Harbourview Property for about HK$850,000.
108. The agreed market value of Island Harbourview Property is HK$9,520,000. Hence, the Wife shall be entitled to a lump sum of HK$1,901,347.5 (ie HK$11,421,347.5 – HK$9,520,000).
Outstanding maintenance of the 2 children from August 2009 to August 2010
109. At the hearing on 19 May 2010, Deputy Judge Tracy Chan ordered the Husband to pay $81,900 (ie HK$6,300 X 13 months) being interim maintenance from May 2009 to May 2010 and further interim maintenance for HK$6,300 per month commencing from 1 June 2010 until further order. At another hearing on 14 September 2010, Deputy Judge Tracy Chan ordered that upon the Husband’s undertaking to discharge various outgoings and expenses, he do pay the Wife $8,300 per month as her maintenance pending suit, $7,648 per month as the daughter’s interim maintenance and HK$4,041 per month as the son’s interim maintenance all commencing from 1 September 2010 until further order. Deputy Judge Tracy Chan also ordered that the Wife’s claims for the outstanding maintenance of the 2 children from August 2009 to August 2010 be adjourned to the ancillary relief hearing.
110. The initial basis for the Wife’s claim was that the Husband failed to pay the 2 children’s monthly expenses at $16,680 for 13 months from August 2009 to August 2010 (ie $16,680 X 13 = $216,840). In her open offer, the Wife reduced the claim from $216,840 to $134,940 after deducting $81,900 which had been paid by the Husband pursuant to the Order made by Deputy Judge Tracy Chan on 19 May 2010.
111. It is the Husband’s case that all along, he has never stopped paying the maintenance and various expenses for the children and that he fully complies with the interim maintenance Orders respective dated 19 May 2010 and 14 September 2010.
112. Upon being cross-examined, the Wife said that the figure of $16,680 per month was derived by adding the children’s monthly expenses but deducting their school fees and extra tuition costs. So for the daughter is $11,550 - $4,000 = $7,550. For the son is $17,030 - $4,000 - $3,900 = $9,130. Thus, the figure of $16,680 is the total amount of $7,550 and $9,130.
113. It was Wife’s evidence in her affirmation that she had been paying household and other expenses by using the subsidiary credit card before its termination in August 2009 by the Husband. After August 2009 without the subsidiary credit card and the Husband refused to pay all children’s other expenses (save and except their school and extra tuition fees), which forced her to borrow from the Husband’s mother. I accept the Wife’s evidence and find that it is extremely unreasonable for the Husband to terminate the subsidiary credit card in August 2009 suddenly. I also accept that the Wife had to use her own savings and borrowing from the Husband’s mother to discharge the children’s other expenses than their school and extra tuition fees.
114. Mr Kong, Counsel for the Husband, submitted that the Wife was all along in her possession a VISA Gold credit card and that she had never relied on her existing Visa Gold to cover such ad-hoc moments. I consider that the fact that she did not use her VISA Gold credit card is neither here nor there. She did not use the card does not in any way show whether she was short of cash at the material time or not. In any event, she was not cross-examined at all by Mr Kong on this point. In my judgment, this is unfair to the Wife who has not given an opportunity to explain during cross- examination. Accordingly, I reject Mr Kong’s submission in this regard.
115. Nevertheless, I am of the view that I have to first deal with the question, namely what the proper sums of the 2 children’s monthly maintenance. Then, I shall consider whether to exercise my discretion to order the Husband to pay the children’s outstanding maintenance.
Maintenance
116. The amount of the maintenance for the Wife in the sum of HK$8,300 per month has been agreed by the parties.
117. The Husband states in his updated Form E that monthly expenses for the daughter and the son are HK$11,446 and HK$17,811. But, the Wife seeks the daughter’s maintenance to be increased from HK$11,446 to HK$16,446 per month to cover university fees from September 2012 onwards and HK$17,811 per month for the son.
118. The Husband does not challenge any item of the monthly expenditure stated by the Wife in her updated Form E. Except that he contends that the daughter’s expenditure would not be increased for she would not be required to attend extra tuition classes (Mathematics and English) for the sum of $3,870[19]. He said that the costs saved from those tuition classes should be able to cover for her tertiary education expenses. I accept that it is very unusual for a university student to attend tuition classes for Mathematics and English. Hence, the monthly maintenance from September 2012 onwards for the daughter shall be HK$12,576 (ie $16,446 - $3,870)
119. Under cross-examination, the Husband admitted that he has the financial ability to pay the children’s maintenance as requested by the Wife.
120. Hence, I order the Husband to pay the Wife HK$11,446 per month (to be increased to HK$12,576 from September 2012 onwards) for the daughter’s maintenance and HK$17,811 per month for the son’s maintenance commencing from 1 June 2012.
121. Obviously, the 2 interim maintenance Orders made by Deputy Judge Tracy Chan on 19 May 2010 and 14 September 2010 respectively are inadequate for the Wife to maintain herself and the 2 children. I consider that interim maintenance Orders are only made on a board-brush approach. The fact that the Husband complies with these interim maintenance Orders does not mean that he had paid sufficient maintenance in the past. To achieve the justice, I am of the view that the Husband shall pay back the 2 children’s maintenance to the Wife as claimed. The 2 children’s monthly expenses claimed by the Wife are only at $16,680 for 13 months from August 2009 to August 2010 (ie $16,680 X 13 = $216,840). However, the 2 children’s monthly expenses now found by me are HK$29,257 (ie HK$11,446 + HK$17,811), which is much higher than that claimed by the Wife. In my judgment, the Wife is fair to reduce the claim to $134,940 after receiving $81,900 paid by the Husband. I therefore order the Husband to pay the Wife $134,940 as the outstanding maintenance of the 2 children from August 2009 to August 2010.
Conclusion
122. Having carefully considered all the circumstances and the relevant factors in section 7 of the MPPO, I now make the order as follows:
1. The Husband do move out from Island Harbourview Property and deliver vacant possession thereof to the Wife within 2 months after the issue of the Decree Absolute;
2. The Husband do transfer all his shares of and in LH Limited to the Wife at nil consideration within 5 months after the issue of the Decree Absolute with all necessary and reasonable expenses be borne by the parties in equal share;
3. Charming Garden Property shall be sold by private agreement at the best market price within 3 months after the issue of the Decree Absolute; failing which it shall be sold by public auction within 2 months thereafter, and all necessary and reasonable expenses such as estate agency fees, legal expenses, auction fees shall be borne by the parties in equal share;
4. The sale proceeds of Charming Garden Property shall be used to pay off its existing mortgage and the existing mortgage of Island Harbourview Property, and the net balance thereof shall be paid to the Wife forthwith;
5. Subject to the first charge of DLA, the Husband do pay the Wife through DLA a lump sum representing the difference between the sum of HK$1,901,347.5 and the aforesaid net balance of the sale proceeds of Charming Garden Property received by her within 1 month after the sale of Charming Garden Property;
6. Subject to the first charge of DLA, the Husband do pay the Wife through DLA a lump sum of $134,940 being the outstanding maintenance of the 2 children from August 2009 to August 2010 within 1 month after the issue of the Decree Absolute;
7. The Husband do pay the Wife the periodical payments for HK$11,446 per month (to be increased to HK$12,576 from September 2012 onwards) for the daughter’s maintenance and HK$17,811 per month for the son’s maintenance, first payments to be made on the 1st June 2012 and thereafter on the first day of each succeeding month until the 2 children reach the age of 18 or finish full time education whichever is the later;
8. The Husband do pay the Wife the periodical payment for HK$8,300 per month for her own maintenance, first payment to be made on the first day of the month after the issue of the Decree Absolute and thereafter on the first day of each succeeding month until any of the parties’ death or re-marriage of the Wife, whichever is earlier;
9. All such payment shall be paid to the Wife’s HSBC AC No.070-4-017763 direct;
10. Section 18 declaration be granted; and
11. Parties be at liberty to apply for implementation of the above orders.
123. In my view, it is not necessary to make an order to set aside the transfer of the 1,000 shares in AW to Wong since the value of these 1,000 shares has been regarded as part of the family assets. However, I consider that the Husband still has to pay costs of the Wife’s Section 17 application.
124. For the question of costs of the ancillary relief proceedings, the open offer by the Husband is far away from my determination whilst that of the Wife is much closer. Based on the general principle of ‘costs follow event’[20], he shall bear the costs. I now exercise my discretion to order him to pay costs of these ancillary relief proceedings including the Wife’s section 17 application and all costs reserved in relation thereto with Certificate of Counsel, to be taxed if not agreed on a party and party basis. There be no order as to costs as between the Wife and Wong. The Wife’s own costs be taxed in accordance with the Legal Aid Regulations. These are costs orders nisi to be made absolute in 14 days unless any of the parties make application to vary the same by Summons.
| | ( Simon Lo ) |
| | Deputy District Judge |
Mr Eugene Yim instructed by Messrs. Francis Kong & Co, Solicitors acting for the Petitioner
Mr Hatten Kong instructed by Messrs. Henry Lo & Co, Solicitors acting for the 1stRespondent
The 2ndRespondent acting in person absent
[1] FACV No. 16 of 2008
[2] ibid para 56
[3] ibid para 57
[4] ibid para 58-61
[5] ibid para 62-70
[6] ibid para 71-73
[7] ibid para 74-79
[8] ibid para 80-82
[9] ibid para 83-130
[10] ibid para 131-132
[11] the net value to be HK$8,670,000 [ie HK$9,520,000 - HK$850,000 (mortgage) ]
[12] the net value to be HK$1,620,000 [ie HK$3,810,000 - HK$930,000 (mortgage) - HK$1,260,000 (premium)]
[13]LKW (n1) para 73, PJ Ribeiro stated:-
The parties have an important duty to ensure that the court has sufficient information regarding their assets. They must make full and frank disclosure and a party who fails to do so runs the risk of the court drawing adverse inferences and robustly attributing assets to him or her, or making adverse costs orders.
[14] CACV No 295 of 2003, (24 March 2004)
[15] ibid
[16] See Husband’s Form E dated 27 January 2012 section 2.5 in pg.8
[17] See Husband’s Form E dated 27 January 2012 section 4.1,4.2 and 4.3 in pg.7 and 8
[18] See Husband’s Form E dated 27 January 2012 section 3.2 in pg.14
[19] See Wife’s Form E dated 1 February 2012, supplemental sheet: pg 19a
[20]Gojkovic v Gojkovic [1992] Fam 40