KKSR v. CLH

FCMC 13299/2019

[2024] HKFC 141

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 13299 OF 2019

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JUDGMENT
( Ancillary Relief, Addback and Conduct)

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This Application

1.  This is the ancillary relief trial between the Petitioner Husband (“H”) and the Respondent Wife (“W”). There is a child of the family (“K”) who was born on XX January 2009, aged 14 at the time of trial.

2.  During this 5 days trial, both parties are legally represented and gave evidence at trial.

Background

3.  H is Singaporean, born in February 1961; he was 62 at the time of trial. He says he is now retired. He had a son with his first wife whom he divorced in 1989. He has lost contact with his son and his ex-wife for more than 20 years.

4.  W is Singaporean, born in January 1972; she was 51 at the time of trial. She is now retired.

5.  The parties met in Singapore in January 1992. Back then, H was working as an Air Maintenance and Engineering Officer with X Air Force, and W was a Sales Consultant and Receptionist at a Beauty Salon.

6.  In September 1993, W relocated to Hong Kong to work as a flight attendant with Y, whilst H remained in Singapore.

7.  In October 1995, they met again, and subsequently married in Singapore in April 1996.

8.  Due to work requirements, early in their marriage, the parties were in a long-distance relationship where W lived in Hong Kong and H lived in Singapore.

9.  In June 2002, H relocated to Hong Kong to work as a Marketing Director with a US company. The parties lived together since then, initially at a property at Seaview Crescent (“SC”), then purchased a property at Caribbean Coast in 2009 (“CC Property / FMH”), where they lived together until their separation.

10.  In July 2003, H established his own company (“EW”) supplying aviation parts and equipment, he says EW ceased operation in August 2016.

11.  In March 2010, the parties adopted K in Hong Kong.

12.  However, the parties’ relationship gradually deteriorated and it broke down irretrievably in early 2018. They separated in March 2018. It is W’s case that H has unilaterally ceased all financial contribution to herself and K, including school fees, management fees of the Hong Kong properties and household expenses in around July 2019.

13.  H filed a petition for divorce on 7 November 2019, W and K moved out of the FMH to SC in December 2019. The Decree Nisi was granted on 30 September 2020.

14.  W resigned from Y and her employment ended in January 2023.

History of litigation

15.  On the same day of the Petition, H also sought an exparte injunction, that W be restrained from dealing with their FMH. The said injunction was then discharged on 18 November 2019.

16.  By the Order dated 30 June 2020, the parties have joint custody of K with care and control to W and reasonable access including staying access to H, and K is not to be removed from Hong Kong without leave until she turns 18.

17.  W filed a MPS summons on 23 December 2020, and by the Order dated 19 April 2021 (“MPSOrder”), H is to pay $17,500 per month to W from the date of the MPS Order and W can make use of the rental income generated from the CC Property until further order of the Court.

18.  W filed a summons for specific discovery on 30 September 2021, which Order was handed down on 21 February 2022.

H’s case and his Open Proposal

19.  It is H’s case, based on his calculation, that the matrimonial pot is $37,814,514.14. He adds the value of the agreed matrimonial pot and the amount that he is asking for add-back to arrive at this number.

Adding-back

20.  H says the following should be included in the matrimonial pot:

a.  Withdrawal of JPY1,230,000 and AUD14,700 from the parties’ joint account by W;

b.  Mortgage of $2,000,000 taken out by W;

c.  Loan of $170,000 to Billy (“B”) by W; and

d.  50% of joint account between W and her mother.

21.  H says he has retired by 2016, and also been living in and out of hotels since he left the FMH.

22.  H also argues that he has provided information to the best of his abilities, and some information is dependant on third parties or his personal attendance overseas. He says the bulk of the proceeds or income was applied towards his own needs, legal costs and travelling.

Apportionment of matrimonial assets

23.  H puts forward two proposals:

H’sProposal 1

a.  Each party shall keep assets held in their respective names intact.

b.  W to pay H a lump sum of $5,000,000 representing the appropriate amount of equalization monies within 28 days from the date of the Order.

c.  The parties to split the remaining credit balance in the parties’ joint bank accounts equally.

H’s Proposal 2

a.  W to transfer the following properties to H:

(i)  FMH; and

(ii)  W’s share in the Cambodia Property.

b.  Either H to transfer the following properties to W:

(i)  Carpark at Caribbean Coast;

(ii)  Carpark at Seaview Crescent; and

(iii)  Workshop C25 of WK Industrial Building

Or H to pay W the net sales proceeds of the said properties upon the same being sold.

c.  H to redeem the current outstanding mortgage loan of the FMH prior to or at the time of the transfer of the FMH from W to H.

d.  Each party to bear their own costs in relation to all the expenses including the legal fees arising from and/or in connection with the above property transfers. All stamp duty to be borne by the parties in equal shares.

e.  The parties to split the remaining credit balance in the parties’ joint bank accounts equally.

f.  H to pay W a lump sum of $2,500,000 representing the equalization monies within 28 days from the day of the Order.

g.  Save and except the above, each party to keep assets held in their respective names intact.

An equal sharing case

24.  In his closing submissions, H’s counsel says that there should be no departure from equal sharing, thus the matrimonial pot should be apportioned in half.

25.  Furthermore, H’s counsel invites the Court to adopt H’s Proposal 2, which H prefers.

K’s expenses

26.  H proposes:

a.  H to pay $17,500 per month as maintenance to W.

b.  H to continue with the said payment or such amount as decided by the Court on the basis K’s future expenses to be shared equally between H and W.

27.  H says that his proposal as to K’s expenses is reasonable and in line with HHJ KK Pang’s finding in the MPS Judgment (“MPS Judgment”) that K’s needs to be in the region of $24,000 per month. In his open proposal he says he is happy to continue to pay $17,500 per month for K.

W’s case and her Open Proposal

28.  It is W’s case, that the matrimonial pot is $35,231,361.44, this is the agreed figure between the parties.

Adding-back

29.  W says the following should be included in the matrimonial pot:

a.  The discrepancy between the selling price and the actual value of V Property in the Philippines (the “Philippines Property”) sold by H just before the trial in May 2023;

b.  Withdrawal of PHP2,200,000 (approximately $330,000) from H’s bank account in the Philippines by himself in April 2022;

c.  Hidden cash found in the former matrimonial home;

d.  Rental income from his overseas solely owned properties; and

e.  Sale proceeds of the various properties H owned in his sole name.

30.  W says H has failed to account for a number of the financial position of the parties’ various matrimonial assets which include inter alia H’s unilateral sale of 7 matrimonial properties, and also failed to make material non-disclosure of bank accounts, business operations, and sale proceeds. She says while H claims to have retired in 2016, she discovered he has continued to operate some business which generates income to him. And even when he eventually delivered up more information, it came very late in the day.

31.  W’s counsel argues that H actions amount to financial / litigation misconduct, she submits these conduct cannot be remedied by a cost order, as there has been depletion of assets, H’s conduct was of a serious enough nature to justify an order for adding back of the above-mentioned amounts to the matrimonial pot, or a departure from equal division.

A needs base case

32.  W says that she seeks to depart from equal sharing of the matrimonial pool based on H’s financial and litigation misconduct, as well as for her needs.

33.  W says for a clean break, the FMH would likely have to be sold. Once the FMH is sold, mortgage instalments of $8,176 per month and management fees of $4,460 per month cease to apply. In such circumstances, her general and personal expenses per month will be $17,607 and $21,300 respectively, thus $38,907 in total. As a result, W says that her needs are at least $18,000,000 on a Duxbury calculation, although no Duxbury calculation by a SJE has been ordered.

34.  W says that K’s general and personal expenses per month are currently $17,607 and $40,000 (school fees and levy of $16,490 included) respectively, thus $59,607 in total. W also says that K will continue to study at D College until completion of Year 13 and depending on which university K attends, the estimated total education expenses may range from $1,304,440 to $2,744,440. W proposes K’s expenses be shared equally between H and W.

35.  W challenges H’s expenses to be excessive and not adequately supported by documentary evidence. W claims that H travels extensively and does not spend much time in Hong Kong. W says that H’s realistic and reasonable needs are $26,600 per month exclusive of maintenance payment, which is in line with the finding in the MPS Judgment. As a result, H’s needs are $7,000,000 on a Duxbury calculation.

Apportionment of matrimonial assets & K’s expenses

36.  W calculates K’s expenses as follows:

a.  D College

Year 10-13

$794,440

b.  J School in the US

School fees for 4 years

$1,950,000

c.  Living expenses

8 years until completion of tertiary education	$1,968,000
TOTAL	$4,712,440

37.  W proposes:

W’s Proposal 1

a.  Out of the matrimonial pool, $4,720,000 be set aside solely for K’s expenses and be contributed equally by the parties:

(i)  The sum be placed into a separate bank account used exclusively by W for K’s maintenance until she reaches the age of 18 or completes her first undergraduate degree, whichever is the later.

(ii)  In the event the sum is not exhausted, the parties either by agreement transfer the remaining balance to K when she completes full time education or share the remaining balance between the parties equally if no agreement is reached.

b.  Out of the remaining balance of the matrimonial pool after setting aside $4,720,000, W to receive 58% of the matrimonial pool on the basis of her higher needs and H’s material non-disclosure and litigation misconduct, for which:

(i)  W to transfer her 50% interest in the Cambodia Property to H, with all costs of transfer including any taxes involved borne by H.

(ii)  The parties to split the remaining credit balance in the parties’ joint bank accounts equally.

(iii)  W to transfer H a lump sum that makes up H’s 42% of the matrimonial pool as of 19 April 2023.

(iv)  W to retain the remaining assets in the matrimonial pool for her use.

c.  The parties to withdraw their respective Form As registered against the other’s properties located in Hong Kong.

d.  H to return all title deeds over the FMH, which are now in H’s possession, to W.

e.  Save and except the above, there be a clean break up between the parties.

W’s Proposal 2

If the sum of $4,720,000 is not agreed between the parties or ordered, W proposes:

a.  W to receive 58% of the matrimonial pool without having set aside any sum for K.

b.  W to transfer her interests in the Cambodia Property to H.

c.  The parties split the remaining credit balance in the parties’ joint bank accounts equally.

d.  W to transfer a lump sum to H to make up H’s 42% of the matrimonial pool.

e.  The parties share K’s school fees equally, and if agreement is not reach, H to pay $30,000 per month as K’s child maintenance until K completes an undergraduate degree, and the said sum to be adjusted annually according to HKCPI and K’s needs (education needs included).

f.  K’s child maintenance be secured with a charge against H’s solely owned properties:

(i)  Carpark at Caribbean Coast; and

(ii)  Carpark at Seaview Crescent.

38.  In order to come up with the lump sum payment for K’s expenses and H’s share of the matrimonial pool, W proposes:

a.  W to sell either the FMH or SC.

b.  Sale of SC to take place approximately within 6 months from the date of Judgment, depending on the prevailing market conditions.

c.  Sale of the FMH to take place after the 1-year fixed lease ends on 15 November 2023.

d.  W to make the lump sum payment within 3 months of the sale of the property or within 1 year from the date of Judgment.

Issues

39.  There is an agreed list of issues by the parties:

i.  What are the values of the parties’ assets and financial resources?

ii.  Should there be any sums added-back as alleged by W? If the answer is affirmative, what is the amount to be added back?

iii.  What are the parties’ respective earning capacities?

iv.  What are the needs of the parties and K?

v.  What should the ongoing financial provision for K be and how should the same be provided for in the view of the parties’ assets, financial resources, earning capacity and needs?

vi.  How should the parties’ assets be divided on a clean break basis? Are there good reasons for departing from equal division of the assets? If affirmative, how should such departure be reflected?

vii.  Has there been litigation misconduct? If affirmative, how will such misconduct impact upon the court’s assessment on item (vi) or otherwise?

The Matrimonial Pot and the Parties’ respective positions

Agreed items

40.  The following table represents schedule of landed properties owned by the parties and their respective positions on ownership and value (from SJE or by agreement).

1	Assets	Value	H’s Ownership	W’s Ownership
1	Flat C, CC Property	$7,130,000		100%
2	Flat D, CC Property	$8,370,000 *		100%
3	SC	$11,000,000 **		100%
4	Carpark at CC Property	$1,340,000	100%
5	Carpark at SC	$1,300,000 by	100%
6	Workshop C25 of WK Industrial Building	$1,970,000 by	100%
7	V Property Philippines (now sold)	PHP25,086,000	100%
8	Cambodia Property	USD90,396 (=$705,088)	50%	50%
9	Thailand Property	TBH2,580,000 (=$610,944) by	100%

* W took out mortgage of $2,000,000

**Outstanding mortgage of ~$1,500,000

41.  It is noted that the valuation of flats C & D of CC Property as a single unit is $13,700,000.

42.  W has $891,036 in her bank account, and H has $425,314, together they have $54,577 in their joint accounts.

43.  H’s life insurance is valued at $289,125, W does not have anylife insurance. As to pension, H’s is $2,323,495 whilst W’s is $208,760. H has shareholdings at $1,516,920.

44.  The parties agreed assets totalled $35,231,361.

Disputed Assets

Wife’s Case

A.  Sale proceeds from selling overseas properties

45.  W says that H sold part of the matrimonial assets, which were 7 overseas properties, prior to and during the current proceeding, without her knowledge; and the sale proceeds from those transactions should be added back to the matrimonial pot. The following table represents the said transactions with details of ownership, transaction date and selling price.

#	Assets	Ownership	Transaction date	Selling Price (HK$)
1	Unit 902, Japan	H’s sole name	14 Nov 2018	1,344,743
2	Unit 302, Japan	H’s sole name	16 Dec 2019	502,398
3	Australian Property	H and H’s brother jointly	18 Feb 2021	1,755,182
4	Unit 803, Japan	H’s sole name	28 Apr 2021	618,388
5	Bellagio Property	H’s sole name	5 Nov 2021	1,638,000
6	Unit 504, Japan	H’s sole name	24 Jan 2022	463,202
7	Verve Property	H’s sole name	3 May 2023	3,036,000*

* This is the HK$ equivalent of PHP22,000,000 which was the price at which H disposed of the property in May 2023. But W says this was at an undervalue and that the valuation of PHP 25,000,000 should be adopted.

46.  W says that H’s explanations as to the whereabouts of the sale proceeds have been evasive and inconsistent, taking an example, H’s explanation of using the sales proceeds of Unit 302 to reinvest in the Thailand Property is not reasonable, as the latter was purchased in October 2019 before the former was sold in December 2019. H generally says that these proceeds have been applied towards his living expenses, legal fees, and purchase of shares.

B.  Exchange Rate difference

47.  With regard to the sale proceeds of these overseas properties, W contests that H has applied the exchange rate as of 14 November 2022 to all the transactions instead of the prevailing exchange rate of the date of each transaction to the effect that H is able to lower the amount of sale proceeds. W alleges that H should be held accountable for the resulting discrepancy of $1,067,841. The following table represents the said transactions with the transaction date, net sale proceeds (“NSP”) in local currency, and the equivalent HK$ amount using W’s and H’s respective exchange rates.

#	Assets (transaction date)	NSP (local currency)	NSP (W’s exchange rate)	NSP (H’s exchange rate)
1	Unit 902, Japan (14 Nov 2018)	$66,495 + JPY18,525,330	$66,495 + $1,278,247	$66,495 + $1,028,155
2	Unit 302, Japan (16 Dec 2019)	JPY7,076,032	$502,398	$392,719
3	Australia Property (Feb 2021)	AUD291,558	$1,755,182	$1,506,745
4	Unit 803, Japan (28 Apr 2021)	JPY8,588,723	$618,388	$476,674
5	Bellagio Property (5 Nov 2021)	PHP10,920,000	$1,638,000	$1,452,360
6	Unit 504, Japan (24 Jan 2022)	JPY14,316,727	$510,334	$378,055
TOTAL			$6,369,046	$5,301,205
Difference				$1,067,841

48.  H disagrees with W’s allegations that during the marriage, he was always the person who managed the property investments to the effect that he did not need to seek W’s permission whenever he bought or sold the properties. H says that the sale proceeds were used to pay for family holidays, invest in shares, reinvest in properties and sustain his living including paying legal fees; any unused funds are now in his various bank accounts.

49.  H says that he adopted the exchange rate of 14 November 2022, as this date was close to the date when the Agreed List of Issues and Agreed Schedule of Joint Landed Properties were filed. H further says that W’s proposal to fix the value of sale proceeds at the exchange rate of the transaction date essentially ignores the fact that the proceeds were already “turned into cash”.

C.  Rental income

50.  W alleges that H at all times received and kept the rental income from the overseas properties. His disclosure with regard to these have been haphazard. Rental contracts were produced for some but not all the properties, pulling together what was produced and known to the W, a table was produced during trial and also subsequently attached to the closing submission, showing total rental income received from October 2019 – August 2023 of $1,712,190.

51.  H says that the rental income was used to finance his living, as he was a retiree with no other income.

D.  Valuation of V Property, Philippines

52.  W does not accept a previous valuation of PHP23,340,000, as she understands that the property value did increase during the relevant period of time. W says that H should be responsible for the discrepancy between the net selling price of PHP19,580,000 and the actual value at the material time which based on valuation is PHP25,000,000, which was approximately $490,000.

53.  H disagrees, he deems the sale price was the best offer at the time, which is in line with W’s expert evidence that there would be a bargaining allowance of 5% to 30% of the asking price.

E.  Cash withdrawals

54.  W says that H hid $400,000 cash in different currencies hidden in small cabinet under the worktable at the FMH; and H withdrew PHP2,200,000 from his Metrobank account, and spent it on his personal trips.

55.  H denies W’s allegation, and says W gave inconsistent descriptions as to the appearance of the said cabinet as well as the amount of cash during cross-examination. H says that he used the cash to pay for K’s expenses and family holidays. H points out that the W first says it was $400,000 in her affirmation of November 2022; then in a prior affirmation in 2019, says it was about $300,000. Photos were taken of the cash which appears in various currencies. H counterclaims that W took the cash upon her discovery, and when the cash was returned, the total amount came to be $245,000 by his tally.

56.  H says the PHP2,200,000 was spent on his overseas trip and diving. W says this was withdrawn in April 2022 and was not disclosed until May 2023. No disclosure was made prior to FDR in August 2022, H’s 10^th and 11^th affidavit on 10 August 2022 and 17 February 2023, and his updated Form E dated 19 May 2023. H on cross examination accepts that there are no receipts or proof of such spending.

F.  Shares

57.  H says that he has used the sale proceeds from various properties towards buying shares for investments, these largely appeared in the Dah Sing Bank (“DSB”) joint account, and subsequently H moved his investments to his sole account with Standard Chartered Bank (“SCB”). W produced a detailed breakdown of the share transactions, amount used to purchase, amount received on sale, and net profit. The breakdown covers the period from 16 October 2019 to 28 May 2021 for DSB and 5 November 2020 to 22 March 2023 for SCB, these were produced as Table 1 and Table 2 during the proceedings. It is H’s evidence that he sold his shares in DSB and transferred money to SCB and then repurchase shares therein. W submits that H started selling down his shares in his SCB account from September 2022 to March 2023, with a resultant net gain of $567,980.

58.  H denies that he withdrew money from their joint accounts to buy shares in his personal account to prevent dissipation of matrimonial assets by W. H agrees that the shares now held in his SCB account forms part of the matrimonial pot. As per H’s Form E dated 19 May 2023, the total value of all holdings was $1,516,920.

F.  Conclusion

59.  By W’s calculation, after deducting the expenses in connection with all the transactions above, the total of $5,939,366 unaccounted by H should be added back to the matrimonial pot.

60.  H disagrees with W’s calculation because W double counts the assets and ignores his expenses. He maintains that there is nothing to add back to the matrimonial pot.

H’s case

A. Sale proceeds from Nanning Property

61.  The property in Nanning in W’s sole name was sold in October 2022 for RMB 435,000.

62.  H says that W’s explanation of using the sale proceeds of RMB377,013 from selling Nanning Property to pay K’s expenses and legal fees is unreasonable as she already had a loan of $500,000 from her friend as well as her withdrawals of JPY1,230,000 and AUD14,700 from their OCBC joint account. H also says that W could not provide an explanation supported by documentary evidence as to the whereabouts of the sale proceeds.

63.  In W’s Reply submission, her counsel has shown transactions in her bank account and the receipt of funds from the Nanning Property. This came in three tranches of SGD19,994 on 12 January 2023, SGD31,994 on 9 February 2023, and SGD17,994 on 22 February 2023. This totals around $410,000 on conversion from SGD.

64.  W says that she was on unpaid leave since July 2022, and the rental income generated from the FMH was not enough to pay for her and K’s expenses and legal fees. In September 2022, she had only $100,000 in her bank account, and she could not pay off the upcoming legal fees as well as the legal fees owed to her previous solicitors which amounted to $418,000, without selling Nanning Property. She explained in her examination in chief and under cross examination that this went to 4 months of school fees for K at $74,000, payment for previous lawyers, and she spent the balance on living expenses.

65.  She says that her solicitors have duly informed H of this sale in October 2022.

B. Cash withdrawals

66.  H says W has withdrawn JPY 1,230,000 and AUD14,700 from their OCBC joint account in around October 2020; W says this is about $166,100, and by H’s calculation translates into $179,000.

67.  As to W’s withdrawal of JPY1,230,000, this was converted to SGD15,626 and can be traced to the joint account belonging to W and her mother. W says this is for a monthly sum of SGD1,000 for her mother, and that H is well aware of her payment to her mother during the marriage. This amount constitutes 16 months of payment from July 2019 when H stopped paying family expenses to October 2020 when this withdrawal was made. H says that W’s explanation of paying maintenance to her mother is not supported by any documentary evidence. H also says when confronted, W did not mention to him that she is paying maintenance to her mother, and her answers given during cross-examination was evasive.

68.  As to W’s withdrawal of AUD14,700, she says this is approximately $80,000 of which $70,000 went to her bank account with Standard Chartered, and she kept $10,000 as cash. Of the $70,000, she used $55,062 as school fees for K. H says that W’s explanation of paying K’s school fees was unreasonable because W at that time still received income of $30,000 and already took out a mortgage of $2,000,000 against the FMH.

69.  W says that H stopped payment of all household expenses and K’s expenses, which amounted to $40,000 to $50,000 a month. H contributed only $10,000 a month since December 2019 while pocketing half of the rent, that is $17,500, generated from the FMH. She therefore had to withdraw money from the joint bank accounts, knowing that this is the account which has paid for the family expenses.

70.  In response to H’s contention that his financial position was exacerbated after the W’s withdrawal, and was forced to sell the Australian property; W’s counsel points out the balances of the parties joint account before and after the said withdrawals which shows that the account was funded, and refutes in saying that H was not forced to sell the Australian property but chose to do so.

71.  W also says that H’s raised queries on the Singapore account which she disclosed in late December 2021 and January 2022, no question was raised after production of documents until this hearing.

C. Loan to B

72.  W lent $170,000 to B when she was dating him.

73.  W says that B has already repaid the whole sum to her by end of 2014, but under cross examination acknowledged that she was still receiving repayment in 2015.

74.  H says there was no proof showing that Billy had repaid the loan in full, and invites the court to add back $170,000 to the matrimonial pot.

D. Joint account of W and her mother

75.  H says W treated the balance of $66,704 in the said joint bank account as hers entirely, as reflected in W’s Form E.

76.  W says that her mother is the actual owner of the bank account, and adding her name onto the account is only to allow W to assist her mother in managing it in case unfortunate events happen to her mother. W further says that she has no knowledge of how her mother uses the money in the bank account.

E. Mortgage against the FMH

77.  W took out a mortgage on the FMH in August 2019 for $2,000,000.

78.  H says that W’s action caused an extra liability to be incurred, which essentially means she has dissipated $2,000,000 worth of matrimonial assets, especially when it was unnecessary to do so.

79.  W says that H stopped all financial contributions towards K and herself in around July 2019, she therefore had to rent out the FMH to generate income to support her and K’s living expenses. She then took out a mortgage against Flat D of the CC Property in August 2019 to pay for the renovation of SC before moving in as it had been rented out for many years without a proper renovation. She says that at the material time, H did not move out of the FMH as agreed, had locked her out of their study, and repeatedly lost his temper at K; it was important that she left the FMH to get out of the situation. Out of the $2,000,000 mortgage, $1,100,000 was for renovation, and the balance was for her and K’s living expenses as well as legal fees.

80.  At the hearing, W gave explanation on the spending on renovation and legal fees, in H’s closing submission, this was not further challenged. However, H insisted that W has borrowed more than she needed, and that it was unnecessary to do so at that time, and asks for this $2,000,000 to be added back.

F. Conclusion

81.  The Court is invited to add back JPY1,230,000, AUD14,700, the mortgage of $2,000,000, the loan of $170,000 to B, and 50% of the balance of joint account of W and her mother to the matrimonial pot.

82.  W disagrees with H’s suggested addbacks.

The Applicable Law & Legal Principles

83.  Section 7 of the Matrimonial Proceedings and Property Ordinance (“MPPO”), Cap 192 sets out the matters that the court must have regard to when making orders for ancillary relief:

“(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.”

84.  The Court of Final Appeal in its landmark judgment of LKW v DD [2010] 13 HKCFAR 537 has laid down a 5-step approach in assessing the division of the parties’ matrimonial assets:

1.  The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing (§§71 to 73);

2.  The assessment of the parties’ financial needs. If the total resources are not enough to meet the parties’ needs, the s.7 exercise should stop at this step and there is no room to apply any sharing principle (§§74 to 79);

3.  If surplus assets would remain after the parties’ needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division as part of that principle. This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division (§§80 to 82);

4.  In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of s.7 and the implicit objective of a fair distribution of the assets. Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations (§§ 83 to 130); and

5.  The weight to be given to each of the factors is a matter of discretion for the court (§131).

85.  Which are to be considered against 4 guiding principles, namely:

(i)  objective of fairness,

(ii)  rejection of sex or role discrimination,

(iii)  yardstick of equal division, and

(iv)  rejection of minute retrospective investigation.

86.  I shall come to some other relevant legal principles when I discuss various issues below.

Credibility of Witnesses

87.  I would like to start briefly with my observation of the respective parties’ demeanour at the hearing.

88.  W’s suggests to me that the H displayed “hallmark characteristics of a witness lacking in credibility” and quoted the case of Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513 at §53 which provides the guidance in this regard. In brief, one needs to consider if the party’s case is inherently plausible or implausible; whether the party’s case is contradicted by evidence, whether a witness has been discredited over one or more matters to which he has given evidence, and his demeanour.

89.  I accept W’s submission that H has given false evidence on oath, as under cross examination, I find that he has not been telling the truth; in particular when he says he has retired and no longer earning an income. H has also admitted that he has not reported his income to the tax authorities. I also find the way in which he was giving oral evidence to be vague and evasive.

90.  As for the W, I am not of the view that her credibility is challenged. Admittedly, while there was occasional lack of clarity in her answers, I do not find that she has been lying, nor do I find that her case has been contradicted by evidence in any substantial way.

91.  Against this observations of mine, I shall proceed to apply the legal principles to this case.

STEP 1: Identifying the Matrimonial Assets

92.  Under this heading, the Court is to consider the financial resources of the parties, with reference to s.7(1)(a) of the MPPO.

Matrimonial Pot

93.  According to the agreed joint asset and liabilities schedule dated 19 April 2023, the agreed net value of the matrimonial pot is $35,231,361.44. I will deal with the various disputed assets below.

H’s failure to account

94.  W has produced a detailed table at trial (Table 3) and Tab C of her closing submission, which is a tally of her calculation of the proceeds of sale of overseas properties, rental income, net profit from sale of shares, cash at home and deduct therefrom the H’s allegation of how these have been spent, including his living expenses (not known as never provided), payment of legal fees, purchase of shares, and reinvestment into other properties to arrive at her proposed add-back amount of $5,939,366.

95.  From Tab C of W’s closing submission, in Hong Kong dollars using W’s currency conversion approach:

Unaccounted items	Date of disposition	Amount (HK$)	Where spent per H’s case
Unit 902	14.11.2018	1,344,743,47	Purchase Thai property 735,434 and shares (unknown)
Unit 302	16.12.2019	502,398.27
Unit 504	24.1.2022	463,202.88	Purchase shares in DSB and SCB $ 299,361.21*, legal fees (see below), living expenses (unknown), Cost Order 29.10.2021 $250,500
Bellagio	13.11.2021	1,638,000
Unit 803	28.4.2021	618,388.06
Australian property (50%)	18.2.2021	877,591.05	H says remaining sale proceeds in WL Bank 130,169.48
Verve		2,780,360	Used to pay legal fees of 527,600
Rental Income	Oct 2019 – Apr 2023	1,633,790
	May 2023 – Aug 2023	78,400
Net gain from sale of shares		567,980.09
Hidden cash in cabinet		400,000	Payment of various amount total 46,812
Subtotal		8,914,972.13
NET
Saving in bank from joint schedule			452,619
Costs Order 21.2.2022			250,000
Legal Fees paid			1,531,912
Legal Fees to be paid			741,075
BALANCE			5,939,366

*Per calculation by W of H’s shares transaction, $ 299,361.21 is the amount H needs from his own account to top up for his share purchases.

96.  I am of the view that W has presented a plausible calculation of these unaccounted-for sums, having taken into account what she could pull together in terms of H’s claim on how these monies have been spend, and with analysis of the transactions in question.

97.  I will add here that I do not intend to dive into analysing the share transactions summary prepared by W, suffice to say H has been using money in his hand to engage in share transactions and the value would invariably and indisputably be part of the matrimonial pot. I also acknowledge there is dispute on how much was actually in the “hidden” cabinet on the parties’ respective case but I will not make a finding on the actual amount. That said, and on this issue, I do accept that there are substantial amount which was not explained by H when given opportunities to do so.

Broad-brush assessment of the H’s living expenses during this period

98.  W has not taken into account the living expenses that H alleges to have come out of these sums. She is correct that H never produces any breakdown of how much he is spending. Clearly, I am unable to assess how much his needs were over the period of time when all the amounts were allegedly received by him and unaccounted for. The best reference I can have in this regard is from the MPS Judgment on 19 April 2021 which assessed the H’s expenses at $26,600. I notice that from H’s reply submission when he says that W has failed to accurately reflect the reality and ignored some of the H’s evidence in her Table C, he himself utilize the number from the MPS Judgment. I will adopt the same. The estimated living expenses is therefore $26,600 x 57 months = $1,516,200. I have adopted the start date of November 2018 as that was when he first disposed of his overseas properties which are under dispute, and calculated up to July 2023.

99.  Assuming he has been paying the MPS ordered at $17,500, he would have paid from April 2021 and calculated to time of hearing in July 2023, that would tally $17,500 x 28 months = $490,000.

100.  The estimated amount of living expense and payment of MPS is therefore $2,006,200. Pitching this against the amount of $5,939,366, this still leave around $3,900,000 unaccounted for.

101.  In asking to add back the amount of $5,939,366, W says Tab C does not represent other amounts that were also unaccounted for. W also seeks to add the amount of above-mentioned PHP2,200,000 which H withdrew from his Metrobank account in April 2022 and which he claims to have spent on trips but acknowledged he has no supporting documentation. This equates to $330,000, which means over a course of 16 months he spent $20,625 per month on trips which must be an exaggeration, or just unreasonably excessive.

102.  She also disagrees with H on the amount at which he sold the Philippine property, she said it was sold at an undervalue by PHP3,086,000, which is $438,212. On this issue I accept H’s argument that this there could be fluctuation in an eventual sale price which is lower than the valuation, this is always subject to market condition, and I do not intend to take this discrepancy into account.

H’s allegations

Mortgage loan of $2M August 2019, Cash withdrawal of JPY1,230,000 and AUD 14,700 October 2022 and Sale of Nanning Property October 2022

103.  These are monies taken out by W and by her case, this was required for her living expenses, K’s school fees, a one-off renovation costs for SC, and payment to her mother. I shall deal with W’s expenses below.

Loan to B

104.  W says she was involved in a relationship with B during the marriage and but brought to an end to appease the H. She says that the loan was indeed repaid, not in 2014 as originally claimed but in 2015.

105.  I accept W’s argument that this loan of $170,000 8 years ago is not of an amount and of a time frame which needs to be featured in these proceedings.

W’s joint account with her Mother

106.  The amount in this account from the W’s first Form E was $66,704, where she stated that this account is in the name of her mother; in her updated Form E, the amount is $18,751 wherein W explained that this account belongs solely to her mother. Looking at the agreed schedule of assets, the value placed on this account is $2,848.28, which is 50% of SGD1,012 converted into HK$ of $5,696.55. H also alleges that money has left this account before this value was adopted for the schedule.

107.  Not much was covered in cross examination on this topic except for questions surrounding W’s delivery of passbook account information. On the basis of the amount in question, and the lack of challenge to the ownership of the account at trial, I shall not be taking this issue into consideration.

W’s need for living expenses

108.  From the evidence, W was without any meaningful financial support from the H from at least July 2019 until the MPS decision in April 2021. She was on unpaid leave since July 2022. She ended up needing to mortgage the FMH, borrow money from friend, withdraw money from joint account, and sell the Nanning property to supplement her cash flow for expenses. Looking to these numbers, these constitute:

		$	W’s claim of how spent
August 2019	Mortgage of FMH	2,000,000	1,100,000 went to renovation of SC Balance for living expenses
October 2022	JPY 1,230,000	W’s case:166,100 H’s case: 179,000	Converted to SGD15,626 for W’s mother
	AUD14,700		K school fees and living expenses
October 2022	Sale of Nanning Property	414,714	K school fees Legal fees
TOTAL		2,593,714 Using H’s higher conversion rate for the two October 2022 withdrawal

109.  Looking at W’s case, after netting $1,100,000 for renovation from $2,593,714, the balance is $1,493,714. I cannot see how much legal fees W has to pay during this period, but she did say she had to pay off her previous lawyers and the Form H for trial shows she has paid legal costs of $2,144,662 up to time of trial with around $800,000 outstanding; she has also repaid her friend for the $500,000 loan to her. I also take into account the MPS Judgment which assessed the M and K’s needs to be $74,000 per month (and even with the MPS Order of $17,500 only from April 2021, this brings it down to $56,500), W decreasing income over this period and that she receives rental income from the FMH.

110.  In the whole scheme of things and on a broad-brush bases, I accept W’s case in her need to seek further funds to support herself and pay for K, and accordingly will not be adjusting the matrimonial pot in accordance with H’s submission.

Interest Rates

111.  As various transactions in this case span over a period of time when properties were disposed and there had been currency fluctuation, W has adopted the exchange rate at time of transaction, whereas H has used the date of 14 November 2022. This latter date does not have much bearing on the time line, H says it was closed to the date when the Agreed list of issues and Schedule of joint land properties were filed, this was just before the first PTR on 18 November 2022.

112.  H argues in the reply submission that by that time (November 2022), the sale proceeds had been converted into cash, and as such “it is only reasonable that the value of the cash should be recorded in exchange of the relevant foreign currency on the date of recording them for the two documents mentioned above”.

113.  W says that as JPY, AUD and PHP has depreciated in the interim, this has resulted in a discrepancy of $1,067,841. (See paraph 47 above)

114.  In my view, H’s case is that he has used the various sale proceeds for various purposes, mostly for expenses in Hong Kong, so they must have been converted over the course of the period; H never gave evidence as to when these currency conversion took place, and W were not able to track the fund flow. I am not of the view that H should just pick a date to determine these foreign currencies in HK$ equivalent, especially when it has not been agreed and resulted in around $1 million difference, of which W is rightly taking issue. For a fair approach for this case, I accept the W’s position that the exchange rate should be taken as of the date of sale as a uniform approach to determine the amount received from the disposed properties.

Parties’ Earning Capacity

H’s case on income and earning capacity

115.  According to H’s Form E dated 19 May 2023, he has retired since June 2016. His counsel repeats this in his opening submission. He also says he receives no monthly salary in his Form E of May 2023, and relies on the net rental income of $19,600 generated from his properties. In his counsel’s closing submission, the H position is that he has “scaled down the business in 2016” and “the year he officially retired was 2019”.

W’s case on H’s income and earning capacity

116.  W disagrees that H is retired, as she alleges that despite EW ceased to operate back in August 2016, H still continued to pursue business with an intention to transact and earn a profit until at least 2019.

117.  W also disagrees with H’s explanation that another company of his (“AET”) was only for APEC travel card and not for business, as there were funds in and out from AET’s bank account before its dissolution on 30 June 2021. W therefore asserts that AET continued its operation until July 2021.

118.  W further says that H used to co-own another company (“E”) with his friend (“M”) with whom H still have business dealings after de-registration of E on 13 March 2014.

119.  W points out that despite his initial denial, H was in fact a founder and shareholder (49%) of another company (“AKC”) co-owned with M. W also points out that although H claimed not to have any business registered in Singapore, he has indeed registered 3 companies there.

W’s case on her income and earning capacity

120.  According to W’s Form E dated 19 May 2023, she has retired since January 2023. She receives no monthly salary. She relies on the rental income of $36,000 generated from her properties.

121.  Before retirement, W earned $52,000 per month at the height of her career as a flight attendant with Y. However, W says that her monthly salary was reduced to $22,050 from January 2021 because of COVID. W further asserts that her career prospects and employability as a flight attendant at her age are extremely limited, and it would be unrealistic to suggest that W could make $52,000 per month if she rejoined the airline industry.

H’s case on W’s income and earning capacity

122.  H says W retiring at the age of 51 before the official retirement age of 55, was for litigation purpose, because W could not offer any satisfactory explanation for her decision to retire a couple of months after Hong Kong re-opened the boarders and the aviation industry continued to pick up.

Discussion

123.  I am of the view that H’s case that he has retired in 2016 was successfully challenged under cross examination. The evidence that we see is that he appears to continue engaging in transactions that brings income to him after 2016. I am also of the view that his age at 62, with no apparent declared ailment, is not an impediment to him in continuing with his business in trading of aviation parts, and conclude that this is something he is able to continue to do, at least on a selective part-time basis to supplement his income. The lack of sufficient information in this regard has made it impossible for me to put a number to his income.

124.  As to the other source of H’s income, which he declared in this Form E to be rental income of $19,600, comes from the Cambodia property, two carpark spaces, his workshop in Hong Kong, as well as his Bangkok property.

125.  As for W, I am unable to accept that she has no earning capacity at age 51. I am conscious that she has been a flight attendant for a number of years, and her last income was approximately $22,000. While I am not able to assess whether she can return to the airline industry in any form or role, she should be able to utilize her experience in the service / hospitality industry to find some work. Acknowledging that this may mean a career change at her age, I do not expect her income to be substantial, but it should not be less than her last salary. This will be taken into account at the final assessment of these proceedings.

STEP 2: Assessing the parties’ needs

H’s case on his needs

126.  According to the Updated Form E, H estimates that his general and personal expenses on a monthly basis to be $31,940 and $47,350 (including MPS of $17,500) respectively. H says that K’s expenses are mostly covered by his monthly payment of $17,500 to W pursuant to the MPS Order. He further provides $1,000 per month for K’s entertainment and holidays. His totals are therefore $80,290.

127.  Breakdown as follows:

General Expenses
Hotel Rental	29,040
Food	2,000
Household	900
Subtotal	31,940
Personal Expenses
Meals out	10,000
Transport	1,200
Clothing and Shoes	1,000
Personal grooming	1,300
Entertainment / presents	1,000
Holiday	8,000
Medical dental	700
Insurance	3,200
IM	17,500
Supp / gym	1,500
Thai boxing	1,500
Mobile plan (H & K)	450
Subtotal	47,350
Child
Entertainment / presents	1,000
Subtotal	1,000
TOTAL	80,290

128.  H maintains that he has been staying in a hotel room for 3 years and he would like to have a home in Hong Kong, and if possible, moving into the FMH after the current proceeding, as reflected in H’s Proposal 2, or acquiring another place on the Kowloon side.

W’s case on H’s needs

129.  W challenges H’s expenses, in particular those related to holidays and travel, for being excessive and not supported by evidence.

130.  W further challenges H’s needs as to accommodation, as H has been spending substantial time in Thailand since 2019 and the Thailand Property has never been rented out since purchased in 2019. On this W produced an investigation report with her 9^th Affirmation showing H’s entry and exit from May 2019 to August 2022 into and out of Bangkok. On a quick perusal of the report, H was in Thailand every month from May to December in 2019; in 2020 he flew in and out of Thailand in the first quarter and then stayed from March to September; in 2021 he was briefly in Thailand between 2 August to 22 September; and his regular travel resumes in February 2022 taking him to Thailand every month until the end of the report time in August 2022. This is during covid. W says that he spent 48% of the time over that period in Thailand. To that end, W alleges that H was not paying any rent as claimed and he does not treat Hong Kong as his place of primary residence. W proposes $26,000 per month for H’s expenses, which is in line with the MPS decision.

W’s case on her needs

131.  According to the said Form E, W estimates that her general and personal expenses on a monthly basis to be $47,830 and $21,300 respectively. The total is $69,130. As mentioned above, W has in her open proposal states that if the FMH is to be sold, she will have less expenses as she does not need to pay for CC Property’s mortgage ($8,176) and management fees ($4,460) but she will also loose the income therefrom.

132.  The following comes from her updated Form E

General Expenses
Mortgage	16,176
Utilities	5,500
Management Fees	6,670
Food	8,000
Household	5,000
Insurance	300
Domestic helper	5,300
Miscellaneous	884
Subtotal	47,830
Personal Expenses
Meals out	3,000
Transport	1,000
Clothing and Shoes	2,000
Personal grooming	3,000
Entertainment / presents	1,500
Holiday	3,500
Medical dental	1,000
Tax on property income	2,500
Yoga	800
Contribution to mother	1,500
Acupuncture / massage	1,500
Subtotal	21,300
TOTAL	69,130

H’s case on W’s needs

133.  H does not challenge W’s expenses. There is nothing mentioned in H’s opening, closing and reply about W’s needs, W’s case therefore is that her numbers are not challenged.

Discussion

134.  To start with, I need to recap that HHJ KK Pang has assessed H needs at $26,600 in April 2021.

135.  From H’s numbers, I would remove his rental expense. There is of course a need for accommodation, in the long run, he may need to acquire a property as he plans. Looking back at his previous rental figures, his 2021 MPS application says $10,800, his November 2022 narrative affidavit says $21,000 and his Updated Form E now says $29,040. So, this item of expense has increased three-fold over 2 years. Not much has been addressed on the H’s accommodation needs at trial, nor did H respond to W’s contention that he has a property in Bangkok which was never rented out since purchase in 2019, and which he can use as she says Hong Kong is not his primary residence. I take note that he has never tried to reinvest in a property in Hong Kong after the parties’ separation despite his selling and buying overseas. He has continuously lived in hotels over the duration of the divorce proceedings which suggest to me that there is little intention to find a place of some permanence, he has not even rent a property as his base in Hong Kong, this points to me that he may well be leading a peripatetic life as suggested by W. If he has aspired to have one property in Hong Kong to each of the party, it should have been considered in the light of realistic economics of the situation. I acknowledge that there is a residence available to him in Thailand; I find his hotel rental needs to be exaggerated and if he is in HK, this expense can be pared down. Even if he wants to purchase his own accommodation, he should not be needing a huge apartment and could be properly budgeted.

136.  On his personal expenses, I first draw reference to the MPS decision which finds that his personal expense to be $26,600 – $9,900 (rental at that time as found by HHJ KK Pang) = $16,700. I also make reference to what he says in his Form E that he has been relying on his rental income of $19,600 for his living expenses as he is retired.

137.  I also find his meals out of home and holiday expenses excessive. I adopt the number of $6,000 for meals and place his holiday expenses on the same level as W and K at $3,500. I will also adopt $5,000 for transport, clothings and shoes, personal grooming, entertainment, presents gym and supplements. His insurance shows a marked increase from his MPS number of $700 to $3200 per month with no support. The only insurance document he produced for his Updated Form E pertains to surrender value of his AIA life policy, so $3,200 is not accepted and I will use $800 for his insurance. He has a mobile plan for himself and K at $450, and says he gives $1000 per month for K.

138.  I calculate his personal expenses as $6000 + $5000 + $3500 + $700 + $800 + $450 = $16,450.

139.  Looking at the matrimonial pot, I am of the view that he can be covered in terms of the accommodation needs, should he be purchasing a small apartment, renting short term or staying in hotels when he is here. I have assessed that he still has earning capacity and his business does not require him to be stationed in Hong Kong as he appears to be conducting this via correspondences. His personal needs are not excessive, he can still have income from his various properties, and if he uses the Bangkok property himself, will bring his rental income down to $18,000 per month, this is more than adequate to cover his own personal expenses.

140.  W says in her open proposal that without the FMH expenses, her general expense will go down to $17,607 per month. In my view this number does not add up. I will conduct my own calculation as follows: I will deduct mortgage and management fees of the FMH of $8,176 and $4,460. I will also reduce her utilities to $3,500, and food and household expense to a total of $8000. This will bring her General expenses to $8,000 (mortgage for SC) + $3500 + $2,210 + $8,000 + $300 + $5,300 + $884 = $28,194, I will round this up to $30,000 as the W’s general expenses. On this number, M should be responsible for herself and ½ share for K, which brings this to $22,500 and H should be responsible for $7,500 for K.

141.  My observation on this post divorce expenses is that when W has liquidity in her hands, she should consider paying off the SC’s mortgage of around $1.5 million which can reduce her monthly expenses by a further $8,000.

142.  As for her personal expense, I am of the view that her personal grooming can be reduced from $3,500 to $1,500, the tax on property rental income should also go away when FMH is sold, so this will reduce her personal expenses further by $2,500. Removing $4,500 from her personal expenses will bring her number to $16,800, which is more or less the H’s personal expense as well.

143.  M’s monthly needs is therefore $22,500 + $16,800 = $39,300. Taking into account her earning capacity which I assessed to be no less than her last salary at $22,000, she still needs $17,300 per month which must come from the capital, or she has to find a job with a higher income.

144.  In the W’s scenario, she will have a roof over her head for herself and K. There will also be a need to contribute to K’s expenses at least for another 8 years.

K’s Needs

145.  As to general expenses, and base on the above calculation, K’s general expenses needs should be ½ of M’s, which is $15,000. As for personal expenses, W provides estimates with a rising trajectory whereas H does not provide any, except $1,000 for entertainment and holidays, as he maintains that all other items are being paid for with his contribution of $17,500 W. W expects that the school fees will increase year on year, which is not an unrealistic conjecture.

146.  H says that the figures given by W were inflated. He relies the MPS Judgment that K’s needs to be in the region of $24,000 per month. In his opening submission, he says K’s expenses should be $28,000. H’s closing submission recognises some minor adjustments in terms of uniforms, and ECAs, but he still maintains that his $17,500 for K is a reasonable proposal.

147.  The following table represents the parties’ proposals of K’s needs:

	W’s Per Form E 21 August 2020	W’s Per Form E 19 May 2023	H’s estimates
School fees	11,435	18,523	H relies on HHJ Pang’s finding of $24,000
Tuition	N/A	1,980
School books and stationery	500	1,000
Transport to school	600	700
Medical / dental	By W’s employer	1,000
ECA	6,620	6,880
Entertainment/ presents	1,300	1,600
Holidays	2,000	3,500
Clothing/shoes	1,200	1,500
Lunches /pocket money	1,000	1,500
Other transport	800	500
Uniform	200	300
School trips	N/A	1,000
Others	1,800	1,500
Total	27,455	41,483	24,000

148.  Looking at W’s latest proposal on K’s expenses, my observation is that entertainment and holidays and “Others” which is listed as “Supplements, skin care products, toiletries, personal hygiene items” in the Form E look a bit on the high side, but I do not intend to shave this number down substantially. Looking at this overall, the total number needs to take into account increase in school fees in the coming years, and children expenses will always increase with age. I will round down this number to $40,000.

149.  I therefore estimate K’s expenses to be $55,000 ($15,000 + $40,000), each parent is to contribute $27,500 towards K’s expenses on a monthly basis.

150.  It is noted that W has serious concerns about H’s ongoing payment of K’s expenses for H has at various times objected to paying K’s maintenance. W alleges that H stopped contributing to the household and K’s expenses for a period from July 2019. To that end, W invites the Court to order a lump sum payment, as she believes that would best secure K’s welfare in the future.

151.  I do not have information before me as to how my assessment of K’s needs at $55,000 can be translated to a lump sum. In any event, I am not minded at this juncture to make an Order for a lump sum payment for a child.

STEP 3: Deciding whether to apply the Sharing Principle

152.  I have come to the conclusion that the parties’ needs can be satisfied by the matrimonial pot, taking into account the capital they will retain or receive, their respective earning capacity, and the need to contribute to K’s expenses for the upcoming approximate 8 years.

153.  This is a marriage of 23 years, it is my view that there should be a clean break between the parties, which is in line with the parties’ proposals. The starting point on this assessment is that the parties will have a 50-50 share of the matrimonial pot.

STEP 4: Reasons for Departure from the Sharing Principle

154.  On this penultimate step of ancillary relief analysis, I shall address H’s conduct and the extent to and principles under which it is to be taken into regard. To recap, W has asked for an adjustment of the 50-50 sharing due to the H’s conduct with W getting 58% of the pot; and H’s submission is that it should be a 50-50 sharing.

Failure to Account

155.  It was submitted that H’s conduct in his failure to account amounts to financial misconduct, and that it constitutes wanton dissipation of family assets which could only be remedied by add-back principles.

156.  H has argued that he was the person in charge of family investment and handling of rental income, W says in oral evidence that that was true “before things turn bad”. I am of the view that H cannot rely on his previous role in the marriage with regard to management of family finances to say that H does not have a duty to properly account during and for the purpose of the divorce proceedings.

157.  H argues that this is not wanton dissipation, and that he has accounted for the funds.

158.  Referring to my analysis above, I find that the way in which H gave sweeping statements on how these proceeds were dealt with was unhelpful as there was no proper accounting or tracking of these funds when it is clear that this is an important issue for these ancillary relief proceedings. When one looks at the parties’ respective submissions, I find that despite the ambiguity of the evidence provided by H, W was able to piece together and analyse what they have at hand to show the extent of unaccounted funds, having only the information from his less than satisfactory account of the way he deployed those funds. On the H’s closing submission, despite this very live issue pervading through the hearing, I am still not assisted as to any breakdown on his spending on living expenses, his unsupported allegation of spending on travel, or how much was spent on legal expenses (except from the Form Hs). I have no reservation in accepting W’s case that H has failed to account for a good part of the matrimonial assets.

159.  I turn to the recent Court of Appeal decision in LCC v LTLA CACV 281/2022 [2024] HKCA 406 on 30 April 2024 in which Madam Justice B Chu devoted a section of her judgment to go through the jurisprudence on Add - back principles starting from §27. The guidance has aways been to exercise caution when invoking this principle. In quoting from the case of MAP v MAP (Financial Remedies : Add-back) [2015] EWHC 627 (Fam), she said at paragraph 41:

“41.Moor J pointed out again that the argument in the area of “add-back” is essentially an issue of conduct, namely “conduct that it would be in the opinion of the court be inequitable to disregard”, and for such conduct to bite it has to be “gross and obvious”, and that for the court to add back assets that have been spent, the court has to be satisfied that there has been “wanton dissipation of assets”.”

160.  I also find the following excerpts of the Judgment to be helpful, namely §§47 - 48 and 61:

48. In a recent case in July 2023, Tsvetkov and Khayrova [2023] EWFC130, Peel J reiterated the 4 situations identified by Mostyn J in OG v AG where conduct is relevant and he then set out a two stage approach for a party asserting conduct in paragraphs 43 and 44 of his judgment (“Two Stage Approach”). Peel J also set out in paragraph 46 the procedure which should normally be followed when there are, or may be, conduct issues. In particular, conduct being a specific [section 7] factor must always be pleaded as such and that usually, if relied upon, the conduct allegations should be clearly set out in the relevant box in a party’s Form E.

49. We find the Two Stage Approach helpful in cases where conduct is an issue in ancillary relief claims and we set out the Two Stage Approach (slightly modified) as follows -

Stage (1)

A party asserting conduct must prove:

(i) the facts relied upon; and if established,

(ii) those facts meet the conduct threshold, which has consistently been set at a high or exceptional level; and

(iii) that there is an identifiable (even if not always easily measurable) negative financial impact upon the parties which has been generated by the alleged wrongdoing. A causative link between act/omission and financial loss is required. Sometimes the loss can be precisely quantified, sometimes it may require a broader evaluation, but it is doubtful that the quantification of loss can or should range beyond the financial consequences caused by the pleaded grounds.

Stage (2)

If Stage (1) is established, the court will go on to consider how the misconduct, and its financial consequences, should impact upon the outcome of the financial remedies proceedings, undertaking the MPPO section 7 exercise which requires balancing all the relevant factors.

….

61. To summarise, following GS v L, the line of “add-back” cases in England has consistently set the threshold for the conduct for the court to have regard to for the section 7 exercise at a high or exceptional level, namely so gross and obvious that it is inequitable for the court to disregard it. In cases where one spouse alleges the other spouse of misconduct of over-spending, there must be clear evidence of dissipation in which there is a wanton element. In considering whether there has been wanton dissipation, the court has taken into account matters including (i) the extent, timing and nature of the alleged wanton dissipation; (ii) the general assessment of the overspending party; (iii) the motivation for the overspending such as whether the overspending was with the intention to reduce the other spouse’s financial claims, and/or whether it was bona fide; and (iv) the negative financial impact upon the parties. Upon the misconduct being established, the court will then consider how the misconduct and its financial consequences should impact upon the outcome of the financial award having regard to all the relevant section 7 factors. “Add-back” is ordered in very limited circumstances even though it is recognized as an option, and the courts in England appear to be moving away from this option, with at least one judge pointing out that this technique does not re-create any actual money and is a process of penalisation. What is clear is that, there has been a constant reminder that the add-back has to be conducted very cautiously. No matter which route one pursues, the ultimate goal is to achieve fairness.

161.  In the line of cases quoted by Madam Justice Chu, dissipation took the form of overspending or frittering of family assets, gambling, gifting away, and in one case, spending on drugs alcohol and prostitute. Not all the cases ended in funds being added back to the matrimonial pot.

162.  I acknowledge that the case law does not say that failure to account equates dissipation, as dissipation would mean that family assets have been spent. The word wanton also carries with it an element of intention in the act of dissipating but this aspect of the jurisdiction was left in some ambiguity (see paragraph 44 and 50 of the LCC v LTLK above). It is trite that to allow add - back of amount under the line of jurisprudence requires a high bar. I find that in this case, the unaccounted-for money is not wanton dissipation, as it is not clear to me, nor is it the W’s case, that the money has been spent. But it is a factor that must be taken into account, and it is a consequence of the H’s failure to provide satisfactory account of how these monies had been deployed, which resulted in an apparent reduction in the agreed matrimonial pot before the court.

163.  It was submitted by W’s counsel that while litigation conduct on the part of one party can be remedied by a cost order generally, the depletion of matrimonial assets through litigation misconduct cannot be remedied by an order for costs as the Order only allocated remaining assets and fail to take into account the lesser wealth on the table as a result of a defaulting party’s conduct.

164.  This issue will be read further with the issue of disclosure elaborated below.

H’s non disclosure

165.  W has taken issue with various non-disclosure on H’s part which needs to be taken into account.

Non-disclosure regarding overseas properties

166.  This is the same area of concern in terms of failure to account by H, but the following information deals with how the H dealt with the provision of information with regard to these properties.

167.  W alleges that despite her concerns as to the disposition of assets from the outset, H did not address many of them properly, even after W’s specific discovery application. The following table represents the alleged misconduct by H.

#	Assets	Alleged misconduct
1	Unit 902, Japan Sold 14 Nov 2018	-H refused to provide S&P agreement or account for proceeds when asked by W 1st Questionnaire (October 2020) -Complete documents only produced in H’s 2nd answer (July 2021) -H made reference to the sale proceeds together with that of Unit 302 in his 9th Affidavit in response to W’s specific discovery application (Dec 2021)
2	Unit 302, Japan Sold 16 Dec 2019	-H claims that he first disclosed by Whatsapp in January 2020 and only produced a completion statement -H refused to provide documents in his answer to W’s 1st Questionnaire (October 2020) -H provided contract of sale and breakdown only in his 9th Affidavit (December 2021) in response to W’s specific discovery application
3	Australian Property Sold 18 Feb 2021	-H failed to provide disclosure when asked by W in March 2021, and he made no disclosure before the FDR in August 2022. -H only accounted for sale proceeds in his 10th Affidavit (November 2022)
4	Unit 803, Japan Sold 28 Apr 2021	-H says he disclosed the sale of property in a letter of instructions to SJE -H 2nd Answer on July 2021 did not disclose the sale -H provided sale documents and account for sale proceeds in 10th Affidavit (November 2022)
5	Bellagio Property Sold 5 Nov 2021	-H provided sale documents and account for sale proceeds only in his 10th Affidavit (November 2022)
6	Unit 504, Japan Sold 24 Jan 2022	-H provided sale documents and account for sale proceeds in 10th Affidavit (November 2022)

168.  As a starting point, I think it is important to consider the time lapse between the sale of the properties until the provision of documents by H.

169.  The following are some of the comments from the W regarding the disclosure made by H with regard to these properties:

a.  H lumped together sale proceeds of Unit 902 and Unit 302 and said it is used for purchase of Thai property which could not be as Unit 302 was sold only after Thai property was purchased.

b.  H says proceeds of Unit 902 was deposited into an OCBC account in December 2018, which account was never disclosed in his subsequent Form E and 1^st Answer.

c.  H lumped together sale proceeds of 803, Bellagio and 504 and said proceeds were used to purchase shares, living expenses, legal fees and pay for a costs order.

d.  H gave no breakdown of sums received, how much shares were purchased, and how much was spent on travel or living expenses. Under cross examination, he was still unable to give any answer as to how the sale proceeds were used specifically, how much was spent on living expenses and legal costs.

e.  Regarding the Australian property, W says she does not dispute H’s brother 50% interest but says the statutory declaration of the latter’s beneficial interest dated Sept 2021 post-dates the sale of the property and was produced very late despite asked for in May 2021. H’s evidence regarding why he gave 52% to his brother instead of 50% was not very convincing. H did not disclose this sale when he filed his affirmation in opposition to W’s MPS application12 days after he signed the sale agreement, and in particular he relied on the on-going costs of the Australian property (which was already sold by then) as a reason he could not afford K’s maintenance. In his 10^th Affidavit, H says part of the proceeds were used to sustain his living expenses “and or” purchase shares on the market. No breakdown of these expenditure was provided. And lastly on this property, H says proceeds were deposited into WL Bank but failed to deliver sufficient financial statements in support.

f.  Disclosure by WhatsApp of a sale contract or by mentioning a property has been sold in a letter of instruction to a SJE are not proper disclosure.

170.  W says H had gone along with valuation of the Philippines Property at the first PTR in November 2022, and then went off to sell this property in May 2023. Valuation report was filed in early July, and H disclosed the contract of sale with information on proceeds 5 days after and only three weeks before trial. W says unnecessary costs has been incurred and H should have informed her and the Court that he intended to sell the property. H on this says W was informed of the sale shortly after and told the W there was no need to value the property.

Non-disclosures relating to retirement and other income

171.  Quite an amount of time was spent on cross examination of the H on this topic. To set the scene, W’s counsel says H repeatedly says he had retired in June 2016 and after EW ceased business on 31 August 2016. Despite W repeated questions on this topic in her Form E, her affidavits, and under her specific discovery application, H maintained his retirement date in his lawyer’s letter in July 2020, his first Form E in October 2020, his 10^th affidavit in November 2022 and all the way up to his 2^nd Form E on May 2023, less than 3 months before the trial.

EW

172.  During cross examination, he was shown a number of quotations containing his handwriting in July and October 2016 and January 2019, using his home address as contact and work email address. He admitted under cross -examination that he had continued working after his alleged retirement date.

173.  He was found to have received USD49,988 into EW’s corporate account in January 2017. W says he has said twice that EW’s corporate account was closed in 2016, and that he did not produce bank statements for EW beyond January 2015.

174.  H was also asked about his withdrawal of $1,400,000 from EW’s corporate bank account in December 2014 to pay off the FMH mortgage, but W says full payment was made in August 2014. H was repeated asked where this money went, while H said he would check with the bank, no answer was forthcoming. When asked where this money has gone at trial, his oral evidence was vague and he said it “might” have gone to purchase of the Philippines property or Bellagio.

AET

175.  According to an extract of business registration information, this business was in operation from March 2017 to June 2021. This company was not disclosed by H in his first Form E or his 1^st or 2^nd Answer but was only revealed after W’s specific discovery application. He says AET is dormant and was only used to maintain his APEC card. However, on cross examination, emails were put to him regarding quotations being made on AET letterhead in 2018. AET’s bank account had transactions coming in and out in June 2018 which H failed to explain. And H was also unable to explain why $150,000 left AET’s corporate account in April 2019 and transferred to his personal name account. The relevant bank statement shows a deposit of $170,000 into this account in March 2017. Despite W’s repeated ask about this amount, the source of payment, no answer was ever provided by H. In his re-examination, H explains that this is an interbank transfer, the evidentiary document shows a AET cheque in the sum of $150,000 for the H, so this goes to show that the amount left AET corporate account and enter his account but does not explain the deposit into AET, where it came from and why its account is being used to pass through funds, having in mind H’s case that AET is a dormant company.

Other Companies

176.  H failed to disclose a business by name of AKC, he denied participation nor ownership, but he was shown company documents showing he was one of the founder of the company and holds 49% thereof.

177.  With regard to another company EIL which he co-owned with M and incorporated in 2008. He was he was a director but the company was de-registered in 2009, evidence shows that there was an invoice from another company addressed to EIL in March 2014; under cross examination, H assumed it was a “typo”.

178.  H denied he had any Singaporean business; three were uncovered, H says he did not disclose these because he wasn’t sure if these are still in existence or if the account is active. He was cross-examined on an order addressed to EW with a Singapore address for attention of his brother-in-law in February 2015. Under cross examination, he says he manages the Singapore business from Hong Kong remotely.

Non-disclosure relating to bank statements

179.  W says that H’s other non-disclosures include his failure to provide statements of his various bank accounts as well as those of EW and AET.

180.  W complained that H failed to provide bank statements for Maybank in Cambodia, and Metrobank in the Philippines. For the latter account, bank statements were only produced in June 2023. He says he had to make personal trips to these places to get his bank statements, but W says H has been to both Cambodia and Philippines in the interim and failed to obtain statements on his trips.

181.  H only produced limited bank statements from BDO Bank in the Philippines and only after W’s specific discovery application. W says H did eventually attended the BDO Bank in person to produce bank statements from Feb 2022 to July 2023 just before the trial.

182.  H only produced limited statements for his WL Bank 0025 account and only after W’s specific discovery application in December 2021, but these are only statements dated September 2019, March 2021, April 2021 and May 2021.

Non-disclosure relating to Shares

183.  With reference to W’s compilation of the above-mentioned Table 1 and 2 which was her analysis of share transactions of the H, W found out that H has liquidated the shareholdings in their joint account, and used the proceeds to purchase shares in his personal account. The account to which the H transferred these holdings was not disclosed until the specific discovery application when W made enquiry regarding a related credit card.

184.  I note further here that the time when H started using his personal account at SCB for share transaction in November 2020 was the month after W has withdrawn the JPY and AUD from their joint account in October 2020. It was also from this month onwards, that H started to sell down the shares from their DSB joint account. I find this timing coincidental and aligned with W’s comment that H switched his share transaction account to prevent her from accessing family assets.

H’s response to W’s allegations

185.  H says he has repeatedly made disclosure by Whatsapp, emails, correspondence and via solicitors. Despite all the information that was given, W has turned a blind eye and continues to insist it was lacking.

186.  H says that W’s complained non-disclosure has been dealt with by W’s specific discovery summons. H was already penalized by paying costs for such summons. Subsequent to that summons, H has been making prompt and full disclosure. As such, H should not be penalized again on the same basis for this trial if the Court finds that there was litigation misconduct on H’s part for non-disclosure.

Discussion

187.  The law is trite with regards to parties’ ongoing duty of full and frank disclosure in the midst of divorce proceedings. In this case, W had two rounds of answers to questionnaires, and H had five. W was only able to elicit more information from H after her specific discovery application in September 2021, and H was ordered on 21 February 2022 to provide additional information per W’s request and had to pay 2/3 of the costs of the discovery summons. Discovery by H was made in April and May 2022.

188.  In turning my mind to this duty of full and frank disclosure, I remind myself of the often-quoted passage from the case of L v L [2006] HKFLR 121 from Mr Justice Lam (as he then was) at §198:

“It is high time high time that litigants in matrimonial proceedings and those advising them should appreciate that affirmation of means and answer to questionnaire are not a game of hide and seek. Too much legal costs and judicial time had been spent on such wasteful exercise. As stressed by Mr. Mostyn, the onus fall squarely and fairly on a party to give full and frank disclosure of his or her own means. To adopt a wait and see approach with a hope that the opponent might fail to ask the right question is a tactic to be deplored. That by itself is a breach of the positive duty to give disclosure…”

189.  From the very number of times H has been ordered to make disclosure, coupled with his various answers during the proceeding, the way he answered question at the oral hearing, together with the above summary of unsatisfactory disclosure; I am satisfied that H has failed deplorably in this duty. H’s evidence left little to be desired and his case is full of gaping holes.

190.  I will not go into minute retrospective investigation of these information; such is not the approach as guided by leading authority. The question before me is therefore, how are these non-disclosure on the H’s part is to be taken into account.

191.  Various authorities have been submitted to me in this regard. H contests W’s “rather dubious proposition” that litigation conduct and financial misconduct is one and the same is unsupported by the law. He relied on the decision of Thorpe J in the case of P v P (Financial Relief: Non-Disclosure) [1994] 2 FLR, which held that the failure of a party to give full and frank disclosure is to be dealt with by an order in costs, and not a reduction of the share of the available assets. That said, H acknowledged in his reply submission that “The only situation that litigation misconduct may amount to financial misconduct is when there is a flagrant breach of obligation to make full and frank disclosure coupled with a dishonest presentation. Even then it is still up to the court to bring that into a balancing exercise to see whether such conduct is gross and inequitable not to disregard.”

192.  Thorpe LJ sitting in the Court of Appeal in the case of Tavoulareas v Tavoulareas [1998] 2 FLR quoted his own finding in P v P, and also the case of M v M (Financial Provision: Party Incurring Excessive Costs) [1995] 3 FCR 321, where he has also said the following:

“Conduct is only relevant insofar as the wife relies upon the manner in which the husband has conducted these proceedings. Ordinarily speaking, it seems to me that the manner in which proceedings are misconducted is to be reflected in orders for cost rather than directly in the scale of the awarded sum. However, this seems to me to be the exceptional case where the husband's strategy has been so extreme that it would be inequitable to disregard it. It seems to me that it is appropriate to look at the quantification of the wife's share not of what remains today but of what remain today had that policy of waste and destructions not been pursued.”

However, in this latter case, Thorpe LJ did not find that the lower court’s decision was based on a penalization of the W’s conduct.

193.  W advocates that whether the effect of the conduct is to be reflected in a cost order or when determining the division of the matrimonial assets, the objective is to achieve a fair outcome which properly reflects all the circumstances. On this, she relies on the HHJ I Wong decision in JTMW v NAV[2022] HKFC 46, I will make reference to the following §§ 65 and 66.

“Legal Principles

65. Apart from LKW v DD (2010) 13 HKCFAR 537, I was not referred to any further judicial authority. It has come to my attention from a separate matter that Moylan LJ of the English Court of Appeal recently considered this issue in Rothschild v De Souza [2020] EWCA Civ 1215, [2020] 3 FCR 664 (also reported as TT v CDS [2021] 1 FLR 996) where, similar to this case, there was a highly acrimonious divorce and destructive litigation on a massive scale.

66. Moylan LJ agreed that litigation conduct could be taken into account under s 25(2)(g) of the Matrimonial Causes Act 1973 (Hong Kong’s equivalence is section 7(1), MPPO). The learned judge reviewed the authorities and helpfully set out the legal framework with respect to the correct approach to the issue of litigation conduct. The general approach is that litigation conduct within the financial remedy proceedings will be reflected, if appropriate, in a costs order. However, there are cases in which the court has determined that one party’s litigation conduct has been such that it should be taken into account when the court is determining its award. The depletion of matrimonial assets through litigation misconduct will plainly not always be remedied by an order for costs. Such an order simply reallocates the remaining assets between the parties and does not necessarily remedy the effect of there being less wealth to be distributed between the parties. What is important is that, whether by taking the effect of the conduct into account when determining the distribution of the parties’ financial resources (both income and capital) and/or by making an order for costs, the outcome which is achieved is a fair outcome which properly reflects all the relevant circumstances: see [65] & [78]. (my emphasis)

194.  W quotes two more cases on this approach, one is WSW v CSLPC[2022] HKFC 155, where DDJ J Lee in her assessment of the husband’s non-disclosure and where wife has contributed to the Children’s expenses, departed from the 50-50 sharing to give the W 55% of the matrimonial pot; and the case of NKPL v NSF[2022] HKFC 140 wherein the Court again depart from the 50-50 principle and grant the husband a 60% of the matrimonial pot due to the wife conduct including the lack of full and frank disclosure.

195.  I would like to circle back to the case of P v P relied upon by H. In that case, Thorpe J at 392 E – H, commented on a passage from B v B (Real Property: Assessment of Interests) [1988] 2 FLR 490 which dealt with the wife’s conduct in that case and in which the court therein ruled that the conduct was inequitable to disregard. Thorpe J said:

“If that passage is to be taken to establish, first, that flagrant breach of the obligation to make full and frank disclosure coupled with a dishonest presentation constitutes financial conduct which may in appropriate cases be brought into the balancing exercise, I am in complete accord. If it is to be construed as meaning that the court making primary findings of fact before applying the statutory criteria is entitled to draw inferences adverse to the party proved guilty of breach, then I am in complete accord. But I do not follow the passage so as to conclude that if at the end of the judicial investigation the conclusion is (a) that the applicant has been dishonest but (b) her dishonesty has failed to conceal from view any substantial asset, then on some punitive basis she should receive less of what is available for distribution. It seems to me that in that case such price as is to be paid by the dishonest litigant is the price in cost not in reduction of the appropriate share of the available assets.” (my emphasis)

196.  What can be drawn from this case on my reading, is that Thorpe J was not saying that conduct is only to be remedied by costs. He accepted that a flagrant breach of the duty of full and frank disclosure can be brought into a balancing exercise by the Court, adverse inferences can be drawn, but costs order is appropriate (versus reduction of share of matrimonial assts) where a party’s dishonesty has “failed to conceal from view any substantial assets”.

197.  I am of the view that this is just such a case that falls into the category as described by Moylan LJ in the case of TT v CDS, and as enunciated by HHJ I Wong in the case of JTMW v NAV. This is also a case where the dishonest party has succeeded in concealing from view assets that should be in the matrimonial pot. There is clearly conduct on H’s part which has left unexplained “missing” family assets and which H has failed to proffer any decent explanation despite given numerous chance to do so. The way the evidence has been put forward is clearly set to leave W in an ambiguous cloud of unanswered questions, which but for the effort of her legal team, the court would have little assistance. In this regard, one could only imagine the costs that have been expanded by her in putting her case together.

198.  There is no need for me to put my finger on an exact number as to how much is exactly missing from the family pot, there is sufficient basis for me to draw an adverse inference against H that that there are assets which have not been brought to light. What is clear to me is the undeniable impression left with this Court as to the H’s case, with the lack of information, lack of satisfactory explanations, lack of breakdown, and lack of a clear path to trace transactions, it is hard not to construe these actions on his part as a deliberate attempt to obfuscate. The Court should never condone such behaviour. I think there is dishonest intention on H’s part, and I find that his conduct is of a gross and obvious nature and inequitable to disregard. The inequity here is in W’s inability to access the part of the matrimonial pot which is not on the table due to the way in which H had chosen to present his case. This is a case which justifies my departure from the usual 50-50 sharing principle.

STEP 5: Deciding on the Outcome

What is a fair outcome?

199.  Achieving a fair outcome is one of the important pillars that forms the foundation to our decision. I am of the view that fairness in this case involves an adjustment to the sharing principle. As shown above, the pot has decreased in size due to H’s failure to account for the family assets, this ties in with his duty of full and frank disclosure which is found to be lamentable in his case. I am therefore of the view that I shall depart from the 50-50 sharing of the matrimonial pot, and give 55% to W and 45% to H.

200.  With information from the agreed schedule of assets and liabilities, the various percentage holding can be seen as follows:

	Husband	Wife	Total Pot
Holding as of now	12,479,766.82	22,751,594.63	35,231,361
At 50-50 sharing (for reference)	17,615,680.5	17,615,680.5	35,231,361
At 45-55 split	15,854,112.45	19,377,248.55	35,231,361

201.  In considering this percentage, I have taken into account matrimonial assets which has been unaccounted for by H including sale of his overseas properties and the rental income from these properties prior to their sale; the unsupported spending by him of his withdrawal of PHP2,200,000, the interest rate discrepancy and the extent to which H has failed in his duty of full and frank disclosure. I am conscious that he has made a last-ditch effort to put in information which W criticizes as a mere show for optics for then upcoming trial, however looked at, this is clearly not fair to W as she and her legal team had no doubt need to scramble to put their case together at the last minute to challenge H’s evidence. I have also taken into account that K will be living with M, and an element of buffer has been built in, as I have been reminded of the concern M has over H’s payment of maintenance as shown by his previous unilateral cessation of payment.

202.  At this point, I have taken into regard the parties’ respective proposals. In particular, W is the owner of the two Hong Kong properties, of which she lives in one, and receives rental from the other. H has a property in Thailand, and one property in Cambodia jointly owned with W which he asks for and W has indicated her intention to transfer this Cambodia property to him. H also has two carparks and one workshop in Hong Kong.

203.  W should have a roof over her head, this is to protect K’s interest for on-going stability. To reduce her expenses, she would therefore be expected to keep her present residence, dispose of the FMH, and use the sale proceeds to make equalization payment to H, and keep some liquidity for living expenses and to support K.

204.  As for H, assuming he retains the two carparks, the Workshop and the Cambodia Property for rental income, he will have $15,854,112 - $2,640,000 (2 carparks) - $1,970,000 (workshop) – $705,088 (Cambodia property); which leaves around $10 million and his earning capacity to support his living, and to pay for K until she finishes her tertiary education.

205.  Based on my decision to depart from the 50-50 sharing principle, H is to have 45% of the matrimonial pot which is $15,854,112.45. Given he has $12,479,766.82, and the value of the ½ share of the property in Cambodia is $352,544, there should be an equalization payment of $3,021,801.63 to be paid by the W to him. Time shall be given for W to deal with any existing tenancy arrangement and to liquidate the FMH.

The Order

206.  For the reasons aforesaid, I make the Order as follows:

(a)  Upon the granting of the Decree Absolute, W is to transfer her share of the Cambodia property to H, the cost and expense of transfer to be shared equally between the parties.

(b)  W is to pay H equalization payment of $3,021,801.63 within 9 months from the date of the Decree Absolute.

(c)  Upon compliance of (a) and (b) herein, both parties’ claims for ancillary relief against each other do stand dismissed.

(d)  H do pay the W periodical payments for K in the sum of $27,500 per month, such payment to commence on 1 August 2024 and to be made on the 1^st of each month thereafter until K’s 18^th birthday or cessation of full-time education, whichever is the later or until further Order.

(e)  I grant the declaration under section 18 of the MPPO that I am satisfied with the arrangement of the child K.

Costs

207.  H has submitted that in so far as W seeking costs on the basis of H’s alleged misconduct, he has been penalized when he paid for costs under W’s specific discovery summons. The Costs Order made against him then was for 2/3 of the W’s costs. Admittedly, the cost he paid was justified in the light of W needing to take out a Summons to ask for missing information. H’s lack of disclosure and the attitude in which it was conducted pervade throughout the proceedings and I am of the view that it was not limited to what was sought at the specific discovery hearing. Therefore, this conduct has not been remedied by the Costs Order made in the discovery summons.

208.  In conclusion, I have found against H on his various unaccounted for family assets, I have concluded that he has failed in his duty of full and frank disclosure, I have also decline his proposal of 50-50 division of the family pot, and instead adopt W’s ask for a departure from equal division. In an overall assessment, W can be considered to be the successful party and costs should therefore follow the event.

209.  W shall be awarded the costs of these ancillary relief proceedings, to be taxed if not agreed, with certificates for counsels. This to be an Order Nisi to include all reserved costs, and be made absolute 14 days from the date of this Order.

For Petitioner: Mr Eugene Yim instructed by Messrs Chaine Chow & Barbara Hung

For Respondent: Ms Madeleine Booth instructed by Messrs Hugill & Ip

FCMC 13299/2019

[2021] HKFC 213

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13299 OF 2019

________________________

________________________

________________________

J U D G M E N T

(Vacating registration of Form A)

________________________

Application

1.  This Judgment is concerned with the Petitioner Husband (H)’s summons dated 4 February 2021 for an order for vacating the registration of the Notice of Application for Ancillary Relief (Form A)  at the Land Registry against the following properties (adopting the description used in Respondent Wife (W)’s Skeleton Submission):

(1)  Caribbean Coast Carpark No. C25;

(2)  Seaview Carpark No. D195;

(3)  Workshop C25.

(collectively “the Subject Properties’)

2.  The bulk of the matrimonial assets includes 6 Hong Kong properties, 1 PRC property, two Philippines properties, two Japan properties, 1 Cambodia property and 1 Thailand property. The Subject Properties and all overseas properties are registered in H’s name, except that the Cambodia property is registered in the joint name of the parties and the PRC property is in W’s name. The remaining three residential properties in Hong Kong are registered in W’s sole name.

H’s Case

3.  The grounds upon which H relies in support of his application can be summarised as follows:

(1)  He is a retiree and is living in a hotel;

(2)  He needs a home and intends to purchase an apartment in Hong Kong;

(3)  He has not had overnight access to the daughter, born in 2009 and adopted by the parties in 2010, since December 2019. With his own apartment, he can have overnight access to the daughter of the family;

(4)  He plans to sell the Subject Properties to fund the intended purchase;

(5)  According to him, the net value of W’s assets is HK$30,765,442[1];

(6)  The total value of the Subject Properties is only about HK$4,200,000 that is merely a fraction of W’s assets;

(7)  W’s case on how much cash H has in hand or that around HK$6 million ought to be added back to H is hotly disputed.

W’s Case

4.  In opposition, W asserts that:

(1)  Allowing H’s application will in effect be granting an interim sale of property order which the court neither has statutory or inherent jurisdiction to do so, citing WHWV v WECH [2020] 5 HKLRD 408 ;

(2)  H’s plan to purchase an apartment of about 1,000 square ft and be valued at about HK$12,000,000 is unnecessary, unreasonable and unrealistic;

(3)  H’s failure in providing basic information, such as timeline, the identity of targeted property, how the purchase money be paid for, e.g. in full or by instalments, any mortgage loan etc., suggests that H does not have an actual, real or genuine plan.  That only should be fatal to this application;

(4)  The total value of the overseas properties that he holds being estimated at HK$5,435,000, together with his cash in hand, H can amass HK$7,636,000 that is more than sufficient for him to purchase a small apartment in Hong Kong. Therefore, H fails to show a good cause;

(5)  From the Table of Agreed/Disputed Assets and Liabilities W produced[2] (W’s Table), it can be seen that around HK$6 million ought to be added back to H. W’s Table shows H has a much larger holding of the matrimonial pot than he represents to the court.

Legal Principles

5.  Section 19 of the Land Registration Ordinance, Cap. 128 provides that the court or judge may on the determination of the lis pendens, or during the pendency thereof, where the said court or judge is satisfied that the litigation is not prosecuted bona fide, or for other good cause shown, make an order for vacating the registration in the Land Registry of such lis pendens without the consent of the part who registered it.

My view

6.  My view is as follows:

(1)  The first and foremost issue falls to be determined is whether good cause is shown in the present application;

(2)  In the Social Investigation Report dated 19 February 2020, the case social worker recommended care and control of the daughter to W, and reasonable and flexible access to H to preserve the daughter and father relationship and to strengthen their affection. By the consent order dated 30 June 2020, joint custody of the daughter was granted to the parties, with care and control to the W and reasonable access including stay access to H. I accept that H’s desire to have stay access is genuine, real and reasonable;

(3)  It being undisputed or indisputable that the parties lived comfortably during marriage, I accept that H needs to have a home in Hong Kong for himself and the daughter;

(4)  I am aware that the issue on the parties’ respective financial positions remains a continuing source of dispute that will be sorted out at the later stages of these proceedings.

(5)  However, I regard that he can make do with e.g. renting an apartment or as suggested by W purchasing a smaller apartment for the time being;

(6)  Looking at the matter in the round, I do not accept that good cause is shown for the purpose of this application.

Disposal

7.  It is ordered that the summons dated 4 February 2021 be dismissed. Solicitors for W do forthwith draw up, file and serve this order.

Costs

8.  Apparently, W can be regarded as the successful party. I make an order nisi that H do pay W the costs of this application, including reserved costs. The order nisi becomes absolute 14 days after this order is made unless a party has applied to the court for varying the order.

The Petitioner Husband acting in person

Ms. Valerie Tang instructed by Tang Lee & Co. LL.P. for the Respondent Wife

FCMC 13299/2019

[2021] HKFC 211

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13299 OF 2019

________________________

________________________

________________________

J U D G M E N T

(Single Joint Expert Direction)

________________________

1.  By the order dated 25 May 2021, it was directed that if the parties cannot agree on the choice of Single Joint Expert (SJE)  for the valuation of the landed properties involved, each do lodge a letter with the court on or before 30 July 2021, giving 1 suggestion with full CV/ estimated time for completion/ estimated costs. On 29 July 2021 and 30 July 2021 respectively, the petitioner husband (H)  and the respondent wife (W)  lodged their suggestions with the court. By the order dated 5 October 2021, the hearing of the parties’ application for expert directions was fixed to 20 October 2021, with 1 hour reserved. This is my decision.

2.  The properties involved include 6 HK properties, 1 PRC property, two Philippines properties, two Japan properties, 1 Cambodia property and 1 Thailand property.

3.  About the 6 HK landed properties, I take notice that:

-  Both parties’ suggested valuers are professionally qualified and experienced valuers who are suitable to prepare the valuation reports;

-  Both parties’ time estimate are acceptable;

-  W and H’s estimated costs are HK$60,000 and HK$13,500 respectively;

4.  W’s estimated costs being much more expensive that H’s, I take the view that H’s valuer is preferable to W’s. It is therefore ordered that Desmond W H Wong of Citiland be appointed as the single joint expert on the valuation of the 6 HK properties pursuant to O.38, r.4A. The expert report of the single joint expert be available on or before 24 November 2021. Each party do contribute 50% for the cost of the said expert and such costs shall be in the cause.

5.  H sought to adduce two valuation reports of the two properties in Philippines, and the valuation report of one of the two properties in Japan i.e. Unit 504 that are prepared in Japanese. I take notice that the said reports are prepared on his own initiation and are in breach of the terms of the order dated 25 May 2021. Therefore, I shall reject his proposal to adduce the said reports.

6.  H argued that W’s estimated costs of the preparation of the reports of the two Philippines properties and the two Japan properties being much more expensive that H’s costs of the above mentioned one-sided reports, his valuers should be preferred to W’s.

7.  However, there is no acceptable evidence that the valuers who prepared the said one-sided reports are amenable to be appointed as the parties’ SJE. It is also obvious that H has had private communications with the valuers. In the circumstances, I take the view that I should not appoint H’s valuers to be the parties’ SJE.

8.  H did not give any suggestion on valuer of the properties in Cambodia, Thailand and PRC. I have reviewed W’s suggestions. I am satisfied that they are acceptable.

9.  Accordingly, I make the order that W’s suggestions be appointed as the parties’ SJE for the valuation of the properties in Philippines, Japan, Cambodia, Thailand and PRC. The expert reports of the single joints expert be available on or before 24 November 2021. Each party do contribute 50% for the cost of the said expert and such costs shall be in the cause.

10.  The costs of this application be in the cause of the AR proceedings, including reserved costs.

The petitioner husband acting in person

Ms. Valerie Tang instructed by Tang Lee & Co. LL.P. for the respondent wife

FCMC 13299/2019

[2021] HKFC 63

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13299 OF 2019

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-----------------------------------

-----------------------------------

J U D G M E N T

(Maintenance Pending Suit)

-----------------------------------

Background

1.  The parties were married in 1996. The parties adopted the child of the family (the ‘daughter’), a girl born in 2009, in 2010.  The petitioner husband (‘H’) petitioned for divorce on behaviour on 7 November 2019. By the consent order dated 30 June 2020, joint custody of the daughter was granted to the parties, with care and control to the respondent wife (‘W’) and reasonable access including staying access to H. The Decree Nisi was pronounced on 30 September 2020.

2.  By the summons dated 17 December 2020, W made an application for an order that:

(1)  H do pay W the sum of HK$27,000 per month as interim maintenance (‘MPS’) for the daughter from the date of order until further order of the court;

(2)  H do pay W half of the rental income of a property situated in Phnom Penh, Cambodia (‘Cambodia property’), registered in the joint names of the parties, in the sum of HK$4,000 per month from 1 January 2021;

(3)  An order for an account of 50% of the rental income of the Cambodia property for the period from 7 November 2019 to the date of the order and that H do pay the said 50% of rental income to W within 14 days of the order;

(4)  H do undertake that he shall not sell any or any part of the landed properties in Hong Kong or elsewhere in which he has beneficial interest without order of the court;

(5)  Any other relief or order as the court deems fit; and

(6)  Costs.

3.  This is the hearing of W’s application by the summons dated 17 December 2020. W contends that the present application is occasioned by a change in W’s financial circumstance including a reduction in her salary and a loss of her rental income so much so that, with her current income and the voluntary payment of the sum of HK$10,000 per month from H, she is unable to cover the household expenses and the other expenses for herself and the daughter. While H opposes W’s present application, he offers to continue the voluntary monthly payment of $10,000 per month for the benefit of the daughter until the determination of the ancillary relief proceedings.

The Applicable Principles

4.  W’s application is governed by section 3 of the Matrimonial Proceedings and Property Ordinance, Cap. 192. 

5.  The court has a wide discretion in the matter, subject to the result being reasonable: TL v ML & Ors (Ancillary Relief: Claim Against Assets of Extended Family) [2006] 1 FLR 1263 per Deputy High Court Judge Mostyn QC (as he then was) at 1289:

“The sole criterion to be applied in determining the application is ‘reasonableness’ (s. 22 of the Matrimonial Causes Act 1973), which, to my mind, is synonymous with ‘fairness’.”

6.  In HJFC v KCY  [2012] HKFLR 27, Hartman JA said at §37:

“The principles that have emerged over time to guide judges in matters of interim maintenance have been fashioned in the main to ensure fairness. This is well illustrated in the judgment of Nicholas Mostyn QC, sitting then as a deputy High Court judge, in TL v ML and Others (Ancillary Relief: Claim against Assets of Extended Family) [2006] 1 FLR 1263, at 1289, in which, having looked at earlier authorities, he derived the following principles that speak specifically to fairness or are based on the need to ensure it. For present purposes, it is sufficient to cite the relevant principles without citing the judge’s reference to the source of those principles:

i. The sole criterion to be applied in determining the application is ‘reasonableness’, which is synonymous with ‘fairness’.

ii. A very important factor in determining fairness is the marital standard of living. This is not to say that the exercise is merely to replicate that standard.

iii. In every maintenance pending suit application there should be a specific maintenance pending suit budget which excludes capital or long-term expenditure, more aptly to be considered on a final hearing. That budget should be examined critically in every case to exclude forensic exaggeration.

iv. Where the affidavit or form E disclosure by the payer is obviously deficient, the court should not hesitate to make robust assumptions about his ability to pay. The court is not confined to the mere say-so of the payer as to the extent of his income or resources. In such a situation, the court should err in favour of the payee.

v. Where the paying party has historically been supported through the bounty of an outsider, and where the payer is asserting that the bounty had been curtailed but where the position of the outsider is ambiguous or unclear, then the court is justified in assuming that the third party will continue to supply the bounty, at least until final trial”

W and the daughter’s reasonable needs

7.  W, now aged 49, is a flight attendant. According to W’s Form E filed on 11 September 2020, the bulk of her assets includes three residential properties in Hong Kong, namely (1) the Seaview Crescent property (‘Seaview Crescent property’) and (2) Flat C and (3) Flat D ((2) & (3) collectively the ‘Matrimonial Home’) all of which are registered in W’s sole name. The net values of the Seaview Crescent property and the Matrimonial Home are HK$9,411,692 and HK$12,673,242 respectively. She also had HK$567,616 in bank, value of insurances policies of HK$59,910, value of debts owed to her of HK$35,000, value of valuable personal items of HK$70,000 and value of pensions of HK$1,350,526, and debts of HK$32,028. The net value of her assets and liabilities was HK$24,135,958. Besides, W is the registered owner of an apartment in Nanning, China, of which the market value is about RMB400,000. At the present hearing, it was updated that W’s cash in bank was diminished to HK$281,000.

8.  According to W’s Form E filed on 11 September 2020, her average monthly earned income was HK$29,998.48 and she also received rental income from the Matrimonial Home of HK$35,000 per month, and her monthly general expenses, personal expenses and child expenses were HK$47,497, HK$23,900 and HK$27,455 respectively, totally HK$98,852. Due to the outbreak of COVID-19 and the restructuring of W’s employer, her basic salary and fringe benefits have been reduced. In addition, the tenant of the Matrimonial Home quitted the tenancy in January 2021. At the present hearing, it was updated that her income after salary reduction and loss of rental income from the Matrimonial Home was HK$39,577 per month until March 2021, HK$34,577 per month for the period from 1 April 2021 to 31 December 2021 and HK$21,544 per month thereafter.

9.  She has since trimmed her monthly expenses down to HK$44,497 for general expenses, HK$14,000 for personal expenses and HK$27,106.5 for child expenses, totally HK$85,603.5 per month, details of W’s updated general expenses and personal expenses are as follows: -

General

	HK$
Mortgage instalment	15,180
Utilities	5,500
Management fees	6,670
Food	7,500
Household expenses	3,000
Insurance	1,409
Domestic helper	5,000
Broadband	238
	44,497

Personal

Meals out of home	2,000
Transport	1,500
Clothing/ Shoes	2,000
Personal grooming	2,000
Entertainment/ presents	2,000
Holidays	N/A
Medical/ Dental	$500, the rest is provided by employer
Tax	4,000 subject to downward adjustment
Contribution to parents	N/A
Tennis lessons	N/A
	14,000

10.  W has not provided the details of the daughter’s updated monthly expenses. According to her Form E filed on 11 September 2020, the details are as follows:

Child

School fees	11,435
Books and stationery	500
Transport to school	600
Medical/ Dental	Provided by employer
Extra Curricular Activities	6,620
Entertainment/ presents	1,300
Holidays	2,000
Clothing/ shoes	1,200
Lunches and pocket money	1,000
Other transport	800
Uniform	200
Supplements, personal hygiene items	1,800
	27,455

11.  Despite that H takes the position that some items of W’s expenses are inflated, he has not provided the particulars of his comments on W’s expenses.

12.  W contends that the parties lived a comfortable living standard during the marriage. Despite that it seems indisputable to me that the parties lived a comfort living standard during the marriage, I take the view that the parties have to face the reality that once the divorce process has started, the parties’ standard of living will drop. Many factors combine to lower the parties’ standard of living after divorce. Expenses will begin to mushroom as soon as the divorce process starts, for example legal fees, new living expenses and myriad other costs will drain their financial resources. Money previously used to support one household must now stretch to support two.

13.  I take notice that most of the monthly expenses are flexible. I regard that W should consider cutting down on the food expenses and her personal expenses. After having carefully considered, I take the view that the food expenses under general expenses should be reduced to HK$6,000 per month and that W’s total expenses on meals out of home, transport, clothing/ shoes, personal grooming and entertainment/ presents should be reduced to HK$4,500 per month. Given that there has been around 50% reduction of W’s earned income, I presume that W’s tax downward adjustment is not less than HK$2,000 per month. Without going to an item by item forensic examination of each and every item of the child expenses, I accept the child expenses at HK$24,000 per month. In summary, I assess W’s monthly expenses at $43,000 (≒42,997) + 7,000 + 24,000= HK$74,000 per month. I accept W’s earning was HK$39,577 per month until March 2021, HK$34,577 per month for the period from 1 April 2021 to 31 December 2021 and HK$21,500 (≒21,544) per month thereafter. I however take notice that there is no evidence that the Matrimonial Home will not be rented out for comparable rent in the near future. I see no reason why I should not assume that W will continue to receive rental income from the Matrimonial Home of around HK$35,000 per month. In the circumstance, W has/ will have a shortfall of around HK$17,500 per month, the breakdown of which is as follows: HK$74,000 -  56,500 (21,500 + 35,000) = HK$17,500 per month.

H’s ability to pay

14.  H, now aged 60, a retired businessman. According to his Form E dated 7 October 2020, the net value of his assets and liabilities was HK$15,538,670, including the net value of HK$15,149,500 of 9 Hong Kong and overseas landed properties, all registered in his sole name, and the Cambodia property registered in the joint name of the parties, cash in bank of HK$343,105.52, value of stocks of HK$26,064 and value of valuable personal items of HK$20,000, and he had no debts.

15.  According to H’s Form E dated 7 October 2020, he had the following monthly rental income: -

	Approx. HK$
2 units in Philippines	18,300
The Cambodia property	8,000
Units #803 & #504 in Tokyo	5,000
1 carpark space in Caribbean Coast	2,000
1 carpark space in Seaview Crescent	2,000
1 office unit in an industrial building in HK	5,800
The Melbourne property	AUD2,700

16.  According to H, due to COVID-19, some of his properties have become vacant so that the monthly rental incomes has decreased. In his opposing affirmation, he gave an update of his monthly rental income as follows: -

	Approx. HK$
Verve #2201, Manila	11,800
The Cambodia property	8,000
Unit #504 in Tokyo	2,200
1 carpark space in Caribbean Coast	2,000
1 carpark space in Seaview Crescent	2,000
1 office unit in an industrial building in HK	5,925
	31,925

17.  According to H’s Form E dated 7 October 2020, his general expenses, personal expenses and child expenses were HK$23,300, HK$35,000 and HK$6,000 per month respectively, totally HK$64,300 per month. In his opposing affirmation, he gave an update of his monthly expenses as follows: -

	HK$
Hotel rental	10,800
Meals out of home	15,000
Transport	1,000
Clothing/ Shoes	1,500
Personal grooming	900
Entertainment/ presents	2,000
Medical/ Dental	500
Insurance	700
Interim maintenance	10,000
Supplements/ gym	1,400
Thai boxing class	1,800
Costs and charges for vacant properties	20,280
	65,880

18.  It appears from the above that his monthly rental income is insufficient to meet his monthly expenses and accordingly he argues that there is no room for any upward variation of the MPS. At the same time, he makes complaint that his financial situation was worsen as a result of W’s withdrawal of AUD14,700 and JPY1,230,000 from the parties’ joint bank account on 9 October 2020. 

19.  W contends that, on top of his monthly rental income, H has resources that can reasonably be deployed for the purpose of MPS payment: - (1) H sold a landed property in Osaka, Japan for JPY8,300,000 in January 2020; (2) During the period from 15 November 2020 to March 2021, H sold totally 26,400 HSBC shares for the net value of HK$1,160,206.18 and withdrawn HKD1,154,607 from the same account; (3) H sold the Melbourne property for AUD575,000 in March 2021 and after having taken care of the outstanding mortgage loan of around AUD264,043.41 he should have received the proceeds of sale of around AUD310,956.59.

20.  It is worthy of noting that H does not take issue on either the said sale of HSBC shares or the withdrawal of the said sum of HKD1,154,607. About the sale of the Osaka property, H has provided a breakdown of the sale proceeds showing that the net sale proceeds are around JPY6 to 7 million[1]. As to the sale of the Melbourne property, H argues that the Melbourne property was jointly owned by his older brother living in Singapore and him and the sale proceeds have been divided between them in equal shares. According to him, what he has received is only around HKD769,130[2]. Despite that W takes great exception on the argument that H’s older brother was beneficially interested in the Melbourne property, as I am not in a position to resolve the parties’ factual disputes on the beneficial ownership of the Melbourne property at this stage, I must leave the parties’ disputes in this regard to be dealt with in the third party proceedings, if any, or the substantive ancillary relief proceedings. For the present purpose, I consider that I can safely assume that H has been sitting on the net proceeds of sale of the HSBC shares and the Osaka property as well as not less than 50% of the net proceeds of the sale of the Melbourne property, i.e. totally not less than around HK$2 million, since around January 2020.

21.  W takes the position that H has deliberately inflated his monthly expenses and reduced his rental income to put him in a situation that he cannot pay towards W and the daughter’s expenses.

22.  I now turn to H’s monthly expenses. As shown by the receipt produced, the hotel rental is HK$9,900 per month instead of the claim of HK$10,800. Taking into consideration W’s expenses on food for W, the daughter and the helper, i.e. totally around HK$9,000 per month, I regard that his meals out of home expenses should be reduced to HK$6,000 per month. I have said in the above that the parties have to cut down on expenses. I regard that it is fair to assume that the parties should have similar standard of living and on a broad brush basis I assess H’s personal expenses on transport, clothing/shoes, personal grooming and entertainment/ presents, supplements/ gym and Thai boxing at the same level of W’s personal expenses, i.e. HK$4,500 per month. I accept W’s position that many of the so-called costs and charges for vacant properties are one-off expenses and accordingly the claim of HK$20,280 per month is obviously excessive. I make a provision of HK$5,000 per month for the so-called costs and charges for vacant properties. In summary, I assess H’s monthly expenses at HK$9,900 + 6,000 + 4,500 + 500 + 700 + 5,000 = HK$26,600 exclusive of MPS payment.

23.  As per H’s Form E dated 7 October 2020, his monthly rental income was around HK$54,100. Against such backdrop, W is incredulous to H’s account of his current monthly rental income of only HK$33,995. She takes the position that H’s current rental income is around HK$57,325. By reason of the matters in the above, I take the view that it is unnecessary to resolve the parties’ disputes in this respect for the purpose of the present application. No matter whether his true rental income is HK$33,995 or HK$57,325, nonetheless, I remark that H’s rental income is way more than sufficient to meet his reasonable monthly expenses.

24.  Looking at the matter in the round, I have little doubt that H has the ability to pay W HK$17,500 per month as MPS for her immediate and reasonable needs.

25.  In conclusion, it is ordered that H do pay W HK$17,500 per month as MPS, the 1^st payment to be made on the date of this order and subsequent payments on the 19^th day of each succeeding month until further order. Despite H’s argument to the contrary, it is directed that W can make use of all of the rental income from the Matrimonial Home for interim maintenance, until further order of the court.

26.  Inasmuch as the MPS order in the above is adequate to meet W’s immediate and reasonable needs, I make no order as to the paragraphs (2), (3), (4) & (5) of the summons dated 17 December 2020.

27.  I am aware that the issue on the parties’ respective financial positions remains a continuing source of disputes that will be sorted out at the later stages of these proceedings. In due course, any under provision or over provision in the MPS order may be set off if it is fair and just so to do.

28.  Since broad brush approach is adopted and in view of the parties’ arguments on their respective financial positions are yet to be determined, I make an order nisi that costs of by this application be reserved. The order nisi becomes absolute 14 days after this order is made unless a party has applied to the court for varying the order.

[1] KKSR1-6 p.3

[2] Petitioner’s skeleton arguments #28

FCMC 13299/2019

[2020] HKFC 94

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 13299 OF 2019

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RULING ON COSTS

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1.  This is the ruling of the parties’ respective applications for costs of (i) H’s ex parte without notice application dated 7 November 2019; (ii) H’s summons dated 8 November 2019 (“H’s summons’) for inter alia the continuation of the injunction order dated 7 November 2019; and (iii) the paragraph 1 of W’s summons dated 15 November 2019 (‘W’s summons’) for the discharge of the injunction order (collectively ‘the three applications’).

Background

2.  The parties were married in 1996.  This is a long marriage of 23 years.  In 2010, the parties adopted the daughter of the family, born in 2009, now 10 years old. The bulk of the matrimonial assets include 3 residential properties in Hong Kong, namely (1) the Seaview Crescent Property (‘Seaview Crescent Property’) and (2) Flat C and (3) Flat D ((2) & (3) collectively ‘the Matrimonial Home’) all of which said three residential properties are registered in the sole name of the respondent wife (‘W’).

3.  On 7 November 2019, upon the petitioner husband (‘H’)’s ex parte without notice application, Deputy District Judge M Lam granted an injunction order against W that restraining W from disposing or otherwise dealing with the proceeds obtain by her from a mortgage against Flat D, and disposing or otherwise dealing with the Matrimonial Home. On 18 November 2019 (‘the return date’), after an oral hearing, I made the order that the injunction order dated 7 November 2019 be discharged, save insofar as they relate to the restriction restraining W from delivering up possession of the Matrimonial Home, subject to H’s undertaking to damages. It was also ordered that costs of the three applications are to be disposed of on the papers.

W’s position

4.  W’s position was that she should have costs of the three applications allegedly for the following reasons:

(a)     There was no urgency or the need for secrecy justifying the ex parte without notice application;

(b)     It was obvious to H that W did not intend to defeat H’s claim for ancillary relief;

(c)     By the filing of the Form 8 against the Matrimonial Home, W was already prevented from further disposing or otherwise dealing with the same to H’s prejudice;

(d)     By reason of matters in the aforesaid paragraphs (a), (b) and (c), the injunction order should not be sought in the first place;

(e)     In any event, the injunction order dated 7 November 2019 was liable to be discharged because H had failed to serve the same on W within the time prescribed by the court order;

(f)     H’s application for a disclosure order was not granted;

(g)     W was the successful party as she succeeded in the application to discharge the injunction, except to the extent of prohibiting W from delivering up and parting possession with the Matrimonial Home.

(h)     W has achieved better than the ‘alternative case’ set out in W’s summons;

H’s position

5.  H’s position was that he should have costs of the three applications allegedly for the following reasons:

(a)     H disputed W’s contention that there was no urgency or the need for secrecy;

(b)     At the return date hearing, W insisted that she should be allowed to go ahead with the tenancy agreement. So, W did not actually offer any alternative case;

(c)     In view of W’s insistence on going ahead with the tenancy agreement, the injunction was the only way that H could continue living in the Matrimonial Home;

(d)     By the same token, the filing of Form 8 against the Matrimonial Home did not serve the same purpose of an injunction order;

(e)     H was the successful party as he succeeded in obtaining an order restraining W from delivering up or parting possession with the Matrimonial Home that was essential to the injunction order.

6.  Incidentally, H contended that it was of no consequence on costs that the disclosure order was not granted.

Legal principles

Costs

7.  The court has a wide discretion as to costs. The relevant provisions in the rules governing the exercise of discretion as to costs are Order 62 rr. 3 and 5.  Order 62 rule 3(2) provides that if the court in the exercise of its discretion sees fit to make any order as to the costs of or incidental to any proceedings (other than interlocutory proceedings), the court shall, subject to that order, order the costs to follow the event, except when it appears to the court that in the circumstances of the case some other order should be made as to the whole or any part of the costs.  In considering the appropriate order the court must have regard to the underlying objectives of Civil Justice Reform: Order 62 r.5 (1)(aa).  One of these objectives is the discouragement of unnecessary or unmeritorious applications. When dealing with costs orders, under Order 62 rule 5(1) the court may take into account, among other things, the conduct of the parties and any admissible offer to settle made by a party, which is drawn to the court’s attention. Rule 5(2) provides that conduct for this purpose includes (a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (b) the manner in which a party has pursued or defended his case or a particular allegation or issue; (c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and (d) conduct before, as well as during, the proceedings.

8.  In YBL v LWS (No 2) [2017] 2 HKLRD 783, the Court of Appeal held that the relevant principles on the exercise of discretion as to costs were:

(a)      Whilst the courts often started with the proposition of costs following the event, it was no longer the general rule but a starting point (Hung Fung Enterprises v Agricultural Bank of China [2012] 3 HKLRD 679 applied);

(b)      There had to be some justification for depriving a successful party of his costs;

(c)      In measuring who was the successful party and the extent of his success, the court must examine the reality and justice of the case. Thus, in Hysan Development Co Ltd v Town Planning Board (No 2), no order as to costs was made notwithstanding the success of the appellant in reversing the Court of Appeal’s decision because they did not achieve the full objects of their appeals (Hysan Development Co Ltd v Town Planning Board (No 2) (2016) 19 HKCFAR 635 applied);

(d)      In addition, under O.62 r.5, the court in exercising its discretion should take into account the matters set out in r.5(1) as might be appropriate in the circumstances;

(e)      Order 62 r.5(2) highlighted conduct which the court could take into account including whether it was reasonable for a party to take an issue, the manner in which the matter was pursued or defended, the extent of success, and conduct before, as well as during the proceedings;

(f)       If a successful party had brought the litigation upon himself or had done some wrongful act in the course of the transaction, he could be deprived of his costs.

Ex parte application

9.  The starting point is that applications for interlocutory injunctions should be made inter partes after the commencement of proceedings. It is contrary to the principles of natural justice that any judicial order adversely affecting a party’s interest should be made without the party being given a reasonable opportunity of being heard. Derogations are only permitted in certain limited and exceptional circumstances, the most obvious of which concerns matters of such extreme secrecy or urgency where there is no time to warn the defendant of what is proposed, or where the purpose of the injunction will or may well be frustrated is the defendant is informed of what is proposed, or where the defendant simply cannot be found: Hong Kong Civil Procedure 2020, Vol 1, 29/1/50.

My view

10.  I take the view that the main issues include: -

(i)      Merits of the ex parte without notice injunction application;

(ii)     Who can be regarded as the successful party;

(iii)     The parties’ conduct.

Merits of the ex parte without notice application

11.  It is not disputed, or indisputable, that: -

(i)     W has brought forth an early termination of the lease of the Seaview Crescent Property behind H’s back;

(ii)     In August 2019, W put the Matrimonial Home on sale unilaterally;

(iii)     On or about 9 August 2019, W took out a mortgage against Flat D without giving prior notice to H or his consent;

(iv)     In late October 2019, W signed a lease to let out the Matrimonial Home without giving prior notice to H or his consent;

(v)     When H discovered the said mortgage on 5 November 2019, he did not know how much W had received under the said mortgage.

12.  According to H, W has surreptitiously put in place a deliberate and well thought out scheme to defeat H’s claim for ancillary relief and to remove the daughter from the Matrimonial Home and H’s care. H contended that there was urgency in the matter due to the risk of H losing the roof above his head and due to the solid dissipation already made as evidence by W’s surreptitious actions laid out in the above, and a need for secrecy as H had a legitimate fear that once W found out H was initiating divorce proceedings and applying for an injunction, she would immediately dispose of the mortgage proceeds or even further dispose of the other matrimonial assets behind H’s back.

13.  I take notice that H knew as early as in August 2019 that W might have put the Matrimonial Home on the market and he was actually told in late October 2019 that W had let out the Matrimonial Home. The prospective tenant was due to move in on 1 December 2019. No doubt, he has had plenty of time to apply to the court for relief to prevent W from unilaterally removing him from the Matrimonial Home and there was no extreme urgency due to the alleged risk of H losing the roof above his head in the circumstance.

14.  I further take notice that: -

(a)     H knew that W would not be able to sell the Matrimonial Home as he was keeping the title deeds of the Matrimonial Home at the material time;

(b)     It appears from the facts set out in the above paragraph 13 that, in fact, W did not hide from H the listing or the subsequent leasing out of the Matrimonial Home, despite that those actions were taken by W without giving prior notice to H or his consent;

(c)     The mortgage having been taken out on 9 August 2019, had W intended to squander the monies obtained from the mortgage, she would have already done so long ago;

15.  Against the above, I regard that it is unlikely that, if W was informed of the injunction application, she would immediately dispose of the mortgage proceeds, or dispose of the other matrimonial assets, if she had not already done so. After having carefully considered the above, I do not accept that there was extreme urgency or the need for secrecy as alleged by H, or at all, justifying the decision of not informing W of the ex parte application.

16.  The parties were still on talking terms. It is also not disputed that H could reach W via WhatsApp. I take the view that H should have informed W of his ex parte application. If W were so informed, there and then, it would have been made clear to H that the mortgage loan was $2 million that was only about a quarter of the value of Flat D and a small fraction of the total value of the matrimonial assets, and that it would have been clarified that one of the reasons that W took out the mortgage was that she needed funds to meet the renovation costs of the Seaview Crescent Property that were about $700,000. Were such clarifications provided, H would have seen that his claim for ancillary relief was still well covered by the remaining matrimonial assets so much so that there was no risk of dissipation to H’s prejudice.

17.  I accept that the filing of the Form 8 against the landed properties would prevent W from further disposing or otherwise dealing with the same.

18.  I do not accept that H’s ex parte application was totally unnecessary, however. As H contended, an essential part of the injunction was to let H continue living in the Matrimonial Home.

Who can be regarded as the successful party

19.  The parties took issue on who can be regarded as the successful party. In YBL v LWS (No 2) supra, the Court of Appeal held that, in measuring who was the successful party and the extent of his success, the court must examine the reality and justice of the case.

20.  After having carefully considered all circumstances, I accept that, in view of W’s insistence on going ahead with the tenancy agreement at the return date hearing, W did not actually offer an alternative case.

21.  I agree that the consequence on costs that the disclosure order was not granted is minimal.

22.  More substantively, both parties succeeded partially. H was successful in obtaining an order restraining W from delivering up and parting possession with the Matrimonial Home while W was successful in the application to discharge the injunction order, save to the extent of prohibiting W from delivering up and parting possession with the Matrimonial Home.

The parties’ conduct

23.  I take the view that the chain of events leading to H’s ex parte application must be considered when looking to his motives to pursue the application for an ex parte injunction and the relative merits of the application at the time when it was made. Apparently, there was deep distrust between the parties that was caused by W’s repeated unilateral actions. It is obvious that such unilateral actions exacerbated H’s distrust of W and prompted him to take out the ex parte application. I take the view that the court should make a costs order that reflects the fact that W has brought the litigation upon herself.

Conclusion

24.  I remind myself of the provisions of Order 52 rr. 3 and 5 that set out the factors that the court shall have regard in exercising its discretion as to costs. I take notice that I have not accepted that there was extreme urgency or the need for secrecy justifying H’s decision of not informing W of the ex parte application. I place particular significance on the fact that both parties were partially successful. H was successful in restraining W from delivering up or parting possession with the Matrimonial Home that was an essential part of the injunction while W was successful in the discharge of the injunction save to save to the extent of prohibiting W from delivering up and parting possession with the Matrimonial Home. I also place particular significance on the fact that W perpetrated repeated unilateral actions that exacerbated H’s distrust of W and prompted him to take out the ex parte application.   Looking at the matters in the round, I regard that it is just and reasonable to make no order as to costs of the three applications.

Disposal

25.  I make no order as to costs of the three applications, including all reserved costs. In a broad-brush way, I make the order nisi that there also be no order as to costs of the costs only proceedings, including all reserved costs. The order nisi becomes absolute 14 days after the order is made unless a party has applied to the court for varying the order.

Ms. Fiona Chong instructed by China, Chow & Barbara Hung, solicitors for the petitioner

Mr. Jeffrey Li instructed by Chong & Yen, solicitors for the respondent