FCMC 14649 / 2014
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
NUMBER 14649 OF 2014
|Coram: His Honour Judge I Wong in chambers (Not Open to Public)
|Date of Hearing: 10 January 2017
|Date of Judgment: 23 January 2017
1. This is the petitioner wife’s application of 27 September 2016 for an injunction to restrain the respondent husband from:
(1) dealing with his securities accounts held in his name as well as any new securities account he may open other than by way of usual trading and due to market fluctuation. A total of 17 accounts are listed on the summons; and
(2) withdrawing funds more than $75,000 per month from his bank and securities accounts as his living expenses.
2. Further, the respondent is to be restrained from giving donations to charity. All donations must be to a properly licensed Hong Kong charity or to the school that the parties’ son is attending and agreed between the parties.
3. In the mention hearing of 4 October 2016 I gave an ‘interim interim’ order in terms of the petitioner’s application (with the threshold of living expenses being adjusted to $100,000) pending determination of the application.
4. For convenience, I shall continue to refer the petitioner wife as “P” and the respondent husband “R” in this Judgment.
Background to the Present Application
5. I need to mention that this is in fact the 3rd application of P for an injunction.
6. The first was taken out on 20 May 2015. This summons (“the 1st Injunction Summons”) dealt mainly with the landed properties and fixed assets under R’s name. In brief, P sought an order to restrain R from dealing with the proceeds of sale of 3 properties, namely (1) the Wan Wah property, (2) the Pacific Heights property and (3) the Camel Paint property. She also sought to restrain R from dealing with the remaining landed properties and assets already came to light and remained unsold. These assets included but not limited to 4 landed properties in Hong Kong and in the Mainland, 2 Hong Kong/PRC dual vehicle licenses, 2 golf club memberships and an interest in a sand mining business in the Mainland.
7. The second summons (“the 2nd Injunction Summons”) was taken out on 11 August 2015 and was in part a follow-up on the proceeds of sale and the remaining part for further restraining R’s investment activities. The relevant part of the summons, insofar as it related to R’s investment activities, was to restrain R:
(1) From engaging in further stock, margin borrowing and lending, futures, options and unit trust related investments, whether out of his personal bank or securities accounts or out of any joint accounts with third parties, and whether in Hong Kong or overseas, pending further Order of the court; and
(2) From purchasing any further investment linked insurance policies, as well as engaging in the redemption of such policies, and any kind of investment purchase, sale or switching under existing insurance policies, without P’s express consent or an order of the court.
8. The 1st Injunction Summons and the 2nd Injunction Summons were heard on 27 October 2015. At that point, R had already agreed to pay the proceeds of sale into court. By a Judgment handed down on 21 December 2015 (“the 2015 Injunction Judgment”), insofar as it related to the 1st Injunction Summons, I gave an order restraining R from further dealing with the landed properties and assets pending the resolution of these proceedings and without an order of the court.
9. As regards the 2nd Injunction Summons, R offered the following undertakings (“the Undertaking”):
“1. To provide the Petitioner with documentary evidence including bank and security accounts statements (for example, investment advices and investment confirmations) for each month on the 1st day of the next calendar month or as soon as the same are available in respect of any stock, margin borrowing and lending, as the same are available in respect of any stock, margin borrowing and lending, futures, options and unit trust related investments whether out of his personal bank or securities account or out of any joint accounts with third parties, and whether in Hong Kong or overseas;
2. Pending resolution of these proceedings and without P’s consent or further order of the court, he shall refrain from purchasing any further investment linked insurance policies or the redemption thereof save and except for the necessary purchase, sale or switching of investments when required under his existing individual policies.”
10. With the Undertaking and for the reasons set out in the 2015 Injunction Judgment I dismissed P’s 2nd Injunction Summons. There was no appeal against that decision.
11. To summarise, the state of the matter since the 2015 Injunction Judgment is:
(1) The proceeds of sale of R’s landed properties are being retained in court;
(2) R is restrained from dealing with the landed properties and other tangible assets until further order of the court; and
(3) Pursuant to the Undertaking R is to provide documentary evidence including statements of his investments in a timeous manner and, to put it broadly, not to purchase any further investment linked insurance policies or their redemption.
12. It was against the above background that about 9 months later P took out the present application. It can readily been seen that the scope of the injunction now being sought is very similar to her 2nd Injunction Summons.
13. It is pertinent for me to recap what I said in the 2015 Injunction Judgment about the background of the parties and their stance in the ancillary relief proceeding:
4. The parties were married in August 2001, with a son born in February 2004, now nearly 12 years old. In November 2014, P petitioned for divorce on the ground of 2 years separation. She claimed that the parties had separated since about 2004.
5. Both parties are 50 years old. P, who retired in 2014, used to have a very successful practice as a solicitor. Probably due to this reason R ceased work in about 2004 and took up the role of a homemaker; the major source of income for the family therefore had been P’s income from her legal practice. R’s another role was to manage the family assets in various forms of investments. In doing so, he has been using some companies as vehicles including two in the names of TAH Limited and NP Limited that feature in the present specific discovery exercise. Probably this is for this reason that he described himself as self-employed in his Form E. This triggered some queries from P. Be that as it may, it seems to me clear that this was the division of labour that the parties agreed upon during the subsistence of the relationship: P was the income earner and R was the homemaker cum ‘family funds’ manager.
6. R accepts this is a ‘big money’ case. He also accepts that the principal source of funds for the investments he has made on behalf of the family during the marriage, and particularly since the birth of the son, has been the joint account of the parties, which has been primarily funded from P’s legal practice, he, however, rejects that such income has been the sole contributor to the family fortunes for the reason that he had savings or assets prior to ceasing employment. He has since done his best to enhance the family wealth through his management to the same. P doubts very much whether this was the case.
7. There is also an issue as to the date of separation. P pleaded that the parties separated in about 2004 but R claimed it happened at a much later time. Yet whatever date it is, it is common ground that the parties have continued to live in the matrimonial home until this day. It is also significant to note that even on P’s own version, notwithstanding that she had long separated with R, she continued to ‘allow’ R to manage her assets to the extent that the father of her son had the authority to manage all the accounts including her own HSBC account into which her earnings from legal practice were deposited. R was even able to operate the accounts online to the exclusion of P in that only he had the password and the security fob.
8. P has one main theme running through her application for discovery: she is suspicious that R may have further assets yet undisclosed to her.
9. P complains that a great deal of money has gone missing or is unaccounted for. She says that before her retirement, she was bringing in income as partner of a law firm of almost $30 million a year. From 2010 to 2014, she earned $146.6 million in salary and dividends. P says that in 2010 the combined assets of the parties were about $63.3 million and in 2014, they stood at about $153.3 million, hence an increase of $90 million only. However, during the same period of time, there were receipts of $209.9 million, with about $146.6 million from P’s practice. Thus, the figures show that a great deal of money has gone missing or is unaccounted for. I do not think I need to go into the details. Suffice for me to say is that during the same period, according to P’s forensic accountant, there were receipts of $47.6 million in respect of which no information or supporting documentation is available and over $216 million was transferred or paid out, of which $125 million were without information or documents provided. There is a ‘black hole’ of as much as $100 million.
10. P says since 2010 R had deliberately kept her in the dark and she therefore did not ‘complain’ because she simply had no idea as to what was going on. R failed and refused to properly account and give full and frank...