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K v D

Judgment Cited authorities 10 Cited in Precedent Map Related
Vincent
Judgment Date15 July 2009
Year2009
Judgement NumberFCMC8732/2007
Subject MatterMatrimonial Causes
CourtFamily Court (Hong Kong)
FCMC8732/2007 K v. D

FCMC 8732/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

SUIT NO. 8732 OF 2007

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BETWEEN

K Petitioner
and
D Respondent

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Before : HH Judge Bruno Chan in Chambers

Date of Hearing : 11 – 14 May & 16 June 2009.

Date of Judgment : 15 July 2009.

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J U D G M E N T

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1. This is the Petitioner Wife’s application for ancillary relief, mainly for an order for equal division of the matrimonial assets between her and the Respondent Husband upon the dissolution of their marriage, and also for his contribution towards the support of her daughter born to her former marriage but has been treated as a child of this family and is now a 19 year old university student in St. Andrews, Scotland.

2. The parties first met in 1987 but only commenced a relationship in 1996, married in 1999, and separated in 2006. The Wife is now a 52 year old event organising/managing consultant residing in Hong Kong, while the Husband is aged 58 and a retired civil servant receiving his pension in Canada.

3. There is no major dispute as to the income of the parties or their assets, rather the focus of the disputed evidence has been on when exactly did they commence cohabitation or become committed to each other, and when exactly did they separate, with the perceived forensic purpose of the focus being first to seek to identify those dates or moments, and then to seek to identify what assets did they each bring into the marriage, what value should be assigned to those assets for the purpose of their distribution, and how should they be distributed between the parties now that their marriage has come to an end.

4. The Wife blames this forensic exercise on the Husband for taking the wrong approach towards the distribution of their assets, which she says should instead be a simple equal division taken at the time of their separation, with the relevant valuation being their current values other than those already realised then when they were realised, hence with the total assets currently valued at HK$18,167,558, an equal share would give an entitlement of HK$9,083,779 to each party, as their marriage had essentially been an equal partnership in terms of assets, contributions and every other sense.

5. The Husband however argues that the valuation of all the assets should be taken at the time of the trial at only about HK$11,772,799 in total, and that this is a proper case to depart from equality, with both parties married late in life and with no child from the marriage, and as the Wife did not put her case on the basis of need, it is therefore necessary to consider the financial position of the parties at the time the relationship began and now, as his initial contributions were more significant than the Wife’s and should not be disregarded, but his position has since declined, hence her proposal for an equal distribution of assets in the circumstances would be manifestly unfair. .

Background

6. The Husband was born in Canada on 14th April 1951 and received his education up to university in engineering in Ontario. He came to Hong Kong in early 1981 to join the civil service as a geotechnical engineer in the then Public Work Department. In 1988 he was transferred to the Environmental Protection Department and was promoted to Senior Environmental Protection Officer in 1990, a position he had held up to his retirement on 28th December 2004 when his pre-retirement income was about HK$120,000 per month including salary and various allowances.

7. In 1996 he purchased a property at Woodland Gardens, Conduit Road, Hong Kong (“Woodland Gardens Property”) for HK$7,800,000 by means of a mortgage of HK$5,350,000 from Hang Seng Finance and a government loan of HK$1,732,000 as his home up to the time of the marriage and thereafter as the parties’ matrimonial home.

8. The Wife was on the other hand born in England on 2nd August 1956 and after completing secondary education, she went on to train as a nurse. She then decided to develop her career in business and in 1987 came with her first husband Mr. MK to Hong Kong where she subsequently gave birth to their child E on 23rd March 1990 who would later become a child of this family.

9. In or about 1993 the Wife separated from her first husband and moved to Manila with E. In 1996 the parties commenced their relationship and it was then agreed that the Wife and E should relocate back to Hong Kong to be with the Husband and also in time for E to commence her new school term in September 1996, which they did in about August of the same year.

10. As noted above it is an issue between the parties as to when exactly that they commenced their relationship, with the Wife claiming that it was in about August 1996 when they began their commitment to each other and when she would stay over at his Woodland Gardens Property from time to time, while the Husband’s case is that it was only in March 1997 when they actually started cohabiting together as a family. In any event their decision was for the family to first reside in his Woodland Gardens Property, with the intention to sell it and to buy another property for the family, but the subsequent Asian financial crisis in 1997 made the sale impractical, and so the property became their matrimonial home. They eventually registered their marriage on 15th August 1999 in Ontario, Canada after the Wife had divorced her first husband.

11. After the marriage the Wife ran a company known as MD and MS with sole marketing rights in Asia for certain products that assisted sleep, but the products were subsequently pulled from the market by the manufacturer over accreditation problems. She then traded as K & Co. and from early 2001 as V Limited. There was also a time when she was involved in what is known as a FC Collection business but of no significant value or income. In 2003 she formed a consultancy business known as DDK Limited (“DDK”) in events management which has since been her sole source of income averaging about HK$52,000 per month according to her Financial Statement (Form E) filed in these proceedings.

12. In about late 2002 the parties decided to leave Hong Kong to settle in Canada, reluctantly on the part of the Husband as he preferred living in Hong Kong where he had the security of a well-paid job, but insisted by the Wife due to her unhappiness with his alleged drinking problem and her belief that their future should be in Canada. The parties therefore sought and obtained legal advice to structure their assets to minimize tax liabilities with the Canadian Revenue Agency in preparation for the move.

13. Accordingly a BVI registered company known as CO Group Limited (“COG”) was set up in 2002 with the parties as the only directors with equal share holding to hold properties and investments by way of shareholder loans. It has 3 bank accounts all with HSBC, of which a trust loan account operated solely by the Husband to deal with the shareholder loans, while the other 2 accounts have the parties as joint signatories.

14. As part of COG’s business plan, another company known as K I Limited (“KIL”) was set up with COG as the only share holder and again with the parties as directors to purchase and hold the following properties in Canada :

(a) 19XX Jackson’s Mill Road, Kingston, Ontario (“Jackson’s Mill Property”);

(b) 3XX, 3YY and 3ZZ Queen Street, Kingston, Ontario (“Queen Street Properties”);

(c) 1XX Bagot Street, Kingston, Ontario (“Bagot Street Property”).

15. The Jackson’s Mill Property was purchased on 31st October 2002 as the parties’ future intended home for C$376,000 by means of a mortgage of C$244,400 from HSBC Canada with the parties as guarantors, with the down payment of C$127,100 funded from the Husband’s savings as a COG loan to KIL, plus a further payment of C$10,422.75 from him.

16. In anticipation of their move to Canada, the Wife in 2003 enrolled E into Trinity College School in Ontario as a boarder starting for the new school term of September 2003.

17. Shortly thereafter in April 2003 the Wife met an accident after falling through the glass door of a shop in a shopping mall in Central, Hong Kong which had not affected the parties’ plan but did cause her serious head injuries with post-traumatic stress and post-concussion syndromes. Legal proceedings have subsequently been instituted in the High Court on her behalf to sue for damages for the injuries which to my understanding are still unresolved at the time of the hearing of this application.

18. By late 2004 or early 2005 the parties agreed that the Jackson’s Mill Property be transferred to the Husband’s sole name before his official return to Canada to minimise potential capital gain tax there. The transfer was completed in December 2005 at the then market value and recorded for the sum of C$384,000 by means of another HSBC Canada mortgage in the Husband’s sole name with the down payment funded by a loan from the COG trust loan account.

19. The Bagot Street Property was purchased on 1st February 2003 as investment for C$354,000 by means of a mortgage of C$228,800 with the down payment funded by the Wife’s savings.

20. The Queen Street Properties which consisted of 3 units were purchased about 2 months later on 2nd April 2003 also as investments for the total sum of C$610,000 again by means of mortgages with HSBC Canada with the down payments funded similarly by the parties’ savings.

21. The parties then appointed a local property manager known as Keystone Property Management (“Keystone”) to manage these properties including letting them out for rental income, with the management fees and other expenses relating to the properties being met by an overdraft account of KIL...

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