Li Wai Tat Walton v Li Man York Evelyn

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

1998, No. 70
(Civil)

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J U D G M E N T

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Nazareth, V.-P.:

1. This is an appeal by the respondent ("the wife") against the judgment of Deputy Judge Saunders dated 19 January 1998. A decree of divorce had been granted upon the petition of the husband who then applied for ancillary relief. The wife likewise applied for ancillary relief on the following day, 5 December 1995. She now appeals against the award made by the deputy judge.

The facts

2. These can conveniently be taken from the judgment. Both the husband and wife at the time of the proceedings were aged 49. They had been married for 23 years. They met as students when both were living in Los Angeles attending university. Both came from wealthy backgrounds and received considerable assistance from the husband's parents to enable them to start life together. The husband's parents gave them funds to buy a good home in Los Angeles. When the first child was born, an amah was sent to Los Angeles from Hong Kong to assist the wife.

3. There are two children of the marriage, Adrienne, a daughter aged 23 at the time of the proceedings was then at university in Hong Kong, having graduated from a university in Boston. The younger, a son, Brian, then aged 20, was at university in San Francisco. No issue arose in respect of them as there were ample funds from which they will be cared for and the wife did not seek to include them in her award.

4. During his medical education at university the husband had an allowance from his parents which enabled him and the wife to live to a very good standard. In due course the husband qualified as a doctor and obtained specialist qualification as an ophthalmologist. The husband's family is a prominent and successful medical family which, in 1922, was instrumental and establishing what is now Hong Kong's largest private hospital, the Hong Kong Sanatorium and Hospital Ltd ("the Hospital").

5. The wife graduated with an MBA and qualified as a real estate broker, but although there was an opportunity for her in Los Angeles, she did not take up a job. Her family was from Vietnam and that fact enabled the parties to obtain US citizenship while they lived in Los Angeles. Her parents are also very wealthy. She, however, is one of 13 children, 11 daughters and two sons. By 1979 the husband had obtained the qualifications mentioned and was on the teaching staff at the University of California, Los Angeles. He and his wife had the two then young children and were settled in California with the husband looking forward to a career in academic medicine and practice as an ophthalmologist.

6. However, in 1980 they returned to Hong Kong and the husband joined his father at the Hospital. The couple soon began to live to a standard which the judge described as consistent with that of a successful and prominent medical practitioner in Hong Kong. They were both keen golfers and enjoyed club and social events. The marriage was apparently happy and successful. However, it was destroyed when the wife in October 1994 discovered a condom or condoms in a drawer in the husband's office. Following that in February and March 1995 the wife made a number of substantial withdrawals from the husband's bank accounts and refused to explain to him what had happened to the proceeds. In July 1995 the husband issued a petition based on the wife's unreasonable behaviour which went to trial before Deputy Judge Carlson (as he then was) who granted a decree nisi on 15 November 1996.

7. It remains to mention that about the time the divorce proceedings were approaching hearing, the wife sought maintenance pending suit and was granted $95,000 a month together with certain other expenses by Hartmann J.

The judge's approach

8. Having outlined the foregoing matters in his judgment, the judge then correctly directed himself on his duty to have regard to s.7(1) of the Matrimonial Proceedings and Property (Cap. 192) ("MPPO") noting the "reasonable requirement" formulation and the principles set out in the judgment of Hunter JA in C v C [1990]2 HKLR 183, 186-7. Likewise, with respect to the Duxbury calculations submitted by the parties, he noted their limited usefulness by reference to B v B[1982]3 FLR 298. He then proceeded to identify and value the financial resources of the parties (save those that he did not think it necessary to value) in pursuance of paragraph (a) of s.7(1), turning later to the remaining paragraphs, i.e. (b) to (g), and lastly to the Duxbury calculations.

Resources

9. The husband produced a list of all the assets in the parties' names or held in trust for them. This was used as the working basis for identifying their assets with the agreement of the wife, and admitted as Exhibit P1. Upon that basis the judge identified the following assets, beginning first with those agreed, and following with those in dispute.

Agreed assets

The matrimonial home

10. The matrimonial home was House B9, Hillgrove, Chung Hom Kok in Hong Kong ("Hillgrove"). The agreed value as at November 1997 was $29m. It was subject to a mortgage of $4,068,500 which was advanced to the husband by his mother. Later a trust fund was established for the husband (the Waltly No. 1 Trust) and the mortgage was transferred to that Trust. The husband paid the interest.

The Los Angeles houses

11. There are two houses in California one at Bel Air ("Vicenza") and the other in Los Angeles ("Roscomere"); this property is debt free and has an agreed value of US$650,000. Roscomere has an agreed value of US$558,000, but it is subject to a mortgage of US$500,000. It is kept vacant and is the family home on their trips to California. The income from Vicenza finances the mortgage on Roscomere, subject to a small deficiency covered from Hong Kong income.

Cars

12. The family had seven cars, two in Los Angeles and the other five in Hong Kong. The value in Exhibit P1 was given as $2,154,660.

Retirement investment accounts

13. The husband had two retirement investment accounts of US$214,921 and US$1,207,030, totalling HK$3,261,629.

Jewellery

14. The wife had jewellery of an agreed value of $750,000 which she wished to retain.

Club membership

15. The parties were members of eight clubs. In addition, they had the use of the Aberdeen Marina Club through the husband's sister. The memberships of only two of the Clubs were allocated a value in Exhibit P1, i.e. the Singapore Island Country Club with a value of $869,120 and the Xili Golf & Country Club $720,000.

Disputed assets

The wife's bank accounts - the non-disclosure

16. As indicated, the event that triggered the filing of a divorce petition by the husband was his discovery that the wife had removed very substantial sums from his bank accounts. It should, however, be mentioned again here that it was the wife's earlier discovery of evidence in the husband's office which in the absence of any explanation pointed to his infidelity that led to the breakdown of mutual trust. Although the husband earned around $10m a year, and still had substantial sums in the bank, he was very concerned at the disappearance of the funds as he had US income tax to pay. From the very inception, and throughout the whole of the proceedings, the husband's solicitors repeatedly pressed the wife to disclose what had happened to the funds. She persistently evaded their requests and released only limited information. During the trial it became necessary for the judge to make orders requiring the wife to disclose information relating to her bank account she held with the Coast Federal Bank in California, which resulted in yet another previously undisclosed account with that bank, being discovered. The judge was satisfied that the wife had patently and deliberately failed in her obligation of full and frank disclosure to the court and had intentionally concealed from the court assets in her name or held for her by others which she knew she ought to have disclosed. He added

"Her evidence in relation to withdrawals from accounts in Los Angeles of three sums totalling US$246,228 on 13 June 1995, after the proceedings had been commenced, was evasive and dishonest. I categorically reject her explanation that she 'could not remember' what she had done with the funds. It is simply unbelievable that a person in such circumstances would 'forget' what she had been done with nearly $2m withdrawn in one day from the bank .... That is especially so for a witness who, when it suited her, could remember any detail she wished to recall".

17. He also rejected her explanation of disposal of funds totalling nearly $7m from Hong Kong bank accounts on 16 February 1995 and 2 March 1995 as equally unbelievable. That included her assertion that she "gave away" the funds to her sisters, mother and friends. He concluded that if she had so given away funds that it was more likely that she had merely placed them with the people concerned on the basis that the funds would be returned to her at her request, as was the case with $500,000 she gave her mother.

18. It is not necessary to recount the details of the withdrawals and the wife's explanations rightly categorised as contradictory and duplicitous by the judge. Suffice it to say that her counsel conceded that she should account for some "$8-9m". The husband's accountants prepared...