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W v H And Another

Judgment Cited authorities 16 Cited in Precedent Map Related
Vincent
Judgment Date29 February 2008
Year2008
Judgement NumberHCMC1/2006
Subject MatterMatrimonial Causes
CourtHigh Court (Hong Kong)
HCMC1/2006 W v. H AND ANOTHER

HCMC 1/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MATRIMONIAL CAUSES NO. 1 OF 2006

(transferred from FCMC 4816 of 2005)

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BETWEEN
W Petitioner
and
H 1st Respondent
Z 2nd Respondent

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Before: Hon Saunders J in Chambers (Not Open to Public)

Dates of Hearing: 12-16, 19-21, 28-30 November 2007

Date of Judgment: 29 February 2008

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J U D G M E N T

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Background:

1. In these matrimonial proceedings the net assets of the wife amount to some $50 million. The assets of the husband arguably amount to some $300 million. The extent of the husband’s assets will depend upon the outcome of an application by the wife under s 17 Matrimonial Proceedings and Property Ordinance, Cap 192, (MPPO), to be dealt with later in this judgment.

2. In this judgment, except where indicated, all figures are in Hong Kong dollars. Unless it is particularly relevant, I have rounded all figures to the nearest $100,000.

3. Mr Pilbrow, for the wife argues that the concept of the entitlement of a wife, in ancillary relief proceedings, being limited to her reasonable requirements, is no longer the law in Hong Kong. Consequently, he says that of the total assets owned by the parties, the wife should receive 45%. Mr Coleman, for the husband says that the notion of reasonable requirements was established in Hong Kong in C v C [1990] 2 HKLR 183, CA, and still remains the law.

4. The case for the husband is that I am bound by that decision, it being a decision of the Court of Appeal. Mr Coleman says, as to the wife’s reasonable requirements, simply that no order need be made, as the assets in her name are sufficient to meet her reasonable requirements.

5. It is now clearly established, sensibly so, that the starting point of an inquiry in an application for ancillary relief is the financial position of the parties, an exercise that requires first, the computation of the assets, and then the distribution of the assets in accordance with the law: see Charman v Charman [2007] 1 FLR 1246. There is no dispute between the parties of this proposition.

6. Because in this case there is a direct challenge by the wife as to the legal principles to be applied, and upon which the distribution should be undertaken, it seems to me sensible to first consider the submissions on the relevant law. Following my determination of the relevant law to be applied, I shall determine the extent of the assets, and then turn to the distribution of those assets in accordance with the law.

The Relevant Legislation:

7. The starting point for a consideration of the law in relation to ancillary relief must be the relevant legislation, the MPPO. Two provisions of the Ordinance are relevant. They are ss 4 and 7. I set out below the relevant provisions of each, indicating where I have omitted matters irrelevant to the present proceedings.

8. The first, s 4, gives power to the court to make orders for the financial provision for a party to a marriage in the case of divorce.

“s. 4(1) On granting a decree of divorce…., the court may, …., make any one or more of the following orders, that is to say-

(a) an order that either party to the marriage shall make to the other such periodical payments and for such term as may be specified in the order;

(b) an order that either party to the marriage shall secure to the other to the satisfaction of the court, such periodical payments and for such term as may be so specified;

(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified.”

9. The second, s 7, sets out certain matters to which the court is to have regard in deciding what orders to make under s 4.

“s. 7 (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….., the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution…. of the marriage, that party will lose the chance of acquiring.

10. The most striking feature of this legislation is that, whilst setting out matters to which the court is obliged to have regard, no guidance at all is given to the court as to the way in which, having regard to those relevant matters, the court should then approach the making of an order for financial provision.

11. The provisions in Hong Kong are to all intents and purposes identical to those contained in the Matrimonial Causes Act 1973, (UK). For convenience I shall refer to the English legislation by the use of the section numbers in the Hong Kong legislation.

The interpretation of the English legislation prior to 2000:

12. In a series of decisions of the Court of Appeal in England, beginning with O’D v O’D [1977] 2 WLR 308, [1976] Fam 83, followed by Page v Page (1981) 2 FLR 198, and finally in Preston v Preston [1982] Fam 17, the court established a principle whereby, (usually), a wife’s entitlement to ancillary relief was determined by ascertaining, having regard to all of the matters set out in s 7, a sum that constituted her reasonable requirements, and, assuming there were sufficient assets, awarding her that sum.

13. In Duxbury v Duxbury (1987) 1 FLR 7, the court used a calculation, based upon the statistical anticipated duration of the life of the wife, to determine a lump sum which, if invested at an appropriate rate of interest, and from which both capital and income withdrawn annually, would provide her with an appropriate sum upon which to maintain her standard of living. This calculation, which became known as a Duxbury calculation, afforded a starting point upon which the court could assess the reasonable requirements of a wife.

14. The effect of this interpretation of the legislation was that in the usual case, where after a reasonably long marriage, the bulk of the assets were in the name of the husband, he would be required to pay to the wife a lump sum for her reasonable requirements, he retaining the remaining assets. Significantly, if the assets in the hands of the husband, following the assessment of the wife’s reasonable requirements and payment to her of that sum, exceeded the amount due to the wife, then usually the husband would retain the whole of that sum. Thus, if, from assets of $30 million in total, it were determined that the wife was entitled to $10 million to meet her reasonable requirements, then she would receive that sum, and the husband would retain $20 million.

The interpretation of the Hong Kong legislation:

15. In Hong Kong, in C v C [1990] 2 HKLR 183, the Court of Appeal ruled that in ancillary relief proceedings the approach that had been adopted in England was to apply. In determining what was the proper lump sum to award, Hunter JA said that what was required was :

“…a quantification of needs, of reasonable requirements in the broadest sense of that phrase, of the claims of both parties to these assets in the light of all the circumstances and of the considerations specifically named in s 7(1).”

16. Since that decision, ancillary relief proceedings in Hong Kong have been determined by the assessment of the reasonable requirements of the wife. In “big-money” cases a Duxbury calculation would usually be used to determine the entitlement of the wife. Just as in England, in Hong Kong if after paying to the wife the sum assessed by the court, the assets remaining in the hands of the husband exceeded the sum paid to the wife, he was entitled to keep the whole of that sum.

The English law after 2000:

17. In October 2000, for the first time ever, the provisions of the Matrimonial Causes Act 1973, (UK), came before the House of Lords for consideration in White v White [2001] AC 596, [2000] 2 FLR 981. There, the House of Lords determined that the concept of ‘reasonable requirements’ that had been in use since 1976, did not properly reflect the law.

18. Instead, the court identified the objective implicit in the provisions of the Matrimonial Causes Act 1973, as being to achieve a fair outcome in the financial arrangements on or after divorce, giving first consideration, where relevant, to the welfare of children. The following passage from the headnote to the report of the decision in [2000] 2 FLR 981, accurately reflects the principles enunciated by the leading speech given by Lord Nicholls of Birkenhead:

“Fairness required the court to take into account all the circumstances of the case. In seeking to achieve a fair outcome, there was no place for discrimination between husband and wife and their respective roles. Fairness required that the division of labour should not prejudice or advantage either party when...

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