On Divorce and Matrimonial Assets: Third Party Interest
By Mrs. Cecilia Wong and Mr. Alex Lam
A Brighter Future 更光明的未來（？）
You have always wanted a place of your own, but you were not born into a wealthy family and knew well that purchasing a landed property in Hong Kong these days would be difficult beyond all beliefs.
You lived on pennies a day just to maintain some semblance of a home with your spouse. Food expenses, utilities, management fees and perhaps money for diapers and baby formula too, all of these seemed to exist just to put pressure on you. You had lost hope at one point that you would ever become a homeowner, and all your dreams faded away as you dally away your youth.
A brighter future then appeared before your eyes as your in-laws came to the rescue. They offered to help you and your spouse purchase a brand-new home, with new renovations and your favourite furnishings too.
Sadly, the good life which you envisaged was short-lived and your marriage took a turn for the worse.
You have now moved out of what once was a happy place to you, because it is now just a former matrimonial home in which everywhere you look, you find full of bitter memories. Your estranged spouse has long gone, and now lives happily ever after with his or her new significant other.
But of course, you have heard of the so-called 50/50 rule in divorce. You want half of your spouse’s assets as “compensation” for a marriage gone wrong (with no fault of your own, of course). You hope you would receive a sizeable payment in one go from your estranged spouse, with which you may purchase another place which you may finally call your own home.
But can you?
The Ungrateful Spouse 忘恩負義的配偶
For a long time, you have worked more than 60 hours a week and yet, you are barely able to make ends meet. You wanted a place of your own, but you knew it was impossible on your meager salary. Even if you had nothing else in the world, you thought to yourself, you still had your spouse and your parents. Hope was always around the corner.
Your parents did not have your grandparents’ help when your parents purchased their property, but “times are different now”, your parents reassured you, “and we understand your difficulties”, said your lovely parents. Out of pure love and affection, your parents had helped you pay for a property which then became the matrimonial home between you and your spouse.
Your parents wanted nothing but the best for you and your spouse. They treated your spouse as a child of their own. They forego living comfortably in their golden years and parted ways with their precious retirement fund to help you and your spouse settle down. All that your parents have ever asked for was to be treated with respect and not to be left old, senile and ignored in their old age.
But not only was your spouse ungrateful for your parents’ kind gesture, your spouse wanted nothing more than to get rid of your parents. Sadly also, your marriage took a turn for the worse. Every day, you bathe yourself in regret that you are unable to fulfill the rosy picture which you had once painted onto the minds of your parents, of what blissful joy you, your spouse and your children could have given to your parents.
In the least, you think to yourself, even if nothing good came out of your now dead marriage, you must not let your now estranged spouse walk away with what really does not belong to him or her.
But can you?
一路以來，你每週工作 60 多個小時仍只能勉強維持生計。你想擁有一個屬於自己的地方，但你知道僅靠你微薄的工資是不可能的。即使你在世界上一無所有，你心想，你仍然有你的配偶和你的父母。希望總在拐角處。
How the Courts Deal with Matrimonial Assets in Divorce Proceedings 法庭如何處理離婚訴訟中的婚姻財產
The above describes two common types of scenarios involving third-party interest in matrimonial assets. If, for instance, your estranged spouse claims that your in-laws are the real owners of your former matrimonial home, then your in-laws are the third-party. Conversely, if your parents had provided funding towards a property for you and your spouse, then your parents are the third-party.
Before going into how the Courts in Hong Kong deal with third-party interest in matrimonial proceedings, you should first understand how the Courts deal with division of matrimonial assets in divorce proceedings.
In reality, the 50/50 rule is not a rule, per se, but a starting point for the Courts to decide how matrimonial assets should be split.
Five (Not So) Simple Steps to Division of Matrimonial Assets 分割婚姻資產（並非如此簡單的）的五步指引
In a landmark case LKW v DD (2010) 13 HKCFAR 537, the Court of Final Appeal has laid down a 5-step exercise on how the Courts in Hong Kong should approach the making of ancillary relief orders. Without going into details, the five steps are as follows:-
Step 1: Identifying the net financial resources of each party to the divorce
Step 2: Evaluating the financial needs of each party
Step 3: Applying the 50/50 split as a starting point for asset division between the parties
Step 4: Considering whether there are good reasons for departing from the 50/50 starting point
Step 5: Making a decision
It is in Step 1 that third-party interest may complicate the matter. If third-party interests in matrimonial assets are involved, the Court may first have to determine the extent and nature of the beneficial interests of the third-party prior to going onto Step 2.
在標誌性案例 LKW v DD (2010) 13 HKCFAR 537中，終審法院就香港法院應如何處理附屬濟助訴訟的制訂了一個五步的指引。簡單而言，該五個步驟如下：
第 1 步：確定婚姻各方的經濟資源
第 2 步：評估各方的經濟需要
第 3 步：應用 50/50 分割作為各方之間資產劃分的起點
第 4 步：考慮是否有充分的理由離開 50/50 的起點
第 5 步：作出判決
在第 1 步中，第三方權益可能會使問題變得複雜。如果婚姻資產涉及第三方利益，法庭可能要先確定第三方權益的範圍和性質後再進行第 2 步。
Third-Party Interest 第三方權益
The identification of the net financial resources of each party to divorce involving third-party interests in matrimonial assets may therefore be a lengthy and arduous process. The relevant third-parties may be joined to the divorce proceedings, and separate hearings as well as further filing of evidence and documents may be required.
There may be an arrangement of trusts between one party to divorce and his parents in relation to the relevant matrimonial assets. For instance, a party may be holding a property in name only, and the real owner who should receive proceeds of sale from disposing the property may be that party’s parents. Sometimes, such “trust” arrangements are not meant to be enforced or may even be outright shams, or façades appearing to the outside world (and perhaps appearing to you too) to be something entirely different from what they appear to be.
Sometimes, so-called loans by a parent to his child for the purchase of a property are not meant to be repaid, or are sometimes repayable upon demand, depending on the intentions of the person making the loan and the person receiving the loan. Such loans, if used to fund the purchase of matrimonial properties, further complicates the matter.
Another problem which may arise in terms of identification of matrimonial assets is when, upon contemplated or an imminent divorce between spouses, one party to divorce dissipates matrimonial assets in an attempt to avoid letting the other receive a share of the matrimonial treasure pot, as, for instance, when a party sells his property and transfers all the proceeds of sale unto his parents, leaving his bank account balance negligible, meaningless or in the red.
Where the third-party is a person of old age, of questionable mental disposition or pretends to be of questionable mental disposition in order to abuse the Court process, and perhaps claims to have forgotten certain important details which should have been advantageous to you, threatens to commit suicide, produces weapons to make threats and so forth, these are all factors which a party to divorce should be mentally prepared to deal with as a part of the process of divorce.
The way forward 下一步
The outcome of division of matrimonial assets often depends on the strength of your evidence and how well your witnesses stand up in Court and, while withstanding rigorous cross-examination by legal advisers of your opponent and sometimes questions by the Judge, to tell a version of your side of the story that is favourable to you.
As strong as your evidence is on paper, if at all, your case is only as strong as your witnesses and the experience of your legal advisers. A successful suit of divorce requires practical insights, technical know-hows with a proper dose of common-sense which is not at all common these days when it comes to the law. Theories, conjectures and dogma may all be thrown out the window when it is the parties’ and their children’s livelihood which are at stake.
Divorce requires foresight and careful planning ahead, to prepare for a well-placed strategy against your spouse, who often turns belligerent once a divorce becomes imminent. Our solicitors are familiar to advise on various family disputes with a pragmatic approach, mediation as well as asset preservation and recovery. Let us help you, whether you wish to deal with your spouse, children or in-laws amicably or, if antagonism and aggression become unavoidable, claim on your behalf for what rightfully belongs to you and the significant people in your life.
If you have any enquiries, you may contact us at 2545 8181 and speak with our firm’s Partner Mrs. Cecilia Wong or our Associate Solicitor Mr. Alex Lam.
Profile of our Professionals 本行之律師
Mrs. Cecilia Wong, Partner
Mrs. Cecilia Wong holds a Bachelor of Laws degree of Peking University, Postgraduate Certificate in Laws of the University of Hong Kong, Graduate Diploma in Law of Manchester Metropolitan University, Graduate Diploma in Management of McGill University, Bachelor of Arts (English Literature) of Concordia University, and etc. She is a China-Appointed Attesting Officer. Mrs. Wong has over 20 years of experience as a solicitor in private practice and is competent in matrimonial law, criminal and civil litigation, probate, commercial and corporate law. She actively participates in promoting the use of mediation in Hong Kong and has enormous experience in mediation and arbitration for various matters. Her public duties engagements include being a member of the Chief Justice’s Working Party on Mediation, a member of the Family Council, a member of the Family Law Committee of the Law Society of Hong Kong, a member of the Mental Health Committee and past chairlady of the Appeal Tribunal Panel, Planning and Lands Branch of Development Bureau. She is also a past Council member of the Law Society of Hong Kong and etc.
Mr. Alex Lam, Associate Solicitor
Mr. Alex Lam holds a postgraduate law degree of Juris Doctor and Postgraduate Certificate in Laws from the Chinese University of Hong Kong. He has over 8 years’ private practice experience in civil litigation, property, corporate and commercial matters. Prior to joining the firm, Mr. Lam had practiced with various prominent local law firms. He is experienced in advising a broad range of high-profiled clients including multi-national companies, local listed and private companies and individual clients on civil litigation, legal compliance and investigation as well as corporate matters involving high valued transactions, claims and disputes. Mr. Lam often advises on various contentious and non-contentious matters, covering contractual and employment disputes, estate planning, trust and estate claims, matrimonial proceedings as well as compliance and regulatory issues. He has assisted a wide range of clients by adopting pragmatic, collaborative approaches and delivering robust, yet flexible advice to tackle various acrimonious litigation cases. His broad clientele includes small and medium enterprises, partnerships and individuals.
黃吳潔華律師 | 合夥人
林志聰律師 | 律師
林志聰律師擁有香港中文大學法律博士學位及法律專業文憑。他在民事訴訟、房地產及公司與商業事務方面擁有超過 8 年的執業經驗。在加入本行前，林律師在多間知名本地律師行執業，其客戶涵蓋跨國企業、本地上市公司、私營公司及個人客戶。他曾為眾多知名客戶就巨額交易、索償和爭議提供有關民事訴訟及法律遵循與調查的諮詢。林律師經常就各種爭訟及非爭訟性事務提供法律意見，其中包括合同和僱傭糾紛、遺產規劃、信託與遺產爭議、婚姻訴訟及法律遵循與監管問題。他採取務實、協作的方針向客戶提供穩健而靈活的建議來處理各種激烈的訴訟，為廣泛的客戶提供解決方案。林律師的客戶包括中小企業、合作夥伴和個人客戶。