PLTO v KLK
Court of Appeal
Civil Appeal No 48 of 2012
Cheung, Fok JJA, Macrae J
Family Law
13–14 December 2012, 27 February, 25 March 2013

Division of matrimonial assets —discretionary family trust —whether entire value of trust to be considered as matrimonial assets available for distribution

A couple (husband “H” and wife “W”) married in 1968 and were now in their 70s. In February 2009, H presented a divorce petition based on two years’ separation. The decree nisi was pronounced in May 2009 and made absolute in September 2010. H had a very successful company (“C”) and he settled 84.63% of C’s shares on a discretionary family trust, set up in offshore Jersey and operated by a professional trustee, which H established in 1995. They had an only child (“K”), following the death of two other children, and H, W and K were equal beneficiaries of the family trust. On W’s application for ancillary relief, the judge in the lower court valued 84.63% of C at HK$1.56 billion and found that H, W and K notionally each had a one-third interest in the family trust. He valued the total matrimonial assets at $1.14 billion comprising H and W’s two-thirds’ notional share, H’s assets, and W’s assets. The judge recognised that the long marriage prima facie entitled W to equal distribution of the matrimonial assets but ultimately awarded her HK$432 million representing 37.74% of the assets. W appealed on various grounds.

Held, allowing W’s appeal, that, inter alia:

The judge rightly concluded that the matrimonial assets included a two-thirds interest in the value of the family trust, being the resource that would likely be available to H for the purpose of assessing such assets, and not the whole of the trust as W argued. H’s decision to provide for K by the family trust was important given the loss of the other two children and as K was heir to the business, it was natural for H to keep her interest away from the matrimonial dispute.

But the length of the marriage and W’s contribution justified an equal distribution of the matrimonial assets of HK$1.14 billion. Half of this was HK$572.4 million and the difference between this and the HK$432 million award was HK$140.4 million.
 

Jurisdictions: 

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