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.