COURT OF FINAL APPEAL, HKSAR
CHIEF JUSTICE GEOFFREY MA
JUSTICE PATRICK CHAN PJ
JUSTICE R.A.V. RIBEIRO PJ
JUSTICE HARTMANN NPJ
LORD CLARKE OF STONE-CUM-EBONY NPJ
15 FEBRUARY 2013
Chief Justice Geoffrey Ma
The present appeal involves a consideration of the court’s approach in applications for ancillary relief under s 4 of the Matrimonial Proceedings and Property Ordinance Cap 192 (“the MPPO” - set out in para 28 below) where, in the assessment of the financial resources of the parties to a marriage, it is relevant to take into account the financial assistance provided by third parties to the husband or wife. In particular, it will be necessary to consider the extent to which (if at all) the court, when making such orders, is able to encourage third parties to provide such financial assistance so as to enable the husband or wife to meet his or her ancillary relief obligations. This latter point involves a consideration of what has become known as “judicious encouragement” in matrimonial law.
Financial assistance from third parties can of course take various forms, anything from the payment of money or transfer of property to the meeting of liabilities. What is involved here is the court’s approach in taking into account property or financial resources to which the husband or wife has or is likely to haveaccess, but to which (until the property or financial resources are transferred) that party has no legal entitlement. Thus, for example, trust property to which a husband or wife has a legal entitlement, do not present any difficulties: such property will certainly be taken into account in ascertaining that party’s assets. It is where discretionary trusts are involved or where, as in the present case, the financial assistance has come from a party’s relatives (in the present case, the parents), that difficulties may sometimes be encountered.
The relevant provisions in the MPPO are s 4 (applications for periodical payments and lump sum orders following a divorce, a decree of nullity or a decree of judicial separation) and s 7(1) (matters which a court must take into account when deciding applications under ss 4, 6 or 6A of the Ordinance). (Section 7(1) is set out in para 29 below.)
In the present case, after a trial in the Family Court (HH Judge CK Chan), it was ordered that the Husband (the petitioner) make periodical payments of $14,000 a month to the Wife (the respondent) from 1 November to the end of 2010, thereafter such periodical payments to be increased to $21,000 a month until the death of either party or the remarriage of the Wife, whichever is earlier, or until further order. No lump sum was ordered. On appeal, the Wife’s appeal was allowed and the Court of Appeal ordered that periodical payments of $42,500 a month be made to the Wife starting from 1 November 2010 until the death of either party or the remarriage of the Wife, whichever is earlier, or until further order. A lump sum of $1.5 million was also ordered to be paid by the husband within one year.
Before dealing with the applicable law and then applying it in the present case, I must first set the scene by identifying the relevant facts and the context of this appeal.
The general facts are amply set out in the judgments of the Family Court (dated 19 October 2010) and the Court of Appeal (dated 2 December 2011). The Chief Judge described the case as “a particularly sad case”. The parties met in the early 1990s when still in their teens, eventually marrying in 2000 in London. Unfortunately, in 2002, the Wife was diagnosed with a rare intestinal condition known as “superior mesenteric artery syndrome”. Her life was described by the Chief Judge as a “nightmare” for her and her family. When the matter came to trial in June 2010, the Wife had undergone some 10 operations since 2002, during which a large part of her digestive system had been removed. She weighed 70 lbs at trial. She was on heavy medication and was confined to her home. She was under the care of two experts in gastro-intestinal diseases and another for her genital prolapse. The experts are of the view that it is unlikely the Wife will be able to lead a normal life: it is not surprising she also suffered from depression and other psychiatric problems. Her mother acts as her guardian ad litem in the present litigation.
With the Wife’s condition as it was, until 2006, the Husband remained at her side and they were very much attached to each other. He kept her company during her treatment in Hong Kong and abroad. In late 2006, however, the Husband told the Wife and her family that he needed a break to re-establish his working career. They separated and the Husband moved back inwith his parents.
On the financial side, the trial Judge recorded the Husband’s employment history as follows (para 82 of the judgment):-
I shall deal with the Husband’s earning capacity later in this judgment (for the Court of Appeal took a different view in analyzing this aspect to that of the trial Judge) but highlight at this stage one factual point. Apart from being a Harvard graduate, the Husband possesses impressive financial qualifications. In particular, he graduated in 2010 with an Executive MBA degree, having attended the Kellogg/HKUST Business School. The EMBA course at this School is one of the most prestigious courses of its kind and, in terms of salary, on average, graduates with this degree commanded the highest starting salaries in the financial sector. Mr Russell Coleman SC (who represents the Husband) drew our attention to a chart compiled by the Financial Times dealing with EMBA rankings for 2012. This chart indicated that the three-year average annual salary for graduates with a Kellogg/HKUST EMBA was US$465,774, the highest by far of the top 100 business schools world-wide. At trial, the figure contained in the FT chart then available was US$345,111.
Earning capacity aside, both parties to the marriage enjoyed significant financial support from their own parents.
The Husband’s parents, both in their seventies, come from a well-known family in Hong Kong. The trial Judge made a finding that they could not be regarded as being in the “extremely rich” category. However, it is clear that they have been supportive of the couple before the separation in 2006, and since then – indeed all along – they have continued generously to support the Husband:-
They paid for the wedding reception at the Shangri-la Hotel in August 2001.
The Husband’s parents also met the bills for the credit cards of the couple (the Wife had four supplementary cards) when they were still together. The parents did not give evidence at trial but the Wife’s parents did. Their testimony was to the effect that the Husband’s parents had given financial support in the past so as to allow the couple to lead a reasonably high standard of living. The Husband was able to buy expensive items for the wife; at trial a list was compiled showing that designer goods were purchased having a value of over $1.13 million.
After the couple separated, the Husband’s parents continued to support him and did so generously as they had done previously. The trial Judge did not provide many details of this (other than to make an important finding to which I shall refer below), but the judgments of the Court of Appeal are more revealing:-
Cheung CJHC referred to the fact that documents showed that between 2005 and 2010, the Husband had a total of over $7 million deposited into his account, even though his total salary over that period came to just over $400,000. This gave him an annual income of nearly $1.5 million. Over the same period, the withdrawals from his bank account amounted to $8.28 million; this equated to an annual average of $1.74 million. The Husband’s credit card bills were paid by his father: in the few years prior to the Court of Appeal hearing, this amounted to just less than $1 million. Between 2006 and 2008, the Husband received gifts from his mother amounting to nearly $1.6 million.
In the judgment of Peter Cheung JA, reference was also made to the fact that the Husband’s parents had paid the entrance fees to enable him to join the Hong Kong Jockey Club ($250,000) and the Hong Kong Country Club ($75,000). His medical expenditure was taken care of by the parents and they also repaid loans made to the Husband by his friends. Although the Husband lived with his parents (at one stage this included staying at a penthouse flat in Repulse Bay), his monthly expenditure at the time of the Court of Appeal hearing was $45,900. Since the evidence from the Husband indicated that his monthly income was only $14,000, there was a shortfall of some $31,900. Peter Cheung JA inferred that this must have been funded by his parents or from some other undisclosed source.
Reference has already been made to the Husband having attended an EMBA course at the Kellogg/HKUST Business School (see para 9 above). The fees for this course, amounting to $755,000, were paid for by the Husband’s parents.
Judge C K Chan found, as a fact that the financial support given by the Husband’s parents to him would continue. In para 86 of his judgment, it is stated, “There is no reason to believe that such support will not be continued”. The same point was made by Cheung CJHC in his judgment (at paras 41, 43 and 50).
The trial Judge also dealt with the financial support that had been given to the parties by the Wife’s parents both during the subsistence of the marriage and after they had separated in 2006. This was expected to continue. After the couple separated in 2006, the Wife became completely dependent on her parents. Her Father, a medical doctor, paid for all of her living and medical expenses following the separation. By the end of 2009, these expenses totalled slightly below $1.7 million. By the time of trial (June 2010), these expenses amounted to over $2.4 million. These payments made by the Wife’s parents are relevant to the issue whether the Court of Appeal was correct to order a lump sum payment of $1.5 million from the Husband to the Wife.
C THE PROCEEDINGS BELOW
C.1 The Family Court
On 3 November 2008, the Husband petitioned for divorce based on 2 years’ separation. A decree nisiwas granted on 24 March 2009. The Wife made an application seeking a number of forms of ancillary relief. We are now concerned with only two: the periodical payments order and the lump sum order. Both orders were made under s 4(1) of the MPPO (see para 28 below).
Following a three day trial in the Family Court, Judge CK Chan made an order only for periodical payments, dismissing the application for other forms of ancillary relief including a lump sum payment. The Judge was of the view that although the Wife’s needs amounted to $42,500 a month (taking into account her physical condition: see ss 7(1)(b) and (e) of the MPPO - these provisions are set out in para 29 below), the Husband’s ability to pay was such as to justify no more than an order of $14,000 a month. It is to be observed here that the Judge was looking at the question of periodical payments only from the point of view of the Husband’s ability to pay for the Wife’s needs. This was stated by the Judge to be the issue before the Family Court. There was therefore no question of any account to be taken of the Wife’s financial resources in this regard.
The sum of $14,000 a month represented the Husband’s offer to pay what was then his monthly salary. The reason in the increase in the periodical payments to $21,000 a month as from 1 January 2011 was the anticipated increase in the Husband’s salary to the $30-40,000 range from the beginning of 2011.
The Judge’s assessment was based on his view of the Husband’s earning capacity. He rejected the Wife’s submissions to the effect that his earning capacity was more. The Judge also took no account of the financial assistance the Husband had been receiving from his parents. As stated earlier, the Judge made a finding that the Husband’s parents were not in the “extremely rich” category. In para 73 of his judgment, the Judge said this:-
However, as can be seen from the earlier part of this judgment, the court has already ruled that the Husband’s parents are not extremely rich people as believed by the Wife, therefore, the notion of judicious encouragement has no place in this judgment.
C.2 The Court of Appeal
The Wife’s appeal was allowed by the Court of Appeal; the periodical payments to be made by the Husband were increased to $42,500 a month and a lump sum payment of of $1.5 million was also ordered (see para 4 above).
Essentially, the Court of Appeal was of the view that the Judge had first erred in his analysis of the Husband’s earning capacity: on the available facts, his income of only $14,000 a month at the time of the trial was seen to be unacceptably low.
Secondly, the Court of Appeal was of the view that the Judge was wrong to ignore the very significant financial support given by the Husband’s parents to the Husband. As both the Chief Judge and Peter Cheung JA found, the Husband’s “affluent lifestyle” continued to be funded by his parents.
As for the lump sum payment of $1.5 million that was ordered to be paid by the Husband, the reasoning of the Court of Appeal can be seen from para 51 of the judgment of the Chief Judge:-
As regards the amount, having looked at the entire circumstances, including in particular the Wife’s needs, the amount that her parents have expended on her whether before or after the 2006 separation, the length of the marriage and the fact that no children are involved, I take the view that a lump sum of $1.5 million would be a fair and reasonable amount.
This element of a repayment to take into account the financial support of the Wife’s parents is also clear in the judgment of Peter Cheung JA (at para 66 of his judgment). He was of the view that at least a part of the support that had been provided by the Wife’s parents, ought to have come from the Husband in the first place (see para 64 of the judgment).
D THE ISSUES ON APPEAL
D.1 The questions
On 1 June 2012,the Appeal Committee granted leave on the basis thatthe following questions were of great, general or public importance:-
D.2 The issues to be determined in this appeal
The two questions raise the issue of the court’s approach when assessing the financial resources of the parties to a marriage for the purpose of determining the appropriate ancillary relief to be granted, where third party assistance to the parties to the marriage is involved. Subsumed in this issue is a consideration of the so-called concept of “judicious encouragement”. This is the main point of principle in the appeal. The application of the law to the facts is the other issue which flows from the main issue.
It is these two issues I must now address.
E. ISSUE 1: TREATMENT OF THIRD PARTY ASSISTANCE IN APPLICATIONS FOR ANCILLARY RELIEF UNDER S 4 OF THE MPPO
E.1 The statutory context
I have already (in paras 1 and 2 above) identified the particular factual situation with which this issue is concerned. It involves a consideration of the extent to which the court, in an application for ancillary relief under s 4 of the MPPO, can take into account financial assistance given by third parties to the parties to a marriage.
It is, however, important at the outset to identify the proper statutory context.
In terms of ancillary relief, the relevant statutory provisions are contained in Part II of the MPPO. The granting of orders for periodical payments and lump sum payments is referred to in s 4(1):-
In dealing with applications for ancillary relief under ss 4, 6 or 6A of the MPPO, the approach of the court is spelt out in the all-important s 7(1):-
This provision provides a statement of the court’s duty in deciding whether or not to exercise its powers under ss 4, 6 or 6A of the Ordinance. It also spells out how such powers are to be exercised, having regard to the conduct and all relevant circumstances including the matters enumerated in sub-paras (1)(a) to (g). Sub-paras 1(a), (b) and (e) are of particular relevance in this case.
In LKW v DD (2010) 13 HKCFAR 537, this Court gave authoritative guidance both in terms of principle and approach in the treatment of applications for ancillary relief. We are concerned in the present appeal mainly with Step 1, namely, the identification of the assets of the parties to the marriage. Step 2 is not contentious in this appeal, and Steps 3 and 4 are not relevant. Step 5 (deciding the outcome) is obviously also involved.
Step 1 involves the application of s 7(1)(a) of the MPPO.
E.2 The identification of the parties’ financial resources
Section 7(1)(a) is stated in wide terms. Two points are of note:-
The court is not restricted to taking into account only those assets which in law represent the property of either spouse. Section 7(1)(a) is widely drafted to include “other financial resources” of the parties. These resources will therefore include those assets or resources to which the relevant spouse has or is likely to have access but to which he or she may not have a legal entitlement.
Nor is the court constrained to look only at the present position. The court looks into the financial resources which a party actually has (or should have) at present or which that party is likely to have in the foreseeable future.
E.3 Treatment of financial assistance from third parties under s 7(1)(a)
The width of the wording of s 7(1)(a) of the MPPO will include financial assistance made by third parties to the parties to a marriage. Accordingly, such assistance made by a third party to the husband or wife may be taken into account in the computation of that party’s overall financial resources.
As stated in para 2 above, such third party assistance may take various forms. The authorities, to which I shall presently turn, show commonly trust situations or where relatives have provided financial assistance. There are of course other factual situations.
In every case where third party assistance is involved, there are two critical evidential questions for the court to consider:-
What is the extent of the financial assistance provided by the third party to the husband or wife?
What is the likelihood of such financial assistance continuing in the foreseeable future?
It goes without saying that in the fact finding exercise, the court must look at the reality of the situation and have regard to matters of substance and not just form. In looking at reality, the court can take into account not only what a party actually has, but also what might reasonably be made available to him or her if a request for assistance were to be made. In O’D v O’D  Fam 83, which involved the court taking into account the financial support given to the husband by his father, Ormrod LJ said at 90 D-E “In making this assessment the Court is concerned with the reality of the husband’s resources, using that word in a broad sense to include not only what he is shown to have, but also what could reasonably be made available to him if he so wished”.
In addition, in looking at what may occur in the foreseeable future, past conduct is often a useful guide: see SR v CR (Ancillary Relief: Family Trusts)  2 FLR 1083, at 1091 (para 27).
Having ascertained the extent of the financial assistance provided by the third party and then finding on the evidence on a balance of probabilities that there is a likelihood of the continuation of such financial assistance in the foreseeable future, the court is then in a position in law first to take this into account in the identification of the financial resources of the parties and secondly, in determining the appropriate ancillary relief to be granted. This is an approach that is entirely consistent with the court’s duty under s 7(1) of the MPPO. Needless to say, the outcome in any given case is inevitably fact-sensitive.
E.4 Judicious encouragement
So far, the approach set out in section E.3 is, I would suggest, non-controversial. To what extent is it then permissible for the court to frame its orders in such a way so as to encourage third parties to provide or continue to provide financial assistance to the husband or wife (as the case maybe) for the purpose of enabling his or her ancillary relief obligations to be met? Here, the position becomes more problematic and controversial, and this has in my view led to some confusion among judges and practitioners. I am here referring to the concept of “judicious encouragement”.
To start with, the term itself is ambiguous. If one starts from the premise that save in exceptional circumstances, court orders can only apply to parties to a litigation and not non-parties, it is difficult to see where the concept of “judicious encouragement” fits as a matter of principle. Courts make orders that are intended to bind and if necessary, to be enforced. It is difficult to conceive of a situation where an order of the court merely “encourages” compliance, and all the more so in relation to a non-party.
The origin of the term “judicious encouragement” is the judgment of Waite LJ in the decision of the English Court of Appeal in Thomas v Thomas  2 FLR 668, where, at 670F-671A, it is said:-
But certain principles emerge from the authorities. One is that the court is not obliged to limit its orders exclusively to resources of capital or income which are shown actually to exist. The availability of unidentified resources may, for example, be inferred from a spouse’s expenditure or style of living, or from his inability or unwillingness to allow the complexity of his affairs to be penetrated with the precision necessary to ascertain his actual wealth or the degree of liquidity of his assets. Another is that where a spouse enjoys access to wealth but no absolute entitlement to it (as in the case, for example, of a beneficiary under a discretionary trust or someone who is dependent on the generosity of a relative), the court will not act in direct invasion of the rights of, or usurp the discretion exercisable by, a third party. Nor will it put upon a third party undue pressure to act in a way which will enhance the means of the maintaining spouse. This does not, however, mean that the court acts in total disregard of the potential availability of wealth from sources owned or administered by others. There will be occasions when it becomes permissible for a judge deliberately to frame his orders in a form which affords judicious encouragement to third parties to provide the maintaining spouse with the means to comply with the court’s view of the justice of the case. There are bound to be instances where the boundary between improper pressure and judicious encouragement proves to be a fine one, and it will require attention to the particular circumstances of each case to see whether it has been crossed.
The italicized words appear to introduce a principle to the effect that a court may somehow frame its orders in a way that will encourage third parties to provide financial assistance sufficient to enable a spouse to meet his or her ancillary relief obligations in accordance with the court’s view of the justice of the matter.
It is this concept that in my view has caused unnecessary confusion among judges and practitioners. If this was intended to be a statement of principle, it appears at first sight simply to ignore:-
The statutory requirement contained in s 7(1)(a) of MPPO that only assets or financial resources which a party “has or is likely to have in the foreseeable future” should be taken into account. It is difficult to see how a third party who is “encouraged” (albeit in a judicious way) comfortably fits into this rubric.
The point made in para 41 above in relation to court orders affecting non-parties.
The italicized words in Thomas were made without any discussion of principle. Certain authorities were cited to the Court of Appeal in that case and it is illuminating to see the summary of the effect of those cases contained in the judgment of Glidewell LJ in Thomas (it is to be noted there is no reference to “judicious encouragement” in this passage). At 677H-678D, it was said:-
The judge also had, as we have, the guidance to be derived from the various authorities to which Waite LJ has referred. Those which are the most helpful in this case are, in my view, the decisions of this court in O’D v O’D  Fam 83, B v B (1982) 3 FLR 298 and Browne v Browne  1 FLR 291. From these authorities I derive the following principles:
In my view, the judgment of Waite LJ did not introduce any new principle along the lines stated in para 43 above, whereby third parties can be “encouraged” to provide financial assistance depending on the justice of the case. None of the authorities identified in his judgment support such a view. Properly understood, in my judgment, the judgments of the Court of Appeal in that case applied the approach set out in section E.3 above: where third party financial assistance is involved, the court will first ascertain the answers to the two questions set out in para 36 above before determining the appropriate order for ancillary relief.
In Thomas, in the passage set out above, Waite LJ himself warned against any undue pressure being imposed on third parties. It was also said that the court would not act “in direct invasion of the rights of or usurp the discretion exercised by, a third party.” Glidewell LJ also emphasized the point that the court ought not apply undue pressure. He also referred, crucially, to the need to have regard to the likelihood of third party assistance in the foreseeable future.
It is extremely unlikely that the Court of Appeal in Thomas was advocating a novel approach based on “judicious encouragement”. One of the cases relied on (in both the judgments of Waite LJ and Glidewell LJ) was Howard v Howard  P 1. In a passage which bears repetition, Lord Greene MR said this at 4-5:-
.... In my opinion there is no jurisdiction in the Divorce Court to make an order which will leave the husband in a state of starvation (to use rather picturesque language) with a view to putting pressure on trustees to exercise their discretion in a way in which they would not have exercised it but for that pressure. Under discretionary trusts (as, indeed, under this trust) other persons are potential beneficiaries. In many such trusts the range of potential beneficiaries is a very wide one. Here it extends to any future wife that the husband may marry and the children of any future marriage. The settlement has not been varied in that respect. On what ground should pressure be put upon the trustees to exercise their discretion in such a way as to pay to the husband, in order that he may pay maintenance to his wife, sums which in their discretion they would not otherwise have paid to him? It seems to me that such an order is as bad as an order on a man to pay a sum far in excess of what he could be ordered to pay out of his own means merely to put pressure on a rich relation to support him. That is not within the scope of s. 190 of the Act. What has to be looked at is the means of the husband, and by “means” is meant what he is in fact getting or can fairly be assumed to be likely to get. I must not be misunderstood. It is, of course, legitimate (as was done in this case) to treat a voluntary allowance as something which the court can, in proper circumstances, infer will be likely to continue, and make an order on that basis. If and when the allowance is cut off, the husband can come back and apply to have the order modified. Similarly, in the case of a discretionary trust, if the court finds that the husband is in fact receiving regular payments under such a trust it is perfectly entitled to make an order on the footing that those payments will in all probability continue, leaving it to the husband to come back to the court if at some future date they are stopped. But in this case the trustees have exercised their discretion so that the husband will, as frequently happens under these discretionary trusts, get nothing. Trustees, for very good reasons, often do not give money to the husband and the only object of this order, so we are told, was to induce the trustees to change their decision as to the proper disposition and administration of this trust income. The trustees, if they were well advised, would say: “We have exercised our discretion and we refuse “to change it. It is only when circumstances alter that we “shall take them into account and exercise our discretion in “a way suitable to the altered circumstances as we can see them.” If they were to do that the husband would be left with a voluntary allowance of 150l. out of which he has to pay 100l. to the wife, who has remarried.
In my opinion the practice, if it be a practice, indirectly to put pressure on trustees in this sort of way to commit a breach of their duty and to exercise their discretion in a way contrary to what they desire, is wrong ....
Howard was followed in numerous subsequent cases, among them the Court of Appeal cases of B v B (Financial Provision) (1982) 3 FLR 298 and Browne v Browne  1 FLR 291. Both these cases were referred to in Thomas.
This is also the way in which it would appear the English courts since Thomas have consistently approached the question of third party financial assistance. While there have been references to “judicious encouragement” and to that part of the judgment of Waite LJ referred to above, the courts have concentrated on the necessity to find, on the evidence before them, not only that third parties have provided financial assistance to the husband or wife, but that it was likely this would continue in the foreseeable future:-
In Charman v Charman  2 FLR 422, where a discretionary trust in favour of the husband was involved, the Court of Appeal regarded it as important to ascertain the likelihood of the trustee of the discretionary trust providing financial assistance to the husband: at 427 [para ]. This approach was endorsed by Black LJ in her judgment in Whaley v Whaley  EWCA Civ 617 at para 40.
In TL v ML and Others (Ancillary Relief: Claim Against Assets of Extended Family)  1 FLR 1263, Mr Nicholas Mostyn QC (now Mostyn J, then sitting as a Deputy Judge of the High Court) analyzed at some length the concept of “judicious encouragement”: see in particular paras -. At para , the learned Deputy Judge said this:-
The correct view must be this. If the court is satisfied on the balance of probabilities that an outsider will provide money to meet an award that a party cannot meet from his absolute property, then the court can, if it is fair to do so, make an award on that footing. But if it is clear that the outsider, being a person who has only historically supplied bounty, will not, reasonably or unreasonably, come to the aid of the payer, then there is precious little the court can do about it.
If the true ambit of “judicious encouragement” is really no more than a restatement of the approach set out in section E.3 and in the previous paragraphs, I have no quarrel with that. However, if the term means a form of pressure on third parties to add to the relevant spouse’s resources which, on the evidence, they would not do or are unlikely to do, I would for my part reject such a concept. It is an approach which is consistent neither with principle nor with the authorities. The approach of the courts should be that as set out in section E.3 above.
I have said earlier that the use of the term “judicious encouragement” has caused confusion among judges and practitioners alike. The Cases lodged in the present appeal indicate some confusion as to what exactly this concept means. This is not surprising when the courts in Hong Kong have themselves been unclear as to the meaning of that term. With respect to the judgments of the Court of Appeal, it appears the judges were not very sure as to the meaning either. In FMFT v HKFE  1 HKC 134, Woo JA (with whose judgment the other members of the Court of Appeal agreed) made reference at 142F-G to “judicious encouragement” being utilized by the court “to induce family companies and discretionary trustees to help a maintaining spouse to satisfy financial arrangements made by the court”. Reliance was placed on Thomas.
In my view, it is time to reiterate the approach that in the assessment of the financial resources of the parties to a marriage for the purposes of considering an application for ancillary relief under s 4 of the MPPO, the court is guided only by s 7(1), in particular sub-para (a) thereof. The term “judicious encouragement” does not call for a different approach when third party assistance is involved.
For my part, it would be better if the term “judicious encouragement” were no longer to be used.
F ISSUE 2: APPLICATION OF THE LAW TO THE FACTS
In section B above, I have dealt in some detail with the facts, and the findings made by the trial Judge and the Court of Appeal.
The Court of Appeal made two important findings of fact, one in relation to the Husband’s earning capacity, the other relating to the financial support received by the Husband from his parents:-
On earning capacity, the Court of Appeal was of the view that the Husband had “obviously” failed to utilize his potential. The Husband’s education and professional qualifications have already been set out (see paras 8 and 9 above). The Court of Appeal was of the view that for a person like the Husband to be earning only $14,000 a month (as at the date of trial), this represented an obvious under ulitization of his earning capacity. I am in agreement with the views of the Court of Appeal here in reversing the trial Judge’s findings in this regard. It is important also to emphasize one further matter. Where, as in the present case, periodical payments are contemplated, it is right that the court should be able to look into what the future earning capacity of the paying spouse is likely to be. In the present case, the evidence demonstrated that the Husband was getting significant salary increases (see para 16 and footnote 6 above). Furthermore, with in particular his EMBA qualification, this would place the Husband in an even stronger position as far as earning capacity is concerned.
On the generous financial support which the Husband’s parents have provided to him (see para 11 above), the important finding of both the trial Judge and the Court of Appeal was that this support would continue (see para 12 above).
In these circumstances, given the financial resources of the Husband both in terms of his earning capacity as well as financial support from his parents, the orders made by the Court of Appeal were entirely justified:-
In relation to the periodical payments of $42,500 a month, in view of the Husband earning capacity alone, this sum would be justified. When account is taken also to the financial support from his parents, there is no question that the Court of Appeal’s order was a correct one.
On the lump sum payment of $1.5 million, this was again more than justified on the basis of the Husband’s financial resources. There was admittedly an element of repayment to the Wife’s parents here but this represented what the Husband ought to have provided in the first place as part of his responsibilities to his Wife.
During submissions, Mr Coleman complained that no account had been taken by the Court of Appeal of the Wife’s financial resources, including especially the financial support that she had been receiving from her own parents. Quite apart from it being questionable whether it was open to the Husband to advance this argument in this appeal, the question of the Wife’s financial ability in relation to the periodical payments was never an issue in the courts below: the only issue was the Husband’s ability to pay (see para 74 of the judgment of the Family Court and para 15 above). As for the lump sum payment of $1.5 million, it is clear in view of the expenses paid by the Wife’s parents (see paras 21 and 22 above) that this sum represented what should have been the Husband’s share.
For the above reasons, I would dismiss the Husband’s appeal. I would also make an order nisi that the Wife (the respondent in the present appeal) should have the costs of and occasioned by the appeal. If any party wishes to have a different order for costs, written submissions should be served on the other party and lodged with the Court within 14 days of the handing down of this judgment, with liberty on the other party to lodge written submissions within 14 days thereafter. In the absence of such written submissions, the order nisi will stand absolute at the expiry of the time limited for these submissions.
Justice Chan PJ
I agree with the judgment of the Chief Justice.
Justice Ribeiro PJ
I agree with the judgment of the Chief Justice.
Justice Hartmann NPJ
I agree with the judgment of the Chief Justice.
Lord Clarke of Stone-cum-Ebony NPJ
I agree with the judgment of the Chief Justice.
Chief Justice Ma
The appeal is accordingly unanimously dismissed. The Court also makes an order nisi as to costs in terms of para 58 above.
 This is the name given to the District Court when exercising its family and matrimonial jurisdiction under the Matrimonial Causes Ordinance Cap 179 and the MPPO.
 Cheung CJHC, Peter Cheung and Kwan JJA.
 In the judgment dated 14 March 2012 of the Court of Appeal (dealing with the Husband’s application for leave to appeal to this Court and for stay of execution), Cheung CJHC said it was “regrettable” that at the date of the hearing of the substantive appeal before the Court of Appeal, the Husband did not disclose the fact that he was then earning $54,000 a month, with an annual conditional bonus of $150,000.
 Section 7(2) deals with the position where children are involved; this has no relevance in the present appeal.
 Section E.2 in the judgment of Ribeiro PJ in LKW.
 Section E.3 of the judgment in LKW.
 Section E.4 in the judgment in LKW.
 Section E.5 in the judgment in LKW.
 Section E.6 of the judgment in LKW.
 Meaning resources that party should have if he or she properly and reasonably utlised all available resources, for example, earning capacity.
 Such as where there are proceedings in rem or where certain orders (for example Mareva injunctions) are intended to bind third parties; these situations do not apply in the present context.
 Howard v Howard  P 1, Donaldson v Donaldson  1 WLR 827, J-PC v J-AF  P 215 per Sachs LJ at p 227, O’D v O’D  Fam 83, B v B (Financial Provision)  3 FLR 298, Nicholas v Nicholas  FLR 285, Browne v Browne  1 FLR 291, Crittenden v Crittenden 2 FLR 361, Green v Green  1 FLR 326, and H v H (Financial Provision: Capital Assets)  2 FLR 335.
Mr Russell Coleman SC and Mr Robin Egerton, instructed by Kwok, Ng & Chan, for the appellant.
Mr David Pilbrow SC, Mr Jeremy S. K. Chan and Mr Julian S. F. Chan, instructed by Chaine, Chow & Barbara Hung, for the respondent.
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