Voices:  Divorce

A much anticipated decision on the division of divorcing couples’ assets was delivered last week (12^th November) by the Court of Final Appeal.  This is of great public importance as it definitively overrules the principle of “reasonable needs”, which provided that so long as the needs of the claimant spouse (usually the economically weaker party) are satisfied, the surplus of assets can be retained entirely by the other spouse.

Now, in its stead, the Court of Final Appeal has firmly planted the principle of fairness, and further clarified the new guidelines which the Hong Kong Courts are to follow when determining how assets should be dealt with, upon the breakdown of marriage. 

The Court of Final Appeal expects the new Ruling to provide guidance, and not to be taken to imply any legal presumption or burden of proof.  The Court’s decision simply asserts that its own objective is to achieve fairness; that this dictates that there should be no discrimination on grounds of gender or domestic roles; that the “yardstick of equal division” should be checked against the judge’s tentative views of the division of assets, and any departure from equality must be explained.

The decision also means that in future, Hong Kong’s courts will reject any minute retrospective investigations into the history of the marriage, as this will only increase acrimony, discourage settlement and deplete the parties’ and the Courts’ resources. 

The judgment has already been mis-interpreted as an automatic 50/50 split of the family assets.  However, the Court has warned that equality in treatment does not necessarily mean equality in the division of family assets. 

Firstly, the needs of the parties will remain the primary consideration, and only if there is surplus left over will the sharing principle be applied. 

Secondly, the Court indicated that certain factors will warrant a departure from an equal split of the assets.  They include but are not limited to:-

• Short marriage (usually under 7 years)
• Significant assets from external sources, not accrued through joint endeavour during the marriage, such as inheritance or gifts
• Pre-marital assets
• Few, or no, assets accrued during the marriage

These new guidelines were immediately put to test in the second Court of Final Appeal judgment which was delivered on the same day.  The couple in that second case, who were married just 31 months but cohabited for 12 years, was granted a division of assets in the proportion of 32% to the wife and 68% to the husband. 

This landmark decision will not make the legal process more predictable.  The Court continues to have wide discretion and financial provisions are highly fact specific.  However, married couples in Hong Kong can now take comfort in knowing that there will be no gender or role discrimination between the parties and the principle of fairness will become the guiding principle in the Court’s decision of distributing family assets in the breakdown of the marriage. 

Winnie Chow is a Partner at Hampton, Winter and Glynn.  The company represented the husband in this case on a pro bono basis in view of the significant legal implications of the case.