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Case Update – EBS v NTCD [2024] HKCA 335; CACV 543/2021

8 May 2024

EBS v NTCD [2024] HKCA 335; CACV 543/2021


In EBS v NTCD [2024] HKCA 335, the Court of Appeal ruled that when a party overstays in the family matrimonial home (FMH), the opposing party owning the property is entitled to receive compensation in the form of rent for the overstay. The court ordered the wife to pay the husband 12 months’ rent for the FMH after she ignored a court order to vacate the property. Additionally, the court departed from the usual equal sharing principle set out in LKW v DD and recognised the wife’s argument that she should be compensated for giving up her highly lucrative career. This landmark decision upholds justice and acknowledges the value of personal sacrifices in marriage.

Background of the parties

W, a former investment banker, became a stay-at-home mom after the birth of their child (B). H, previously a managing director at an investment bank, faced redundancy due to PTSD and Depression. Despite their separation, H continued to cover the mortgage and FMH expenses, as well as B's school fees. W managed her own expenses and the remaining costs related to B.

Compensation ground

The Wife presents a compelling argument for a greater departure from equal asset division in her favor. She emphasises that the Husband should bear two-thirds of their son's maintenance and a higher amount, citing her decision to give up a successful career for the sake of the family's well-being. She asserts that this sacrifice warrants compensation and highlights the relationship-generated disadvantage she faces in her post-divorce earning capacity.

The Court carefully considered multiple factors, including the Wife's exceptional earning capacity, the challenges she faces in returning to work, her agreement based on the Husband's assurances, her role as the primary caregiver, the Husband's failure to fulfill financial obligations, and the limited mingling of assets. The Court of Appeal recognised the importance of compensating the Wife for her significant sacrifices, including her abandonment of a promising music career at the Husband's insistence.

Greater sum of maintenance ground

The Court contemplated key factors in the Wife's appeal, including the potential for economic disparity, whether it was relationship-generated, the income gap, the Wife's career prospects, and resource comparison. While acknowledging potential debate on compensation and exceptional circumstances, the Court held that the Wife was barred from raising this argument since it was not raised during the trial.

Husband’s Cross-Appeal

The Husband argues that the judge's order should be modified to include a payment from the Wife to compensate for mesne rent and the decrease in the capital value of the former matrimonial home caused by her failure to vacate as ordered.

The Court of Appeal recognized that it would be unfair to disregard the harm inflicted on the Husband due to the Wife's misconduct. By disregarding the court's order and continuing to occupy the property, the Wife deprived the Husband of potential rental income or investment returns, while saving herself from rental or similar expenses. Consequently, the Court orders the Wife to pay a sum representing twelve months' rent for the period she remained in the former matrimonial home after being ordered to vacate.

The full judgment can be found here.

To learn more about Azan, please visit his profile here.

This case summary was written by Vivienne Chen.

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