• Fri
  • Jul 25, 2014
  • Updated: 5:31am
NewsHong Kong
COURTS

HK$766m divorce payout for ex-wife of leading engineer Otto Poon

Leading engineer must split whole of family trust fund after divorce, top-court judges rule after hearing of couple's tragic past

PUBLISHED : Friday, 18 July, 2014, 5:16am
UPDATED : Friday, 18 July, 2014, 7:49am
 

The ex-wife of top engineer Otto Poon Lok-to will get a divorce payout worth more than HK$750 million after the top court ruled that Poon must share the whole of his HK$1.5 billion family trust with her.

Five Court of Final Appeal judges accepted the argument by Kay Kan Lai-kwan, 75, who was married to Poon, 74, for more than 40 years, that two lower courts were wrong to rule that only two-thirds of the fund should be considered a matrimonial asset.

The High Court and Court of Appeal had ruled that one-third of the trust should be held back for the couple's only surviving child, a daughter. The top court ruled that the lower courts erred in protecting the interests of the daughter individually.

"[The daughter] like the wife … did not have any fixed beneficial interest in the trust fund," Mr Justice Roberto Ribeiro wrote. Describing the workings of the fund as "revealing", the judge said the trust's only assets were dividend payments from Analogue Group, an engineering firm built up and controlled by Poon.

Ribeiro, along with Chief Justice Geoffrey Ma Tao-li, Mr Justice Robert Tang Ching, Mr Justice Kemal Bokhary and Mr Justice William Gummow, ruled that the fund must be regarded as a financial resource of the husband. They said Kan was entitled to HK$766 million.

Poon had argued that the award should have been based on his worth in 2001 - just HK$25 million - on the basis that their marriage effectively ended then, even though Kan did not initiate divorce proceedings until 2008.

The couple married in 1968, the judgment said. Poon's business prospered in the 1990s, and he created the trust fund in 1995. But tragedy struck the same year, when the couple's younger daughter died in a traffic accident. The wife recalled being "totally heartbroken", while the husband was quoted as saying: "Kay and I found it impossible to talk to each other or to turn to each other in our moment of grief."

Five years later, the couple's only son died after jumping from the balcony of their home. After that loss, Poon told the court, the distance between the couple "became too wide to be bridged … there was simply nothing that we could say to each other any more". While they lived under the same roof, their marriage was "a bare shell and nothing more".

But Kan did not seek a divorce until 2008, when she discovered that Poon was in a long-term relationship with an employee.

The High Court first awarded Kan HK$432 million. On appeal, the award was increased to HK$572.4 million. The top-court judges described the case as "a classic example of a marital partnership that justified equal sharing of the matrimonial assets".

Gareth Thomas, a leading commercial lawyer, said the ruling showed that Hong Kong courts would look into how trusts operated, not just the theoretical protection they provided.

Kan's payout is still well below the record HK$1.4 billion awarded to Florence Tsang Chiu-wing, former wife of tycoon Samathur Li Kin-kan, although that was slashed to HK$411 million on appeal last month.

Additional reporting by Bloomberg

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