Lcklm Nee Cklm v. Lwk
Read the full judgment text of CACV 186/2016 on BabelCite. This Court of Appeal judgment was delivered on 4 May 2017 before Hon Lam VP, Cheung and Kwan JJA.
Civil Appeal – Consent order – Matrimonial home – Slip rule – Inherent jurisdiction – Rectification – Double counting – Appeal dismissed – Costs – Petitioner wife and Respondent husband reached financial settlement recorded in consent order sealed 30 April 2014 – Husband applied to amend consent order under slip rule and inherent jurisdiction alleging double counting of mortgage and OLL loan in Paragraphs J and K – Court held amendment not available as husband did not make out case of accidental omission or failure to manifest Court's intention – Paragraphs J and K did not suggest additional payment requirements – Appeal dismissed with costs to wife and certificate for two counsel
Legal issues: Scope of slip rule and inherent jurisdiction for consent orders · Construction of Paragraphs J and K of the consent order
Outcome: Appeal dismissed
Cited by 1 case · Cites 5 cases
|
CACV 186/2016 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 186 OF 2016 (ON APPEAL FROM FCMC NO. 11425 OF 2011) ________________________ BETWEEN
________________________
________________________ J U D G M E N T ________________________ Hon Lam VP ： 1.1. I gratefully adopt Cheung JA’s summary of the background of the case and the dispute between the parties. For my part, I agree that the appeal should be dismissed but I would do so without prejudice to other possible courses that might be taken by the Respondent in seeking rectification or other relief by further proceedings. 1.2.Before us, there is serious dispute between Ms Yip SC and Ms Eu SC as to whether the settlement was reached on the basis of equal division regarding the interest in the matrimonial home. In connection with that, I am not satisfied that all the requisite evidence is before the court. 1.3.There is also a dispute as to the proper construction and the effects of Paragraphs J and K of the consent order. On one possible view, given the condition precedents (b) and (c) in Paragraph K have to be satisfied before the obligation of the Petitioner to pay for the one half of the Net Value of the Matrimonial Home shall arise, the amounts to be deducted under sub-para (v) (a) and (b) would be zero in the calculation of the Net Value for the purpose of Paragraph K(i). And on that view, there would not be any double counting working against the husband. However, that was only a view raised at the hearing and neither party has fully embraced the same before us. I can see that there are scopes for argument. We have not heard full submissions on construction. In light of that, this is not the proper occasion for us to determine the construction issue. 1.4.I am of the view that these disputes cannot be summarily resolved in an application under the slip rule or the inherent jurisdiction of the court to amend. The appropriate course is to have these issues properly canvassed in a fresh action. 1.5.For these reasons, I am not persuaded that the judge was wrong in dismissing the application for amendment. Hon Cheung JA : I. The appeal 2.1.The petitioner wife and respondent husband reached a financial settlement at a Family Dispute Resolution (‘FDR’) hearing and recorded their settlement in a minutes of consent order. The minutes were approved by Deputy District Judge I Wong (now H H Judge I Wong) and made an order of the Court on 18 February 2014 (‘the consent order’). The consent order was sealed on 30 April 2014. 2.2.The husband applied by ‘slip rule’ under Order 20, rule 11 of the Rules of the High Court and under the Court’s inherent jurisdiction to amend certain parts of the consent order. Apart from minor amendments which were not disputed, the Judge refused the application but granted the husband leave to appeal against his refusal. The husband had also relied on the ‘liberty to apply’ provision in the consent order but this is no longer an issue in this appeal. II. The background 3.1.The wife and the husband are a very successful couple engaged in the logistic trade. Their assets comprise mainly of the following :
3.2.The contentious aspect of the husband’s application to amend the consent order is in respect of the provisions relating to the matrimonial home. 3.3.The market value of the matrimonial home is specified at HK$49 million. ELI which holds this property owes a loan of $15,160,264.72 to another company called OLL (‘the OLL Loan’). The matrimonial home is also subject to a mortgage in favour of Hang Seng Bank with an outstanding mortgage repayment of $15,003,503.82. 3.4.Under the terms of the settlement, the wife is to acquire the husband’s interest in ELI by paying him one half of the net value of the matrimonial home. The net value is defined in Paragraph J of the consent order as the sales price less (1) the outstanding mortgage payment of $15,003,503.82, (2) repayment of the OLL Loan of $15,160,264.72, (3) other expenses in relation to the transfer of shares of ELI, (4) all other liabilities of ELI as shown in the audited accounts of ELI. 3.5.Under Paragraph K of the consent order the payment by the wife to the husband for acquiring his shares is subject to (1) the completion of the sale of the warehouse, (2) each of the parties to repay 50% of the OLL Loan, (3) the husband to pay the wife half of the outstanding mortgage repayment of $15,003,503.82 and (4) any other assets and liabilities of ELI shall be shared or borne by the parties equally. 3.6.The husband’s application is to change the agreed value of the matrimonial home from the net value to the current market value in Paragraph K(i) of the consent order. 3.7.The Judge set out the Paragraphs J and K of the consent order with the proposed amendments as underlined.
III. The husband’s case 4.It is the husband’s case that the intention of the parties is to have a 50/50 division of the matrimonial home after discharging its liabilities which is also on 50/50 basis. The intention is that the husband should get about $9.42 million by transferring his interest to the wife in the matrimonial home. However, according to the terms of the consent order, the husband would not in fact get this $9.42 million and, instead, has to pay out about $15 million more because of double counting by the terms of the consent order. The net result is that, taking into account the $9.42 million, the husband will suffer a net loss of $5,663,768.54. This figure, however, was not spelt out in the judgment below. IV. The Judge’s decision 5.1.The Judge held that, there was ambiguity in the consent order in respect of the use of terms ‘net value’ and ‘sale value’. He also referred to the common intention was to give the husband $9.418 million but there was a double counting by $15 million in terms of the mortgage and the loan. 5.2.The Judge gave five reasons for refusing the application:
V. The principles 6.1.There are three ways for error recorded in a judgment to be corrected. The first is to apply to the judge who gave or approved the judgment under the inherent jurisdiction of the Court or by way of the ‘slip rule’ to correct an accidental omission so that the Court’s intention is manifested. In the case of a consent order, the Court’s intention is to give effect to the true bargain of the parties as recorded in the consent order. The second is to appeal against the judgment and the third way is to commence a fresh action to set aside the judgment by reason of fraud or mistake. 6.2.In respect of the first method, Ribeiro PJ in Man Ping Nam v Man Hong Hang (No. 2) (2007) 10 HKCFAR 140 at 144 states that :
6.3.The parties accepted that amendment under the Court’s inherent jurisdiction or the ‘slip rule’ is available even in a consent order. 6.4.In respect of the second and third methods, this Court in WTOL v WYPP (Unrep. CACV 241/2011, 18 July 2012) states that,
6.5.Where the mistake is a mutual or common mistake or a unilateral mistake by one party and known to the other party, the cause of action is for rectification of the agreement or as in the present case, the consent order. As Lord Hoffmann NPJ held in Kowloon Development Finance Ltd v. Pendex Industries Ltd (2013) 16 HKCFAR 336 :
6.6.The parties had referred to a number of first instance decisions on applications under the Court’s inherent jurisdiction and the slip rule. I would like to repeat that parties should not refer to such decisions to this Court since they are not binding on us as a matter of precedents. The practice of referring to first instance decisions when there are plenty of decisions of this Court and the Court of Final Appeal on the topic has become too prevalent lately and should be stopped immediately. 6.7.Specifically on these cases, I would comment on LPKP v PTRR (FCMC 11056/2005, 19th November 2009) where the Family Court Judge in Paragraph 10 set out the ‘Summary of the law’ by counsel :
6.8.The two cases cited in support of this proposition are in fact cases on rectification and not under the slip rule. VI. The over counting 7.1.The husband’s case that he should receive $9.42 million can be illustrated by the following chart prepared by Ms Anita Yip SC (together with Mr Ken S H Chan) for the husband. The deduction from the market value or sales price is in respect of the outstanding mortgage payment and repayment of the loan.
7.2.On the husband’s case, as per paragraph K(i) of the consent order, the wife shall acquire all the husband’s 50% share of ELI by paying the $9.4 million to the husband and this means she will assume all the assets and liabilities of the husband and will solely settle the OLL Loan and the Mortgage Loan. 7.3.Ms Yip’s submission that by virtue of Paragraph K there will be an over counting resulting in the husband not receiving the $9.42 million but also have to pay an extra of $5,663,768.54 can be illustrated by the following chart prepared by her.
7.4.Ms Yip submitted that as a result, the wife will be getting the matrimonial home for free and she is not required to pay off either the mortgage payment or the OLL Loan. This is because in deriving the calculation of 50% share of net value, both the OLL Loan and the Mortgage Loan have been accounted for once. And in following the calculation of paragraph K(i)(b) and (c) of the consent order, these two loans are ‘double counted’. VII. The wife’s response 8.Ms Audrey Eu S.C. (together with Mr Au Lut Chi) for the wife disagreed with Ms Yip’s submission. She accepted that the wife has to pay approximately $9 million to acquire the matrimonial home from the husband according to the consent order. The figure that Ms Eu relied upon is $9.5 million but nothing really turns on whether the payment is $9.42 or $9.5 million. VIII. My view 9.1.If indeed the wife has to pay the $9.42 or $9.5 million to the husband, then one may think that the husband’s application for amendment is a case of much ado about nothing. However, Ms Yip still insisted before us that it is not how much the wife is going to pay the husband but rather how much the husband has to pay in order to get that money. Eventually, Ms Yip stated that there is an over counting of $7.5 million in respect of the mortgage repayment and this will result in the husband receiving $2 million instead of the agreed $9.42 or $9.5 million as the case may be. 9.2.The husband’s application for amendment is based entirely on the case of over counting. To address this, one has to look at the terms of the consent order. On the face of Paragraphs J and K, the question of over counting does not seem to exist at all. In order for the husband to receive $9.42 million by giving up his interest in the matrimonial home, he is required under Paragraph K(i)(b) and (c) to pay half of the outstanding mortgage payment and half of the OLL Loan. It should be pointed out that the parties do not seem to be concerned over the other expenses and liabilities in Paragraph K(i)(d) and (e). The over counting, according to the husband, stems from Paragraph K(i)(b) and (c). These provisions are, on their face, condition precedents to be fulfilled by the husband in order to receive his half share of the net value of the matrimonial home at $9.42 million and they do not suggest any requirement of additional payment on his part in order to receive this sum. The husband’s contention is that he has already paid half of the outstanding mortgage payment and the OLL Loan in order to get his half share of the net value of the matrimonial home under Paragraph J and in addition he has to pay the same sums again under Paragraph K(i)(b) and (c) (or according to his latest position payment under (c)). This does not seem to be borne out by the terms of the consent order. Paragraph K(i)(b) requires the husband and the wife each to be responsible for half of the OLL Loan payment. Although Paragraph K(i)(c) only requires the husband to pay half of the outstanding mortgage payment, there is no suggestion that he is required to pay an extra $7.5 million. $7.5 million only is what the terms of the consent order required him to pay in the settlement. In any event, Ms Eu has submitted that as the wife will acquire the whole of the matrimonial home through ELI, she will be solely responsible for the outstanding mortgage payment herself. Looking at the matter in the round, my view is that the husband has not made out a case of accidental omission or that the Court’s intention as recorded in the consent order has not been properly manifested which needs to be remedied either the Court’s inherent jurisdiction or under the ‘slip rule’. This being the case the Judge had correctly dismissed the application although on a basis different from the one that I have adopted. 9.3.In any event, in view of the shift of the husband’s own position on how much is over counted, this is clearly not a suitable case for amendment. IX. Conclusion 10.I would dismiss the appeal with costs to the wife together with certificate for two counsel. Hon Kwan JA : 11.I agree with the judgment of Cheung JA.
Ms Audrey Eu S.C. and Mr Au Lut Chi, instructed by Ernest Li & Co., for the Petitioner Ms Anita Yip S.C. and Mr Ken S. H. Chan, instructed byLam and Lai, for the Respondent |
Cases cited in this judgment
Other judgments that cite this case