Fsm v. Bds and Others
Read the full judgment text of FCMC 12749/2016 on BabelCite. This Family Court judgment was delivered on 22 October 2019 before Deputy District Judge J Chow.
Matrimonial Causes – Beneficial Ownership – Common Intention Constructive Trust – Section 17 MPPO – Property Disposition – Husband held property on trust for mother – Stepfather funded purchase – Sale proceeds used for Tai Po Property – Wife’s application dismissed – Costs awarded to husband
Legal issues: Beneficial ownership of KT Mansion · Section 17 MPPO application
Outcome: Wife’s summons dismissed; Husband found to hold no beneficial interest in KT Mansion.
Cited by 1 case · Cites 4 cases
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FCMC 12749 / 2016 [2019] HKFC 258 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NUMBER 12749 OF 2016 ________________________
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________________________ J U D G M E N T ________________________ Introduction 1.This is the petitioner’s (“the wife’s) application for determination of the beneficial ownership of a property disposed by the 1st respondent (“the husband”) after filing of the petition. The wife also applies for an order that such transaction be set aside pursuant to section 17 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“the MPPO”). Background 2.The wife and the husband were lawfully married in Hong Kong on 10 December 2006. The wife and the husband were 40 and 46 respectively at time of trial. They gave birth to a pair of twins in 2009. 3.The wife has been a full time house wife since 2008 and was financially dependent on the husband. During the marriage, the husband worked in the financial industry. In or about 2012, the husband decided to set up various businesses. He has been an entrepreneur and a director of at least 5 private companies. The husband was also an advertisement part-time model. 4.In or about August 2010, the wife discovered the husband has had an extra-marital affair with a female (“Madam Yang”) in the mainland. The affair with Madam Yang continued and resulted in an illegitimate daughter born on 20 November 2014. While appeasing the wife, the husband promised her to stay in the marriage and provided her with financial security by adding the wife as an account holder of his bank account. 5.In or about October 2015, the wife discovered the husband has continued his extra-marital affair with Madam Yang, their relationship further broke down. The husband left their matrimonial home shortly after February 2016, they separated. 6.On 4 October 2016, the wife petitioned for a divorce on ground of behavior. On 14 December 2016, a decree nisi was granted. On 12 January 2018, by consent, both the husband and wife were granted joint custody of the two children; sole care and control to the wife and defined access to the husband. 7.On 7 February 2017, the wife applied for maintenance pending suit against the husband. The trial of the wife’s application was heard by Deputy District Judge R. So. The learned judge made an order in her judgment delivered on 3 January 2018 that the husband shall pay maintenance pending suit and interim maintenance to both the wife and two children in sum of HK$150,000 on a monthly basis (“interim maintenance order”). 8.The husband failed to comply with the interim maintenance order, the wife took out a judgment summons on 1 December 2017. The wife’s application 9.The wife’s present application came about because the husband did not disclose the property in issue, a flat of a multistoried building in Hong Kong (“the KT Mansion”) in his Form E. This property was purchased by the husband and the husband’s stepfather (“the stepfather, the 3rd respondent”) in 2001. They were joint tenants. 10.The stepfather paid up the purchase price of KT Mansion in sum of HK$3,800,000. It has no mortgage. On 10 December 2013, both the husband and the stepfather sold KT Mansion at a price of HK$14,800,000. The husband’s mother (“the mother, the 2nd respondent”) signed the sale and purchase agreement for and on behalf of the husband and the step-father on the strength of a power of attorney. The mother continued to handle the sale of KT Mansion, it was completed on 20 January 2014. The mother received proceeds of sale in sum of HK$13.3 million. 11.On the day of signing the sale and purchase agreement of KT Mansion, the mother and step-father signed another sale and purchase agreement to purchase another property in Hong Kong (“the Tai Po Property”). An initial deposit of HK$1.6 million was paid to the vendor of the Tai Po Property. On 11 February 2014, to complete the purchase of Tai Po Property, the mother and stepfather jointly signed the assignment and had paid the balance of purchase price of HK$14.4 million to the vendor. It is not in dispute the mother had applied the proceeds from the sale of KT Mansion to the said purchase. 12.Both the mother and his step-father had subsequently purchased in the joint names two other landed properties in Central and Stanley, Hong Kong. 13.On 28 March 2017, the wife took out a summons for an order of joinder of the husband’s mother and the stepfather as the 2nd and 3rd respondents. Such application was granted on 10 May 2017. 14.The wife sought an order to set aside a disposition of a KT Mansion pursuant to section 17 of the MPPO together with determination on the issue of its beneficial ownership, the sale proceeds and subsequent purchase of another property with that proceeds. The husband’s case 15.The husband explained KT Mansion does not belong to him, it was purchased by the mother and the step-father. The husband did not contribute to the purchase price, he merely held the property on trust for his mother with no beneficial interest. He emphasized the stepfather paid for the price of KT Mansion. 16.The husband did not live in KT Mansion, neither did the wife nor the children. The mother and step-father decorated the flat with their own ideas, they purchased furniture to fit the premise. Both of them had lived there as their matrimonial home until they move to Tai Po Property in 2014. 17.The husband further explained, the mother was a United States citizen, she intended to avoid potential tax consequence in US, she then requested the husband to be named as the registered owner of the KT Mansion. The stepfather thought he could purchase KT Mansion with his own name, the husband could assist the purchase by executing a power of attorney to the husband. As a result of the discussion, three of them decided to purchase KT Mansion by the step-father and the husband as joint tenants. The stepfather then executed a power of attorney in favor of the husband and he handled all the documentations of the purchase. The issues 18.The wife’s application consisted of two claims which are based on the same set of facts. It is the wife’s case that KT Mansion was meant to be a gift by the mother to the husband. The wife accepted this is not a case of express gift, she relied on inferences to be drawn at time of the purchase. 19.The husband’s defence is premised on “common intention constructive trust” where the husband has held KT Mansion for both the mother and the stepfather. The husband pleaded, in the alternative, “presumption of resulting trust” where he has held KT Mansion on trust for the stepfather. 20.The first issue is to determine whether the husband has beneficial ownership in KT Mansion. I have to come up with a finding on the common intention of the husband, the mother and the step father when KT Mansion was purchased. The wife’s application will come to an end if the common intention of purchasing KT Mansion was the husband to hold his share on trust for the mother. 21.The 2nd limb of the wife’s application came into the scene when I have found the above issue in favour of her. Pursuant to section 17 of the MPPO, I shall then determine whether the sale of KT Property should be set aside. Whether the disposition of the sale proceeds of the KT Property, i.e. by transferring to the mother or the stepfather shall be accounted for the as part of the matrimonial asset. 22.Or in the alternative, as the proceeds of the sale of KT Mansion has been deployed towards the purchase of Tai Po Property by the mother and the step-father, I shall decide whether the husband shall have beneficial interest in the Tai Po Property or any part of it. 23.Both the wife, husband, the husband’s mother and step-father testified. Applicable legal principles Beneficial ownership 24.The law on beneficial ownership is well settled. Hon Lam J (as he then was) gave a thorough account in his judgment Chan Chui Mee v. Wong Sau Kin & ors, HCMP 1904 of 2005, 19 September 2008.
25.On the same issue, I also seek assistance from a recent case by HH Judge Sharon D. Melloy in WSS v. DKPA, FCMC 9725 of 2012, 15 July 2014,
Section 17 application 26.The relevant Section 17(1)(b) of the MPPO provides that :
27.In Kemmis v Kemmis (Welland and Others, Interveners) [1988] 1 WLR 1307, “intention” is well depicted in the following judgment.
Analysis The purchase of the property 28.The burden rests with the husband to prove common intention. 29.The wife testified, since they were dating in 2003 – 2004, the husband mentioned to the wife that he was one of the owner of KT Mansion. The wife heard from the husband a number of times that the KT Mansion was his. She recalled, the husband said the entire KT Mansion will be his eventually because he was the only son of the family. At all times, she did not request the husband to name her as one of the owner of KT Mansion. 30.From the time of purchase KT Mansion until it was sold in late 2013, the husband made known to the wife KT Mansion was used primarily as a family resort for the mother and the step-father when they were in town; or for other family members or friends to stay whenever they visited Hong Kong. Both the wife and the husband have their own place to live, the idea to move in KT Mansion has never come across their mind. Both the wife and the husband paid visits to the mother in KT Mansion when she was in town. 31.The wife perceived gifting of properties is not an unusual event within the husband’s family. The husband’s family is a well off. The husband was gifted a commercial property by his grandfather. In earlier days, both the wife and the husband co-habited in an apartment provided by the grandmother. The husband’s grandmother funded the husband HK$1,000,000 for the husband to paid the for the purchase price of their first matrimonial home. Because of this, the wife believed KT Mansion was gifted to the husband by the mother. 32.I accept the wife’s evidence on what has been said between the husband and herself. The husband as one of the registered owner of KT Mansion, it is not surprising the wife had formed a belief KT Mansion was the husband’s property. Nevertheless, the husband has only mentioned the fact that he was one of the registered owner of KT Mansion, he was quite right to say KT Mansion will be his eventually because he was the only son. 33.I then consider the evidence of the subjective mind of the husband, the mother and the stepfather, they bear the burden to prove intention. 34.Both the husband and wife were still in their courtship in 2001 when KT Mansion was purchased. The reason to purchase KT Mansion was purely an idea from the husband’s family. The wife has no participation nor did she give any comments about the purchase. I accept KT Mansion was meant to be used by the mother and the stepfather when they are in town. It was also planned for a place to accommodate relatives and friends of both the mother and the stepfather’s extended families when they came to Hong Kong. 35.The next issue is the reason why KT Mansion was purchased in this way - the husband and the stepfather as joint tenants. The evidence revealed the husband, the mother and the stepfather trusted each other. It might be the intention of the mother and the stepfather to have named as the registered owner of KT Mansion, save and except the mother, being a US citizen, has some concern of her tax consequence in the US if she had purchased property in her own name. She explained she was not in town at time of purchase. I find her request reasonable and logical to seek help from the husband, her only son, to assist her to be named as a registered owner of KT Mansion. 36.The husband deposed in his affirmation that the mother requested him to hold half share of the property. The husband explained at time of acquisition of KT Mansion, he had only modest income and would not be able to purchase the property. His intention at time of acquisition of the property would be holding half share on trust for and on behalf of the mother. It was never the intention of the mother to allocate the share of KT Mansion by way of gift to him. 37.I aware at the material time, the husband was in his twenties, a graduate from college. I accept the husband would be out of means to purchase KT Mansion or any property without the aid of others. During the course of giving evidence, I see the mother has been a cautious person. Her plans and thoughts were always clear; her actions were swift. She frankly answered during cross examination, the husband is her only son, she had trusted the husband to hold her share and to be named as one of the registered owner of KT Mansion. Coupled with the fact that the mother, having tax consequences in mind and also she was not yet in town, it would more probably than not that she has intended to ask the husband to hold the KT Mansion for and on her behalf at time of purchase. 38.The stepfather was married to the mother in 1993. He had children with his ex-wife but not with the mother. The stepfather was working in a Switzerland company, he was a frequent traveller. In or about 2000, the mother’s father was very ill, the mother wished to relocate in town to take care of him. The stepfather and the mother therefore decided to settle down in Hong Kong. The stepfather resigned from his job and had set up his own company in Hong Kong afterwards. Both the mother and the stepfather looked for a home in Hong Kong and they had purchased KT Mansion. The stepfather explained, at time of purchase, the mother was staying in Sweden and it would be troublesome for her to travel to Hong Kong to complete the purchase. They came up with an idea that “to put the husband’s name as joint tenant”. The stepfather then executed a power of attorney in favour of the husband. The husband agreed to handle all documentation of the purchase. 39.The stepfather further said, he and the mother made decisions on renovations and decorations. They chose furniture themselves. Both the stepfather and the mother stayed in KT Mansion whenever they were in Hong Kong. It was only in 2014, the stepfather and the mother sold KT Mansion and then moved to Tai Po Property. 40.I give weight to the evidence that the stepfather up-fronted the entire payment of HK$3,800,000 to complete the purchase. The particulars were as follows:
41.The stepfather further clarified in his evidence that KT Mansion might have some illegal structures and both the mother and himself had decided to ask the husband to be one of the registered owner. He recalled, the mother’s citizenship never came across his mind when determining this issue. 42.The stepfather responded right away that he had not pay much attention whether to hold KT Mansion as joint tenants or tenants in common with the husband. The stepfather simply said he did not have thought about it. I see from this evidence that the stepfather trusted the husband. 43.I agree with the stepfather it was not the common intention to gift the husband KT Mansion at time of acquisition. I note the purchase was paid in full by the stepfather. The husband has no means to purchase a property as such when he was just a college graduate earning a monthly salary of HK$28,000. Both the wife and the husband did not live in KT Mansion. I regard the act to name the husband as a registered owner, to hold the mother’s share was a joint decision of all three of them. The husband had not taken the mother’s share as his. The stepfather explained he has 3 children from his ex-marriage, it would definitely not his intention to gift the husband the mother’s share of KT Mansion. It was only out of practicality that the stepfather, the mother had decided to acquire KT Mansion in this manner. The stepfather made it clear that he would not share the proceeds with the husband even when KT Mansion was to be sold. 44.I accept both the evidence of the stepfather, the mother and the husband. I consider it was the reason, out of practicality that the husband was named as a joint tenant of the property. It is more probably than not that the family decision was meant to be the husband, holding his share of KT Mansion for and on behalf of the mother. It was a simple family consensus without taking into account whether both the stepfather and the husband to be named as joint tenant or tenants in common. 45.I find the shared, actual, inferred or imputed intention between the husband, the mother and the stepfather in this family context was the husband to hold KT Mansion as joint tenant for and on behalf of the mother. The tactical understanding to render KT Mansion as a gift to the husband had never come across the mind of the mother and the stepfather. Upon this understanding, the mother has acted to her detriment that the stepfather has made a financial contribution to purchase in reliance to the purchase. The husband was also well aware of intention that his share of KT Mansion was not his. To conclude, the husband has no beneficial interest in KT Mansion. 46.The wife’s application shall end. Resulting trust 47.Be it an issue in the defence, I see no importance here upon the determination of common intention above. Section 17 application 48.For completeness sake, I shall deal with the wife’s section 17 application. 49.In or about September 2015, the wife learned the ex-marital affair of the husband and Madam Yang by reading the husband’s whatsapp messages. The husband continued to stay with Madam Yang after the wife found out about her. In March 2016, the wife relayed the husband’s ex-marital affair to the mother, the mother replied the wife that the husband had already told her about the affair with an illegitimate daughter born as early as January 2015. 50.The wife alleged the mother had decided to sell KT Mansion around one year after she had knowledge of the husband’s ex-marital affair. The wife articulated timing of the sale of KT Mansion is of particular relevance. The wife said KT Mansion was sold in December 2013; Madam Yang was pregnant in early 2014; she gave birth to the husband’s illegitimate daughter in November 2014. 51.The wife believed the husband had been stalling since she found out about his extramarital affair with Madam Yang. She perceived the husband could take the time to dispose assets. She believed the husband had withdrawn money from his bank account before adding her name as an account holder. The husband left his well-paid job with over HK$80,000 per month and chose to go on allegedly unsuccessful business ventures. The husband lastly disposed KT Mansion, the landed property in his name. 52.The wife drew an inference that the act of husband (the mother or the stepfather) to sell KT Mansion was aiming to defeat her ancillary claim in this matrimonial suit. 53.The mother and the step father denied that they had knowledge of Madam Yang at time of sale of KT Mansion. The mother and the stepfather had only learnt the husband’s ex-marital affair in November 2015 which was more than one year after the sale of KT Mansion. I share the view of both the mother and the stepfather it is too far fetch to draw an inference that the sale of KT Mansion by the end of 2013 was intended to defeat the wife’s claim of ancillary relief against the husband when Madam Yang was pregnant only in early 2014. 54.Whilst investigating the intention of subjective mind of the husband is always difficult, in this family context, KT Mansion was treated as the matrimonial home of the mother and the stepfather. The mother has legitimate reason to sell it. At time of sale, the mother has settled in Hong Kong and was able to handle the sale herself. I accept the mother’s explanation to have moved to Tai Po Property and to spend more time to take care of her father who was very ill at that time. 55.I recall in the mother’s evidence, she stated her strong view towards the marriage of the wife and husband. She said firmly the husband was an adult and he should have solved his own problem. The mother did not involve in the family relationship actively between the wife and the husband. 56.I refer to my finding that the husband has no beneficial interest that KT Mansion, there would be no disposition of matrimonial asset on the part of the husband accordingly. The wife’s application under this head failed. The Orders 57.With reasons of the foregoing, I make the following orders:
Ms Thelma Kwan instructed by Stevenson Wong & Co., appeared for the Petitioner 1st Respondent appeared in person Mr Kenneth YF Wong instructed by Keith Lam Lau & Chan, appeared for the 2nd and 3rd Respondents | ||||||||||||||||||||||||||||
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