Whwv v. Wech
Read the full judgment text of CAMP 28/2020 on BabelCite. This Court of Appeal judgment before Hon Kwan VP and Yuen JA.
Matrimonial proceedings – Ancillary relief – Matrimonial home – Vacate Order – Leave to appeal out of time – Separate property regime – Jurisdiction to sell property – Costs assessment – Leave granted – Appeal allowed – Vacate Order set aside – Costs assessed at $3,000
Legal issues: Leave to appeal out of time · Jurisdiction to vacate AR notice · Disposition of Wife's summons · Costs assessment
Outcome: Leave to appeal granted; appeal allowed; Vacate Order set aside; Wife's summons to vacate AR notice dismissed; costs to follow event.
Cited by 4 cases · Cites 3 cases
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CAMP 28/2020 [2020] HKCA 839 CAMP 28/2020 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL MISCELLANEOUS PROCEEDINGS NO 28 OF 2020 (ON AN INTENDED APPEAL FROM FCMC NO 11636 OF 2009) __________________________
__________________________ AND CACV 547/2020 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CIVIL APPEAL NO 547 OF 2020 (on APPEAL FROM FCMC NO 11636 OF 2009) __________________________
__________________________ (Heard Together) Before: Hon Kwan VP and Yuen JA in Court Date of Hearing and Judgment: 6 October 2020 Date of Reasons for Judgment and Assessment of Costs: 23 October 2020 __________________________________________ R E A S O N S F O R J U D G M E N T A N D A S S E S S M E N T O F C O S T S __________________________________________ Hon Kwan VP: 1.I agree with the reasons for judgment and assessment of costs of Yuen JA. Hon Yuen JA: 2.On 6 May 2020, the respondent in matrimonial proceedings FCMC11636/20191 (“the Husband”) applied to this court for leave to appeal out of time against an order of a judge of the Family Court2 (“the judge”) made on 23 December 2019 (“the Vacate Order”), vacating the Husband’s registration in the Land Registry of a Notice of Application for Ancillary Relief (“the AR notice”) against the matrimonial home. 3.After the Vacate Order was made, the Husband3 had applied to the judge on 6 January 2020 for leave to appeal. Leave was refused for reasons set out in a Decision of 23 January 2020 (“the Refusal of Leave Decision”). 4.1.The Husband then applied by summons to this court in CAMP28/2020 on 6 May 2020 for leave to appeal the Vacate Order out of time. He filed another summons in nearly identical terms on 19 June 20204. Pursuant to directions given by the master in July 2020, submissions were filed by counsel for the petitioner (“the Wife”) in August 2020. 4.2.After considering the papers and further submissions5 called for by this court, on 16 September 2020, this court directed, amongst other things, that there be a “rolled-up hearing” of the application for leave to appeal out of time and (if leave is given) of the appeal proper, and ordered a stay of the Vacate Order pending its determination. 4.3.After hearing the parties on 6 October 2020, for the reasons appearing below, this court ordered:
Background 5.Briefly, the background to the matter is as follows. 6.1.The Husband and Wife were married in 2010. In 2015, the matrimonial home was bought in the sole name of the Wife at $19.88 million. It is common ground that the Husband and the Wife each contributed $5 million. It is also common ground that the Wife’s mother paid another sum of $5 million towards the purchase. The Husband contends that this was by way of a gift, whereas the Wife contends that this was a loan. The balance was covered by a mortgage loan from Standard Chartered Bank7. 6.2.The mortgage instalments were paid by the Wife. The Husband contends that he enhanced the value of the property by way of renovations. 7.In the summer of 2017, the marriage broke down, and the Husband moved out. There are no children. 8.In November 2018, when the balance remaining on the Standard Chartered mortgage loan was $4.5 million, the Wife re-mortgaged the property to HSBC for a sum of $10 million8, out of which she paid off the Standard Chartered mortgage and paid a sum to her mother for “loans owed”. As at 2 December 2019, the outstanding sum on the HSBC mortgage was $9.7 million9. The Wife has continued to pay the mortgage instalments, and it has not been suggested that she cannot do so. 9.In early 2019, the parties entered into negotiations in relation to the matrimonial home. The Husband wished to retain the property, and proposed to acquire the Wife’s interest in it. The Wife did not wish to retain the property, but rejected the Husband’s proposals, both in terms of the sum offered and the time of payment, as unrealistic. After rejecting the Husband’s 2nd offer, the Wife put the property on the market. Legal proceedings 10.On 27 September 2019, the Wife filed the petition in FCMC11636/2019. 11.On 8 October 2019, the Husband applied for ancillary relief (including transfer of the matrimonial home to him). The AR notice was registered in the Land Registry the following day. It would be noted that such a registration is advised in Family Law and Practice in Hong Kong:
12.1.On 10 November 2019, the Wife received an offer from a third party for the purchase of the matrimonial home at $25.8 million. 12.2.; After being so informed, the Husband wrote to the Wife’s solicitors on 14 November 2019 alleging that the matrimonial home had “personal value given the time, energy and cost” that he had invested in it. He made another offer (the 3rd offer) to acquire her interest for $2.5 million (of which $1 million would be paid up front, and the balance to be paid over 5 years), and to “relinquish claims on the couple’s other assets, inherited or otherwise, accumulated over the course of the near 7-years marriage, as well as her unilateral decision to refinance the mortgage by not less than HK$5 million additionally”. Neither party had disclosed their financial situation by way of filing Form E yet11. 12.3.On 21 November 2019, the Wife rejected the Husband’s 3rd offer and threatened to bring the matter to court. 12.4.On 28 November 2019, the intended purchaser increased his offer to $26 million. The Wife’s summons to vacate the AR notice 13.1.On 3 December 2019, the Wife issued a summons ex parte on notice to the Husband returnable 3 days later, on 6 December 2019. The summons was set down for 15 minutes only. 13.2.The summons sought an order that the AR notice be “vacated forthwith”. The Wife filed an affirmation on the same day (3 December 2019), in which she said:
Order of 6 December 2019 (“Unless Order”) 14.1.Both parties13 attended the hearing on 6 December 2019. This court has been provided with an unofficial transcript by the Wife’s solicitors. The Husband asked for more time to deal with the application but the judge declined, saying that the property would have to be dealt with “anyways be it today or some time later”14. When the Husband pointed out that neither party had submitted their Form E, the judge told him to “forget the other things because all I see is a matrimonial property ... this is only asset”15. 14.2.As the judge recounted in the subsequent Refusal of Leave Decision,
14.3.The judge stood the matter down, during which time, while the Wife’s counsel was drafting the “mutual undertaking” along the above lines suggested by the judge, the Husband “left the hearing unnoticed”17. 14.4.When the hearing resumed, the Wife’s counsel expressed his “worry ... as the undertaking now stands, actually [the judge] might not have the jurisdiction to make it as an order as such”18. 14.5.; The judge then made the following Order, amongst others:
14.6.Pausing there, the undertaking was to “fully indemnify the [Wife] of any shortfall between the current offer of HK$26 million from arms - length buyer and the market value of the [matrimonial home] as of the determination and/or resolution of my ancillary relief claim”. Events of 13 December 2019 15.1.On the morning of 13 December 2019 (the day referred to in the Unless Order for the Husband to file the undertaking), the Husband sent a 4th offer addressed to the Court and copied to the Wife’s solicitors. In this offer, he proposed:
15.2.The Husband also proposed obtaining valuations from two additional banks, stating that there was a bank valuation of $22 million in late September 2019 (in other words, that the property had increased in value in the past 2½ months). 15.3.The Husband did not file any undertaking. Subsequent events 16.The Wife’s solicitors replied to the Husband on 17 December 2019 stating that she was “entitled to sell” the matrimonial home as he has failed to give the undertaking pursuant to the Unless Order. Order of 23 December 2019 (“Vacate Order”) 17.On 23 December 2019, the judge ordered that
Husband’s summons for leave to appeal 18.1.On 6 January 2020, the Husband filed a summons, supported by written submissions, for leave to appeal the Vacate Order. Amongst the draft grounds of appeal were the following:
18.2.On 8 January 2020, the summons was fixed to be heard on 23 January 2020, the judge ordering that “both parties shall attend the hearing personally”. 18.3.On 10 January 2020, the Wife’s solicitors wrote to the court saying she was going on holiday abroad from 22-28 January 2020. They sought an order for an adjournment to a later date after the holidays, or that her personal attendance at the hearing be excused. 18.4.By letter dated 14 January 2020, the parties were informed that the judge had ordered that the Wife’s personal attendance be excused. 18.5.On 16 January 2020, the Husband wrote to the judge’s clerk saying “in light of the [Wife’s] request to potentially adjourn the hearing after the holidays, I would like to bring to your attention my scheduled travel between 7 to 16 February 2020. ...”. Refusal of Leave Decision 19.The hearing of the Husband’s summons for leave to appeal took place on 23 January 2020. He was absent. It may (or may not) be that he misunderstood the order excusing the Wife’s personal attendance as an order for adjournment, but that is immaterial. 20.The judge gave a written decision on the same day. The following matters should be noted. 20.1.First, in setting out the background, the judge said repeatedly that the Husband’s counter offer was that he would pay the wife her share within a period of “8 years”19. That was mistaken. The Husband’s 1st and 2nd offers contained two options, one for payment within 3 years and the other, within 5 years. His 3rd offer was for immediate payment of a sum up front and the balance within 5 years. The period of 8 years was never mentioned. 20.2.Secondly, the judge ignored the 4th offer (which did not contain a period) which was made on the morning of 13 December 2019. Even though the Husband’s 1st and 2nd grounds of appeal referred to the 4th offer, the judge failed to take that into account, saying:
20.3.More importantly, in justifying the making of the Vacate Order in respect of the registration of the AR notice against the matrimonial home, the judge said:
20.4.On the basis of the matters set out above, the judge considered that the Husband’s appeal had no reasonable prospect of success and dismissed the application for leave to appeal. The Husband’s application for leave to appeal out of time 21.1.Order 58 rule 2(4B) of the Rules of the District Court provides that if the judge refuses an application for leave to appeal, a further application may be made to this court within 14 days from the date of refusal. 21.2.However, before that period expired in the present case, on 29 January 2020 the High Court Registry was closed due to public health considerations. The initial closure was from 29 January 2020 to 8 March 2020 (“the 1st closure”). The Registry re-opened on 9 March 2020. However, it was closed again on 23 March 2020 to 5 May 2020 (“the 2nd closure”). It re-opened again on 6 May 2020. On that day, the Husband filed a summons for leave to appeal out of time. Discussion Application for leave to appeal out of time 22.It is well-established that in considering whether to exercise its discretion to extend time, the court will take into account: (1) the period of delay; (2) the reasons for delay; (3) the prospects of success of appeal; and (4) any prejudice to the other party. 23.1.As for (1) i.e. period of delay, Mr Eric Leung, counsel for the Wife, first submitted that the Husband was guilty of a substantial period of delay, contending:
23.2.With respect, there are two errors in that passage. First, the computation of time is erroneous because the closure of the registry did not extend the deadline for filing the summons to 17 March 2020. Rather, s.71(1A)(a) and (2) of the Interpretation and General Clauses Ordinance Cap. 1 provide that if an act is allowed to be done within a period of time (in this case, 14 days from 23 January 2020), and the last day of that period (in this case, 6 February 2020) was a closure day for the Registry, the period includes the next working day. As 6 February 2020 fell within the 1st closure, the last day for filing became 9 March 2020, being the next working day after the 1st closure. The Husband failed to file the summons on that day, and his failure extended to 22 March 2020 (when the 2nd closure started). 23.3.Second, the Husband did not file the summons only on 19 June 2020. He had filed a summons on 6 May 2020, the next working day after the 2nd closure. 23.4.In other words, the period of delay was 9 - 22 March 2020. When this was pointed out to Mr Leung during the hearing, he withdrew his argument that there had been a “significant” delay. 24.In relation to (2) i.e. reasons for delay, the Husband submitted that as he was not legally qualified or represented, he had difficulty knowing when he could file documents in court, and he had made a number of trips to the court building, only to find the Registry closed. In light of the argument of “significant” delay being withdrawn, it is not necessary to consider this. 25.As for (3) i.e. prospects of success, this court considered (for the reasons set out later in this Judgment23) that there were reasonable prospects of success, and so gave leave to the Husband to appeal out of time. 26.As for (4) i.e. prejudice to the other party, there is no extant agreement for sale of the matrimonial home involving a third party, and the Wife has not filed evidence of any prejudice. The appeal proper 27.Proceeding then to the appeal proper, it would appear that as shown in the Refusal of Leave Decision (there being no reasoned judgments for the Unless Order or the Vacate Order), the judge unfortunately erred in the following respects. 27.1.First, the judge was under the mistaken impression that the Husband had offered to purchase the matrimonial home by payments to be made over a period of 8 years. That was not the evidence24. This misapprehension of the evidence was material as this period was repeated by the judge a number of times. 27.2.Secondly, before the Vacate Order of 23 December 2019, the Husband had made a 4th offer on the morning of 13 December 2019. On the face of it, its terms (albeit vague) were different from the previous 3 offers, and it constituted a change in circumstances from the situation at the time of the Unless Order. 27.3.The judge should therefore have considered it before making the Vacate Order. If she thought it was too vague, she should have called for further details. Alternatively, she should have explained why the fresh offer did not impugn her decision. 27.4.Unfortunately, the judge seems to have neglected the fresh offer. She did not mention the 4th offer at all in the Refusal of Leave Decision (even though the offer was referred to in the draft grounds of appeal), but said instead that the Husband had “simply left the matter in abeyance”, which was factually incorrect in light of the fresh offer. 27.5.Moreover, the judge predicated the Vacate Order on the basis that the Husband had failed to file the undertaking. However, it is important to note that this undertaking to “fully indemnify” any shortfall had been imposed by the judge during the hearing on 3 December 2019 on an unrepresented litigant who had been served with the summons to vacate the AR notice only 2 days earlier, whose request for time to consider the matter was refused by the judge. 28.1.Finally, and more importantly, the judge justified making the Vacate Order by the proposition that “it is open for any party to liquidate or crystallize a matrimonial asset at any stage of the proceedings”25 (“the proposition in question”). This court asked Mr Leung whether he supported it, and if so, to provide authority for it. 28.2.Mr Leung sought to argue that the proposition in question was correct because “Hong Kong ... operates a separate property regime”, referring to passages in the judgments in SPH v SA26, B v S27, WYSL v FHCBA28 and CYYC v TVKT 29. 29.With respect, those cases do not support the proposition in question that a spouse in Hong Kong can dispose of any property in his/her sole name unilaterally at any time during the proceedings even though the other spouse has a beneficial interest in such property and is claiming for its transfer, and that the court should assist her in doing so. 29.1.First, it is clear from those cases that their emphasis on the “separate property regime” in common law jurisdictions (such as the UK and Hong Kong) is in order to contrast it with the “community of property regime” which is the default marital property regime in many European civil law countries. 29.2.This contrast is crucial in cases when the common law courts had to consider the effectiveness (or otherwise) of civil law agreements (whether made before or during the marriage) made by foreigners from European civil law countries who then moved to a common law jurisdiction and got divorced there. For example, in B v S, the UK court had to examine if a civil law agreement should be considered as similar in character and objective to a common law pre-nuptial agreement30. Similarly, in SPH v SA, the Hong Kong Court of Final Appeal had to consider the effect (or otherwise) of the default marital property regime of a German couple who married in Hong Kong, but who separately commenced divorce proceedings in Hong Kong and Germany. They had signed an ante-nuptial agreement which provided for retention of the German regime for some assets, but not for others. The issue was whether the Hong Kong proceedings should be stayed in favour of the German courts as the forum conveniens. 29.3.Consequently, such judicial pronouncements regarding the “separate property regime” must be understood in their context. They do not justify the proposition in question that a spouse in Hong Kong can dispose of any property in her sole name unilaterally and at any stage of proceedings (even though the other spouse has a beneficial interest in it and is claiming for its transfer), such that the court should facilitate it. Having said that, it is important to note that it is not the case either that all the properties of every spouse are automatically frozen pending the determination of ancillary relief proceedings, nor should a freezing order be made on all assets31. 29.4.The position is more nuanced. As the Court of Final Appeal held in LKW v DD32, the first step in the exercise under s.7 Matrimonial Proceedings and Property Ordinance Cap.192 (“MPPO”) is the identification of matrimonial assets which are to be shared. In this identification process, a particular item of property may be excluded on the basis of source, e.g. property acquired during the marriage by one of the parties from a source wholly extraneous to the marriage, such as by gift or inheritance (although this factor carries less weight in a long marriage)33, or property acquired after separation without any assistance from the other party34. (It would be noted that Ribeiro PJ was not inclined to also exclude “unilateral assets” acquired from one party’s business or investment)35. 30.What is important however, particularly in the present case, is that the matrimonial home has a special position. Thus, exclusion from matrimonial assets is “not generally applicable to the matrimonial home ...”36. Ribeiro PJ quoted Lord Nicholls’ judgment in Miller v Miller and McFarlane v McFarlane37 that:
31.This court understands that the Wife accepts that the matrimonial home is a matrimonial asset. But what she was seeking to do was to sell it, before financial disclosure statements were filed, before the ancillary relief process had even begun, when the Husband had an admitted beneficial interest in it, and when he had applied for its transfer to him. 32.1.By making the Vacate Order to facilitate that sale, the court was in effect making an interim sale of property order to sell the matrimonial home, transforming the nature of the asset, against the wishes of a beneficial owner who was claiming it, which the court had no statutory jurisdiction to do. Section 6(1) MPPO provides:
Section 6A(1) further provides:
In the present case, when the Vacate Order was made, a decree had not yet been granted. 32.2.There was also no inherent jurisdiction to make an interim sale of property order. In Wicks v Wicks39, cited in Family Law and Practice in Hong Kong40, the husband had bought the matrimonial home but transferred it into the wife’s sole name, declaring her to be entitled to the whole legal and beneficial interest. When the marriage broke down, the wife and children left the matrimonial home to live in a rented house, with the husband remaining in residence. The wife wanted to sell the matrimonial home pending determination of the ancillary relief proceedings, so that she could buy a house for herself and the children to live in, but the husband objected. 32.3.The judge at first instance gave the order. On appeal, after a thorough review of previous judgments, the English Court of Appeal held:
33.For the reasons set out above, it is clear that the proposition in question was too wide and did not justify the making of the Vacate Order against the matrimonial home in which the Husband had an admitted equitable interest and had made a claim for transfer. Accordingly, the appeal was allowed and the Vacate Order set aside. Disposition of the Wife’s summons to vacate the AR notice 34.In the course of the hearing, this court asked counsel for the Wife whether, in the event that the appeal was allowed and the Vacate Order set aside, he would ask this court to remit the Wife’s summons to the Family Court for hearing, or whether he would ask this court to deal with the summons directly. Mr Leung sensibly preferred the latter course as obviously this would save time and costs. 35.Considering this matter afresh, this court dismissed the Wife’s summons.The parties had not yet filed their Form E, so nothing is known of their respective assets43. The Husband has throughout expressed his wish to retain the matrimonial home, and it will be for the court dealing with the ancillary relief proceedings to decide what is the appropriate way of dealing with it. 36.More importantly, the foundation of the Wife’s summons was that if she is not able to sell the matrimonial home now because of the Husband’s unreasonable objection, in the event of a fall in the market, she would suffer a financial loss for which she would “have no recourse”44. That assumption is incorrect. The court determining the ancillary relief proceedings would take into account any behaviour which it may regard as financial misconduct having a direct effect on the net assets of the parties, and the court is well-equipped to deal with such conduct, e.g. by departing from equality of division by way of adjustments45. As this court46 held in ARAV v VP47, how particular behaviour should be considered in terms of financial misconduct is highly fact sensitive, and would depend on the judge’s view of the evidence as a whole at the conclusion of ancillary relief proceedings48. No matter which route is taken (such as add-backs, or departure from equal division), fairness should lead to the same result in terms of whether any adjustment should be made, and assessment of fairness depends on a global assessment to be conducted by the judge at the conclusion of ancillary relief proceedings49. 37.For these reasons, the Wife’s summons to vacate the AR notice registered against the matrimonial home at this stage was dismissed. Costs 38.1.There being no reason why costs should not follow the event, the Husband should have the costs of the Wife’s summons (excluding the hearing of 6 December 2019 which he did not attend to its conclusion) and his summons in the Family Court for leave to appeal (excluding the hearing of 23 January 2020 which he did not attend). The judge’s order of costs on 23 January 2020 should be set aside. Whilst the Husband should not have the costs of the summons in this court for leave to appeal out of time as he was asking the court for an indulgence, he should have the costs for part of the hearing of 6 October 2020 relating to the appeal proper. 38.2.As for assessment of costs, there being no evidence of pecuniary loss in doing any work to which the costs relate, under the rules of court, the Husband shall be allowed no more than $200 an hour50. At the hearing before us, he claimed to have spent an extraordinary amount of time on the matter. Whilst the court appreciates that a litigant in person would require more time than a legally qualified person when dealing with the same matter, the amount of time expended must still fall within reasonable bounds. Taking all circumstances into account, we take the view that in total, his costs should be assessed at $3,000.
The respondent appeared in person 1 This petition was filed on the ground of 2 years’ separation. Previous proceedings in FCMC6424/2019, filed on another ground, were withdrawn. 2 Deputy District Judge J Chow. 3 Who is not legally represented. 4 No date was given earlier for the hearing of the 6 May 2020 summons as the hearing bundle was incomplete. Apparently the Husband filed the required bundle at the same time as the 19 June 2020 summons. 5 Both parties filed further submissions on 16 September 2020. 6 On 9 October 2020, the Notice of Appeal (CACV547/2020) was filed. 7 Wife’s affirmation, 3.12.2019, [7]. 8 As it was an “all moneys” mortgage, presumably this was the amount drawn down. 9 Wife’s affirmation, 3.12.2019, [7]. 10 3rd ed., [7.143]. 11 Financial Statement disclosing the party’s financial assets, etc. 12 Wife’s affirmation, 3.12.2019, [24]. 13 The Husband in person, the Wife by counsel. 14 Transcript, p.2. 15 Transcript, p.2. 16 Refusal of Leave Decision, [9]. 17 Refusal of Leave Decision, [10]. 18 Transcript, p.11. 19 [8], [14] and [17]. 20 [19]. 21 [17]. 22 The Petitioner’s Submissions in Opposition, 6.8.2020, [4]. 23 See [27] - [32] below. 24 See [20.1] above. 25 [17]. 26 [2014] 3 HKLRD 497. 27 [2012] EWHC 265 (Fam). 29 [2017] HKFLR 43. 30 B v S, [8]. 31 CYYC v TVKT [2017] HKEC 324, [14], [71] - [72]. 32 (2010) 13 HKCFAR 537. 33 [93]. 34 [94]. 35 [97]. 36 [98]. 37 [2006] 2 AC 618. 38 [22]. 39 [1999] Fam 65. 40 [5.221]. 41 Similar to s.6A MPPO. 42 Pp.77-78. 43 Contrary to the judge’s assumption, Transcript p.2. 44 Wife’s affirmation, 3.12.2019, [24]. 45 MKKWH v RKSH [2013] HKFLR 540. 46 (Tang ACJHC, Cheung and Fok JJA). 47 [2011] 3 HKLRD 759. 48 [55]. 49 MKKWH v RKSH [1], [3], [5], [54]. 50 Order 62 rule 28A(3), Rules of the High Court and Rules of the District Court. |
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