Yb v. Lx
Read the full judgment text of FCMC 596/2022 on BabelCite. This Family Court judgment was delivered on 9 December 2022 before Deputy District Judge W.Y. Ho.
Injunction – Matrimonial Proceedings – Material Non-disclosure – Freezing Order – District Court – Matrimonial Assets – Costs – s.17 MPPO – s.52B DCO – Parties married in 2008 with two children purchased property and car park – Petitioner claimed Respondent sold properties to Ms. W without consent – Ex-parte injunction granted 11 April 2022 to freeze assets and deposit proceeds – Respondent contested continuation – Court found material non-disclosure regarding prior agreement to sell but exercised discretion to continue injunction – Paragraphs 1, 2(1), 3(1), 3(2) discharged; Paragraph 2(2) continued – Respondent to pay Petitioner's costs of discharge application; interlocutory costs reserved; argument hearing costs apportioned 50/50
Legal issues: Material non-disclosure (Prior agreement to sell) · Material non-disclosure (Domicile) · Discretion to continue injunction · Costs
Outcome: Injunction partially discharged, partially continued. Costs order made.
Cited by 1 case · Cites 4 cases
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FCMC 596/2022 [2022] HKFC 272 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO.596 OF 2022 __________________________________
__________________________________ Coram: Deputy District Judge W.Y. Ho in Chambers (Not Open to public) Date of Hearing: 31 October 2022 Date of Decision: 9 December 2022 --------------------- DECISION (Injunction) --------------------- 1.There are 2 applications before me:
I. BACKGROUND 2.The parties are from Mainland China. They were married in Hong Kong on 9 September 2008 and have 2 children, currently the ages of 14 and 11 years old. The Petitioner filed for divorce in January 2022. 3.In 2011, the parties purchased a property in Tai Po (“the Flat”). In 2015 they purchased a car park in the same estate as the Property (“the Car Park”). The Property and Car Park shall be collectively referred to as “the Properties”. 4.The Petitioner claims she discovered, in or around January 2022, the Respondent unilaterally entered into an agreement to sell the Properties to a Ms. W. The Petitioner tried to resolve the matter amicably with the Respondent but to no avail. 5.On 11 April 2022, the Petitioner filed, on an urgent basis, an Ex Parte on Notice Summons requesting for various relief including the following:
6.The Ex Parte on Notice Summons was heard before me on 12 April 2022 and an order was made on the same day (“the Injunction Order”) as follows (names have been obliterated):
7.The Petitioner abandoned the joinder application at the ex-parte hearing. 8.A return date was fixed for 10 May 2022. The Respondent was present at the hearing and contested the continuation of the Injunction Order. I therefore fixed the matter down for substantive argument and ordered that paragraphs 3(1) and 3(2) of the Injunction Order be stayed pending the argument hearing. Paragraphs 1, 2(1) and 2(2) of the Injunction Order were ordered to be continued until the date of the substantive argument, that is, 31 October 2022. 9.At the substantive hearing, counsel for the Petitioner confirmed the Petitioner no longer sought the continuation of paragraph 3 of the Injunction Order (“Paragraph 3”), but sought the continuation of paragraphs 1 (“Paragraph 1”), 2(1) (“Paragraph 2(1)”)) and 2(2) (“Paragraph 2(2)”) of the Injunction Order. 10.The Respondent’s ground for objecting to the continuation of the Injunction Order can be paraphrased as follows:
II. THE LAW 11.The legal principles governing injunctions in the context of family proceedings are succinctly summarized by HHJ I Wong in the case of CCL aka L, CC v JRC aka C, JR [2021] HKFLR 202 at 213. I find it helpful to set out the relevant parts of his judgment as follows:
12.I shall now proceed to deal with whether the individual paragraphs of the injunction should be continued or discharged. III. PARAGRAPHS 3(1) AND (2) OF THE INJUNCTION ORDER: THE DISCLOSURE ORDER 13.Counsel for the Petitioner, Ms. Lai, no longer seeks the continuation of Paragraphs 3(1) and (2). 14.I therefore discharge Paragraphs 3(1) and 3(2) of the Injunction Order. IV. PARAGRAPH 1 OF THE INJUNCTION ORDER: THE PAYMENT OF DEPOSIT 15.At the time the Injunction Order was made, the Petitioner deposed the Respondent had received a deposit for the sale of the Properties but the Respondent used up all the money. 16.At the return date hearing, the Respondent confirmed, in his affirmation, the deposit money had been paid to his brother and cousin as repayment of loans owed to them. 17.There is no dispute the Respondent no longer has the deposit money. Hence, the remedy available to the Petitioner would be by way of an application to join those who received the proceeds and apply to set aside the said transactions, instead of an injunction. 18.I further note the sale of the Properties had fallen through since the granting of the Injunction Order. Pursuant to the terms of the Agreement for Sale and Purchase executed on 13 December 2021, the Respondent is now liable to return the deposit money back to Ms. W. 19.I agree with the submissions of the Respondent’s counsel, Mr. Yeung, that to allow Paragraph 1 to continue would, in effect, be condoning the breach of the Respondent’s contractual obligations to Ms. W. This is because if Paragraph 1 is not discharged, the Respondent will be unable to fulfil his contractual obligations to Ms. W. Furthermore, Ms. W has a potential claim against the deposit money. The continuation of Paragraph 1 would have the effect of giving the Petitioner priority over Ms. W’s claim. 20.Due to the change in circumstances since the granting of the ex-parte order, and by reason of the matters set out above, I am of the view it is no longer appropriate to allow the continuation of Paragraph 1. I therefore discharge Paragraph 1 of the Injunction Order. V. PARAGRAPH 2: RESTRAINING THE RESPONDENT FROM DEALING WITH HIS ASSETS AND FROM SELLING THE PROPERTIES. 21.The Respondent strongly objects to the continuation of the 2 orders set out in Paragraph 2 of the Injunction Order. 22.I have considered counsels’ submissions and the authorities cited. I do not propose to deal with each and every point raised by counsel. Suffice to say, I shall deal with the salient submissions raised by the parties. A. Material non-disclosure 23.The Respondent alleges the following material non-disclosure committed by the Petitioner:
24.Mr. Yeung submitted the above non-disclosure is material as the non-disclosed facts would materially affect the court’s decision on the following:
25.I shall first deal with whether there was non-disclosure as claimed. I will then proceed to discuss whether the non-disclosure (if any) is material. (i) Non-disclosure relating to the Property 26.The Respondent produced We-Chat messages between himself and the Petitioner. The date of the Respondent’s message is not apparent, but the Petitioner’s response is dated 27 January 2022. Their messages are set out below:
27.According to the version of facts deposed in the Respondent’s affirmation, the Flat was never intended to be a matrimonial home. It was always the intention of the parties to treat the Properties as investment properties and the parties agreed the Properties would be sold when the price was right. The Respondent argued the We-Chat messages produced are proof of the prior agreement. 28.The Petitioner does not deny she sent the messages. However, she explained that since the Respondent had already entered into an agreement with Ms. W by the time she discovered the transaction, she had no choice but to reluctantly agree to the sale. During the hearing, I asked Ms. Lai to clarify whether the Petitioner conceded there was a prior agreement to sell the Properties. Ms. Lai tried to argue that even if there was an agreement to sell the Properties at the price of HK$40 million, the agreement would not long be valid due to the subsequent intervening events. 29.When I sought further clarification from Ms. Lai on whether in fact the Petitioner is conceding there was a prior agreement to sell the Properties, Ms. Lai confirmed there was a discussion between the parties in or around May 2018 on whether the Properties should be sold but there was no agreement. Ms. Lai submitted the Petitioner’s position is that she did not agree to sell the Properties, but if they were to be sold, they should be sold at a price of HK$40 million or above. 30.Having considered Ms. Lai’s submissions and the evidence before me, I find the Petitioner’s explanation of the relevant We-Chat message, to put it quite bluntly, a bit of a stretch. The clear meaning of the Petitioner’s message is that the parties had previously discussed the sale of the Properties and agreed to sell it at the price of HK$40 million. I find the interpretation now put forward by Ms. Lai difficult to accept. If there was no prior agreement to sell the Properties as submitted by Ms. Lai, there is no reasonable explanation as to why the Petitioner would use the phrase “我們的共識” (translated to: our prior consensus / agreement). 31.I find the Respondent’s assertion of a prior agreement to sell the Properties to be the more probable and reasonable explanation for the We-Chat messages. For the purposes of this application, I am prepared to accept there was a prior agreement between the parties to sell the Properties. I am also prepared to accept the same was not disclosed in the Petitioner’s affirmation at the ex-parte hearing and at the return date hearing. 32.Following from the above, I am further prepared to accept the Petitioner knew the Properties were placed on the market for sale prior to January 2022. However, I do not go so far as to find that the Properties were all along intended to be investment properties. 33.The agreement to sell in itself cannot be automatically equated with the original purpose of the purchase. There is clearly a factual dispute between the parties as to whether the family had ever lived in the Flat during the time when the children were in school in Hong Kong. This is not a factual dispute in which the court can resolved at this stage based on affirmations only. I therefore decline to draw the inference the Properties were all along intended as investment properties based on the acceptance there was a prior agreement to sell. (ii) Non-disclosure regarding domicile and/or ties to Hong Kong 34.In his affirmation, the Respondent deposed the children and the Petitioner have never habitually resided in Hong Kong. He was adamant that it was never the intention of the family to stay in Hong Kong permanently. He argued the Petitioner sought to mislead the court into believing the family intended to stay in Hong Kong permanently and that the Flat was intended to be the matrimonial home. 35.The Respondent sought to persuade the court the Petitioner never regarded Hong Kong as her habitual place of residence or her domicile based on the following:
36.The Respondent took out a summons challenging the jurisdiction of this court to deal with the Petitioner’s divorce petition on the basis that none of the parties are habitually resident or domiciled in Hong Kong. The substantive argument is fixed to be heard before myself in March 2023. I therefore do not find it appropriate to make any ruling on the proper domicile or habitual residence of the parties in this decision. These matters will be dealt with in the Respondent’s application relating to jurisdiction. 37.However, I am required to consider whether there has been non-disclosure of facts on the issue of domicile or habitual residence, and whether the non-disclosure is material. 38.I note there is no dispute those facts set out in paragraph 35 hereinabove were not disclosed by the Petitioner during the various hearings relating to the Injunction Order. 39.The pertinent question is whether the non-disclosure is material. B. Whether the non-disclosure is material. 40.Coleman J succinctly sets out the relevant principles on material non-disclosure in the case of Hwang Joon Sang & anor v Golden Electronics Inc and others [2021] HKCFI 2425 (unrep) at paragraph 37 as follows:
41.I shall first deal with the non-disclosure of matters purportedly relating to the Petitioner’s domicile and place of habitual residence. 42.Having considered the affirmation of the parties filed for the purposes of this application, I do not find the non-disclosure of the email, the withdrawn Shenzhen divorce petition, and the rejection of school placement to constitute material non-disclosure. 43.The said matters are all circumstantial evidence which give no conclusive indication as to the Petitioner’s intended domicile. 44.In any event, it is clear from the judgment of Hartmann J in B v A [2008] 1 HKLRD 43 that the parties need not show their substantial connection to Hong Kong is their only substantial connection to a jurisdiction. 45.Hence, even if the matters raised by the Respondent were before the court at the ex-parte hearing, I would have still granted the ex-parte injunction on the basis there was sufficient grounds for the court to exercise its jurisdiction based on the matters deposed in the Petitioner’s affirmation. 46.I therefore do not accept there was material non-disclosure of matters relating to domicile and/or place of habitual residence. 47.In so far as there has been non-disclosure of the prior agreement to sell the Properties, I accept the said prior agreement is relevant in considering whether the application was urgent enough to warrant an order be granted on an ex-parte basis. It is also relevant in the court’s assessment of whether in fact the Petitioner’s assertion that the sale of Properties was as sudden as claimed by the Petitioner. Another factor this non-disclosed fact would have bearing on is the appropriate relief that should have been granted at the ex-parte hearing. 48.By reason of the above, I am satisfied and accept the non-disclosure relating to the previous agreement is a material non-disclosure. 49.In so far as the Injunction Order mandates the Respondent’s assets be frozen, counsel are in dispute over whether the case of Shipman v Shipman [1991] 1 FLR 250 applies to the present case. 50.Mr. Yeung argued the present property transaction should be viewed as no more than a normal commercial transaction. He submitted this court is not burdened with considerations that are peculiar in the family context and that in considering whether the injunction should be discharged or continued, such consideration should be made in accordance with the usual principles that govern normal commercial injunctions. 51.Ms. Lai submitted the Flat is a matrimonial home and that the Properties are matrimonial assets. She argued that in such circumstances, the principles set out in Shipman v Shipman [1991] 1 FLR 250, as followed by Tan Li Hui Cheng v Tan Kian Chee [1997] 4 HKC 94, should apply. 52.In particular, Ms. Lai sought to rely on the following excerpts from the judgment of Le Pichon J (as she then was) in Tan Li Hui Cheng:
53.Having considered the authorities cited, I am of the view Shipman applies to the present case, but I disagree the application of Shipman means the Petitioner is somehow subject to a more relaxed disclosure rule than that generally required of ex-parte applications. 54.I have also considered the case of Tan Li Hui Cheng v Tan Kian Chee [1997] 4 HKC 94 and Ms. Lai’s reading of the case. I agree that I am bound by the decision in so far as it reads: “There is no requirement that an applicant put all facts material to the substantive application before the court in a s.17 application.” (own emphasis) 55.However, I disagree this means that the Petitioner is somehow relieved of providing full and frank disclosure. I agree with the judgments of Mostyn J in the cases of UL v BK [2013] EWHC 1735 and ND v KP [2011] EWHC 457 in that, even in the family context, the duty for full and frank disclosure (especially in ex-parte applications) is an important safeguard to ensure justice. 56.On a careful reading of Tan Li Hui Cheng, I understand Le Pichon J to mean that it is impracticable and impossible for an applicant to be able to supply the court with “all facts material” relating to a section 17 Matrimonial Proceedings and Property Ordinance (Cap 192) application, that is, the actual application to set aside a transaction. This must be correct given the nature of such applications involve third parties and, more often than not, the applicant knows very little detail of the transaction in the initial discovery of the same. To require the applicant to be able to relay all material facts is impracticable in the preliminary stages when there is probably minimal information. My reading of Le Pichon J’s dictum is that she was merely stating that the applicant is not required or even expected to make a full disclosure of all material facts of or surrounding the substantive application (my own emphasis). Her dictum does not exempt parties from the duty of full and frank disclosure that is generally required in ex-parte applications. In other words, in so far as material facts are known to the applicant at the time of the application, the applicant has a duty to make full and frank disclosure of those material facts known to him/her. The applicant is not entitled to pick and choose which facts he/she wishes to disclose under the disguise of Le Pichon J’s dictum in Tan Li Hui Cheng. 57.In so far as the Respondent seeks to persuade the court the case of Shipman is distinguishable, I do not accept the sale of the Properties is to be viewed as a normal commercial transaction. Whether or not the Flat was intended to be a matrimonial home or an investment property is irrelevant in the determination of whether it forms part of the matrimonial assets. Once an asset is acquired during the marriage, it is prima facie a part of the matrimonial assets. The sale of such assets is a disposition of matrimonial assets. The presence of an agreement to sell a matrimonial asset does not change the nature of its disposition. 58.I echo the reasoning of Deputy District Judge KW Wong (as he then was) as set out in the case of C v L [2009] HKFLR 188 at 201:
59.I am of the view that material non-disclosure does not lead to an automatic discharge of an ex-parte injunction order, especially in the context of family cases. The court must adopt a pragmatic approach and consider, having regard to all the circumstances and the need to preserve matrimonial assets, whether the injunction obtained should nevertheless be granted or continued. C. Should the court exercise its discretion to re-grant or continue the injunction. 60.In considering whether the Injunction Order should be continued or re-granted, I have considered the authorities cited to me by counsel. 61.I agree that an injunctive relief should not be used as a tool to merely preserve the matrimonial assets. However, I am also wary of the fact the Petitioner makes a proprietary claim on the Properties, of which is being disputed by the Respondent. As I have explained, the court is not in a position at this stage of the proceedings to determine this factual dispute. This dispute can only be determined after the parties’ evidence is tested in a trial hearing. 62.Even if there was a prior agreement to sell, the Petitioner clearly did not agree to sell at a sum lower than HK$40 million. The Respondent, knowing there was an impending ancillary relief claim in the divorce proceedings, should not have unilaterally entered into the agreement for sale. 63.Furthermore, I also am of the view that such a restraining order is necessary to prevent any dissipation of matrimonial assets. The Respondent does not deny he distributed the deposit money to his family without the prior consent of the Petitioner. Despite the various submissions made at the return date hearing and the substantive argument hearing, the Respondent remained silent on the deposit money and made no proposals on how such sum could be secured for the purposes of the present proceedings. 64.I am of the view the actions of the Respondent and the clear dissipation of the deposit money warrants the continuation of the restraining order at Paragraph 2(2) of the Injunction Order. 65.By reason of the matters set out above, I am of the view it is proper and necessary to grant an injunction to restrain the Respondent from selling the Properties. 66.Since I am of the view Paragraph 2(2) of the Injunction Order should continue, Paragraph 2(1) is now redundant. I therefore order the discharge of Paragraph 2(1). COSTS 67.The Petitioner asks for an indemnity order against the Respondent indemnifying them against the costs of Ms. W. 68.Having considered the submissions of counsel I refuse the Petitioner’s application for an indemnity order. I agree with Mr. Yeung in that there was no need for the Petitioner to seek to join Ms. W to the proceedings for the purposes of the ex-parte injunction application. At the ex-parte hearing, the Petitioner was clear in that she merely wanted to preserve either the Properties themselves or the proceeds from the sale of the Properties. An injunction sought to restrain the sale of the Properties or to restrain the Respondent from dealing with the proceeds of sale is sufficient to protect the Petitioner’s interest. In either relief, there is no need to join Ms. W. 69.I therefore refuse the Petitioner’s application for an indemnity order. 70.In so far as the costs of the Petitioner’s application is concerned, I am of the view that costs should follow the event. I am of the view, whether or not there was a previous agreement, the Respondent should not have entered into the agreement for sale of the Properties without consulting the Petitioner. Moreover, it is clear the Respondent distributed the deposit money to his family members without obtaining the consent of the Petitioner. In such circumstances, the Petitioner cannot be faulted for bringing an application to restrain the Respondent from further dealing with the Properties. 71.I note that although the Petitioner now abandons Paragraph 3 of the Injunction Order and has unsuccessful in upholding the continuation of Paragraphs 1 and 2(1) of the Injunction Order, I nevertheless regard the Respondent as largely unsuccessful in his application for discharge. This is because the main area of contention and focus of the submissions were on the Petitioner’s material non-disclosure and whether Paragraph 2(2) should continue. 72.I therefore make a costs order nisi the Respondent to pay the Petitioner’s costs of the discharge application, with certificate for counsel. 73.Since the Respondent’s discharge application involved multiple hearings before this court and substantial volume of documents were filed for the purposes of the application, I am of the view it is more appropriate to order the costs be taxed if not agreed. 74.In respect of the costs of the interlocutory Injunction Order, I am of the view that such costs should be reserved to be determined by the trial judge. The factual dispute of whether the Petitioner has a proprietary claim over the Properties will be an issue at trial and the determination of the veracity of the Petitioner’s claim will be determinative of whether the interlocutory injunction was correctly sought. I therefore reserve the costs of the interlocutory injunction to be determined by the trial judge. 75.I apportion the costs of the argument hearing at 50% to the interlocutory injunction and 50% to the Respondent’s discharge application. 76.I therefore make the following orders:
Representation: Mr. A. Lai instructed by Messrs. Augustine C.Y. Tong & Co. for the Petitioner (YB) Mr. M. Yeung instructed by Cheung Fung & Hui for the Respondent (LX) | ||||||||||||||
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