Wlmla v. Wwkp
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FCMC 9972/2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MATRIMONIAL CAUSES NO. 9972 OF 2008 ------------------------ BETWEEN
------------------------ Coram: HH Judge C.K. Chan in Chambers (not open to the public) Dates of Hearing: 13-15 April, 5-6 &19 October 2010 Date of Handing Down Judgment: 17 December 2010 ----------------------- J U D G M E N T ------------------------ 1.Although there may be some procedural irregularities on the part of the Respondent Husband (“the husband”), I will treat him to have made the following 3 applications at this trial, namely:
Brief History 2.The parties married in 1973. 3.Within wedlock, they had 2 children and they were:
4.Both children are now adult and living independently. 5.In May 2004, the parties separated. 6.On 5 July 2004, the wife issued a petition for divorce based on the husband’s behaviour (FCMC 7084 of 2004). The parties later reached an agreement for the wife to withdraw her then petition but thereafter the parties had never resumed cohabitation. The parties also signed a deed of separation (hereinafter called “the Deed of Settlement” or simply “the said Deed”) on 7 September 2004 in which they agreed, among other things, that the parties should continue to live separately; the joint property at a unit of Bay View, No. 17 Middle Lane, Midvale Village, Discovery Bay City, Lantau Island, New Territories, Hong Kong (“the Discovery Bay Property”) would be sold and the net sale proceeds be divided between the parties in equal shares; the parties would support and maintain herself or himself; and both parties would not make any claim for ancillary relief against each other in future divorce proceedings. 7.Pursuant to the Deed of Settlement, the wife received the sum of $594,277 being her share on the net sale proceeds of the Discovery Bay Property on 4 October 2004. With this money, the wife and the daughter, M purchased another property at a floor of Race Tower, No.81 Wong Nai Chung Road, Hong Kong (“the Race Tower Property”) as tenants in common in equal shares in December 2004. The purchase price was $3,500,000 with the wife paying $350,000 as down payment while the monthly mortgage repayments would be shouldered by the daughter. 8.The Race Tower Property was sold in December 2008 at $6,300,000. It is the wife’s case that the daughter has paid about 2/3 of the purchase price by way of her contribution to the mortgage repayments, therefore, she was also entitled to 2/3 of the net profits, namely the sum of $2,200,000. As a result, she paid the daughter the said sum by 2 transfers, namely the sum of $500,000 on 2 March 2009 and the sum of $1,700,000 on 13 July 2009. 9.On the contrary, it is the husband’s case that the wife should have been entitled to at least half of the net profits and therefore, he views the payment of $2,200,000 to the daughter as a deliberate attempt by the wife to reduce her capital in order to defeat the husband’s claim for ancillary relief. Therefore, he filed his summons dated 3 November 2009 asking for the setting aside of the payment of $2,300,000 (this was a round up figure and that is why the parties sometimes referred to $2,200,000 and sometimes referred to $2,300,000) from the wife to the daughter. 10.As to the Deed of Settlement, it is the husband’s case that at the time of signing, he was well aware that the document would not be a bar to his future claim for ancillary relief against the wife. Furthermore, he said he was under tremendous pressure at the time, and therefore this court should not give any effect to the terms of the Deed of Settlement. 11.As to ancillary relief, the husband is saying that his business has failed and at the age of 62, he is in a very precarious financial position. On the other hand, the wife is enjoying very good retirement benefits and with financial support from the daughter. Therefore, the husband asks for a fair distribution of the wife’s assets. The Husband’s s.17 Application 12.It is common ground that the Race Tower Property was purchased in December 2004 by the wife and the daughter as tenants in common at $3,500,000. At the time of purchase, the wife paid the down payment of $350,000 from her share of the proceeds of sale of the Discovery Bay Property. A mortgage was taken out for the balance and it was the daughter who has repaid the subsequent monthly mortgage repayments. 13.When the Race Tower Property was sold in May 2008, and after the deduction of the outstanding mortgage loan and other expenses, a net sum of about $3,400,000 was realised. 14.According to the wife, as the daughter had settled the mortgage repayments in the total sum of about $700,000, it was agreed between them that the daughter would be entitled to 2/3 of the net proceeds while the wife would have 1/3. 15.Upon the actual sale, the whole of the net proceeds of $3,400,000 was deposited into the bank account of the wife. She explained that no money was paid to the daughter at the time because it was the daughter’s then wish to quit her job in order to pursue her studies in Theology overseas. The wife was requested to hold the daughter’s share on trust and out of which to pay for the mortgage of the daughter’s another property (“the Po Tak Property”). 16.Later in March 2009, the wife paid a lump sum of $500,000 to reduce the mortgage loan of the Po Tak Property. As a result of the present litigation, the daughter has also requested the wife to pay back the balance and so the further sum of $1,700,000 was paid to the daughter on 13 July 2009. In other words, by July 2009, the wife has returned a total sum of $2,200,000 as the daughter’s rightful share in the proceeds of sale of the Race Tower Property. 17.It is now the case of the husband that as the wife has paid for the whole of the down payment, she should be the sole beneficial owner of the Race Tower Property. In the alternative, she should at least own half of the beneficial interest in the property as she was a tenant in common in equal shares with the daughter. Therefore, the payment of $2,200,000 to the daughter should be set aside and be brought back into the family pool of assets for a fair distribution between the parties. The Law 18.The husband is now relying on s.17(1)(b) of the Matrimonial Proceedings and Property Ordinance, Cap.192 (“MPPO”) in his setting aside application:
The Issue 19.The main issue here is whether the wife, by paying over the total sum of $2,200,000 to the daughter, had the intention of defeating the husband’s claim for ancillary relief. As the disposition was made within 3 years before the date of the husband’s application, the burden is on the wife to prove that she had no such intention. Discussion 20.The starting point for discussion is that the wife and the daughter were tenants in common of the Race Tower Property and therefore, prima facie, each of them would at least be entitled to half of the net proceeds of sale. 21.At trial, the wife testified further to the effect that during the mortgage period, it was the daughter who was responsible in discharging the monthly mortgage repayments of the Race Tower Property. There is evidence to show that the daughter had made payments of $25,000 per month by way of autopay into the account of the wife up to September 2008 (A1/175-188). 22.During cross examination, the wife further explained that despite the sale of the Race Tower Property in May 2008, the autopay did not stop until September 2008 because the daughter had forgotten to discontinue the autopay arrangement. 23.I note that the daughter did not give evidence. Instead, she has written a letter to the court on 5 December 2009 (B/98). I do not intend to recite the contents of the letter in detail, but suffice to say that it supports what the wife has said in her affidavits and in court. In particular, the daughter confirmed that the wife had paid the down payment of $350,000 while she has paid about $700,000 for the mortgage repayments. They had also agreed to share the net proceeds of sale at the ratio of 2/3 to her and 1/3 to the wife. 24.It is regrettable that the daughter has failed to come to court to testify or to be cross examined. However, her reluctance to come to court is understandable because after all she was in the middle of a dispute between her own parents. I think the last thing that she wanted was to face the cross examination of her father who was trying to discredit her mother. 25.Having said that, the undeniable facts of this case are that the Race Tower Property was registered under both names of the wife and the daughter; the daughter did pay a monthly sum of $25,000 into the wife’s bank account which was slightly more than the monthly mortgage repayment; the total mortgage repayments amounted to about $700,000 which should be roughly 2/3 of the total monies paid by the parties for the Race Tower Property. Furthermore, despite the non-attendance of the daughter at the trial, it is never the case of the husband that the letter from the daughter was a false document. After considering all the evidence in the round, I am satisfied that the daughter did pay around $700,000 towards the mortgage repayments of the Race Tower Property which amounted to about 2/3 of the monies paid on this property. I am further satisfied that the payment of $2,200,000 to the daughter was just a payment of the daughter’s rightful share in the property and it was not an attempt to defeat the husband’ claim of ancillary relief against the husband. 26.The husband’s s.17 application is dismissed. The Husband’s Application for Ancillary Relief 27.The next topic is the husband’s application for ancillary relief. The Deed of Settlement 28.One of the major issues concerning the husband’s application for ancillary relief is the Deed of Settlement. 29.It is common ground that the Deed of Settlement was signed between the parties on 7 September 2004. The issue now is the effect of that Deed on the husband’s application for ancillary relief against the wife. The Terms of the Deed of Settlement 30.I think in order to have a meaningful discussion of the Deed of Settlement, it is important to set out the major terms of the document. 31.One would still remember that before the signing of the Deed of Settlement, the wife had issued a petition of divorce based on the husband’s behaviour. At paragraph (5) of the preamble, the purpose of the Deed was stated as follow:
32.It is clear from the above wordings that the parties were contemplating a separation and the covenants to be observed during that period of time. 33.Apart from the terms governing the separation and the sale of the Discovery Bay property, the relevant terms as contained in the main body of the Deed are as follows:
34.Counsel for the wife relies heavily on the case of Edgar v. Edgar [1980] 1 WLR 1410 with the proposition that formal agreements that were properly and fairly arrived at with competent legal advice should be given effect unless good and substantial grounds are shown for concluding that injustice would be done by holding the parties to the terms of the agreement. 35.I have no problem with the principles as enunciated in Edgar and also in the more recent case of Radmacher v. Granatino (English Supreme Court Judgment given on 20 October 2010) in which one can see the modern trend of the recognition of post-nuptial and even ante-nuptial agreements. But before we come to consider whether the husband should be held to the terms of the Deed of Settlement, it is my view that one should always start the analysis by looking at the terms of the agreement to see what has been agreed and their legal effect. Clause 4 of the Deed 36.The agreement as contained in Clause 4 of the Deed is that the parties agreed not to claim for ancillary relief in future matrimonial proceedings. If this Clause is held to be binding on the husband, that will be the end of his application. However, after considering this Clause very carefully, I have to come to the conclusion that the said provision is void. 37.In reaching this conclusion, reference has to be made to s.14(1)(a) of MPPO which states:
As Clause 4 has the effect of restricting a party’s right to claim for ancillary relief and therefore, the inevitable conclusion is that it is a void provision. The other Terms 38.With Clause 4 out of the way, the remaining issue now is the effect of the remaining terms of the Deed on the husband’s application for ancillary relief. 39.As I read from the remaining terms, I think the only other important term is Clause 3, which states that “throughout the subsistence of this deed, …the parties will at all times support and maintain himself or herself…”. 40.I think by a fair reading of this term, together with the other terms of the Deed, it was the parties’ then agreement that none of them will be required to pay any maintenance towards the other in case of a future divorce. 41.But a maintenance order, by definition of s.2 (1) of the MPPO would be restricted to a periodical payment, secured periodical payment or a lump sum order only. The husband’s present application is for ancillary relief, which would include relief other than just maintenance. In other words, even if full effect is to be given to the terms of the Deed of Settlement, it cannot be regarded as a full and final settlement of the husband’s claim for ancillary relief. 42.Having said the above, the fact that the parties have once reached an agreement to support and maintain herself/himself is nevertheless a fact to be taken into account when I come to consider the husband’s application for ancillary relief. 43.Of course, I am also aware of the husband’s evidence concerning the circumstances of the signing of the Deed of Settlement, for example, he said he was being thrown out of the then matrimonial home by the wife; that he was under great pressure, both emotional and financial, at the time; that he was given a false hope of reconciliation, etc. 44.But the undeniable facts remain that the Deed was signed in contemplation of a separation of the parties; both of them were having competent legal advice at the time of signing (the husband was well advised and fully aware that he would not be barred from claiming for ancillary relief in the future); the other main terms of the agreement (the sale of the Discovery Bay Property) have been fully complied with by both parties. Bearing all these circumstances in mind, I do not think it is just to exclude this Deed of Settlement from the court’s consideration in deciding on a proper ancillary relief order. The Law on Ancillary Relief 45.The jurisdiction of the Court in granting financial relief for a party is governed by section 4 of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) which provides:
46.Apart from the granting of financial relief, the court has also power to grant a property transfer order or a sale of property order under ss.6 and 6A of MPPO:
Section 7 Considerations 47.In deciding on how to exercise its power in this regard, the Court is bound to consider Section 7 of MPPOwhichprovides:
Recent Case Law 48.In the recent Court of Final Appeal case of LKW v. DD (FACV No 16/2008, Date of Judgment: 12 November 2010), Ribeiro PJ, after considering the recent line of English authorities of White v. White [2001] 1 AC 596; Miller v. Miller and McFarlane v. McFarlane [2006] 2 AC 618, has given a detailed discussion on how a Hong Kong court should approach the issue of ancillary relief. The following is a brief summary of His Lordship rulings in the case:
The Important Facts of this Case The Wife’s Financial Resources and Needs 49.The wife is now aged 60 and has retired in June 2010 upon which she has received over $2 million as severance/provident fund payment. She is currently studying at the Bethel Bible Seminary for Theology. She does not have any monthly income but still has about $2,900,000 in her bank accounts (Hang Seng Bank and HSBC). 50.As to landed property, the wife is a joint owner of a property situated at a unit on 6th Floor, Fook Hing Court, No.63 Wun Sha Street, Hong Kong (“the Fook Hing Property”) with her daughter. The property is about 500 sq ft in size and was purchased by the wife and the daughter in February 2010 as joint tenant at a price of $3,150,000. Their ownership was later severed and now they are holding the property as tenants-in-common in equal shares. According to the wife, the present value of the property remains more or less the same as the date of purchase and so the wife’s share in the property now amounts to about $1,600,000. Therefore, I am satisfied that the wife is now holding total assets in the region of about $4,500,000 ($2,900,000 + $1,600,000 = $4,500,000). 51.Both children are now grown up and being independent. The only assistance that was given to the wife is the permission of the daughter in allowing her to live at the Fook Hing Property despite the fact she was only a joint owner. 52.As to her needs, she has listed her monthly outgoings in Exhibit P14, which amounts to about $17,000 per month, including about $3,800 per month for her studies. In court, the wife supplemented in saying that upon that figure, there should be added another $2,000 for entertainment/presents and $1,000 for holidays. Therefore, the present total monthly expenses of the wife are about $20,000. I do not intend to go into the details of all the figures as they were not seriously challenged by the husband at the hearing. But I note that the wife is now paying $3,000 per month as donation which I believe is not absolutely necessary. Furthermore, the studies on theology will end in 2011 and so it will not be a long term expense. Therefore, I think it would be fair to assess the wife’s reasonable monthly expenses at $15,000. The Husband’s Financial Resources and Needs 53.The husband is now aged 62. In his Form E, he described himself as a “retired screw and metal parts merchant”. According to him, he used to run a partnership business in Hong Kong but the business began to decline even before the separation of the parties in 2004. His business has now completely failed and he has no source of income. 54.The husband is now residing in a flat owned by his sister’s company in Wanchai. At one stage, he said he was paying $5,000 per month as rent but during cross examination, he said the payment was not exactly rent but a kind of gesture of gratitude to his sister in allowing him to use the premises. Later, he even said he had not made regular payments but could not remember how many times or months that he had in fact paid the money. I accept counsel’s submission that it is more likely than not that the husband was in fact being given free accommodation by his sister. 55.According to the evidence, the husband’s daughter and relatives, including his sisters have all been very supportive to him in terms of financial assistance. By his evidence and the bank documents, it is clear that the husband has received the following financial support in the past:
56.As to his needs, the husband has stated in his Form E the following monthly expenses:
57.From the evidence, it is quite clear that some of the figures are no longer correct. For example, I have ruled that the husband is in fact being provided with rent free accommodation. Some of the items are also questionable because they are either unnecessary or excessive. The monthly amount of $7,400 he spent on food, together another $4,400 on cigarettes/wines/presents are certainly excessive. As to the monthly subscription of $1,300 he is paying to the Jockey Club, this is also unnecessary. Overall speaking, and in view of the past standard of living of the family, I think it would be fair to allow the husband a monthly sum of $15,000 as his reasonable monthly expenses, which is similar to what I have allowed the wife. 58.As to the husband’s current liabilities, he said he has a total debt of about $$425,000 which is consisted of the following items:
59.Although the existence of these debts are not seriously challenged at the trial, one has to bear in mind that all these debts have been incurred by the husband after the parties’ separation in 2004. 60.I would remind myself that when the parties separated in 2004, the husband’s then financial position was much healthier than it is today. In Exhibit P3, counsel has helpfully listed out the husband’s assets as in September 2004 which came up to close to $2 million. 61.I would also remind myself that upon the sale of the Discovery Bay Property in 2004, the parties were supposed to share the sale proceeds equally. But as a matter of fact, the husband had received about $200,000 more because he only shared the net balance of purchase price but not the deposit with the wife. At the end of the transaction, the husband had received about $800,000 while the wife had only received about $600,000 (the deposit of about $200,000 being kept by the husband). 62.After the receipt of her share of the profit, the wife had made good use of the money in buying the Race Tower Property with the daughter, which investment proved to be a wise move and good profit was generated. After the realisation of the profit in the Race Tower Property, the money was re-invested in the present Fook Hing Property which provides a stable home for the wife. 63.On the other hand, the picture of the husband was totally different. After separation, the husband had engaged himself in high risk investment, for instance in securities trading. He has also lost money in gambling which included horse betting (Exhibit P4) and in Macau casinos. All these, together with his living expenses for the past 6 years, have not only depleted all his capital but made it necessary for him to rely on the generous financial support of his sisters and daughter. This is an important fact that I have to take into account in the s.7 exercise. Other Circumstances to be Considered 64.Another important circumstance to be considered is the length of the marriage. The parties married in 1973 and separated in 2004. It was a very long marriage of 31 years. 65.There has been some dispute on the parties’ respective contribution to the marriage. I understand that during the existence of the marriage, the husband was a businessman and the wife having a stable employment. I trust both of them must have made contribution to the family, including the raising of 2 children and the accumulation of family assets (e.g. the Discovery Bay Property). I would regard both of them having made more or less equal contribution to the family during the marriage. 66.As to the husband’s health, he stated in his Form E that he had “phobia & mental depression, hypertension, uncontrolled stools and joint ache”. I trust that at the age of 62, the husband may be suffering from physical decline or even psychological discomfort. But I do not see any concrete evidence to say that he is suffering from very serious illnesses. Ancillary Relief 67.After considering all the evidence in this case, I am satisfied that the wife has assets in the amount of $4,500,000 while the husband has nil. Therefore, the total assets in this family are $4,500,000. 68.Although the husband has present liabilities of about $425,000, it is my view that the negative value should not be put into the equation because all those debts were incurred after the parties’ separation 6 years ago and equally important, they were due to the inappropriate spending of the husband (e.g. speculating in securities, gambling and lavish spending). 69.I see that both of them are residing either in self owned property (the wife) or free accommodation provided by relative (the husband). The husband is receiving monthly assistance of $9,000 from his sister while the wife is living on her own savings. Both of them have monthly needs of about $15,000 each. It seems that the husband will have a monthly deficit of $6,000 but he also receives irregular financial assistance from other relatives including the sister in Australia and may be even the daughter. There is no evidence to suggest that that assistance will not be forthcoming in the future. Therefore, I am satisfied that if the husband is prepared to exercise further economy in his spending, he should not worry too much about his future needs. 70.As to the division of the family assets, I understand that by applying the sharing principle and in view of the very long marriage in this case, the usual order to be made should be equal division. However, I am of the view that there exists good reasons for this court not to adopt such a division and those reasons include:
71.After considering all the circumstances of this case, and in particular the above special factors, it is my view that a departure from equal division of the family assets is called for. I would think an order in favour of the husband representing 20% of the wife’s assets, which is a sum of $900,000, would be fair in all the circumstances. With this amount, the husband would at least be able to clear all his debts and still retain about $500,000 to start a new living. As to the wife, she will be able to retain about $2,000,000 for her future retirement. The Husband’s s.17A Application under MCO 72.The last issue is the husband’s application under s.17A of the MCO. 73.In this application, the husband has filed a Form B, being a Notice of an application under Rule 56B (of the Matrimonial Causes Rules, Cap.179A) making an application under s.17A of the MCO, which reads:
74.As one can see from the above provision, in a case where the petitioner obtains a decree nisi based on 2 years separation, the said decree should not be made absolute unless the court is satisfied that:
75.By coming to the view that the wife should pay a lump sum of $900,000 to the husband, I am of the view that reasonable and fair financial provisions have been made and therefore, there is no reason to delay the granting of the decree absolute. Orders 76.Based on the above reasons, I would make the following orders:
Costs 77.The husband failed in his 2 applications under s.17 of the MPPO and s.17A of MCO, but succeeded to a limited extent in his ancillary relief application. I am of the view that a proper order is for no order as to costs, including all costs reserved. This will be in the form of an order nisi, to be made absolute upon the expiry of 14 days from the handing down of this Judgment.
Representation: Ms. Janine Cheung, Barrister-at-law, instructed by Messrs. Chaine, Chow & Barbara Hung, solicitors for the Petitioner Respondent acting in person |
Cases cited in this judgment