Wtol v. Wypp

CACV 241/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 241 OF 2011

(ON APPEAL FROM FCMC No. 9019 of 2008)

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BETWEEN

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REASONS FOR JUDGMENT

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Hon Tang VP:

1.I have had the advantage of reading Cheung JA’s Reasons for Judgment, with respect, I agree and have nothing to add.

Hon Cheung JA:

The Consent Order

2.The petitioner (wife) instituted proceedings for divorce and ancillary relief against the respondent (husband).

3.On 26 September 2008 H H Judge Bruno Chan granted a decree nisi for divorce and ordered by consent (‘the Consent Order’) the following:

‘(1) The respondent do pay the petitioner a lump sum of HK$190,000.00 through the Director of Legal Aid within 7 days after making of the decree absolute herein.

(2) Within one month after the making of the decree absolute herein, the respondent do forthwith transfer all his interests in the following properties and at the costs and expenses of the respondent:-

(i) [A flat in Fullview Garden, Hong Kong (‘the Chaiwan property’)] to the petitioner;

(ii) [A flat in Paterson Street (‘Property A’)] to [WSW, WKF and WCY] as joint tenants subject to mortgage; and

(iii) [Another flat in Peterson Street (‘Property B’)] to [WSW, WKF and WCY] as joint tenants subject to mortgage;

(3) [A flat in Shenzhen (‘the Shenzhen property’)] be sold at the costs and expenses of the respondent and the proceeds of sale be given to [WSW, WP, WKF and WCY] in equal shares.

(4) The above sale be conducted by [WSW, WP, WKF and WCY] jointly or severally within 3 months after making of the decree absolute and the respondent shall execute such documents promptly as may be necessary to complete the sale and at a price to be decided by the petitioner alone.’

4.The persons referred to in the consent order, namely, WP [1^st son], WSW [1^st daughter], WKF [2^nd son] and WCY [2^nd daughter] are the adult children of the parties.

The husband’s appeal

5.On 4 November 2011, the husband lodged the present appeal seeking an order that the provisions contained in paragraphs 2(ii) and (iii) of the Consent Order be set aside on the ground that he had not consented to the making of these provisions. Leave to the husband to appeal out of time was granted by the Judge.

The husband’s case

6.In his affirmation filed in support of his application for leave to appeal out of time (‘the 3^rd affirmation’), the husband dealt with the background of his appeal.  Before the wife instituted the divorce proceedings, the parties had already been separated for over 20 years.  The husband was surprised by the divorce petition and believed it was instigated by the 1^st daughter. However, the husband decided to take a conciliatory approach in order to conclude the family dispute harmoniously.

7.The husband and wife jointly owned the the Chaiwan property which was purchased by the husband who was also responsible for the mortgage repayment.  It was used as a residence by the wife.

8.The husband is also the owner of Property A and Property B.

9.The husband also owned the Shenzhen property.

10.On 16 August 2008, the husband and wife together with the four children had a family meeting and agreed to the following:

1) The Chaiwan property would be transferred to the 2^nd son and the wife, each holding a 50% share。

2) The husband would pay a lump sum of HK$190,000.00 to the wife and a sum of HK$130,000.00 to the wife’s friend, SYN.  However, the 1^st daughter would pay these two sums on the husband’s behalf first.

3) The Shenzhen property would be sold as soon as possible and the proceeds would be applied to purchase another flat to be used for family gatherings.  The new property would be held by the sons and daughters jointly and equally.

4) Property A and Property B would not be sold.  These properties would be transferred to the sons and daughters in equal shares.  The fees and legal costs for the transfer would be shared equally among the sons and daughters.

5) The legal costs and fees of the proceedings would be borne by the 1^st daughter.

6) After the settlement, the husband and wife would have no further claims against each other.  The matter would be resolved out of court.

11.The terms of the agreement were contained in a minute drafted by the 2^nd daughter and signed by the husband and wife and the four children.

12.After the meeting, the two sons promised the husband that they would not lay any claims on his assets during his lifetime notwithstanding what had been discussed at the family meeting.  The 1^st daughter also informed the husband that she would not claim his assets in the manner as stated in the minutes of the family meeting.  She provided a declaration dated 11 September 2008 stating that she would waive any claim to the husband’s assets and properties.  The 2^nd daughter also promised that she would not claim the husband’s assets.  She also signed a similar declaration.

13.After the family meeting, the husband left it to the wife and the 1^st daughter to complete the legal formalities of the divorce proceedings. 

14.The husband attended the office of Messrs. Henry Wan & Yeung, the former solicitors of the wife.  A lawyer called Mr. Yeung asked the husband to sign documents.  He told the husband that after signing the documents the divorce proceedings would be settled out of court and he did not have to attend court.  The documents that were signed by the husband were in English and Mr. Yeung briefly explained to him the content of the documents which, by and large, resembled the minutes of the family meeting.  The husband said that he signed the documents without the benefit of independent legal advice.  He said that he did not remember clearly what documents he had signed and he had no idea about the legal effects of the documents and he did not realize that the documents he had signed would become terms of the court order.  Mr. Yeung did not explain to him the legal effects of the documents. 

15.The husband did not attend court on 26 September 2008 when the Consent Order was made.  He could not recall whether he had received the sealed copy of the Consent Order.  In any event, he did not take note of the content of the sealed order as he did not read English.  He thought that the matter had been settled amicably out of court in accordance with the understanding of the family meeting and the promises made by the children after the meeting.

16.After the family meeting, the husband had paid HK$190,000.00 to the wife through her lawyer as well as the legal costs of the divorce.  He paid the legal costs notwithstanding the agreement at the family meeting was that the 1^st daughter would pay for them.  He also mortgaged Property A and Property B and used the money raised for charitable purpose. 

17.The husband said that he understood the Chaiwan property had been transferred to the wife solely and not 50% each to her and the 2^nd son as agreed in the family meeting.  The Shenzhen property had been sold and the proceeds of sale had been distributed among the four children instead of being used to purchase another flat to be used for family gatherings.  The 1^st daughter kept 40% of the proceeds of sale of the Shenzhen property while the other three children each had 20% of the proceeds of sale. 

18.On 8 May 2009 the wife issued a summons seeking an order that the husband was to transfer Property A and Property B to the four children.  The husband was shocked by the application.  As a result he fell seriously ill and was hospitalized.  He enquired with the children why they had done this and all except the eldest daughter had again affirmed their previous promises that they would not lay any claim on his assets during his lifetime.  They said the summons was taken out at the insistence of the 1^st daughter who insisted that one third share in Property A and Property B should be transferred to her. 

19.The husband then engaged a firm of solicitors to oppose the summons.  The husband also issued an originating summons on 22 June 2009 for an order that paragraph 2(ii) and (iii) be set aside.  

20.The wife’s summons and the husband’s originating summons were heard on 26 June 2009 before the Judge.  On that day the Judge granted an order that

(1) leave be granted to the wife to withdraw her summons;

(2) the originating summons of the husband be adjourned with liberty to restore. 

21.In October 2010, the 1^st daughter informed the husband that she had been arrested by the police and was charged with fraud/deception.  She demanded the husband to pay her HK$300,000.00 - HK$500,000.00 as legal fee for her defence.  The 1^st daughter threatened that she would ask the wife to re-activate the proceedings against him should he refuse her demand.  The husband did not accede to the 1^st daughter’s threat.

22.On 8 December 2010 the wife took out another summons (‘the 2^nd summons’) asking the Registrar of the High Court to be appointed to execute the assignments of Property A and Property B on the husband’s behalf and that vacant possession of these properties is to be delivered by the husband upon execution of the assignment.

23.The 2^nd summons was heard on 2 March 2011 before the Judge who ordered it to be adjourned with liberty to restore.

24.The husband then issued a summons dated 17 March 2011 for leave to appeal against the Consent Order out of time.  The Judge granted leave on 6 October 2011.

25.The wife’s present solicitors had written to Messrs. Henry Wan & Yeung enclosing the affirmations of the husband which contained allegations against Mr. Yeung.  The solicitors asked for Mr. Yeung’s response.  The response that came back on 30 May 2011 simply stated that ‘the allegations are denied.’

The Consent Summons

26.The documents signed by the husband before Mr. Yeung were a Consent Summons dated 5 September 2008 and An Acknowledgement of Independent Legal Advice (‘the Acknowledgement’).  The Consent Summons was filed in court on 8 September 2008.  The terms of the Consent Summons eventually became the terms of the Consent Order. 

27.In the Acknowledgement the husband stated that:

‘ I, WYPP formerly known as WSP, the Respondent in the above proceedings, hereby acknowledge that the contents of this Consent Summons have been interpreted and explained to me by Miss Wong Big Yue Virginia of Messrs. Henry Wan & Yeung, Solicitors for the Petitioner. Although I have been advised to seek independent legal advice on the terms of this Consent Summons, I declare and confirm that I fully understand and accept the contents and I do not wish to seek independent legal advice.’

28.The Acknowledgement was in both the English and Chinese language.  The signature of the husband in the Acknowledgement was witnessed by a person called LY. 

The husband’s response

29.In his 5^th affirmation the husband stated that

‘ 3. I recall that after the said Mr. Yeung, and assisted by a Ms. Wong had briefly explained to me the payment method of ancillary relief and settlement method of the transfer properties (“the Properties”), I asked Mr. Yeung and Ms. Wong if the terms of the Consent Summons dated 5^th September 2008 was the same as what had been agreed and recorded in the Chinese minutes of the family meeting. In particular, I told them that the Properties shall remain to be my residence and/or under my disposal and shall only be transferred to my sons and daughters after I pass away. Mr. Yeung and Ms. Wong had given me a definite affirmative reply answer of “Yes”. So I believed, and still do, that the terms of family meeting minutes, as varied by the promise/undertakings of the sons and daughters, are binding and shall prevail. Had I been properly explained and made known to the true contents of the Consent Summons, I would not have signed on it when Mr. Yeung asked me to sign.

4.  In respect of the Acknowledgement of Independent Legal Advice (“the Acknowledgement”), it was passed to me by Mr. Yeung together with the Consent Summons for my signature.  I did not personally read the Acknowledgement nor had Mr. Yeung or any one of the firm’s staff ever explained to me or had drawn my attention to the true meaning and implication of that document.  I was given to understand that the Acknowledgement was just part of the Consent Summons and that all I needed to do at that moment was to sign on them such that the case would be settled outside the court with settlement terms exactly in accordance with those recorded in the Chinese minutes of the family meeting.

5.  My assistant Ms. LY (“LY”) had accompanied me when I attended the office of Messrs. Henry Wan & Yeung.  I told LY to sign as witness to my signatures in the said documents.  LY had no knowledge of the documents and had not given any independent advice to me.  In fact, neither Mr. Yeung nor Ms. Wong had truly explained the said documents to me or had ever given any independent legal advice to me in respect of the said documents.’

The stance of the 1^st and 2^nd sons

30.The 1^st son had filed an affirmation dated 6 July 2011 in which he maintained that he would not ask for a transfer of the husband’s property until after his death.  On the other hand, the 2^nd son had filed an affirmation dated 15 July 2011 stating that he had never made any promise which allowed the husband to make use of the property during his lifetime. 

The 1^st daughter’s evidence

31.The 1^st daughter claimed that after the family meeting, the 1^st son informed her that since he was applying for public assistance, he did not want the properties to be registered in his name and that she should inform the parents about this.  The 1^st daughter then informed the parents about the 1^st son’s request.  After the husband signed the divorce documents, he informed the 1^st daughter that he had signed the documents and that the money and properties to be provided to the wife were to be distributed in accordance with the family agreement.

32.On 11 September 2008 the husband asked the 1^st daughter to sign the declaration.  He induced her to sign it with money and also threatened that he would kill himself if she refused to sign.  In order to placate him the 1^st daughter signed the declaration.  However, on the next day she immediately revoked the declaration.  The 1^st daughter claimed that she had never promised to allow the husband to live in the properties during his lifetime. 

The 2^nd daughter’s evidence

33.The 2^nd daughter also filed an affirmation dated 15 July 2011 saying that she had a meeting with the husband on 5 February 2009 in which the husband asked her to sign the declaration.  The husband also tried to induce her to sign the declaration with payment of money and also threatened to kill himself.  In order to placate him she reluctantly signed the declaration.  She also said that she had not made any promise to allow him to live in the properties during his lifetime.

Principles

34.In de Lasala v. de Lasala [1980] AC 546, the Privy Council, on appeal from Hong Kong, held at page 561 (per Lord Diplock) that:

‘ Where a party to an action who seeks to challenge, on the ground that it was obtained by fraud or mistake, a judgment or order that finally disposes of the issues raised between the parties, the only ways of doing it that are open to him are by appeal from the judgment or order to a higher court or by bringing a fresh action to set it aside.’

See Lui Sik-kuen alias Lui Lup-fun v. Lee Suk-ling [1992] 2 HKLR 371 applying de Lasala v. de Lasala. 

35.In respect of these two approaches, a fresh action is clearly more appropriate where there are factual disputes between the parties.  As Booth J (as she then was) in Crozier v. Crozier [1994] Fam 114 at 117 stated:

‘ In cases where issues of fact will need to be resolved or the court will be asked to make substantive orders, then it will clearly be more convenient for the case to be heard by a judge with the appropriate jurisdiction rather than by the Court of Appeal.’

Mr. Wu’s submission

36.Mr. Wu, counsel for the husband, argued that while the wife and the children (other than the 1^st son) had ample opportunity to rebut the case of the husband, they had only chosen to state their own version of events after a long delay and without explaining the reasons for the delay.  Their credibility is of grave doubt.  He further argued that it is not explained by the wife and the children (other than the 1^st son) as to why the disposal of the properties was different from the agreement reached at the family meeting where the properties were to be transferred to the four children in equal shares instead of to three of them under the Consent Order.  He submitted that there is no evidence from the wife and the children as to what had happened between the family meeting and the signing of the Consent Order which caused only three of the children to have a share in Property A and Property B.  He submitted that the only compelling inference is the husband was made to agree to something which he was not aware of when he signed the documents before Mr. Yeung.

37.He further submitted that even if this Court is not in a position to resolve the factual dispute, we should nonetheless set aside paragraph 2(ii) and (iii) of the Consent Order.

Disposition

38.In the present case there are clearly serious factual disputes which render the appeal procedure to be inappropriate.  In order to succeed it is crucial for the husband to establish that, first, after the family meeting all his children had agreed not to deal with Property A and Property B during his lifetime.  Second, the husband has to establish the truth of the conversation he had with Mr. Yeung when he signed the Consent Summons.

39.In respect of the first issue, apart from the 1^st son, the other children stated that they had not made the alleged promise to the husband. 

40.There was no delay by the wife in enforcing the terms of the Consent Order.  The husband was supposed to effect the transfer within one month of the making of the decree absolute and shortly thereafter, on 16 February 2009 the wife’s solicitors wrote to the husband to inquire about the progress of the transfer and asked for details of the mortgage of Property A.

41.In respect of the second issue, what the husband said in his 3^rd affirmation was clearly at variance with the Acknowledgement that he had signed.  He further contended that there was an assurance by Mr. Yeung that the Consent Summons signed by him was in accordance with the terms of the minutes of the family meeting as varied by the agreement or the promises made by his children after the family meeting. Short of hearing evidence which is clearly inappropriate when there is an alternative remedy which is more suitable to deal with a situation like this, this Court is not in a position to address the factual disputes.  These serious factual disputes will prevent this Court from setting aside paragraphs 2(ii) and (iii) which in fact is the relief sought by the husband in this appeal. 

42.In the circumstances this Court had no alternative but to dismiss the appeal with costs to the wife.

Hon Kwan JA:

43.I agree with the reasons for judgment given by Cheung JA.

Mr Martin Wong, instructed by Wong & Wong, for the petitioner

Mr Paul K N Wu, instructed by Phyllis K.Y. Kwong & Associates, for the respondent