Z v. X

CACV 166/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 166 OF 2011)

(On Appeal from HCMC No. 1 of 2007)

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BETWEEN

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D E C I S I O N

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Hon Cheung JA (giving the Decision of the Court) :

1.The Husband applies for leave to appeal against our judgment of 13 November 2012. He also applies for a stay of the judgment pending appeal. The Intervener also applies for leave to appeal.

The Husband’s application

2.The Husband’s application is based on the great general or public importance ground.  He identifies the following points of law as being relevant to this ground :

1) Whether, in circumstances where a spouse believes or has been held to believe that his or her marriage has long been over, there is a necessity for the other party to be informed of that decision for the Court to be able to proceed in its consideration as to the length of a marriage on the basis that the marriage has thereby de facto ended, even if it has not de jure terminated.

2) Whether, in considering the length of a marriage, the Court is limited to a consideration of the length of or continuation of the marriage in law.

3) Whether the primary importance of a consideration as to the length of a marriage is :

(1) the length of the marriage per se; or

(2) to identify the period over which any contribution might have been made by the parties and any ‘marital acquest’ might have been created, so that a distinction might be drawn between a ‘long marriage’ where contributions have been made by both parties, and a ‘long marriage’ where there has been contribution by one party unmatched by any contribution by the other party; and/or

(3) to identify the treatment of any ‘unilateral’ or non- matrimonial assets during the marriage,

4) Whether assets which are generated without any direct or indirect assistance from one spouse :

(1) are to be regarded as ‘unilateral assets’, that is non- matrimonial assets;

(2) and if so any relevance as to the length of the marriage arises where the importance of the source of the assets may diminish over the time of the marriage.

5) How should a court approach the contradiction or tension between (a) the generation of assets by one party without any direct or indirect assistance from the other, and (b) as held by the Court of Appeal, ‘the fundamental ethos in the new approach that there should be no distinction between monetary and non-monetary contribution by a married couple’.

6) Whether, in cases where the matrimonial resources consist essentially shares in private companies whereby it is inevitable that the paying party will have to dispose of part or whole of such shares in satisfaction of the financial award, the Court should, instead of simply applying a valuation of the shares of such company for the purpose of division of assets, consider the unique characteristics of such assets in the exercise of its discretion in determining the financial award to achieve a fair outcome between the spouses.

3.We do not accept that the questions as framed satisfy this ground.  They are fact specific and unique to this case.  Further the husband in this Court and below failed to adduce any evidence despite relying on the alleged difficulties in complying with the order for payment.  No alternatives had been suggested. Accordingly we will refuse the husband’s application for leave to appeal.

The Intervener’s application

4.The Intervener relies on the ‘as of right’ ground.  Pursuant to the directions sought by the Wife, Deputy High Court Judge Carlson ordered the Intervener to be joined for the purpose of determining the issue of the beneficial ownership of the 87.5% shareholdings in NAIGL.  The joinder conforms with the practice recognized in TL v ML [2006] 1 FLR 1263 :

‘ [33] It is well established that a dispute between a spouse and a third party as to the beneficial ownership of property can be adjudicated in ancillary relief proceedings: see Tebbutt v Haynes [1981] 2 All ER 238, per Lord Denning MR at 241:

“It seems to me that, under s 24 of [the Matrimonial Causes Act 1973], if an intervenor comes in making a claim for the property, then it is within the jurisdiction of the judge to decide on the validity of the intervenor’s claim. The judge ought to decide what are the rights and interests of all the parties, not only of the intervenor, but of the husband and wife respectively in the property. He can only make an order for transfer to the wife of property which is the husband’s property. He cannot make an order for the transfer to the wife of someone else’s interest.”

[34] It is to be emphasised, however, that the task of the judge determining a dispute as to ownership between a spouse and a third party is, of course, completely different in nature from the familiar discretionary exercise between spouses. A dispute with a third party must be approached on exactly the same legal basis as if it were being determined in the Chancery Division.’

5.In our view the Intervener’s application satisfies the requirement of the second limb of section 22(1)(a) of the Court of Final Appeal Ordinance (Cap. 448), namely,

‘ the appeal involves, directly or indirectly, some claim or question to or respecting property or some civil right amounting to or of the value of $1000000 or more.’

6.The Court of Final Appeal in Chinachem Charitable Foundation v. Chan Chun Chuen [2011] 6 HKC 273 stated that,

‘ [20(iv)] To come within the words “some claim or question to or respecting property or some civil right”, the claim must be a claim to some particular property or to a proprietary right of the requisite value. Other types of claim are insufficient, even if they are incidental to the enjoyment of property rights which are not themselves the subject-matter of the claim.’

7.Our finding is that 83.1% of the NAIGL shares belong beneficially to the Husband and not the Intervener.  The Intervener’s claim is a claim to the 83.1% of the shares and the proprietary right of their beneficial ownership.  Evidence on the value of the shares which exceeded $1 million was adduced in the Court below.

8.Accordingly we will grant leave to the Intervener to appeal conditional upon her paying into Court $400,000 as security for the costs of the appeal within 30 days.

Stay of execution

9.The fact that the Intervener is now entitled to appeal does not mean the judgment must be stayed.  Concurrent findings had been made on the beneficial ownership of the NAIGL shares.  A stay is not justified on the ‘merits’ ground.  As to the question of whether the appeal will be rendered nugatory, the Husband only now identifies for the first time after the trial and appeal the problems in meeting the order.  However, in order to ensure that the interests of the parties are met, we will grant a partial stay of the judgment sum of $173.6 million on terms, namely, there will be a stay of execution to the extent of $150 million only and conditional upon the Husband paying $50 million thereof into Court within 30 days from the date of handing down of this decision. For the avoidance of doubt, there is no stay in respect of the balance of the judgment sum.

Costs

10.The following provisional costs orders are made :

The Husband is to pay the Wife the costs of his application for leave to appeal to be taxed if not agreed.  The costs of his stay application be costs in the cause of the appeal.

11.The Intervener’s application for leave to appeal be costs in the cause of her appeal. 

Mr Neal Clough and Mr Timothy Parker, instructed by King & Co., for the petitioner

Mr Robin Egerton, instructed by Mayer Brown JSM, for the respondent

Mr Jeremy S.K. Chan, instructed by Hom & Associates, for the intervening party

Annex

A breakdown of the agreed judgment sum provided by the parties