Tcwf v. Lkks
Read the full judgment text of CACV 154/2012 on BabelCite. This Court of Appeal judgment was delivered on 10 June 2014 before Lam VP, Kwan JA, Barma JA.
Civil appeal – leave to appeal to the Court of Final Appeal – ancillary relief proceedings under the Matrimonial Property and Proceedings Ordinance (MPPO) – Framework Agreement and Special Articles conferring rights on the Husband's father (STL) to claw back assets in the Japanese business – referral of alleged criminality to the Director of Public Prosecutions – findings of forgery, conspiracy to pervert the course of justice and perjury – fighting fund – deduction of costs orders from needs award – Court of Final Appeal Rules (Cap 484 sub. leg. A) Rule 4(1). Whether the Father's proposed questions on the setting aside of the trial judge's referral to the DPP raise a question of great general or public importance – held no; an accomplished referral is not reversible on appeal, the questions were fact-specific or factually inaccurate, and a proposed new ground regarding legal professional privilege had not been raised at the main hearing and could be raised in related appeals (CACV 101 and 107 of 2013). Whether the Wife's 14 proposed questions of great general or public importance satisfy the leave threshold – held no; the questions were fact-sensitive, several were premised on a false characterisation that the Husband owned the Japanese business assets absolutely, and they sought to relitigate findings of fact rather than engage matters of general importance. Whether leave should be granted under the 'or otherwise' limb – held no exceptional reasons. Principles on appellate interference with primary findings of fact affirmed (Ting Kwok Keung v Tam Dick Yuen, Biogen Inc v Medeva plc, Piglowska v Piglowski). All notices of motion dismissed with costs, with a warning that the court will consider costs sanctions under Order 62 Rule 8 in future for overlong, argument-laden notices of motion contrary to the succinct requirement of Rule 4(1) of the Court of Final Appeal Rules.
Legal issues: Leave to appeal to the Court of Final Appeal - Father's application · Leave to appeal to the Court of Final Appeal - Wife's application
Outcome: All notices of motion for leave to appeal to the Court of Final Appeal dismissed with costs.
Cites 5 cases
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CACV 154/2012 & IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NOS 154 and 166 OF 2012 (ON APPEAL FROM HCMC NO 5 OF 2008) ____________ BETWEEN
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___________________________ REASONS FOR JUDGMENT ___________________________ Hon LamVP (giving the Reasons for Judgment of the Court): 1.There are two sets of applications for leave to appeal to the Court of Final Appeal in respect of our judgment of 10 January 2014: the first in time are the Notices of Motion taken out on behalf of STL [“the Father”] on 30 January 2014 (one Notice in respect of CACV 154 of 2012 and one Notice in respect of CACV 166 of 2012). The second set is the Notices of Motion taken out by TCWF [“the Wife”] on 7 February 2014. It is common ground that neither party is entitled to leave as of right. We dismissed all the Notices of Motion at the hearing on 6 June 2014. The following are our reasons. 2.Before we discuss the merits of the applications, we wish to reiterate respectfully what has recently been said by Cheung JA in another application for leave to appeal to the Court of Final Appeal. In MKKWH v RKSH CACV 197 of 2012, 26 March 2014, His Lordship said at para 15:
3.In the present case, the draft Amended Notices of Motion of the Father are documents of 12 pages each consisting of 21 paragraphs, with the formulated questions set out within one page and the rest of the document consisting of 2 pages of background and 6 pages of arguments. Worse still, the Notices of Motion of the Wife are two documents of 33 pages, consisting mostly of arguments. The formulation of the questions, as shall be apparent below, is not conducive to the distillation of the real questions to be considered in the proposed appeal. Applications by the Father 4.The applications for leave to appeal by the Father focused on our refusal to set aside the referral of the case by Saunders J to the Director of Public Prosecution. Our reasons can be found at paras 115 to 125 of our judgment of 10 January 2014. 5.In the two Notices of Motion of the Father, identical questions were formulated:
6.The Father applied for leave to amend his Notices to add a fourth question:
7.On question (1), for reasons we have set out in our judgment, we do not think it is reasonably arguable that an accomplished referral is reversible and as such appealable. Once a referral had been made, it is a matter for the prosecuting authority. 8.On question (2), we do not think it calls for determination in the present case. As we have said in our judgment, there is no doubt that it was open to judge to refer the matter to the Director of Public Prosecutions as part of the duty to uphold the rule of law. This is particularly so bearing in mind that the allegations are in respect of perjury, forgery and conspiracy to pervert the course of justice in the course of proceedings before the judge. See also paras 5 to 8 of our judgment in CACV 101 and 107 of 2013. 9.Question (3) as formulated is clearly a fact specific question. It does not raise any question of great general or public importance. Further, as submitted by the Wife (with her written submissions prepared by Mr Howard QC, though he was not able to appear at the oral hearing), it is factually incorrect to say that Saunders J had decided against referral in February 2011. In any event, it follows from what we said in respect of Questions (1) and (2) that Question (3) cannot have any ultimate bearing on the matter. 10.The new question proposed to be added to the Notices of Motion has not been argued before us in the main appeal. In such circumstances, we do not think we should grant leave for it to be raised at this late stage in the context of these applications. Once the judgment has been supplied to the Director of Public Prosecutions without any condition, it is for him to decide what use he could make of it. If the Father wishes to seek relief in terms of the use of LPP materials contained in the judgment, he would need to seek the necessary redress against the Director. This should not be achieved by an appeal (in which the Director is not a party) on the new proposed ground. If the release of the judgment to the Director has any bearing on the LPP question which the Court of Final Appeal shall consider in the other appeals (viz. those arising from CACV 101 and 107 of 2013), the Father may consider seeking leave from the Court of Final Appeal to permit him to raise it in the context of that appeal. That will be a matter for the Appeal Committee of the Court of Final Appeal. 11.Nor do we see any basis for granting leave to the Father under the “or otherwise” limb in the context of these applications. Applications by the Wife 12.Turning now to the Wife’s applications, 14 “questions” were formulated as questions of great general or public importance in her Notices of Motion, with most of them actually consisting of a series of questions. 13.The 1st proposed “question” is formulated as follows:
14.These can be considered together with the 2nd proposed question: “Is property which is legally and beneficially owned by a party or parties to the marriage (and confirmed, by operation of a s.17 MPPO/counterclaim order, to be available to the parties until satisfaction of the ancillary relief claim by payment of the award in full), but which is encumbered by contingent third party rights, prima facie available for division between spouses (such that consideration of the extent to and circumstances in which the third party may exercise his rights at a future date becomes a factor that is part of the discretionary exercise under s.7 MPPO) or does the existence of a contingent third party right alone mean that the encumbered property is not property to which a party to the marriage is entitled “in possession or reversion”?” 15.A fundamental premise of these questions is that the property in question, namely the Husband’s interest in the Japanese business, was owned by him absolutely. As explained in our substantive judgment, this is a wrong premise. There is no dispute that the initial funds for the acquisition of the underlying assets in the business came from the Father. And the arrangement between the Father and the Husband from which the rights of the Father stemmed had been in place from the very beginning. These questions challenged our conclusion that by virtue of his rights under the Framework Agreement and the Special Articles, the Father was entitled to exercise his power to claw back the assets from the Husband in light of the divorce and this must be taken into account in working out the financial resource available to the Husband. It was also our conclusion on the evidence that the Father is likely to exercise those rights. 16.At para 202 of our judgment, we said,
17.Further, that was decided against the background that the Wife did not impugn the validity of the Framework Agreement and the Special Articles, see paras 131 and 132 of our judgment. And as we said at para 265 of the judgment, the Wife had full knowledge of the Father’s control over the business and when she worked for the business, she did not labour under the misapprehension that the Father had given up his rights. 18.In coming to our conclusions in this respect, we only applied well established principles to the facts of this case to correct the error of law at para 204 of the judgment of Saunders J. Up to now, we are not persuaded that it is reasonably arguable that the legal rights of the Father can be ignored simply because he chose to exercise it upon the divorce of the Husband and the Wife. The crucial question is whether it was likely that the Father would exercise his legal rights and it is obviously a fact-sensitive question. 19.As we emphasised at para 189, we confined our analysis to bona fide commercial arrangement supported by valuable consideration and we expressed no view on other arrangements of a domestic nature. We also did not express any view on a scenario where assets originally belonging to a husband absolutely were transferred to a third party to set up a kind of pre-nuptial ring fence against a wife’s potential matrimonial claims without the knowledge or acquiescence of his future wife. 20.In our judgment, these questions do not arise on the facts of the present case. Further, the answers to the questions as formulated must depend on the facts of the case and it is undesirable to consider them in the abstract when the facts of the present case do not provide a sound basis for that exercise. 21.Mr Howard recognised the distinction drawn by us at para 14 of his reply skeleton where he said a core question of the Wife's proposed appeal is whether the arrangement between the Husband and the Father is construed as a “bona fide commercial arrangement supported by valuable consideration” or whether it is to be construed as a nuptial protection device that should be subject to proper scrutiny by the Court. 22.We are not impressed by Mr Howard’s argument that the Husband and the Father did not finally complete their agreement until the marriage had broken down. Our analysis of the rights of the Father was based on the Framework Agreement and the Special Articles which require no further agreement between the Father and the Husband after the marriage breakdown to become exercisable by the Father. 23.At para 11 of his reply skeleton, Mr Howard formulated a new question: whether a third party can legitimately enter into a nuptial agreement (in the sense of an agreement solely operating on divorce) intended to effectively deprive the Court of the jurisdiction to apportion assets between divorcing spouses. 24.On its face, it could be a question of great general or public importance. However, the question again starts from a false premise: that the assets in question belonged absolutely to one of the spouses before the agreement is made. As explained above, this is not the situation here. 25.Turning next to the 3rd proposed “question”, formulated again as a series of questions in the Notices of Motion as follows:
26.Sub-paragraph (iii) shall be considered below together with the 4th Question. On (i) and (ii), the effect of the compromise of the s.17 proceedings was considered by us under Sections C2 and C3 of our judgment. As we have pinpointed at para 150: “Neither the s 17 proceedings nor the conspiracy counterclaim impugned the father's rights under the Framework Agreement and the Special Articles. The nature and effect of the father's interest under those documents was not the subject matter of the dispute in these proceedings.” 27.We do not think Mr Howard’s attempt to construct some forensic arguments to extrapolate from the 2011 compromise a concession on the part of the Father that his rights under these instruments shall be sub-ordinated to the rights of the Wife in her claims for financial relief is reasonably arguable. 28.The 4th proposed question is formulated as one question:
29.The circumstances under which this court will interfere with primary findings of fact are well established and Mr Howard did not suggest that we should depart from the principles laid down in Ting Kwok Keung v Tam Dick Yuen [2002] 3 HKLRD 1, Biogen Inc v Medeva plc [1997] RPC 1 and Piglowska v Piglowski [1999] 1 WLR 1360. What he is really complaining about is this court’s application of those principles to the facts of this case. 30.We have explained in Section C5 why we needed to intervene in the Judge’s conclusions on the facts. Mr Howard tried to show that we were wrong in that respect in terms of the 1st and 2nd questions discussed above. For the reasons given above, we held that those grounds were insufficient to support leave to be granted. If the validity of our premise to intervene with Judge’s conclusions in Section C5 cannot be challenged, we do not think there is any reasonably arguable discrete ground for suggesting that we were wrong in doing so. 31.Questions 5 to 11 were formulated as follows:
32.Again, most of these were formulated as a series of questions. Further, they are loaded with submissions. As highlighted by the 9th question, the purpose of these series of questions is to challenge this court’s decision to set aside the findings of Saunders J on forgery, or perhaps more accurately, the findings on the forgery of the 2006 CLA, the conspiracy to pervert the course of justice and perjury on the part of both the Husband and the Father in the affidavits that they have filed. We came to that conclusion on two principal bases:
33.Questions (5) to (8) and (11) related to (b) whilst question (10) related to (a). 34.We must not lose sight of the primary issue in the ancillary relief proceedings: what financial relief the Wife should get upon divorce. The Judge held that the allegations of forgery, conspiracy and perjury were not open to the Wife in terms of the assessment of conduct under the MPPO. We agreed with him. We only disagreed with the Judge on his ruling that these allegations could be raised in the context of credibility. 35.In any event, it is difficult to see how the allegations of forgery, conspiracy and perjury, revolving around the 2006 CLA (which had been set aside under the terms of the 2011 compromise), could constitute relevant conduct under the MPPO when they are considered against our analysis of the financial resources of the Husband and the rights of the Father. 36.As far as the investigation into these allegations by the Director of Public Prosecutions is concerned, as explained in our substantive judgment, he is obliged to conduct independent investigation despite Saunders J’s findings (on the civil standard) being set aside by us. 37.It is also plain that the answers to these proposed questions in the present case depend very much on the rather unusual facts of this case. The manner in which these questions were formulated underlines the lack of great general or public importance in the questions raised in the unusual factual context of this case. 38.We do not think the Wife has satisfied the threshold for granting leave in respect of these questions. 39.The proposed 12th question is:
40.This proposed ground focused on our decision on fighting funds, discussed at Section D14 of our judgment. It should be apparent from a careful reading of our judgment that we rested our decision on the factual circumstances of this case where the fighting fund is sought in respect of potential future litigation with STL (instead of the Husband) and the nature and merits of such litigation are unknown. With respect to Mr Howard, the Wife’s contention that a fighting fund should be ordered in such circumstances is plainly unarguable though it is now being formulated as a general proposition. The short answer is that such discretionary power must be exercised in light of the circumstances of the case and the general proposition advanced in the proposed question does not take the matter further. 41.The proposed 13th question is: “Is it wrong in principle and contrary to public policy to reduce a needs award by the value of earlier costs orders made in favour of the recipient of the award? Specifically, does the fact that a needs award will now necessarily be reduced in the amount of an earlier costs order not run directly contrary to the key objectives of costs orders, namely to deter unmerited or oppressive litigation from being brought and to penalise a party for litigation conduct? Is the normal practice of making a needs award and then deciding whether a spouse should receive a costs award in addition now inappropriate? In which case, any application for costs after a needs award is superfluous.” 42.The reasons for our deduction of $30 million on account of costs orders made in her favour were set out at Section D12 of our judgment. As explained, such deduction was necessary to avoid double recovery on the part of the Wife. The costs in question were not the costs of the main ancillary relief hearing. The proposed question completely distorted our decision and as such does not arise. 43.The 14th question is: “In circumstances where the court has found that the Husband and the Wife both contributed equally to the running of a business - a business that was started with seed corn capital from a third party relative but the value of which far outstripped the initial gift by the date of separation - is the Wife entitled to share equally in the business assets (and in any event the value of the growth of the business during the marriage)?” 44.Again this proposed question distorts our decision. It was premised on a characterization of the capital provided by STL to the business as an “initial gift” and the characterization of the business as one in which the Husband had absolute ownership. We did not proceed on any of these premises. Therefore the question does not arise from our decision. 45.For these reasons, the Wife has not put forward any reasonably arguable question of great general or public importance. Nor do we accept there are any exceptional reasons which warrant leave being granted to her on the “or otherwise” limb. The size of the reduction of the award, our interference with the findings by the Judge, the setting aside of the findings on forgery, conspiracy and perjury are not, whether individually or collectively, sufficient reasons to call for leave to be granted. Results 46.We therefore dismissed all the Notices of Motion before us with costs. 47.It is apparent from what we said above that we do not find the Notices of Motion helpful, particularly in respect of the formulation of the questions in the Wife’s Notices. We expect the legal profession to pay heed to what has now been said by this court on more than one occasion as regards the contents of notice of motion seeking leave to appeal to the Court of Final Appeal generally and how questions should be formulated. In the future, this court will consider the imposition of costs sanctions in similar situations, including sanctions under Order 62 Rule 8.
The Petitioner appeared in person Mr Martin Pointer, QC, and Mr Jeremy S K Chan, instructed by Stevenson, Wong & Co, for the Respondent Mr Richard Todd, QC, Mr Peter Duncan, SC, Mr Norman Nip and Mr Derek Chan, instructed by Stephenson Harwood, for the 2nd & 3rd Interveners |
Cases cited in this judgment
Further hearings and rulings under CACV 154/2012