NSK v. LYK

FCMC 1569/2003

[2022] HKFC 209

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 1569 OF 2003

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JUDGMENT
(Ancillary Relief)

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Introduction

1.  This is a trial of the petitioner wife (“W”)’s application for ancillary relief against the respondent husband (“H”). W is now asking for a property transfer order that H shall transfer all his title and interest in the former matrimonial home located at Room 536, 5/F, Tin Lok House, Tin King Estate, Tuen Mun, New Territories, Hong Kong (“the FMH”) to W at nil consideration.

Background of the case

2.  H and W were married on 3 June 1992 in Hong Kong. However, H, working as a transportation merchant by then, has abandoned W and the two tender aged daughters since April 2000. These proceedings were commenced on 12 February 2003 (over 19 years ago) by the legally aided W on the ground of two years’ separation.

3.  Since the commencement of the proceedings, H had not responded in any part of the proceedings. Neither did W know the whereabouts of H’s residence. As a result, W applied for an order that service of her Petition and all accompanying documents on H be substituted by inserting an advertisement once in Apple Daily News[1] and such substituted service order was granted on 7 March 2003[2] (“Substituted Service Order 1”). To err on the safe side, I ordered[3] another updated substituted service by way of newspaper advertisement on Ming Pao which was duly done on 7 September 2022 (“Substituted Service Order 2”).

4.  On 13 October 2003, HHJ Bruno Chan (as he then was) ordered that the sole custody, care and control of the two daughters be to W with reasonable access be to H, and that the hearing of ancillary relief be adjourned sine die with liberty to restore[4].

5.  On 4 November 2003, Decree Absolute was granted[5]. Since then, the proceedings were suspended due to the disappearance and ignorance of H.

6.  By 2021, W was already over 60 years old with her two grown up daughters[6] and applied for a final judgment in the proceedings followed by the application for legal aid to restore her claim for ancillary relief[7].

The Issues at trial

7.  The issues in dispute in the trial were as follows:

-  Should the trial be proceeded with in the absence of H?

-  What are the available assets?

-  What are the financial needs of the parties involved?

-  How should the assets be divided?

-  How should the transfer of interest be executed?

Analysis

H’s absence at trial

8.  H has not responded at all in these proceeding and was absent on the day of trial.

9.  Order 35 rule 1(2) of the Rules of High Court provides that:

Procedure at Trial

“1. Failure to appear by both parties or one of them (O. 35, r. 1)

(2) If, when the trial of an action is called on, one party does not appear, the judge may proceed with the trial of the action or any counterclaim in the absence of that party.

10.  I am satisfied that pursuant to Substituted Service Order 1 and 2 [8], proper notice of the Petition and the relevant court documents were served on H by way of publication of the respective advertisement on Apple Daily News and Ming Pao, two Chinese newspaper circulated in Hong Kong at the time[9].

11.  Further, a search on death record of H from 1 January 2000 to 13 July 2021 was conducted without any death entry in respect of H located[10].

12.  In light of all the relevant circumstances, I found that H has deliberately chosen not to take part in the proceedings and that he has no intention of claiming any interest thereof. The court is entitled to proceed with the trial in the absence of H accordingly.

Available assets and resources

W has no assets

13.  W is now aged 63 and she only received education up to primary 3 level in Hong Kong. W used to be a housewife during marriage. Since H’s leaving, W worked on odd jobs, mainly cleaning work, and retired in 2018 with no savings[11]. Given W’s lack of financial resources, she was entitled to pay nil contribution for her legal aid[12]. I find W has no assets of her own.

H’s assets

14.  Other than the FMH, it is unknown whether H has other assets. On the face of it, the FMH is still jointly owned by H and his late mother.

15.  W and the two daughters gave evidence by way of affirmation that when the latter, as invited by H’s relatives, paid a last visit to H’s Mother in Tuen Mun Hospital on 4 October 2010, the day she passed away, they saw H thereat. As such, H must have known the death of his Mother.

16.  A reasonable person would be very concerned about his/her title and interest in the property. If there is any significant change to the ownership of the landed property, one must take reasonable actions in response to the change. H must have known that he and his deceased were the joint owner of the FMH.

17.  It can also be sensibly assumed that H would have taken action to obtain 100% ownership of the FMH by simply registering his mother’s death certificate against the property in the Land Registry. By doing so and by virtue of H’s right of survivorship, he would have become the sole owner of the FMH. However, no action whatsoever has been taken by H as shown in the FMH’s last land search record conducted on 17 March 2022. As a matter of fact, H has completely abandoned the FMH since he took away his belongings from it 22 years ago.

18.  Additionally, if H ever cared about his interest in the FMH, he would have come back to request W to return its title deeds to him. However, H left the title deeds in the FMH when he left the family in 2000 and the important documents are still kept by W therein.

19.  The FMH is mortgage free now. On the evidence, the estimated value of the FMH is around HK$1,850,000[13].

Income of W’s family

20.  W and the two daughters are currently living together in the FMH[14]. As W has already retired since 2018 and has no financial resources[15], she is financially dependent on the two daughters[16].

21.  The elder daughter works as a full-time clerk for an online shop selling clothing and housewares earning HK$13,000 per month[17]. The younger daughter is now studying full-time in university and she will have completed her degree by September 2024[18]. The younger daughter’s education fee is paid by government loans. She works as a part-time English tutor giving private English tutorial lessons to primary and secondary school students[19]. She is earning approximately HK$5,000 to HK$8,000 per month.

22.  The family of three therefore depends on the elder daughter’s monthly income and the younger one’s monthly part-time income to make ends meet[20]. The total monthly financial resource that is available for the household of three is therefore around HK$19,500.[21]

Financial needs

W and the two daughters

23.  W’s monthly financial needs are set out in the following table:

General

Item	Amount (HK$)
Utilities (electricity, gas, rates, telephone & water)	2,000
Management fees	350
Food	6,000
Household expenses	1,500
Total monthly household expenses	HK$9,850

 

W’s Personal

Item	Amount (HK$)
Meals out of home	0
Transport	100
Clothing / Shoes	0
Personal grooming (including haircut and cosmetics)	100
Entertainment / presents	0
Holiday	0
Medical / Dental	100
Tax	0
Insurance premia	0
Others (Mobile phone charges)	100
Total monthly personal expenses	HK$400

 

Younger Daughter

Item	Amount (HK$)
University books and stationery	100
Transport to university	500
Medical / Dental	100
Entertainment / presents	200
Holidays	200
Clothing / Shoes	100
Insurance premia	0
Lunches	1,000
Others (Mobile phone charges)	100
Total monthly expenses	HK$2,300

 

Elder Daughter’s Personal

Item	Amount (HK$)
Meals out of home	3,000
Transport	1,000
Clothing / Shoes	300
Personal grooming (including haircut and cosmetics)	300
Entertainment / presents	300
Holiday	1,000
Medical / Dental	500
Tax	0
Insurance premia	0
Others (Mobile phone charges)	200
Total monthly personal expenses	HK$6,600

24.  The total monthly expenses of the family of three are HK$19,150[22]. The said total monthly income of the two daughters of HK$19,500 is therefore only just enough for the family’s humble living.

25.  It is further submitted by W that the average life expectancy in 2020 of female was 88 years old[23]. As W is now only 63, it is therefore expected that she has another 25 years to live. W’s monthly maintenance is around up to HK$4,000 ((HK$3,283 (HK$9,850/3) + HK$400 = HK$3,683). For her remaining 25 years, W will need HK$1,200,000 to live (HK$4,000 x 12 x 25). There is a high chance that W’s financial needs will go up substantially because she is now already suffering from heart problem and diabetes[24] and will likely suffer further complicated medical problems when she ages, and it will substantially increase her medical expenses.

26.  The younger daughter will have completed her university degree by September 2024 which will be around 2.5 years from now. The degree is a 3-year course with yearly school fee of around HK$40,000. Thus, by the time she completes her education and starts to work full-time, she will have a debt of around HK$120,000 (HK$40,000 x 3) to repay. In the next 2.5 years, she will need around up to HK$5,600 (HK$3,283 + 2,300 = HK$5,583) per month for living giving the total of HK$168,000 (HK$5,600 x 12 x 2.5).

27.  In summary, W’s needs from now until the end of her life expectancy can be quantified as follows:

1. Wife’s maintenance HK$1,200,000 2. Younger daughter’s maintenance for the next 2.5 years HK$168,000 3. Younger daughter’s student loan liability HK$120,000 HK$1,488,000

28.  In the past more than 20 years, H has not paid any maintenance for W or the two daughters. Throughout the marriage, W was a full-time housewife and entirely dependent on H financially. I agree with W’s submission that the onus is on H to at least maintain the two daughters financially until they reached 18 or completed full time education.

29.  At the time W’s Petition was issued in 2003, the two daughters were only just aged 10 and 8 respectively. Assuming each of their monthly maintenance was HK$3,000, H should therefore have paid to W the sum of HK$288,000[25] as the elder daughter’s maintenance until she reached 18 and the sum of HK$360,000[26] as the younger daughter’s maintenance until she reached 18 totalling HK$648,000.

30.  Also, H should have maintained W in the past 19 years[27]. Using the same amount of HK$3,000 as the W’s monthly maintenance that should have been paid by H, he should therefore have paid to W her maintenance in the past 19 years for the sum of HK$684,000[28].

31.  The total amount of maintenance that H should have paid to W for herself and the two daughters was therefore HK$1,332,000[29].

32.  Adding the needs of W and the younger daughter until W reaches the end of her life expectancy gives the total figure of HK$2,820,000[30].

33.  The aggregate needs of W and the two daughters quantified at HK$2,820,000 is considerably larger than the value of the FMH estimated at HK$1,850,000.

H’s financial needs

34.  H has not taken any step in these proceedings since the Petition was filed 2003. He has abandoned the family and the FMH for more than 20 years. He has never come back to ask for money from W and/or the two daughters.

35.  If H has cash flow problem, he would have utilized the FMH to resolve it. The last land search record of the FMH shows nothing adverse or beneficial to H’s interest has been registered his title in the FMH. It is obvious that he is not concerned with his entitlement to the other half of the interest in the FMH previously belonged to H’s Mother (deceased) as he has not registered her death certificate against the FMH in the Land Registry[31].

36.  Neither is H bankrupted[32]. In the past 22 years, W has not received in the FMH anything concerning poor financial condition of H.

37.  In this connection, I agree with W’s submission that that it is reasonable for me to draw an inference that H must have had enough earning capacity to cater for his own daily needs, or otherwise, there is no reason why he would have given up the chance to make a claim on the FMH by appearing in the present proceedings or taking step to protect his interest therein.

How the assets should be divided

The applicable law and legal principles

38.  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:

“4. Financial provision for party to a marriage in cases of divorce, etc.

(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of section 25(1), make any one or more of the following orders, that is to say-

(a) an order that either party to the marriage shall make to the other such periodical payments and for such term as may be specified in the order;

(b) an order that either party to the marriage shall secure to the other to the satisfaction of the court, such periodical payments and for such term as may be so specified;

(c) an order that either party to the marriage shall pay to the other such lump sum or sums as may be so specified.

(2) Without prejudice to the generality of subsection (1)(c), an order under this section that a party to a marriage shall pay a lump sum to the other party-

(a) may be made for the purpose of enabling that other party to meet any liabilities or expenses reasonably incurred by him or her in maintaining himself or herself or any child of the family before making an application for an order under this section;

(b) may provide for the payment of that sum by instalments of such amount as may be specified in the order and may require the payment of the instalments to be secured to the satisfaction of the court.”

39.  In addition, the Court can also grant property transfer orders under section 6 of the MPPO with the more relevant sub-sections under (a) and (e) providing:

“(1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation, or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may, subject to the provisions of sections 10 and 25(1), make any one or more of the following orders, that is to say-

(a) An order that a party to the marriage shall transfer to the other party, to any child of the family or to such person as may be specified in the order for the benefit of such a child such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion;

….

(e) an order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion, and for the use of the proceeds of such sale, and the court may make an order under paragraph (c) notwithstanding that there are no children of the family.

(2) Subsections (2) to (6) of section 6A apply in relation to orders under subsection (1) (e) as they apply in relation to orders under subsection (1) of that section. “

40.  In deciding on how to exercise its power in this regard, the Court is bound to consider Section 7 of MPPO which provides:

“7. Matters to which court is to have regard in deciding what orders to make under sections 4, 5 and 6

(1) It shall be the duty of the court in deciding whether to exercise its powers under section 4, 6 or 6A in relation to a party to the marriage and, if so, in what manner, to have regard to the conduct of the parties and all the circumstances of the case including the following matters, that is to say-

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) in the case of proceedings for divorce or nullity of marriage, the value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.”

34.  In LKW and DD (2010) 13 HKCFAR 537, Ribeiro PJ, after considering a list of leading English authorities[33], set out the steps to be taken by the courts in undertaking the abovementioned section 7 exercise. In gist, they are:

(1)  The ascertainment of the financial resources of each of the parties calculated as at the date of the hearing[34];

(2)  The assessment of the parties’ financial needs. If the total resources are not enough to meet the parties’ needs, the s.7 exercise should stop at this step and there is no room to apply any sharing principle[35];

(3)  If surplus assets would remain after the parties’ needs have been catered for, the next step should normally be for the court to apply the sharing principle to the parties’ total assets, with a yardstick of equal division as part of that principle. This means that the total assets should be divided equally between the parties unless there is good reason for departing from an equal division[36];

(4)  In considering whether good reasons exist for departing from equal division, the answer is to be found in the terms of s.7 and the implicit objective of a fair distribution of the assets. Factors like source of the assets, conduct, financial needs, duration of the marriage, contribution to the family and compensation are all material considerations[37]; and

(5)  The weight to be given to each of the factors is a matter of discretion for the court[38].

35.  In that case, Riberio PJ also referred to the four principles which are applicable to all ancillary relief proceeding: (1) the objective of fairness[39]; (2) rejection of discrimination[40]; (3) the yardstick of equal division[41] and (4) avoidance of ‘minute retrospective investigation[42].

The FMH should be transferred to from H to W

36.  As mentioned above, the only way of financial resources of W’s family is the total amount of $HK19,500 being the aggregate sum of two daughters’ monthly income. The total amount of maintenance that should have been paid by H over the years together with the financial needs of W till she reaches the end of her life expectancy far exceeds the estimated value of the FMH.

37.  Without the FMH, W will need to rent a flat elsewhere. If W applied for her own public rental housing, it would take a lengthy period of time, particularly it is not viable for her to make a joint application with her two daughters because they are already or will soon be financially independent. Therefore, even if sale of the FMH gives W a sum of HK$1,850,000, it will not be sufficient to meet with the living expenses because W’s monthly expenses will likely increase considerably.

38.  As regards the elder daughter’s earning capacity, she is currently about 30 years’ old but she has been suffering from obesity and arrhythmia[43] to the extent that she needs to attend the Queen Mary Hospital to receive medical treatments from time to time[44]. Thus, there is a foreseeable risk that she might not be able to work full-time due to her health issue and this family of three will then lose their only breadwinner.

39.  The facts depicted in the case of LKCD and CJL, FCMC 860/2019, [2021] HKFC 91 were very similar to the present ones in that the husband there also abandoned the wife for years and left the wife to take care of the 2 children, and the learned Judge in that case ordered the husband’s half interest in their former matrimonial home to be transferred to the wife so that she could become its sole owner, thereby catering for the housing needs of the wife and the 2 children. Having considered all the circumstances of this case, I will adopt the same approach taken in LKCD and CJL (supra) above and make order in W’s favour.

40.  Applying the principles set out in LKW and DD mentioned above and catering for the reasonable needs of W and the younger daughter, I consider it is fair for the court to order the transfer of the FMH into the sole name of W. It can provide stability and financial resources for W and the two daughters by transferring the FMH into W’s sole name. It is particularly so when H has not paid any maintenance to the family in the past 20 odd years.

How should the transfer be executed?

41.  Upon W’s enquiry[45], the Hong Kong Housing Authority on 31 March 2022 provided W with the “Information for applicants on application for transfer of ownership” which sets out the pre-requisite for the application and the usual grounds for change of ownership of the purchased public housing unit[46].

42.  The two pre-requisites for the application are satisfied as W is now applying for a court order to change the ownership by way of Deed of Assignment at nil monetary consideration and W being the proposed assignee is an authorized occupant of the FMH[47].

43.  The grounds on which W could rely are:

-  Ground (B): Transfer to spouse owing to divorce or separation;

-  Ground (G): Transfer of ownership owing to death of owner (death of H’s Mother (deceased))[48].

44.  W was asking the Registrar of the High Court to execute the necessary assignment for the transfer of the FMH to W. However, in a recent Judgment given by DHCJ Leung in Lai Suk King and+ The Personal Representative of the Estate of Leung Yung, Deceased, HCA 2222/2018, [2022] HKCFI 1087[49], the learned Judge in paragraphs 58 to 59 thereof expressed his reservation on requesting the Registrar of the High Court to execute the necessary assignment and transfer and ordered that a partner of the solicitors acting for the Plaintiff be authorized to execute such documents instead.

45.  In another recent case LKCD and CJL[50] (supra), HHJ CK Chan was also dealing with a similar issue and in paragraph 30 thereof ordered a senior partner of the wife’s solicitors firm to execute the necessary documents for the transfer of landed property ownership.

Order

46.  Having considered all the circumstances, I order as follows:

a.  Subject to the approval of the Hong Kong Housing Authority and the first charge of the Director of Legal Aid, the Respondent do assign all his interest, estate, title and right of and in the matrimonial home known as Flat No. 36 on 5/F of Tin Lok House (Block 10) (Including The Planter / Planter Box Appertaining thereto, if any), Tin King Estate, No. 10 Tin King Road, Tuen Mun, New Territories (“the Property”) to the Petitioner at nil monetary consideration in full and final settlement of the Petitioner’s claim for ancillary relief against the Respondent;

b.  In the event that the approval of the Hong Kong Housing Authority is obtained, a partner of the solicitors acting for the Petitioner be appointed to sign and execute on behalf of the Respondent a Deed of Assignment and other ancillary document(s) assigning or transferring all the Respondent’s interest, estate, title and right of and in the Property to the Petitioner at nil consideration;

c.  The Petitioner shall have costs of the ancillary relief application, including all costs reserved, to be taxed if not agreed; and

d.  The Petitioner’s own costs be taxed in accordance with the Legal Aid Regulations.