TCWF v. LKKS

CACV 154/2012 &

CACV 166/2012

(Heard together)

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)

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_________________________________________

JUDGMENT ON INTEREST AND REDACTION

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Hon LamVP

(giving the Judgment on Interest and Redaction of the Court):

A. Interest

1. We handed down our judgment in this appeal on 10 January 2014.  As the question of interest had not been canvassed at the main hearing, we invited written submissions on interest from the parties.

2. Since we handed down our judgment, the Husband paid a further sum of $208,958,000 on 20 January 2014.  Thus, the principal sum of our lump sum award has been fully paid.

3. The Wife lodged her written submissions on 24 January 2014.  She asked for interest on the award at judgment rate of 8% running from the date of the Main Judgment of Saunders J, viz 1 December 2011 on $411,758,000 million with credit for her receipt of $202,800,000 on 9 December 2011.  As shown in her calculation set out below, essentially she asked for interest on the balance sum of $208,958,000 which was not paid until 20 January 2014.

4. To achieve that, Mr Howard QC invited this court to antedate our judgment to 1 December 2011 pursuant to Order 42 Rule 3.  This is to reflect that justice demands the award of $411,758,000 should have been payable on 1 December 2011.

5. The Wife calculated the interest to be as follows,

“Interest arising between 1 December 2011 and 19 January 2014

a. 1 December 2011 to 30 November 2012 inclusive: @8% of HK$208.958 million = total interest for the year of HK$16,716,640.00;

b. 1 December 2012 to 30 November 2013 inclusive: @8% of HK$208.958 million = total interest for the year of HK$16,716,640.00;

c. 1 December 2013 to 19 January 2014 (50 days): 8% pro rata =HK$2,289,950.68;

d. Total interest accrued between 1.12.11 and 19.1.14 = HK$35,723,230.68.”

6. The Husband lodged his written submissions on 7 February 2014.  He contended that as both tranches of the lump sum have been paid swiftly, no interest should be payable.  Firstly, he said the ordinary rule is that interest runs from the date of the Court of Appeal decision.

7. He said that the outcome of the appeal was uncertain and therefore he should not be penalised for not making the payment of $208,958,000 earlier.

8. He also contended that since the decree absolute was only made on 5 April 2013, it would be wrong for any interest to run from a date earlier than that.  In this connection, he relied on Section 25 of the Matrimonial Proceedings and Property Ordinance [“MPPO”].

Our analysis

9. In respect of orders made in matrimonial proceedings for payment of money, Section 53A of the Matrimonial Causes Ordinance and Section 28AA of the MPPO provide that interest shall start to run from the date on which payment is due as specified by the maintenance order. This may be different from the date of the order or judgment, see Preston v Preston [1982] Fam 17; H v H [2006] 1 FLR 327.  This is to cater for situations where the court grants time to a paying party to secure funds for lump sum payment.

10. When the Court of Appeal disturbs a matrimonial award below, it may exercise the same power as that of the trial judge at first instance, see Section 13(4) of the High Court Ordinance [“HCO”] and Order 59 Rule 10(1).  Thus, it may grant similar indulgence to the paying party.  An example can be found in PLTO v KLK CACV 48 of 2012, 25 March 2013.

11. But this is a matter of discretion.  When the Court of Appeal reduces the lump sum award and there is no evidence to suggest that the paying party would need time to pay, it must be within the power of the Court of Appeal to order that the reduced award be paid as from the date of the first instance judgment if the court is of the view that the recipient should be compensated for not having the money during the appeal period.  Such power exists by reason of Section 13(4) of the HCO and Order 59 Rule 10(1).  It could be achieved by either (a) antedating the date of payment in the order made by the Court of Appeal; or (b) instead of setting aside the whole lump sum award and substituting it with an award of a lesser sum, the Court of Appeal can confine itself to the reduction of the award from the original amount to the reduced level and keeping the stipulated date of payment in the original order.

12. Irrespective of the mode of order achieving the same end, the Court of Appeal cannot stipulate a date of payment which the first instance judge did not have the power to order.  This is where Section 25 of MPPO comes in.

13. Though it is clear from Saunders J’s Barrell judgment that he intended to award interest as from 1 December 2011, he did not consider the effect of Section 25 MPPO in so providing.  That section provides,

“(1) Where a petition or joint application for divorce or a petition for nullity of marriage or judicial separation has been presented or made, then, subject to subsection (2), proceedings under section 3, 4, 5, 6 or 6A may be begun, subject to and in accordance with rules of court, at any time after the presentation of the petition or the making of the application; but

(a) no order under section 4, 6 or 6A shall be made unless a decree nisi of divorce or of nullity of marriage or a decree of judicial separation, as the case may be, has been granted;

(b) without prejudice to the power to give a direction under section 26, no such order made on or after granting a decree nisi of divorce or of nullity of marriage, and no settlement made in pursuance of such an order, shall take effect unless the decree has been made absolute.

(2) Rules of court may provide, in such cases as may be prescribed by the rules-

(a) that applications for ancillary relief shall be made in the petition, joint application or answer; and

(b) that applications for ancillary relief which are not so made, or are not made until after the expiration of such period following the presentation of the petition, making of the joint application or filing of the answer as may be so prescribed, shall be made only with the leave of the court.

(3) In subsection (2) "ancillary relief" (附屬濟助) means relief under any of the provisions of sections 3, 4, 5, 6 and 6A.”

14. Counsel referred to several authorities in relation to this point, but none of them are directly on point.  Mr Howard relied on McMinn v McMinn [2003] 2 FLR 823 and Young v Young [2013] EWHC 3637 (Fam) to contend that there is a distinction between the jurisdiction of the court to make an order for lump sum payment and the enforceability of such order.  His submission is that though a lump sum order cannot be enforced before decree absolute, it is still an order of the court which carries with it the implication of an obligation to pay interest if it were not paid punctually. Whilst such a distinction was apparently so drawn in Young v Young [2013] EWHC 3637 (Fam), there was no suggestion that the decree nisi would not be made absolute within the 28 days which the judge gave the husband to pay and thus no discussion in that judgment on the equivalent of our Section 25.  We cannot derive much assistance from it.

15. In McMinn v McMinn [2003] 2 FLR 823, Black J held that an order for lump sum was a valid order but the wife (who was killed by the husband after the decree nisi, so that there could not be any decree absolute) “had no enforceable right at the time of her death but only a contingent right, contingent … upon obtaining decree absolute.” Mr Howard relied on this authority to advance his submission that Section 25 only governed the enforceability of an order, not the validity of the order.

16. We readily accept that the court does have the power to make a lump sum order before decree absolute.  But we do not think McMinn is an authority for the proposition that the disabling effect of Section 25 is confined to the enforcement of such order.  Whilst Black J did refer to enforcement of such order in the context of Section 25, the case before Her Ladyship did not concern interest arising from the failure to make a lump sum payment in accordance with an order made before decree absolute.  The issue before the court in McMinn was whether the executor of the estate of the unfortunate wife could be joined in the matrimonial case to pursue claims based on the lump sum order.  Notwithstanding the validity of the order, because of the equivalent of Section 25, Black J held that the estate did not have any cause of action against the husband based on that lump sum order as it had not become effective before her death.

17. Mr Pointer relied on Preston v Preston [1982] Fam 17.  But that was not a decision based on the equivalent of our Section 25.  The ratio of that decision was encapsulated in the following sentence in the judgment of Ormrod LJ at p.29,

“… there is no power to award interest on a lump sum or part of a lump sum before such sum becomes due and payable …”

See also the judgment of Brandon LJ at p.38.

18. In that case, the first instance judge ordered interest in respect of some future instalments for a lump sum payment to start to run from a date before they were due.  The Court of Appeal held that this could not be done.  The case was not about whether interest can accrue from a lump sum payment which the court ordered to be paid forthwith before decree absolute.

19. Ormrod LJ observed that interest would accrue automatically in respect of a High Court judgment once the sum becomes due and payable but not in respect of a county court judgment, citing the case of Burrows v Burrows The Times March 10, 1981.

20. To the same effect is the judgment of Baron J in H v H [2006] 1 FLR 327.

21. In neither Preston nor H was there any suggestion that the decree absolute would not be obtained before the due date for payment.  Thus, the present issue did not arise in those cases.

22. It therefore appears to us that there is no direct authority on this particular point. 

23. We agree with Mr Howard that Section 25 should not be considered in isolation.  It should be read together with Section 28AA of the MPPO, in particular Section 28AA(2) which reads:

“(2) Where a maintenance order has been made against a judgment debtor, and the judgment debtor fails to make full and punctual payment in compliance with the maintenance order, the judgment creditor is entitled to interest in respect of arrears of maintenance which accrue on or after the commencement date.”

24. In our judgment, on proper construction of Section 28AA interest starts to accrue from the date specified for payment in the maintenance order, not from the date on which the order becomes enforceable, see Section 28AA(3)(c).  There are situations where payment is made by a judgment debtor in the absence of any enforcement actions.  In that event, interest accrued under Section 28AA(2) will be discharged out of the payment as a first priority, see Section 28AA(6). 

25. An exception is provided under Section 28AA(7) upon an application by a judgment debtor.  There is no such application before us.

26. We do not see any reason why the Wife should not be compensated for being kept out of the balance of the lump sum payment on the facts of the present case.  There is no suggestion that it was beyond the means of the Husband to pay (his ability to pay is demonstrated by the payment of the balance shortly after our judgment).  We will therefore antedate our order for lump sum payment to 1 December 2011 and interest should run from that date.

27. As for the rate of interest, we do not accept Mr Pointer’s submissions that this court should adopt 3% to 3.75% instead of the judgment rate.  Whatever may be the position in England, in Hong Kong the general practice is to award interest on judgment rate in respect of arrears in maintenance awards.  On the facts of the present case, we do not consider there is good justification for departing from such practice. 

B.  Redactions

28. At para 390 of our judgment of 10 January 2014, we dealt with the extent of redaction of the Main Judgment of Saunders J for general publication.  The parties were able to agree on some redactions.  As for the rest (viz. those highlighted in pink and orange in the version prepared by solicitors for the Husband), we are not minded to redact those parts.  Given what has already been published in the public domain (in the form of our judgments) and having regard to the extent of information disclosed in those parts, we do not think they should be redacted.  The only real reference to an address which is of sufficient particularity to identify the actual address is in respect of a property at which they no longer reside.

29. In other words, the Main Judgment should be published only with the green and yellow parts highlighted in the draft redacted version submitted by the solicitors for the Husband on 14 February 2014.

30. We also order the Husband to pay the costs of the Wife in respect of the submissions on Interest and Redaction.