CHAN SZE HUNG v. CHAN CHAN KAM FUNG FRANCES

CACV 197/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 197 OF 2000

(ON APPEAL FROM DISTRICT COURT
DIVORCE JURISDICTION SUIT NO. 12448 OF 1996)

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J U D G M E N T

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Hon Rogers VP :

1. This is an appeal from a judgment and order of Deputy Judge Geiser (as he then was) given on 16 November 1999. The appeal arises in this way. The divorce petition in this case was presented in December 1996. The parties had been separated since 1987. The parties had entered into two deeds of separation - one was dated 2 March 1993 and the other was dated 11 November 1996.

2. The respondent, who was the wife, had applied for maintenance and for a capital sum and the matter came before the judge dealing with matrimonial matters. When giving directions, the judge of his own motion made the following order :

"Issue of the validity of the Deed of Arrangement and the Supplemental Deed to be tried first and to be set down forthwith with 2 days reserved."

3. That order was made on 29 April 1999. The matter eventually came before Deputy Judge Geiser in November 1999 and he held that the deeds were valid. The first order which the deputy judge made was as follows :

"The Deed of Separation and the Supplemental Deed entered into between the Petitioner and the Respondent on 2nd March 1993 and 11th March 1996 respectively be approved and the Petitioner and the Respondent be bound by the terms contained therein."

4. It is to be observed that that order does not follow the terms of the preliminary issue which had been ordered by the judge dealing with the preliminary matters. The second order was :

"There be an order nisi that the Petitioner's costs of and incidental to the application be paid by the Respondent with certificate for Counsel to be taxed if not agreed."

and the third order was :

"The order nisi for costs is to be made absolute at the expiration of 21 days subject to either party being granted liberty to apply."

5. Application was made to the deputy judge for leave to appeal but that was refused. Eventually leave was granted by the Court of Appeal.

6. The orders sought in the Notice of Appeal were first that the appeal should be allowed and that the said judgment and order be set aside. Secondly, that the Deed of Separation and Supplemental Deed (together "the Deeds") be declared invalid; thirdly, alternatively, even though the deeds be declared valid, the husband and wife not be bound by the terms contained therein unless and until so held by the judge hearing the full application for ancillary relief between the parties and fourthly that the costs of this appeal and below be to the wife.

7. The matter then proceeded. Our attention has been drawn to a considerable amount of correspondence between the parties. The first was a letter of 16 May 2000. Of course, that was before the Notice of Appeal was filed and before leave to appeal was obtained. This is a letter from the wife's solicitors to the husband's solicitor and the penultimate paragraph is :

"We would however write to say that our client is prepared not to seek leave to Appeal on the basis that it is clearly understood that the validity of the Deeds is only one of the many issues to be taken into account in terms of Section 7 of the Matrimonial Proceedings and Property Ordinance and before the Court can appropriately consider either our client's application for Ancillary Relief or your client's proposed Application for Dismissal of her claims the Court must have regard to all the circumstances of the case including full financial disclosure of the parties current means to determine what will be the appropriate capital and/or maintenance settlement on behalf of our client."

8. The reply which came back on 19 May read as follows :

" Our client, in his petition, prayed for the Court to exercise its discretion under sections 4 and 6. Matrimonial Proceedings and Property Ordinance by making orders in the terms of the deeds. Such application has not, as yet, been formally dealt with by the Court. Deputy Judge Geiser was well aware of this as he confirmed on page 11 of his judgment with the words 'Whilst I am aware that I am not at this stage dealing with any application for ancillary relief ....'

Judge Carlson had earlier directed that the question of the validity of the 2 deeds should be investigated by the Court as a preliminary point. We are confident that the intent of such direction was for the deeds to be tested in accordance with the principles laid down in Edgar v Edgar and to ascertain whether there were any grounds upon which either of the parties should be released from the binding effect to the deeds. The further purpose was an endeavour to save costs and Court-time.

In the event that the Court were to find that the deeds were indeed valid and binding upon the parties, it would be entitled to express its approval of the terms of the deeds as per Smallman v Smallman. By the expression of its approval, the Court has indicated to the parties that, when it exercises its discretion upon the applications under sections 4 and 6 M.P.P.O., it will be 'required to give effect to the prior agreements by treating those agreements as conduct, which is to be taken into account when considering under section 7 M.P.P.O. what was just between the parties in all the circumstances' (Edgar v Edgar).

Your client's applications for ancillary relief have not to date been dismissed - this can only be done by a specific Court order. In the light of the decision of Deputy Judge Geiser, if your client sees fit to pursue an application for any award of a capital nature from our client, she does so at a high risk as to costs. Our client when the question of the appeal is finalized, will pursue the prayer in his petition and as one of the orders, he will seek the specific dismissal of your client's applications for awards of a capital nature."

9. It seems to me that the position taken on behalf of the husband was that the holding that the deeds were valid meant that the parties were bound by them but that the court was not bound by them, and on an application for relief under sections 4 and 6 of the Ordinance, the court could have regard to, but was not bound by the deeds. Indeed our attention was drawn to section 15(6) of the Ordinance which reads :

"(6) For the avoidance of doubt it is hereby declared that nothing in this section or section 14 affects any power of a court before which any proceedings between the parties to a maintenance agreement are brought under any other enactment (including a provision of this Ordinance) to make an order containing financial arrangements or any right of either party to apply for such an order in such proceedings."

10. That section follows section 14 which deals with the question of validity of maintenance agreements.

11. That position on behalf of the husband appears to me to have been maintained throughout. The only indication that that might not be so arises from the fact that in the course of his decision as to whether there should be security for costs for this appeal, Mr Justice Ribeiro referred on page 4 of his decision to what he understood to be the argument on behalf of the husband. He said :

"Mr David Pilbrow, who appears for the Petitioner, confirmed that it was his client's position that the Judge had indeed gone beyond a narrow finding of validity and that he finally determined the capital financial provision which is to be made in respect of the Respondent. He submitted that it had been the obvious intention of Judge Carlson that this should be determined, that the evidence bearing on the question had been duly canvassed and that the decision had been properly reached by the Deputy Judge. It follows, so his submission ran, that while the Respondent is free to re-open questions of maintenance, the Judge's decision as precluded further debate as to questions of capital when ancillary relief falls to be more generally determined."

12. Having heard counsel in the course of argument this morning, I am satisfied that the way in which Mr Pilbrow puts his case is that he is virtually "home and dry"; not that he is absolutely, in law, "home and dry" but that, as a result of the upholding of the validity of the deeds, it would be a most remarkable situation if some capital award could be made to the wife. There are only two circumstances, which were canvassed in this court, in which that could happen.

13. The first is if there is a material change in circumstances. As to that Mr Pilbrow says that has not happened. The second is if there has been a change in the law or a change in the way the law is interpreted. Bar those two, Mr Pilbrow says, that, in effect, the upholding of the validity of the deeds will, as a practical matter, be an end of the matter. I am satisfied that that is the way he puts, and has put, his argument. It may have come across slightly different, I know not, on the application for security for costs but it is consistent with all the correspondence which we have been shown. In those circumstances, it seems to me that has been the husband's case throughout.

14. The order which was drawn up as a result of Deputy Judge Geiser's judgment, as I have said, could have been more felicitously drafted, and could have been drafted in terms of the preliminary issue. However, having been shown the law both as applied in the cases and in the statute, I am satisfied that there is no preclusion in law to the applications under sections 4 and 6, and that the husband's stance has been correct. In those circumstances, although it might have been hoped that the order would have been drawn up in a more precise way, I do not see that this order should be varied on this application.

15. There are a number of matters which I should also mention. The first is that the grounds of the prayer for relief and the order sought in the Notice of Appeal that the deeds be held invalid appear to have been maintained, at least in respect of the Supplemental Deed, until after 10 January when the skeleton argument on behalf of the wife was lodged. The skeleton argument still has reference to the effect that the deed must be invalid for at least one reason.

16. The other matter to which I would refer is the question of the preliminary issue. In my view, preliminary issues are only of any use if they are going to dispose of the case. They are often a recipe for disaster if they are merely directed to one of the issues which will have to be decided, but which will not dispose of the case. They are in many respects highly undesirable because if it entails, as it did in this case, hearing the parties give evidence, questions of credibility will inevitably be decided by the judge hearing the preliminary issue; this may be embarrassing and difficult for any judge who subsequently may have to decide different aspects of the case. Moreover, if the full ambit of the issues in the case is not ventilated at first, the judge hearing the preliminary issue may well make statements which are found to be unfortunate when it comes to the final full hearing. Quite apart from that, the additional hearings involved in hearing a preliminary issue and, often, consequential appeals, only adds to the time and cost of disposing of a case.

17. Having said that this court is faced with the fact that there was a preliminary issue in this case. The grounds on which this appeal were lodged have now been abandoned and I consider that the order should not be varied. It only falls, therefore, to say that I consider that this appeal must be dismissed.

Hon Le Pichon JA :

18. I agree with the judgment of the Vice President and have nothing to add.

Hon Stone J :

19. I also agree with the judgment of the learned Vice President and have nothing to add.