CHOY KIN CHOY v. CHOY CHAN LAI NGAR

IN THE COURT OF APPEAL

1993, No. 47
(Civil)

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J U D G M E N T  O F  T H E  C O U R T

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Macdougall, J.A.:

1. The applicant (petitioner husband) and the respondent (wife) were married in China in May 1972. In 1974 the appellant came to Hong Kong to live. He was joined by the respondent and their eldest son in 1978.

2. In 1986 the appellant bought the matrimonial home in his and the respondent's joint names. The appellant operated a factory and in 1987 the respondent began employment as a cashier. She is still so employed and now earns $6500 per month. Her eldest son contributes $2400 to the family income. The appellant is at present receiving a salary of $5500 per month.

3. In February 1988 the parties separated, and on 22 August 1990 the appellant issued a petition for divorce. On 5 May 1992 HH Judge Surman made a decree nisi of divorce and ordered that the matters of final custody of the children of the marriage and maintenance be adjourned to Chambers to a date to be fixed. There was also an order that the appellant file the usual affidavit of means.

4. With that brief background we move to 8 February 1993 when Judge Surman made the orders which form the subject of this appeal. The children of the marriage were then aged 19, 13 and 9 years respectively. The two older sons are carriers of the hepatitis B virus and the eldest son suffers from a hearing defect which necessitates the use of hearing aids.

5. In his judgment Judge Surman stated that it had essentially been agreed between the parties that final custody of the children should remain with the respondent wife with the appellant to have reasonable access to them.

6. With respect to the matrimonial home, which is a flat in City Garden, he stated as follows:

"Each of the Parties had wanted to remain in the Property with the children. This was emphasized in their separate proposed arrangements for the children filed with the Divorce Papers.

In my view (although of course, not forgetting the Husband) I had to give important attention to the housing arrangements for the wife and children for whom she now had responsibility.

At my suggestion, the Parties were asked to consider matters, and see if they could reach an agreement.

Unfortunately, they could not.

I was told by the Solicitors for the Husband that if the City Garden Property could be transferred to him, then he would proceed to raise a mortgage on it and pay the Wife a Lump Sum of 2.2 million Hong

Kong dollar within 4 months. (On the agreed value of 3.1 million Hong Kong dollars this represented about 70% of the main family asset) In addition, the Husband offered to pay $1500 per month for each of the two younger children.

The wife, through her Counsel, felt unable to accept the Husband's offer and asked for the City Garden Property to be transferred to her so that she could continue living there with the children; although she recognised there would almost certainly have to be a Legal Charge placed on the Property in favour of the Husband enforceable on the sale.

Decision

I have read the various affidavits, and have heard the Parties give oral evidence. I have also taken particular note of the factors listed in Section 7 of the Matrimonial Proceedings and Property Ordinance (Cap. 198) - especially sub paragraphs (a)(b) and (c). I have come to the conclusion that the proper order is to transfer the City Garden Property to the Wife. In that way, she will have the security of a roof over her head for herself and the children for whom she has responsibility. I do not think it is sensible to expect the Wife to go and look for alternative property.

There should, of course, be a legal charge in favour of the Husband on the property.

To effect a clean break, there should be a legal charge of 25% placed on the property. That charge is to be 25% of the full value when sold, and it should not be enforced by the Husband until the younger child reaches the age of 18, or the Wife remarries, or the house is sold by the Wife, whichever is the earliest.

On the Wife's undertaking to discharge the present mortgage on the property, there is to be a lump sum payment to her by the Husband of HK$134,000. That money is to be paid out of the Stakeholder Account [this related to an account into which the proceeds of the sole of the appellant's factory had been paid]. The remainder of the money in that account is then to be paid out to the Husband. Taking into account his proceeds from the sale of the factory by the Husband, and his eventual realization of 25% of the full value of the Matrimonial Home, the financial assets of the Parties will be split evenly between them. There now being no further requirements to meet mortgage repayments, the amount of maintenance payable to the Wife for the support of the children can be reduced."

7. The judge then made an order that the appellant pay to the respondent $1500 per month for each of the two younger children, such payments to begin on 1 January 1993. The appellant husband now appeals against the judge's order transferring his beneficial half share in the former matrimonial home to the respondent; his orders relating to the legal charge; the order that the appellant pay to the respondent a lump sum of $134,000 upon his undertaking to discharge the outstanding mortgage on the home and that such sum be taken from the stakeholder account; the order that the appellant pay the costs and all disbursements relating to the transfer of the home and the registration of the legal charges; and the order that the appellant pay to the respondent $1500 per month for each of the two youngest children until each child respectively reaches the age of 18 or until further order.

8. Mr. Pilbrow for the appellant submitted that the judge failed to have any or any proper regard to the income, earning capacity, and other financial resources of the parties and to their respective financial needs and obligations as required by section 7(1)(a) and (b) of the Matrimonial Proceedings and Property Ordinance Cap. 192 ("the Ordinance"), and that the effect of his orders in respect of the former matrimonial home was to deprive the Petitioner of both the funds necessary to acquire a flat and working capital for the business that he wanted to establish.

9. Mr. Pilbrow contended that in deciding that it was "not.... sensible to expect the Respondent to go out and look for alternative property, the Judge placed excessive weight on the inconvenience to the respondent and the disruption to her life and that of the children if she were to be required to find alternative accommodation, and failed to have any or any sufficient regard to the possibility and the evidence in respect of the acquisition by the Respondent of a similar property by using the lump sum offered by the Petitioner. He contended that in all the circumstances the award of 75% of the full market value upon sale of the former matrimonial home to the Respondent was excessive and ought to be reduced.

10. Miss van der Eb, who appeared for the respondent, frankly conceded that she was in difficulty owing to what she euphemistically referred to as the judge's economy of findings. She valiantly attempted to persuade us that in making the orders which he did the judge must have been influenced by evidence which the respondent had given to the effect that the appellant had not made full disclosure of his true financial position. The appellant had denied these suggestions.

11. Since the judge made no finding adverse to the appellant in this regard we must take it that he accepted his testimony as to his personal financial position. It would be entirely wrong for this court to make an assumption adverse to a party when the judge of fact has not made any finding that would justify such a conclusion.

12. Notwithstanding the judge's assertion that he was "not forgetting the Husband" we have come to the conclusion that the practical effect of his orders was to disregard the financial needs of the appellant.

13. We are satisfied that this was not an appropriate case for the making of a Mesher order. While we fully accept that the inconvenience and trauma of finding and moving to alternative accommodation would necessarily have a disruptive effect on the lives of the applicant and her children, and that the welfare of the children is of primary consideration, we think that this aspect has been given undue weight, bearing in mind the position in which the appellant has been placed by the judge's orders.

14. The relevant part of the sec. 7 of the Ordinance provides:

" (1) It shall be the duty of the court in deciding whether to exercise its powers under section 4 or 6 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;"

15. Sections 4 and 5 of the Ordinance refer to the making of financial provisions for the parties to a marriage and for their children in the case of divorce.

16. The almost inevitable effect of the judges orders was to deprive the appellant of any of the benefit of the distribution of the matrimonial property until the youngest son attains the age of 18 - a wait of seven years. After repayment of the overdraft to the bank, legal expenses; arrears of interim maintenance and $330,000 ordered to be paid into the stakeholder account, the sale of the appellant's factory premises on 15 April 1992 left him with $146,297. Subsequently, he moved his business to a rented premises in Kwun Tong. However, business took a severe downturn and as a consequence he suffered a substantial loss. After the payment out to him of $100,000 from the stakeholder account when given conditional leave to appeal, he is now left with the $38,000 remaining in that account. This amount is progressively being reduced by the monthly maintenance payments for the children. The evidence disclosed that if the former matrimonial home, whose value at the date of the hearing before the judge was $3.1m, is sold and the respondent awarded two thirds of the proceeds, she would be able to buy a reasonable flat in the same residential area.

17. We think that the judge's decision was so plainly wrong that the only legitimate conclusion is that he erred in the exercise of his discretion in all the circumstances of the case. Taking into account the provisions of section 7 of the Ordinance we came to the conclusion that this appeal should be allowed and that so much of the judge's order as has been appealed against be set aside.

18. In lieu thereof we ordered that:

1. The former matrimonial home be sold but that the date for completion not be earlier than three months from the date of this judgment.

2. The net proceeds of the sale be divided between the parties in the proportion of two thirds to the respondent and one third to the appellant.

3. Failing agreement by the parties as to the manner of sale and the disturbance of proceeds that there be liberty to apply.

4. The amount remaining in the stakeholders account be divided equally between the parties.

5. Maintenance payments for the children be henceforwards paid directly by the petitioner to the appellant.

19. We make no orders as to costs other than that they be taxed in accordance with Legal Aid Regulations.