LEE LI SHUK YIN v. LEE CHAI CHUEN

Civil Appeal No. 22 of 1990

IN THE COURT OF APPEAL

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BETWEEN

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JUDGMENT

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Sears, J.

1. This is an appeal, with leave of Penlington, J.A., against the decision of His Honour Judge Chism given on the 6th December 1989 on an application under the Matrimonial Proceedings and Property Ordinance for a lump sum payment to the Petitioner wife. The matter had come before a different Judge, His Honour Judge Blackwell, in November 1988, when it was adjourned. The brief factual history is as follows:

2. The parties were married on the 9th May 1976 and one child, a son, was born on the 19th February 1978. In July 1987 the wife presented a petition alleging that the marriage had irretrievably broken down and the parties had lived separate for a period of five years.

3. On 17th December 1987, a Decree Nisi of dissolution was granted to the petitioner, who was also given custody of the child; matters relating to financial relief were adjourned into Chambers. An order had been made that the husband pay his wife a sum of $1,600.00 per month by way of interim maintenance.

4. The matter came before His Honour Judge Blackwell as I have indicated, and the only two family assets were two properties. One was a flat in Greenwood Garden, Shatin which the husband had purchased after the marriage had broken down and the parties were living apart, and the other Flat C, on the 11th Floor, Garfield Mansion in Seymour Road. Judge Blackwell recognised that it was necessary to have a valuation for those two properties, so he adjourned the application for valuations to be obtained. The usual affidavit evidence was filed in support of the application.. A valuation report with regard to both of those properties was prepared.

5. It is not necessary in the course of this judgment to set out the statutory provisions which are found in Section 4(1)(c) of the Ordinance giving the court power to make a lump sum order.

6. The material factors to which the court must have regard when making the appropriate financial provision are found set out in Section 7 of the Ordinance. When the matter came before the learned Judge below, he first had to discover what were the capital assets from which the respective financial provision would be made.  He took as his starting figures, the value of the smaller flat, that is the Greenwood garden flat, which was estimated be worth $310,000. A mortgage had been obtained for $129,000 and the learned Judge thought, therefore, the net value was $181,000. Unfortunately, it was not drawn to his attention that at the time the application was before the Judge a substantial sum had been paid off the mortgage, and the outstanding mortgage is now in the region of $30,000 odd dollars. The net value should have been taken as approximately $280,000. The other property, the Garfield Mansion flat, was said to be worth $1.25M subject to an existing tenancy. These valuations were carried out in July 1989 shortly after the incidents in Beijing in June and as was recognised in the valuation report, the market at that time was severely depressed.

7. The Judge set those figures out and he deducted from what he thought was the total capital assets, a figure of $86,500. This amount was owing by the husband to his wife as a result of a failure by him to pay maintenance under a separation agreement and the wife had obtained summary judgment against him for that sum of money. In my judgment, the Judge was wrong to deduct that figure from the amount of capital assets. This was a sum of money lawfully owed by the husband to his wife by virtue of maintenance.

8. The Judge said that the marriage was a "fairly short one". The parties actually co-habited for only 6 years. This marriage cannot be classified as a "very short marriage", as described in some of the authorities, so that the wife has her lump sum payment diminished by virtue of the short length of the marriage.  On the other hand, as, has been pointed out, this was not a marriage of great length such as 20 or 25 years, and the Judge in accordance with Section 7 was correct to take into account the length of the marriage.

9. The position in the court below was that the wife was asserting that she was entitled to 1/3 of the capital assets whereas the husband was saying that she was only entitled to some modest figure.

10. The Judge set out at page 2 of his Judgment this sentence:

                "In arriving at the lump sum the court has to consider two essential elements, the value of the family assets and a quantified figure to represent maintenance." In my judgment the Judge was wrong to have regard to what he says was a quantified figure to represent maintenance. The award of a lump sum is not equivalent to capitalised maintenance. It comes under the head of a financial provision to be made by one party to another having regard to all relevant circumstances see Trippas v. Trippas [1973] FAM. 135 at p. 140. He repeated that error later when he was examining the value of the smaller flat because he said that looking at one-third, "that figure would be absurdly low even when adding a lump sum as quantified maintenance."

11. It is clear, therefore, that the approach by the Judge to this lump sum application was wrong in principle. In my judgment the approach is first to discover what are the family assets, and secondly, to have regard, as the Ordinance requires, to the provisions of Section 7. I do not set out the well-known authorities conveniently summarised in Jackson's Matrimonial Finance and Taxation, 4th edition, such as Wachtel v. Wachtel [1973] Fam. 72 (C.A.) where the court indicated that it was a starting point with regard to the provision of a lump sum for the wife to have regard to one-third of the capital assets. As far as the figures given for the two flats, $1.25m and $280,000 odd, this gives a figure for the capital assets in the region of $1.5M. In my judgment, I can see no justification for the Judge below ordering that the husband should pay a figure of only $200,000. No reasons was given for this figure and indeed it is difficult to discover from the affidavits, which had been filed, what matters would have motivated the Judge, other than the fact that the husband was under an obligation to look after his elderly parents, and that there was perhaps a problem with regard to the obtaining of vacant possession of the Garfield Road flat because of a sitting tenant. There is nothing else however, which would disentitle the wife here from coming within the general ambit of a starting point of one-third.

12. The role of this court in so far as appeals from decisions of Judges at first instance exercising an original jurisdiction is notorious. We have been referrer by Miss Kwan to Davis v. Davis (1967) P 185 where it was stated that an appellate court should be very slow to interfere with the exercise of a Judge's discretion dealing with matters of financial provision, in the same way as it will be reluctant to interfere with awards of damages. Having regard, however, to the approach of the Judge looking as he did at a "quantified figure for maintenance", the error which he fell into in deducting the judgment debt, the wrong value being attributed to the Greenwood Garden flat, and no reasons being given to justify a figure of $200,000, we feel free to exercise our own discretion and to have regard to the figures which now are not in dispute. With regard to the value, therefore, of the Garfield Mansion property, we are of the view that the appropriate figure now, even recognizing the problem over the sitting tenant, is a figure of $1.5M.

13. As far as the Greenwood Garden flat is concerned, that figure is approxiamtely $280,000. It can be seen, therefore, that the capital assets approximate to $1.8M and on a straight one-third basis, the wife would be entitled to a figure in the region of $600,000. However, we have been persuaded by Miss Kwan, who has put forward every possible point on behalf of the husband, that we must have also regard to the ability of the husband to pay the amount ordered. We take into account the fact that on any view he will have to sell the Garfield Mansion flat, and his continuing obligation to his elderly parents who are suffering from various illnesses. We must also have regard to the costs which have been incurred in the conduct of this application and the costs of this appeal. The figures we have been given for costs of both the parties at first instance are $80,000 and on appeal the figures are $62,000 for the husband and $45,000 for the wife which makes a total figure of a $187,000. If one, therefore, deducts that from the figures I have previously mentioned and has regard to the standard principles on this matter, in my judgment the amount which should be awarded as a lump sum is a figure of $400,000. We also have had regard to the fact that the husband will have to pay the judgment, which we are told is now $108,000 also and so the wife will have in her hand some $500,000. This may be insufficient to enable her to buy outright a flat where she and her child can live, nevertheless it is a figure sufficient to enable her to pay a substantial proportion as a down payment towards that flat. We appreciate that the exercise of discretion in financial provisions is always difficult, nevertheless, having regard to Section 7 we are of the view that the appropriate figure here is one of $400,000. The form of the order and the time within which that should be paid, will be a matter of further submissions on which counsel will be heard.

Clough J.A.

14. Subject to the formal observations, with which I am sure my Lord Sears would agree, that Mr. Justice Kaplan will make, I agree.

Kaplan J.

15. I agree. Perhaps I could just correct one point the Husband's estimated costs of the appeal are $45,000 and the wife is $62,000. I think my Lord Mr. Justice Sears transposed these figures. Perhaps, I can just add two short comments. First, in a case such as this, it seems to me essential to have evidence of the likely cost to the wife of buying a property suitable for herself. It was most unforunate there was no evidence of that nature before the Judge and none before us. Secondly, in volatile property conditions, it is absolute essential to have up-to-date valuations, the property valuation here in July 1989, as my Lord has already said, would probably be most unreliable at the time the matter came before the Judge, let alone when it came before this court.