YHF v. YSM

FCMC 1153 /2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 1153 OF 2014

----------------------------

-------------------------------------

DECISION
(Application for DA under section 17A(4)
of Matrimonial Causes Ordinance, Cap 179)

-------------------------------------

Background

1. The petitioner (“husband”) relies on section 17A(4) of the Matrimonial Causes Ordinance, Cap 179 (“Ordinance”) and applies by way of a summons of 20 August 2014  for an order that this court shall proceed to issue the decree absolute without observing the requirements of sections 17A(2) and (3) of the Ordinance. His application is opposed by the respondent (“wife”).

2. The husband was born in 1960 and is now 54. He has been the breadwinner of the family. The wife was born in 1962 and is now 52. She is a housewife.  In fact, the husband, though his solicitors in the hearing of 29 September 2014, has conceded that she does not have any earning capacity.

3. The couple was married in 1987. Their only daughter, born in 1994, is now 20 and studying abroad. She stays with the wife when she is in Hong Kong.

4. In January 2014, the husband filed a petition for divorce on the ground of 2-year’s separation, namely since March 2003. His petition was not defended by the wife. Decree nisi was granted on 29 May 2014. Until then, the marriage lasted for 27 years.

5. The application for decree nisi to be made absolute was filed by the husband on 14 July 2014, but the wife filed a Form 26 pursuant to rule 56B of the Matrimonial Causes Rules asking this court to consider her financial position after the divorce (section 17A(1)(a) of the Ordinance).  Simply said, the effect of such an application is that the court shall not make absolute the decree unless it has made a full enquiry into the financial position of both parties and is satisfied that the financial provision meets the criteria in section 17A(3) of the Ordinance.

6. Since their daughter is now over 18, custody is not an issue of this case. The outstanding issues are the distribution of assets and the maintenance for the wife and the daughter (when she is still receiving full time education).

7. Form Es have been exchanged, though it cannot be disputed that the wife’s Form E was filed about 3 months late. She was first ordered to file her Form E by 19 May 2014, which was extended to 4 July 2014. Yet the same was not filed until 4 August 2014, the same day when she became legally represented. 

8. The parties are at the stage of discovery and obtaining valuation of the landed properties in question. The next call-over hearing will take place in early January 2015.

Applicable legal principles

9. Section 17A of the Ordinance deals with the application by a respondent to a divorce based on 1-year separation with consent or 2-year separation, for the court to consider his/her financial position after divorce:

“17A. Financial protection for respondent in certain cases

(1) This section shall apply where –

(a) the respondent to a petition for divorce in which the petitioner alleges any such fact as is mentioned in section 11A(2)(c)[1] or (d)[2] has applied to the court under this section for it to consider the financial position of the respondent after the divorce; and

(b) a decree nisi of divorce has been granted on the petition and the court holds that the only fact on which the petitioner is entitled to rely in support of his petition is that mentioned in section 11A(2)(c) or (d).

10. In such application, the court is required to consider section 17A (2) and (3):

“(2) The court hearing an application by the respondent under subsection (1) shall consider -

(a) all the circumstances, including the age, health, conduct, earning capacity, financial resources and financial obligations of each of the parties; and

(b) the financial position of the respondent as, having regard to the divorce, it is likely to be after the death of the petitioner should the petitioner die first.”

(3) Notwithstanding anything in this Ordinance but subject to subsection (4),  the court shall not make absolute the decree of divorce if an application has been made under subsection (1), unless it is satisfied that -

(a) the petitioner should not be required to make any financial provision for the respondent; or

(b) the financial provision made by the petitioner for the respondent is reasonable and fair or the best that can he made in the circumstances.” (my emphasis)

11. However, section 17A(3) of the Ordinance is said to be subject to section 17A(4) which provides that,

“(4) The court may, if it thinks fit, proceed without observing the requirements of subsections (2) and (3) if-

(a) it appears that there are circumstances making it desirable that the decree should be made absolute without delay; and

(b) the court has obtained a satisfactory undertaking from the petitioner that he will make such financial provision for the respondent as the court may approve.” (my emphasis)

12. It is indisputable that the wording of section 17A(4) of the Ordinance gives this court a wide discretion to allow the grant of the decree absolute, despite the fact that an application is made by the respondent pursuant to section 17A(1) of the Ordinance for this court to consider his/her financial position after the divorce and that section 17A (2) and (3) have not been observed.

13. However, in order for this court to exercise its discretion in the favour of the petitioner, the petitioner has to show to the court that both limbs of section 17A(4) (a) and (b) of the Ordinance are satisfied. The burden of proof lies squarely on the petitioner, but not the respondent.

The husband’s argument

14. In this hearing, Mr C K Wong, solicitor acting for the husband, accepts that the husband bears the burden of prove to show that both limbs of section 17A (4) (a) and (b) of the Ordinance are satisfied.

15. He seeks to rely on the husband’s 1^st affirmation dated 19 August 2014 and urges me to take into account the following circumstances:

(1) that both parties have separated since 2003 (which is not disputed by the wife);

(2) that the husband is now cohabiting with a lady whom he planned to marry on 5 September 2014. The marriage had to be cancelled subsequently because the wife has filed Form 26 to ask this court to consider her financial position after the divorce;

(3) that it is the wife’s own delay in filing her Form E which has hindered her financial relief claims. It is not fair to the husband to be denied of the chance to remarry for an indefinite period of time, when the marriage had been broken down irretrievably (See: KEWS v NCHC, FCMC 13087 of 2008, date of judgment 19/10/2010 at §69; LPK v SH, FCMC 14402 of 2011, date of judgment 27/6/2012 at §40(e) and (f)); and

(4) that the husband has been a responsible person all along, paying monthly maintenance of $14,000 to the wife and allowing her to stay in the matrimonial home.

16. In his submission, the above circumstances make it desirable to grant the decree absolute without delay and the 1^st limb of section 17A(4) of the Ordinance is satisfied.

17. In so far as the 2^nd limb of section 17A(4) is concerned, Mr Wong submits the husband has made an open offer in his Form E to pay monthly maintenance of $14,000 to the wife and to transfer his rights and interest of and in the matrimonial home to the wife. In addition, he is prepared to give an undertaking to this court that,

“[he] will make such financial provision for the [wife] as the Court may order and direct.”[3]

18. With the above open offer/undertaking and the fact that the wife has accumulated savings in the sum of $1.6 millions in her bank account, the 2^nd limb of section 17A(4)(b) is satisfied and no prejudice would be suffered by the wife if decree absolute is granted at this stage.

The wife’s argument

19. Mr D Li, solicitor for the wife, is very adamant in saying that since the husband has failed to give full and frank disclosure of his financial position, this court is unable to ascertain the actual and true size of the matrimonial pot, and thus unable to conclude at this stage if the husband has given a satisfactory undertaking. The husband’s application, Mr Li insists, has taken out pre-maturely.

20. On the issue of whether the undertaking is “satisfactory”, Mr Li refers me to the English authorities of Wilson v Wilson [1973] WLR 555 and Wickler v Wickler [1998] 2 FLR 326 and says that there is a clear distinction between mere proposal and “financial provision made”.  He argues that the husband has by his own conduct demonstrated that he would not be abided by his proposed undertaking, as the husband has unilaterally stopped the monthly maintenance of $14,000 to the wife from July 2014 because she does not consent to the granting of the decree absolute forthwith.

21. He further submits that the husband is now working and living with another woman in China. There is a possibility that he would sell the landed property in Hong Kong and refrain from participating further in the ancillary relief matters, causing financial prejudice to the wife (See: JAH nee S v VH , CACV 279 of 2012, date of judgment 18/12/2013). He also reminds me that the husband cherry-picks and proposes the “cheaper” matrimonial home, which is a home ownership flat and subject to payment of premium, to the wife, while he himself is to keep the private property in Tung Chung. All in all, the husband has failed to provide a satisfactory undertaking to this court.

Whether there are desirable circumstances?

22. In order to succeed in this application, the husband has to, first of all, pass the hurdle of the 1^st limb of section 17A (4) of the Ordinance, namely, to establish that there are circumstances making it desirable that the decree absolute should be made without delay.

23. Upon considering all matters before me, I am not persuaded that the husband has passed this 1^st hurdle.

24. Firstly, due consideration should be given to the purpose of section 17A of the Ordinance. It is indisputable, because its heading plainly so suggests, that the whole purpose of section 17A is to provide financial protection to the respondent. 

25. In Hardy v Hardy (1981) 2 FLR 321, Ormrod LJ described the interrelationship between the applications for ancillary relief and section 10 of the Matrimonial Causes Act 1973 (equivalent of section 17A of the Ordinance) at §§327-328 as follows:

“That leads me to say something about s.10 of the 1973 Act, because it looks as though s.10 is falling into disuse. Section 10(3), which I have already read, is intended to provide a protection to a wife particularly (also to husbands in certain circumstances) who is divorced either on 2 years separation or on 5 Years separation, and it was put in by Parliament to prevent just this kind of situation arising, namely a divorce against her will at a time highly convenient to the husband financially, and potentially highly prejudicial to her in the future. The section requires the court not to make a decree absolute unless

‘… the financial provision made by the petitioner to the respondent is reasonable and fair, or the best that can be made in the circumstances.’” (my emphasis)

26. It is thus my view that in the circumstances of this case, the mere fact that the parties have been separated since 2003 cannot, by itself, be a determinative factor under the 1^st limb.

27. Secondly, Mr Wong accuses the wife of causing delay in the ancillary relief proceedings. It is true that she was late in filing her Form E. But in my view, leeway should be allowed to a housewife who was then unrepresented.  A delay of about 3 months is not inexcusable in such circumstances.

28. In the last call over hearing of 29 September 2014, I have given direction for selection of a single joint expert to prepare a valuation report of the landed properties in question. Subject to further discovery to be made by the wife, which has to be endorsed by this court, and the satisfactory replies of the husband to such discovery, the ancillary relief matters are likely to reach the stage of financial dispute resolution (FDR) in 2015. In my opinion, it is too far-fetched for the husband to say that he would be debarred for an indefinite period of time to remarry.

29. Thirdly, I have great reservation as to the relevancy of the cases quoted by Mr Wong in his written submission to the facts of this case.

30. In KEWS v NCHC (supra), the case has already reached the stage of final ancillary relief trial before CK Chan DJ, but the wife made an application for adjournment under section 17A of the Ordinance within the final trial. Such an application, in the view of the learnt judge, would cause delay in the granting of decree absolute for an indefinite period of time and was thus rejected. In so rejecting, the learnt judge set out his consideration at the beginning part of §69 of his judgment. There is no need for me to repeat those factors considered by the learnt judge in my decision. Suffice it is for me to say at this stage, with regret, is that Mr Wong has failed to cite to this court those parts of the learnt judge’s consideration. Had Mr Wong done so, it would be eminent that the same factors noted by the learnt judge cannot be found in the case now before me. I am of the view that KEWS v NCHC (supra) comes to no assistance to the husband.

31. In the other case LPK v SH (supra) cited by Mr Wong, the wife applied to expedite the granting of decree absolute but such application was  opposed by the husband. There was a corresponding divorce action between the parties in the Taipei district court. Deputy District Judge G Own allowed the wife’s application and was of the view that the husband’s application of section 17A of the Ordinance was “suspicious” (at §40(d) of the judgment) and was “a further attempt to delay the Wife’s application for expediting the process of the Decree Absolute” (at §40(c) of the judgment), because the husband himself had seen it fit to ‘expedite’ or ‘keep moving along’ with his Taiwan divorce action whilst seeing no urgency for the wife to obtain the decree absolute after 7 months and 10 days had elapsed from the date of the decree nisi.  The learnt deputy judge accepted the wife’s contention that the husband has been engaging all available tactics to delay her divorce case in Hong Kong whilst he was trying to pursue his Taipei divorce action at full speed if he could.  It is abundantly clear that the facts of LPK v SH (supra) does not resemble at all to this case now before me at all. I fail to see how LPK v SH (supra) can help to advance the husband’s case.

32. In any event, the above 2 cases, being cases of the family court, are not binding on me.

33. Fourthly, it is inaccurate for the husband to depose in his 1^st affirmation (dated 19 August 2014) that he has been paying monthly maintenance to the wife in the sum of $14,000, for such payment has been stopped by him arbitrarily since July 2014. He attempted tHee He attempted to explain this away in his 2^nd affirmation (dated 14 November 2014) by putting the blame on the wife that she has failed to disclose her financial position by filing Form E and thus leading him to believe that she must have sufficient assets to pay for her own living expenses. However, this alleged explanation does not sit well with his own SMS message sent over to the wife on 12 June 2014, in which he unequivocally wrote that he would not pay any maintenance to the wife until terms are in order and signed. The SMS message is totally silent on the alleged failing to file Form E and/or his alleged belief that the wife has assets to cater for her living expenses. The said SMS message reads like this:

“… 法例上你最多取得一半。我給出的條件已經非常合理！… 至於另一提議， 每月維持萬四、[婚姻居所]及供[女兒]讀完大學。從現在直到條件簽妥之前，我不再支付每月萬四元！我不急，你想拖長搞，隨便你！”

34. Subsequent to this SMS message, the husband, through his solicitors, wrote a letter of 5 September 2014 to the wife’s and proposed to pay monthly maintenance of $14,000 (backdating to July 2014) on the condition that she should forthwith endorse a consent summons to withdraw her Form 26 so that he could proceed to apply for decree absolute. This, of course, was rejected by her.

35. In my view, the composite effect of the SMS message and the subsequent letter of the husband’s solicitors are to exert pressure on the wife to withdraw her section 17A application, a right which is avail to her by the clearest wording of the law.

36. To conclude this part of the analysis, I am bound to say that I do not accept the husband’s contention that there are circumstances desirable for granting the decree absolute without delay.

Whether the undertaking is satisfactory?

37. The undertaking provided by the husband is in the precise terms of section 17A (4) (b) of the Ordinance. 

38. In this hearing, I asked Mr Wong if there is any authority on the proper test for “satisfactory undertaking”. Mr Wong told me that he was not aware of any direct authority on this point. Both Mr Wong and Mr Li agree that JAH nee S v VH (supra) is not the direct authority on section 17A(4) of the Ordinance.

39. However, Mr Wong went on to agree in the hearing that analogy can be drawn with section 17A(3) of the Ordinance, in that “satisfactory” undertaking should be an undertaking to provide financial provision of no more than “reasonable and fair”. Mr Li has no objection to this proposition.

40. I commend that Mr Wong has made a fair and correct concession. In my view, the hurdle that the husband has to overcome under section 17A(4) of the Ordinance should not be a low one, because the whole purpose of the section 17A is to protect the respondent and thus the undertaking given under section 17A(4) (b) should ensure that the respondent will receives no less and no more than financial provision which satisfies the criteria of section 17A(3), ie reasonable and fair or the best that can be made in the circumstances.

41. In Grigson v Grigson [1974] 1 WLR 228 (a case not cited by either party), it was held by the English Court of Appeal that an undertaking in the precise terms of equivalent to section 17A (4) of the Ordinance is not sufficient.

42. In Lau Chu alias Lau Kwok Chu v May Lau Tang Su Ping [1989] 2 HKLR 470 (a case not cited by either party), the parties had reached a settlement on financial matters embodied in a consent order in the suit of judicial separation filed by the wife. Later, the husband filed a petition for divorce on the basis that the parties had lived apart for 5 years, which was undefended by the wife. After a decree nisi had been pronounced, the wife filed an application under section 17A(1) of the Ordinance. The husband, whose assets were valued at $175 million, then tookout a summons under section 17A(4) seeking leave to make absolute the decree nisi even though those criteria had not been satisfied.

43. The judge at first instance took into account previous conduct of the husband of, for example, satisfying all the terms on financial matters under the said consent order of judicial separation proceedings; helping the wife out of her financial difficulty by paying her various sums between 1984 and 1987 and meeting substantial expenses of their children, even though he was not obliged by the said consent order to do so. The judge took note of the husband’s offer to make $5 million available to be held by his solicitors in interest-bearing deposit pending the court’s final order. The judge further held that, upon considering the above factors and upon the following undertaking from the husband, his application for grating of the decree absolute was allowed:

(1) to comply with any order that the court might make for ancillary relief to the wife;

(2) save in the normal course of business, not to transfer out of the jurisdiction any of the assets under his control, or dispose permanently of any assets owned by any of the private companies in which he had an interest, including properties and quotas owned by those companies.

44. On appeal by the wife, the Court of Appeal (Hunter & MacDougall JJA with Fuad VP dissenting) dismissed the appeal. Hunter JA in his judgment at p489 referred to Grigson v Grigson (supra) and had this to say:

“In my view Grigson is clear authority for two propositions. The first is that an undertaking in the precise terms of section 17A(4), and no more, is insufficient. The second is that to be sufficient the undertaking has to have certainty, specific content and something upon which it will bite, ie sufficient to give real protection to the wife...”

45. The learnt justice gave his comment on subsection (4) in this way,

“I can detect nothing whatever either in the section or authority to suggest, that sub-section (4) is intended to enable the wife to do better than under sub-sections (2) & (3); to exploit the complexity of the enquiry or a husband's possible concern for the well-being of his new wife. In my judgment the purpose of the sub-section is to empower the court to ensure that the wife will in the future receive no more and no less than financial provision which satisfies the criteria in sub - section (3) and not some chance bonus in addition.” (my emphasis)

46. It needs no elaboration to see that the husband’s undertaking, which is simply in the precise terms of the Ordinance, comes no way close to the criteria as approved by the learnt justice.

47. Pausing here, I take note that in order to ascertain the true financial position of the husband, the wife has recently taken out an inter partes summons of 13 November 2014 for discovery of the husband’s financial position, such as, his alleged beneficial interest in a company limited; alleged withdrawal of over $1,205,000 from his Hang Seng Bank account between April 2013 and January 2014; his alleged reminbi bank account with Industrial and Commercial Bank (“Wife’s Discovery Summons”). The Wife’s Discovery Summons has been adjourned to the next hearing of January 2015 for directions. However, the husband has already indicated in this hearing that the Wife’s Discovery Summons will be contested.

48. For the purpose of this hearing, I do not need to express any confirmed view on the Wife’s Discovery Summons and/or whether the husband has really failed to give full and frank disclosure of his financial position. But it is very telling that even on Mr Wong’s own concession, the husband has failed to attach the bank records/statements of the period required by Form E in relation to his reminbi bank account with Industrial and Commercial Bank. In that regard, I must say that I find it surprising that the husband intends to contest the Wife’s Discovery Summons in its entirety.

49. Be that as it may, it is quite sufficient for me to analyse the Form Es filed by both parties, which are said to be given under oath or affirmation, at this present stage.

50. The Form Es of the respective parties disclose the following preliminary picture of their assets/liabilities. For any difference in the value of the landed properties, I shall use the husband’s proposed value (in order to put his case to its highest):

	Husband	Wife
Matrimonial home	1,750,000.00	1,750,000.00
Tung Chung property	3,788,082.37	NIL
Bank accounts	1,154,180.02	1,595,964.83
Insurance	154,494.00	NIL
Valuable personal items	9,500.00	68,000.00
MPF	1,860,850.66	63,505.36
Foreign currencies in hand	NIL	14,926.85
	8,717,107.05	3,492,397.04
(liabilities)	(2.71)	(35,000.00)
Net assets	8,717,109.76[4]	3,457,397.04

51. Plainly from Form Es, the total family net assets are $12,174,506.80.

52. It is undisputed or indisputable that the marriage is a long one and the wife, being a housewife, does not have earning capacity and is financially dependent on the husband. There is no allegation in the court documents filed so far by the husband that there is any reason for departure from the equality principle propounded in LKW v DD (2013) 13 HKCFAR 537. Hence, at this stage and on the face of it, there should at least be equal division of the family assets.

53. The husband’s open offer, however, gives only 42.7% of the alleged total family assets to the wife, computed as follows:

54. In the circumstances, his open proposal (not by way of an undertaking) is, prima facie, not in accordance with established case law.

55.  I must therefore come to the conclusion that whether by way of an undertaking or an open proposal, the husband has failed to undertake/offer what is reasonable and fair, and thus satisfactory, in accordance with the 2^nd limb of section 17A(4) of the Ordinance.  

Conclusion

56. Due to the matters set out above, I find that the husband has not passed the hurdle of either limb of section 17A(4) of the Ordinance. His application for decree absolute at this stage must be dismissed with costs to the wife.

57. The legal representatives of the respective parties have agreed in this hearing that summary assessment of costs should be made.

58. In the premises, I will make the following order:

(1) The petitioner’s summons of 20 August 2014 is dismissed;

(2) A costs order nisi that the petitioner do bear the respondent’s costs of and incidental to this application. If no application is made to vary the costs order nisi within 14 days from the date of this written decision, the said costs order nisi will be made absolute.

(3) The following directions will then apply:-

(a) the respondent do within 7 days from the date of the costs order absolute lodge and serve her statement of costs;

(b) the petitioner do within 7 days thereafter lodge and serve his summary of objections;

(c) The parties do attempt to agree on the amount of costs within 14 days thereafter, failing which the respondent do report to this court in writing for this court to make summary assessment of costs by way of paper disposal.

 

 

     

[1] A divorce based on 1-year separation with consent of the respondent

[2] A divorce based on 2-year separation

[3] §7 of the husband’s 1^st affirmation [9]

[4] There is a mis-calculation in the total net value of the husband’s assets (see part 2 of his Form E on p13). The correct net value should be $8,717,104.34