AK v. MYNT

FCMC16285/2017

[2019]HKFC62

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 16285 OF 2017

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J U D G M E N T
(Application for leave to appeal)

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1.  The application before the court is for leave to appeal from the order dated 11 January 2019 on the grounds set out in the Draft Grounds of Appeal of the respondent dated 24 January 2019.

2.  This was a very long marriage.  On 4 April 1979, the petitioner wife (W) (now aged 62) was married to the respondent husband (H) (now aged 69) in Hong Kong.  The parties have cohabited at an apartment unit in the mid-levels (“the Grenville House”).  There were two children of the family now living who are both over the age of 18 and financially independent.  On 13 December 2017, W issued the petition for divorce on unreasonable behaviour ground.  She applied for ancillary relief on the same day.    

3.  H has disclosed in his Form E the existence of 9 trusts in which he has varying interests.  However, W became aware of the existence of at least 30 trusts into which substantial assets were settled.  W believed that the said trusts were either directly or indirectly under the control of H for the benefit of himself and his immediate family members.  W was of the belief that assets were settled into the said trusts with the intention of defeating her financial claims in the divorce proceedings.  On 25 May 2018, W took out a summons pursuant to s.17 of the Matrimonial Proceedings and Property Ordinance, Cap. 192 (“MPPO”) for setting aside dispositions totally amounting to USD68,745,365.8 made by two of the said trusts and together with setting aside 20 trusts set out in the schedule 1 annexed thereto.  Since the said s. 17 application, the parties have become entangled in protracted disputes about discoveries.  The next call-over hearing of W’s summons dated 25 May 2018 was fixed to take place on 11 March 2019 for further directions. 

4.  On 12 December 2018, W was informed by H’s solicitors (“JML”) that he unilaterally took out a mortgage in November 2018 (the facility letter being dated 19 November 2018) (“the Mortgage”), secured against the Grenville House for “all monies” in the sum of HK$61,999,999 (“the Loan Monies”).  On 18 December 2018, W’s solicitors (“OLN”) requested H to give an undertaking to put the Loan Monies into an escrow account which could only be accessed with W’s consent.  By way of letter dated 19 December 2018, JML refused.  On 21 December 2018, upon W’s ex parte application, I granted an interim injunction order restraining the disposition of the Loan Monies, which said order would remain in force until 11 January 2019, unless previously varied or discharged. 

5.  On 21 December 2018, W took out the summons for the continuation of the interim injunction order until further order.  On the same day, OLN wrote to JML notifying them of the interim injunction order, and requested copies of documents relating to the Loan Monies and the Mortgage and relevant correspondence exchanged between the mortgagee bank and H.  JML did not comply with W’s said request.  On 4 January 2019, H took out the application for the discharge of the interim injunction order dated 21 December 2018.  On 10 January 2019, W took out the application for the specific discovery of the above-mentioned documents.  W believed that the specific discovery is required to ascertain the impact of the Mortgage on matrimonial assets.  It was W’s position that the interim injunction order should continue until further order, and certainly until H discloses all documents relevant to the Mortgage. W’s inter-parte summons dated 21 December 2018, H’s summons dated 4 January 2019 and W’s summons dated 10 January 2019 were all fixed to be heard at the same time on 11 January 2019, with 15 minutes reserved.

6.  It was simply unrealistic to expect the court to substantively dispose of the parties’ summonses in 15 minutes.  At the end, on 11 January 2019, it was ordered that the hearing of W’s summons dated 10 January 2019 be fixed at 2:30 p.m. on 11 March 2019, with 1 hour reserved, and it is further ordered that : -

(i)  W’s summons dated 21 December 2018 and H’s summons dated 4 January 2019 be heard together at 10:30 a.m. on 21 June 2019, with 1 day reserved;

(ii)  Interim injunction order that will remain in force until 21 June 2019, unless previously varied or discharged; 

(iii)  This order does not prohibit H from spending HK$320,000 per month towards monthly mortgage repayment and HK$200,000 per month on legal advice and representation;

(iv)  H’s affirmation in reply within 28 days;

(v)  W’s further affirmation in reply 28 days thereafter;

(vi)  No further affirmation without leave.

7.  On 24 January 2019, H took out the application for leave to appeal from the interim injunction order dated 11 January 2019 on the grounds set out in the attached Draft Grounds of Appeal.  On 18 February 2019, W lodged her skeleton submissions in opposition for leave to appeal.

8.  H has set out 6 grounds of appeal.

Ground (1): The interim injunction ought to have been set aside on the ground of W’s failure to give notice to H

9.  I accept W’s submissions that the fact that the injunction order was obtained without notice does not give rise to an argument that it should be set aside.  It was necessary for W to apply the injunction order without notice, otherwise the purpose of the injunction order would have been frustrated.  The Loan Monies, having deposited into H’s sole account, could have easily and instantaneously been transferred out by H and completely removed from W’s reach.  In any event, the interim injunction order dated 21 December 2018 was already expired on 11 January 2019, and the interim injunction order dated 11 January 2019 was granted after an inter-parte hearing on the same day.  Ground (1) does not have a reasonable prospect of success.

Ground (2): W’s failure to demonstrate that H was about to make any disposition of the loan monies with an intention of defeating her claim for ancillary relief

Ground (3): taking into account the fact that H might have other resources as evidence of dissipation

10.  I deal with Grounds (2) and (3) at the same time.  I take into consideration: -

(1)  In §4 and §5 of H’s 3^rd Affirmation, he stated that the Grenville House was not the matrimonial home of the parties, and that W had no beneficial interest in the Grenville House.  W disclosed in her Form E filed on 5 February 2018 that her net worth was HK$154,228,368, of which HK$80,000,000 being her 50% interest in the Grenville House.  H disclosed in his Form E filed on 5 February 2018 that his net worth was HK$190,231,360, of which $142,460,000 being his 100% interest in the Grenville House, plus trust interests to be ascertained.  In both parties’ Form E, the Grenville House was categorised as the matrimonial home and was the biggest asset in the marital pot.  Apparently, W’s beneficial interest or claim to the Grenville House is a live issue to be determined.  Accordingly, I do not accept H’s submissions that W has failed to make out her case for any beneficial interests in the Grenville House.  

(2)  It is beyond dispute that there was unilateral alteration of the status quo in that H took out the Mortgage without W’s knowledge or consent. 

(3)  H secretively converted equity in a shared asset into fungible monies which he deposited into his sole account.

(4)  W was kept in the dark for about a month.

(5)  H refused to give the undertaking requested by W.  

(6)  Despite that H claimed that it was necessary for him to mortgage the Grenville House to deal with his liquidity difficulties, the evidence shows that H had other resources to meet his financial needs.

(7)  The loan amount loan was far in excess of any amount H claimed was needed.

11.  After having carefully considered, I take the view that: -

(1)  H’s surreptitious behaviour suggests dishonest intent.

(2)  Looking at the evidence before the court in the round, W has a good arguable case on her claim that the Mortgage was taken out with an intention of defeating W’s claim for financial provision.

(3)  As pointed out by W, H plainly has other assets which can be used to meet his needs.  Clearly the balance of convenience is in favour of re-granting an interim injunction order.

(4)  In view of that the Loan Monies was deposited into H’s sole account and as such could have easily and instantaneously been transferred out by H and completely removed from W’s reach, there is a real risk of dissipation.

12.  Further, W obtained the interim injunction order dated 11 January 2019 under s.17 of the MPPO.  As such, there is a statutory presumption that the disposition of property is done with the intention of defeating the applicant’s claim for financial provision. Throughout H’s 3^rd Affirmation, he attempted to justify the Mortgage as being necessary for his liquidity difficulties.  W took issue on his alleged liquidity difficulties.  Regardless of W’s arguments, H’s justification, even if accepted, do not support the procuring of a loan far in excess of his needs.  Having carefully considered all evidence, I take the view that H has failed to rebut or disprove the statutory presumption.

13.  Grounds (2) and (3) do not have reasonable prospect of success.

Ground (4) Material Non-disclosure

14.  As said in the above, the interim injunction order dated 11 January 2019 was granted at an inter-parte hearing.  Anyway, I was apprised of the background and relevant facts of the case in granting the two interim injunction orders respectively dated 21 December 2018 and 11 January 2019.  Ground (4) does not have reasonable prospect of success.

Ground (5) Undertaking to damages

15.  There is no requirement that an undertaking as to damages be given in an application made by a spouse in matrimonial proceedings unless specifically required by the court: Will v Will [1993] 2 HKLR 398, 405 (Fuad VP) (CA).  I do not see that an undertaking is required in the circumstance of the case.  Ground (5) does not have reasonable prospect of success.

Ground (6) Oral leave application

16.  I see no reason why there should be a departure from the rule that an application for leave to appeal shall be by way of summons and the practice that the Draft Grounds of Appeal shall be lodged with the court at the time of the filing of the summons.  Ground (6) is wholly unmeritorious.

17.  The substantive hearing of W’s summons dated 21 December 2018 and H’s summons dated 4 January 2019 is fixed to take place on 21 June 2019, when the court will decide whether the injunction order dated 11 January 2019 should be continued.  The court could, after all the evidence is in, if it considers it right to do so, vary or discharge the injunction order.  For the present purpose, I take the view that H’s grounds of appeal repeat the same arguments put forward at the hearing on 11 January 2019.  I have already considered and dealt with them.  There is no reasonable prospect of success in any of the Draft Grounds of Appeal.  Nor is there any other reason in the interests of justice that the appeal should be heard.  Section 63A(2) of the District Court Ordinance provides that leave to appeal shall not be granted unless the intended appeal has a reasonable prospect of success or that there is some other reason in the interests of justice that the appeal should be heard. It is ordered that H’s summons dated 24 January 2019 for leave to appeal be dismissed.

18.  It is clear that W is the successful party of this application.  I see no reason why costs should not follow the event.  It is ordered nisi that H shall pay W’s costs of the summons dated 24 January 2019, and there be certificate for two counsel’s attendance.  The costs order nisi becomes absolute 14 days after the order is made unless a party has applied to the court for varying the order.