D v. W AND OTHERS

HCMP 2480/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 2480 OF 2011

(ON AN INTENDED APPEAL FROM FCMC NO. 5857 OF 2006)

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BETWEEN

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J U D G M E N T

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Hon Tang VP:

1.  I have had the benefit of reading Fok JA’s judgment in draft. I agree with it and have nothing to add.

Hon Fok JA:

Introduction

2.  This is an application by summons dated 1 December 2011 for leave to appeal against a judgment of Deputy District Judge T. Chan sitting in the Family Court dated 15 August 2011.

3.  The underlying proceedings were divorce proceedings in which the claims of the husband and wife against each other for ancillary relief had been dismissed by a consent order (“the Consent Order”) made on the same date as the grant of the decree nisi.  The husband was living in a house at Horizon Drive (“the Property”) which was the second matrimonial home in which the couple had lived.  It had been acquired in 1995 by Golden Lake Development Limited (“Golden Lake”), a company owned by the husband and wife, but was transferred in 2002 to Fortune Wealth Asia Limited (“Fortune Wealth”), the shares of which were held by the wife and her mother.  The wife’s case was that she held the shares of Fortune Wealth in trust for her mother.

4.  After the making of the decree nisi, Anglo-American Traders Limited, a company owned by the husband’s parents, brought proceedings relating to funds allegedly provided by it for the husband and wife’s purchase of their first matrimonial home and the subsequent purchase of the Property.  The husband then also commenced proceedings in his own name and as shareholder of Golden Lake claiming declaratory relief and damages against the wife, her mother, Golden Lake and Fortune Wealth.  In that action, Fortune Wealth counterclaimed damages for trespass by the husband and for vacant possession of the Property.

5.  The issue the Deputy Judge had to determine in the proceedings below was therefore whether the Property, which was held under the name of Fortune Wealth, was an asset of the husband or the wife at the time of the Consent Order.[1]

6.  In her Judgment, the Deputy Judge found that the monies advanced by the wife’s parents to enable Golden Lake to purchase the Property had been loans to the husband and wife and not gifts.  She found that it was never the intention of the wife’s parents to give the Property to the couple.  It followed that the couple were indebted to the wife’s parents to the extent of the loans.  She concluded that, at the time of the Consent Order, the Property was beneficially owned by Fortune Wealth.

7.  The Judge also found that the transfer of the Property to Fortune Wealth was a genuine arrangement to assign both the legal and beneficial interest in the Property to Fortune Wealth.  As to the shares in Fortune Wealth in the name of the wife, the Deputy Judge found that these were held on trust by the wife for her mother.

The application for leave

8.  The husband applied to the Deputy Judge for leave to appeal but she dismissed his application on 17 November 2011.  The husband has renewed his application for leave to appeal to this court under s. 63A of the District Court Ordinance, Cap. 336 (the procedure for which is governed by RDC O.58 r.2 and RHC O.59 r.2A).

9.  This application is determined on the basis of written submissions only under RHC O.59 r.2A(5).  The husband’s skeleton submissions state that he is in the court’s hands as to whether the application is so determined.

10.  The question for this court is whether the court is satisfied that (a) the appeal has a reasonable or realistic (as opposed to a fanciful) prospect of success, or (b) there is some other reason in the interests of justice why leave should be granted.

11.  The skeleton submissions of counsel for the husband have addressed the proposed grounds of appeal in the draft notice of appeal under five heads.

12.  Although the grounds of appeal were sought to be advanced as raising points of law, I am satisfied that the reality is that the proposed appeal is against findings of fact by the Deputy Judge.

13.  Where a finding of primary fact by the Deputy Judge is based on her assessment of the credibility of the witnesses or the preference of the evidence of one witness for that of another, this court will not disturb such a finding unless satisfied that it is “plainly wrong in the sense that either (1) that there is no evidence to support it; or (2) that it is contrary to documentary or other incontrovertible evidence that the Judge overlooked”: Tin Kwong International Enterprise Co Ltd & Ors v San Tung & Anor [2006] 2 HKLRD 185 per Woo VP at §14.

14.  It was contended that, by the first head of grounds, the proposed appeal raised the question of the ambit and applicability of the presumption of advancement as applying between parents and a married couple.

15.  I do not consider that these grounds give rise to an appeal with a reasonable prospect of success.  The Deputy Judge referred to authority cited by the husband’s counsel below in support of the proposition that a court could more readily draw an inference that a property was advanced to a newly-wed couple as a gift.  However, having examined the course of conduct of the parties through the relevant period, the Deputy Judge declined to draw that inference because she preferred the wife and the wife’s mother’s evidence to that of the husband and made a finding of fact that the monies advanced to the couple by the wife’s parents were loans rather than gifts.  Furthermore, the Deputy Judge found as a fact that the couple was not a newly-wed couple at the time of the purchase of the Property, since they had been married for 5 years by then.  In the circumstances, there being evidence to establish the intention of the wife’s parents as transferors of the monies, there was no scope for the operation of the presumption of advancement.

16.  It was contended that, by the second head of grounds, the proposed appeal raised the question of the ambit, applicability and evidence to be considered in applying the presumption of resulting trust, and that, by the third head of grounds, the proposed appeal raised the question of the nature and applicability of the common intention constructive trust.

17.  In my opinion, these questions simply do not arise given the findings of fact by the Deputy Judge.

18.  Further to and consequent upon her holding that the monies advanced by the wife’s parents were loans, the Deputy Judge rejected the husband’s explanation for the transfer of the Property to Fortune Wealth in 2002.  Instead, she preferred the wife’s and wife’s mother’s evidence that the transfer was effected in full and final settlement of the loans owed by the couple to the wife’s parents.  Accordingly, the transfer not being gratuitous, no presumption of resulting trust arose in respect of it and the argument that the Deputy Judge misdirected herself on the principles regarding that presumption, even if made good, is academic.

19.  Likewise, for the same reason, there could not as a matter of fact have been a common intention amongst the wife’s parents, the husband and the wife that the couple would continue to retain any beneficial interest in the Property after its transfer to Fortune Wealth in 2002.  So far as the husband’s contention that the Deputy Judge erred in finding there was no detriment to him from the transfer of the Property in 2002, this is a finding of fact which had not been shown to be plainly wrong.  There is therefore no reasonable basis for arguing that the Deputy Judge misapplied the legal principles concerning the common intention constructive trust or should have held such a trust to have been established over the Property.

20.  By the fourth head of grounds, it was contended on behalf of the husband that the Deputy Judge erred in making various findings of fact.

21.  I am satisfied that none of these grounds give rise to an appeal with a reasonable prospect of success.  It is clear from her Judgment that the Deputy Judge gave due consideration to the husband’s evidence but, at the end of the day, she preferred that of the wife and the wife’s mother over his. I do not consider that it is reasonably arguable that the Deputy Judge’s findings of fact were plainly wrong.

22.  Finally, it was contended, by the fifth head of grounds, that the Deputy Judge failed to give proper consideration to the wife’s and the wife’s mother’s conduct subsequent to the transfer of the Property and at the time of the divorce which demonstrated, it was said, their acknowledgment that the Property belonged beneficially to the couple.

23.  It is clear from the Judgment that the Deputy Judge did consider the conduct of the wife and the wife’s mother subsequent to the transfer of the Property in 2002.  She considered the evidence of the husband which it is suggested had not been sufficiently considered but ultimately rejected the husband’s evidence, preferring instead that of the wife and the wife’s mother that the 49% of the shares of Fortune Wealth in the wife’s name were held on trust by her for her mother.  Since the Deputy Judge found the wife was not the beneficial owner of the shares in Fortune Wealth at the date of the Consent Order, there is no scope for the application of the presumption of advancement.  In the circumstances, I do not consider that these grounds give rise to an appeal with a reasonable prospect of success.

Conclusion

24.  In conclusion, I am not satisfied the husband has demonstrated that the proposed appeal, which as I have indicated above seeks to challenge the Deputy Judge’s findings of fact, has a reasonable prospect of success or that there is any reason in the interests of justice why leave to appeal should be granted.

25.  For these reasons, I would dismiss the husband’s summons dated 1 December 2011 seeking leave to appeal and make an order nisi that the husband pay the costs of the application to the respondents to the application (i.e. the petitioner and 2^nd to 5^th respondents), with a certificate for two counsel.

26.  I consider that the renewed application for leave is totally without merit and therefore make an order under RHC O.59 r.2A(8) that no party may request the determination to be reconsidered at an oral hearing inter partes.

27.  It would be appropriate to assess the costs of the respondents to the application on a gross sum basis and I direct the respondents’ solicitors to submit a bill of costs within seven days hereof.  Leave is given to the husband to submit his response within seven days thereafter.