XCHRX THE SECRETARY FOR JUSTICE v. CHAU MEI HA t/a RAMCO INTERNATIONAL CO.

HCA 787/92

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 787 OF 1992

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J U D G M E N T

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1. This is an application by the plaintiff for a charging order absolute against the property at Flat 10, 24th Floor, Block H, Kwai Lun House, Siu Lun Court, Tuen Mun, New Territories. (The said property)

2. The said property is registered in the joint names of the defendant Chau Mei Ha and her husband Lai Yee Lung.(Mr. Lai)

3. By a default judgment dated 3rd of June 1992, the defendant was held liable to the plaintiff in the sum of $4,952,552.00 with interest and fixed costs of $1,105.00. The judgment remained unsatisfied despite various attempts by the plaintiff to enforce the jugdment.

4. A charging order nisi was registered against the said property on 10th July 1995. The plaintiff seek to make absolute such order nisi and Mr. Lai seek to discharge it.

5. It was Mr. Lai's contention that not only did he contribute the entire purchase price for the said property and the associate expenses, there was in fact an agreement between himself and the defendant that she was not to have any interest in the said property other than the right to reside therein during the marriage.

6. The plaintiff accepted that the purchase price of the said property and the associated expenses were entirely paid by Mr.Lai. However, the plaintiff argued that the presumption of advancement operated against Mr. Lai to render the said property chargeable by reason of the judgment against the defendant not being satisfied.

7. The only issue for the court's determination, as agreed to by counsel was whether the presumption of advancement had been rebutted.

8. When the defendant married Mr. Lai in 1984, Mr. Lai was a construction supervisor. Between 1984 and 1988, the defendant was a trade representative. In 1988, she started her own business, Ramco International Company, which business unfortunately failed miserably in 1991. When the defendant finally closed down the business in April, 1991, apart from the liability towards the plaintiff, the defendant was also indebted to another creditor for a sum of $50,000.00.

9. The said property was purchased in the joint names of the defendant and Mr. Lai in November 1993 from the Hong Kong Housing Authority under the Home Ownership Scheme of the Government for the price of about $800,000.00. The said property was mortgaged to Hang Seng Finance Limited and the monthly repayments for 20 years was $5,562.00 each.

10. Both the defendant and Mr.Lai were adamant that the defendant was not to have any interest in the said property. They said they had such an express agreement when the said property was purchased in 1993.

11. Mr. Lai said he was worry that the failed business of the defendant might affect the property and the defendant also said she wanted to be sure that the failure of her business would not result in their family losing a place to live. By that time, they had a young child who was born in 1990.

12. The allegation that there had been an agreement to the effect that the defendant was not to have any interest in the said property was easy to made. Such an agreement between a husband and wife is inherently improbable as observed by Godfrey J. in Cheung Lily v. CED [1987] 3 HKC 307 at page 312:-

"There are few cases, indeed, in which husband and wife can be found to have come to any express agreement about their respective beneficial interests in the matrimonial home. Accordingly, the court, finding it impossible to ascertain the actual intention, has to search for the presumed intention of the parties, the matter thus resolving itself into a battle of competing presumptions. These are the presumption of resulting trust and the presumption of advancement."

13. In most cases, the husband would be asked, "If you did not want the wife to have an interest in the property, why allow her to be registered as one of the owners ?" and the question would be extremely difficult to answer.

14. In the present case, there was a valid reason why the said property had to be purchased in the joint names of the defendant and Mr. Lai. The said property was a property under the Home Ownership Scheme of the Government and there were stringent conditions attaching to such purchase. The property must be purchased in the names of not less than two family members. There was limitation as to the ages, income and length of residence in Hong Kong of the purchasers. The purchasers must not have certain other housing benefits from the Government, etc.

15. It was in my view reasonable for the said property to be purchased in the joint names of the defendant and Mr. Lai even it was intended that the defendant was not to have any interest in it.

16. I must not ignore that the defendant of course was financially independent of Mr. Lai before the failure of her business in 1991. She ran a very substantial business of her own which in fact resulted in a massive debt.

17. More importantly, at the time of the purchase of the said property, both the defendant and Mr. Lai must be fully aware that the defendant would ultimately be faced with a massive debt even if they were not aware of the present proceedings against the defendant at that time.

18. They would have to be very forgetful or imprudent to purchase the said property in 1993 without making suitable arrangement to protect the family home in the light of the imminent potential liability of the defendant arising from her failed business. After all the said property was their only family home, a home not just for the two of them, but their young child as well.

19. I have considered the evidence of the defendant and Mr. Lai carefully. I have also borne in mind the submission made by counsel. I am persuaded on a balance of probability that there had been an agreement between the defendant and her husband at the time of the purchase of the said property that the defendant was not to have any interest in the said property even though she was named as one of the joint owners.

20. In the circumstance, there was no interest in the said property belonging to the defendant chargeable to any unsatisfied judgment against her.

21. The application for the charging order absolute must be dismissed. The order nisi dated 11th July 1995 must also be discharged.

22. In the light of the history and the background of the case, I am satisfied that there should be no order as to costs on the application. The order on costs is an order nisi to be made absolute 14 days after the handing down of this judgment.