MGB also known as MAG v. GCB

FCMC 5376/2015

[2019] HKFC 312

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES NO. 5376 OF 2015

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D E C I S I O N
(Leave to Appeal)

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Application for Leave to Appeal

1.  This is a hearing of the Petitioner (“the Wife”)’s summons dated 14 November 2019 in which she asked for the following orders:

(1)  Leave to appeal against my order dated 31 October 2019;

(2)  If leave to appeal is granted, the Wife do have leave to file Notice of Appeal as per draft Notice attached therein;

(3)  An interim stay of the Order dated 31 October 2019 pending the determination of the appeal; and

(4)  Costs of and incidental to the application to be in the cause of appeal, to be taxed if not agreed.

2.  The Respondent (“the Husband”) opposed the application.

The Law

3.  Leave to appeal is governed by s. 63A (2) of the District Court Ordinance, Cap 336 which reads:

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that-

(a) The appeal has a reasonable prospect of success; or

(b)   There is some other reason in the interests of justice why the appeal should be heard.”

4.  As to what constitutes a reasonable prospect of success, it has been held that the prospects of succeeding in the intended appeal must be “reasonable” and therefore more than “fanciful”, but without having to be “probable”: SMSE v KL[1]

Background of the Order dated 31 October 2019

5.  This case originates from the Wife’s petition for divorce in 2015 in which there was also a claim for ancillary relief (“AR”).  The case first came before Deputy Judge A.N. Tse Ching (now HH Judge A.N. Tse Ching) who granted a MPS Order (by consent) on 3 August 2015 for the Husband to pay the Wife, inter alia, MPS in the monthly sum of HK$80,000.  The important term of the MPS Order was contained in paragraph 2 therein, namely:

“2. [The Husband] shall pay to the [the Wife] maintenance pending suit in the sum of HK$80,000 per month on the 1^st day of each month payable in advance from the 1^st day of the month following the date of this Order until further order or until a final settlement of this matter either by way of agreement or judgment.” (underline added)

6.  The trial for AR was heard before HH Judge Bruno Chan who granted the AR Judgment on 19 June 2017 in which the learned Judge ordered a clean break between the parties with the Husband paying a lump sum of HK$12,360,000 to be payable by the following instalments:

(1)  The sum of HK$7,800,000 to be paid within 3 months of pronouncement of DA; and

(2)  The sum of HK$4,560,000 to be paid by 5 equal instalments of HK$912,000 payable annually commencing from 19 June 2018 to 19 June 2022 inclusive and to be secured by a life insurance to be taken out by the Husband.

7.  The DA was granted on 20 September 2017.

8.  There was subsequent dispute on when the MPS Order should end.  The Wife contends that it should end on the date of DA, i.e. 20 September 2017.  The Husband contends that it should end according to the terms of the MPS Order, i.e. the final settlement of the matter either by way of agreement or judgment.  Since the AR Judgment was handed down on 19 June 2017, therefore, as argued by the Husband, the MPS Order should also end on that date.

9.  As the Husband has stopped payment of MPS from 19 June 2017, therefore, if the Wife’s contentions are correct, he would be in default of about 3 months’ MPS payment.  This was the view adopted by the Wife and so she issued Garnishee proceedings and a sum of about HK$267,347.88 was frozen from the Husband’s 2 bank accounts by virtue of 2 Garnishee Orders Nisi (“GONs”).   The Husband applied for the setting aside of the Garnishee proceedings and on 17 August 2018, the parties agreed that the Husband’s application to be adjourned for argument and in the meantime, the sum of HK267,347.88 would be paid into court pending the result of the Husband’s application.

10.  The application was heard on 11 October 2018 with both parties being represented by counsel.

11.  On 31 October 2019, I handed down a Decision (i.e. the 31 October 2019 Order) ruling in favour of the Husband.  The sum of HK$267,347.88 paid into court together with interest were released to the Husband with costs including all costs reserved with certificate for counsel to the Husband to be taxed if not agreed.

12.  On 14 November 2019, the Wife issued her summons for leave to appeal.  In her solicitor’s affidavit of the same date, she put in a Draft Notice of Appeal in which 6 grounds of appeal were raised.  I will discuss those grounds herein under in turn.  

Delay in the Handing Down of Judgment

13.  The first ground of appeal is that there has been a lapse of 12 months between the hearing (on 11 October 2018) and the handing down of judgment (on 31 October 2019), rendering the Judgment unreliable and erroneous.

My View

14.  It is regrettable that the handing down of the Judgment has taken longer than expected.  However, I see no submission by the Wife on how that fact has rendered the Judgment “unreliable and erroneous”.  There is no suggestion that I have mixed up the facts of the case or my decision was being based on facts which are found to be incorrect.  I am not satisfied that the Wife has a reasonable prospect of success on this ground.

Reliance on the MPS Order instead of the AR Order dated 19 June 2017

15.  The second ground of appeal is that I have relied on the MPS Order in arriving at my conclusion instead of the AR Order made on 19 June 2017.  According to the Wife, since the AR Order did not discharge the MPS Order meaning that the MPS Order should continue until the DA.

16.  I agree with the Husband’s submission that the Wife was simply repeating her arguments at the hearing.

17.  In my view, when one is considering the duration of an order, the starting point is always to look at the terms of the order itself.  In paragraphs 21-30 of my judgment, I have considered the terms of the MPS Order which provided for the payment of MPS to last until “a final settlement of this matter either by way of agreement or judgment”.  It was my ruling that the parties have already reached a settlement on the issue of maintenance of the Wife and therefore, the terms of the MPS Order have been fulfilled and the payment of MPS would end there and then.  I am not convinced that the absence of a term in the final AR Order terminating the MPS Order would simply prolong its payment up to the date of DA.

18.  I am not satisfied that the Wife has a reasonable prospect of success on this ground.

No Capitalization of Maintenance?

19.  The third ground of appeal is that I have erred in finding that the second lump sum payment of HK$4,560,000 was capitalized maintenance.

20.  In this regard, I would repeat paragraph 35(a) of HH Judge Bruno Chan’s AR Judgment:

“Agreed Terms

35. Notwithstanding the apparent significant gulf between the parties essentially over the quantum of the lump sum payable to the Wife and that whether there should be a clean break between them, the parties have nevertheless been able to agree on the transfer of Rumpsticks House and other less controversial items as follows:

(a) the Husband to pay the Wife monthly maintenance of HK$76,000 for 5 years to be capitalized at HK$4,560,000 by 5 equal instalments of HK$912,000 each annually in advance from 31 December 2017 up to 31 December 2021 pursuit to Term (e) of his Open Proposal above;

...”

21.  Term (e) of the Husband’s Open Proposal can be found at paragraph 33(e) of the AR Judgment:

“33. The Husband responded to the Wife’s offer through his solicitors’ letter dated 14^th October 2016 [B4(12)/2800 in which he pointed out what he claims to be errors in the Wife’s calculation of the assets and on the basis of his own calculation of the assets at about HK$66.4 million, his Open Proposal was to effect a clean break settlement on a 50/50 division of the assets which would give the Wife about HK$33.2 million plus capitalized maintenance for 5 years and 50% of his loans as and when they are repaid, which can be summarized as follows:

...

(e) To avoid US tax on monthly maintenance he was to make 5 further payments to her at HK$912,000 each annually commencing from end of 2017 regardless of his income;

...”

22.  Also at paragraph 168 of the AR Judgment, HH Judge Bruno Chan said in his conclusion that:

“168. For the agreed payments of the capitalized maintenance for the Wife by way of a further lump sum of HK$4,560,000 for the next 5 years by 5 equal instalments of HK$912,000 each annually starting from the first anniversary of the date of this judgment, I also so order upon the Husband’s undertaking to take out a life insurance policy in the Wife’s favour so that in the event of his death within the 5 years period she will stand to receive the balance of the said sum with the costs to be borne equally by the parties, with of course liberty to apply.”

23.  It is abundantly clear from the above passages of HH Judge Bruno Chan’s AR Judgment that the parties have actually come to an agreement for the payment of the Wife’s monthly maintenance at the rate of HK$76,000 for 5 years to be capitalized at HK$4,560,000 by 5 equal annual instalments of HK$912,000 each. The purpose of such capitalization was obviously to avoid US taxation.

24.  Moreover, as pointed out by the Husband’s solicitors, even the Wife’s then leading counsel at the hearing on 13 November 2017 referred to the payments as “capitalized maintenance” (page 64 of the transcript at T).    

25.  I am not satisfied that the Wife has any reasonable prospect of success in this proposed ground of appeal.

Has the Wife made Full and Frank Disclosures?

26.  The fourth ground of appeal is that I have erred in ruling that the Wife had not made full and frank disclosure in her ex-parte applications for GONs.  She said that she had already provided an extract of the transcript of the hearing on 13 November 2017 and reference to such transcript was also made in her supporting affidavit for GONs.

My Views

27.  If one should read paragraph 35 of my judgment, the most significant deficiency in the Wife’s supporting affidavit for GONs is her failure to draw my attention to the parties’ agreement on the Wife’s capitalized maintenance for a period of 5 years at a reduced rate of HK$76,000 (instead of HK$80,000) per month.  I commented that if those information was forthcoming at the ex-parte stage, I would have reservation on granting the GONs.  This fact has never been drawn to my attention in the body of the supporting affidavit.  The fact that 11 pages of transcript were enclosed and this read-it-yourself attitude does not mean that the Wife’s duty on full and frank disclosure has been fulfilled.

28.  I am not satisfied that the Wife has any reasonable prospect of success in this proposed ground of appeal.

Should I consider whether the Wife should have issued Garnishee proceedings?

29.  The fifth ground of appeal is that as the GONs had already been uplifted, I should not have gone into the law as to whether the Wife should have issued Garnishee proceedings. In the Wife’s solicitors’ written submissions, I was further criticised in not treating the Wife’s application as one under O.45 r.6 of RHC. 

My Views

30.  As can be seen from paragraphs 16-17 of my judgment, I was fully aware that the GONs had been discharged by consent with the payment into court of the disputed sum.  But whether the Wife had any valid grounds in applying for a GON in the first place was still important because if she had not (which was my finding in the judgment), the natural consequence must be for the release of the payment into court to the Husband. 

31.  The Wife has never requested for her application to be treated as one under O.45 r.6 RHC.  But in any event, the discussion in my judgment and the ruling therein that there was no judgment debt in existence has already served a similar purpose.

32.  I am not satisfied that the Wife has a reasonable prospect of success in this proposed ground of appeal.

Reservation of Rights to file Supplemental Grounds of Appeal

33.  The so called sixth ground of appeal is not a ground of appeal at all and I will say no more on this.

Conclusions and Orders

34.  Based on the above discussion, it is my conclusion that there is no reasonable prospect of success in the Wife’s intended 6 grounds of appeal.  There is equally no other reason in the interests of justice why the appeal should be heard.   Under such circumstances, the Wife’s applications for leave to appeal and for stay are refused and her summons dated 14 November 2019 is dismissed.

Costs

35.  Costs to follow event. The Husband shall have the costs of the summons to be taxed if not agreed. This will be in the form of an order nisi to be made absolute after the expiry of 14 days from the handing down of this Decision. 

Representation:

[1] (2009) 4 HKLRD at para 17