CWK v. KJE

FCMC 1080 / 2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 1080 OF 2003

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J U D G M E N T
(Ancillary Relief)

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Introduction

1.  This is an application by a petitioner husband for an order for sale in relation to a property that was purchased during the original divorce proceedings ie after the divorce petition was issued but before the decree nisi was pronounced. The property is held in the joint names of the parties. He asks for 50% of the net proceeds of sale. The wife for her part asks that his application be dismissed. She wishes to continue to live in the property together with the parties’ two sons. In addition the husband asks to vary the maintenance for the younger son down from HK$3,000 per month to HK$1,000 per month.    

Background

2.  The parties married in June 1991 and had two children, both boys, the elder of who is now 21 years old and self supporting and the youngest who has just started Form 6. He is now aged 17. The husband issued proceedings for divorce on the grounds of two years separation on the 28 January 2003. According to the divorce petition the parties had been separated since November 1999. This was then a marriage of some 8½ years that produced two sons.

3.  On the 25 November 2003 the decree nisi was pronounced. In the accompanying order the custody of the two children of the family was granted to the wife and in addition it was agreed that the husband would pay the wife maintenance for herself in the sum of HK$4,000 per month and maintenance for the two children of the family in the sum of HK$3,000 per month each. Thus originally the husband was supposed to pay the wife HK$10,000 per month. The decree absolute was pronounced on the 19 January 2004.

4.  According to the land registry search the husband purchased the property in question in July 2003 and the wife was nominated as a joint tenant the following day. It is accepted that the property was purchased for HK$850,000 and that each party contributed HK$127,500 towards the down payment. Thereafter the husband paid the mortgage of HK$4,543 per month until February 2013. Since then the wife has been paying for the mortgage. Consequently the husband paid the mortgage from August 2003 – February 2013 – a period of nearly 10 years and the wife for 20 months or so thereafter.

5.  It is the husband’s case that he paid for the mortgage on top of the maintenance of HK$10,000 per month and that he did so in order that the children would be able to live close to their school.

6.  It is the wife’s case that the parties came to a side agreement whereby it was agreed that the husband would pay for the mortgage in lieu of maintenance. Although the wife has not issued any proceedings she says that the husband did not pay her the maintenance of HK$10,000 per month as ordered and that this is something that should now be taken into account.

7.  Other points to note include the fact that the husband lived in the property with the wife and children from 2007 until May 2013. Consequently both parties have benefitted from their ownership of this property. They did not cohabit during this period and indeed it is the wife’s case that it proved very difficult to live with the husband during this time. Unbeknown to the husband the wife also remarried in January 2011. She does not live with her second husband. From the point of view of the maintenance payment however it is clear that the husband’s obligation to pay maintenance for the wife ceased upon her remarriage. This was not known on the 20 August 2013 when the maintenance for the wife of HK$4,000 per month was reduced to nominal maintenance only. Further the husband’s obligation to pay maintenance for the elder son should also have come to an end when he ceased full time education. The exact date for that is not known. In addition the husband says that he is suffering from financial difficulties and that he has borrowed the sum of HK$350,000 using the property as security for that loan. The parties also referred to remortgaging the property – although the precise details of that remortgage are not known.   

Issues

8.  The following issues now fall to be determined by this court:-

Did the husband pay the wife maintenance for herself and the two children of the family, in addition to the mortgage on the property, as he has claimed?

How should the issue of the property be approached?

Should the property be sold immediately and the proceeds of sale split in some way or should an alternative order be made?

Should the maintenance payment for the younger child be varied downwards?

The law on Ancillary Relief

9.  The Court of Final Appeal’s decision in LKW v DD (FACV no 16 of 2008) sets out the approach that the lower courts should now adopt when determining final ancillary relief. Notwithstanding the rather strange facts in this instance, reference will be made to that case as necessary.  In addition I will refer to section 7 of the Matrimonial Proceedings and Property Ordinance, Cap 192.

Discussion

10.  I must now turn to consider the issues, the law, and the parties’ evidence as set out in their affirmations, Form E’s and other documents filed.

The financial position of the parties

11.  The husband is a driver earning in the region of HK$15,000 per month. According to a letter from the Inland Revenue dated the 10 May 2013, his income has always been quite modest. He says that he is now suffering financial difficulty and he would like to sell the property in order to settle his debts. He has no assets other than his share of the property. The husband is 50 years of age.

12.  The wife is now working in customer service earning in the region of HK$12,500 per month. She also has no assets of any significance apart from her share in the property, some stocks and shares worth in the region of HK$65,740, some limited savings and her mpf fund. The wife is now 45 years of age. 

13.  Although the elder son is working his income is also quite modest. According to the wife he earns in the region of HK$10,000 per month.

14.  The parties have agreed that the value of the property is HK$4.5 million.

Did the husband pay the wife maintenance for herself and the two children of the family, in addition to the mortgage on the matrimonial home, as he claimed?     

15.  It is the husband’s case that he paid the wife the HK$10,000 per month plus the mortgage repayment of HK$4,543 per month. The wife says that at most the husband paid the children pocket money of a thousand dollars or so from time to time. She claims that she is owed HK$1,055,000. It is not clear how she has calculated this sum or to what it relates and for what period of time. She has not issued enforcement proceedings, nor has she issued her own application with respect to the property.

16.  The difficulty at trial was that both parties’ were making allegations against the other or bare assertions, with no evidence to support what each was saying. Consequently I directed that the husband file travel records plus additional bank account statements. It is the husband’s case that he paid the wife maintenance in cash when he saw her during his access to the boys. He says that he did not keep a record of this nor was there a regular direct debit from his account for this amount. The wife was her part says that the husband did not pay her any maintenance, that she only saw him about 10 times per year in the period from 1999 when they separated to 2006 and that she believes that the husband was living on the Mainland for some of that time. She says that she was forced to agree to remortgage the property, which is why there is still a sum of approximately HK$500,000 outstanding on it.

17.  From the statement of travel records that the husband obtained from the Immigration department for the period from 1 July 2004 – 31 December 2006 it is clear that the husband frequently went in and out of the territory, which may be consistent with him residing on the Mainland. There are no records from the Inland Revenue for the period of assessment before 2007/2008. So it is not clear whether or not the husband was declaring an income for tax purposes in Hong Kong at that time.  

18.  The husband has produced copies of bank statements going back to the 7 December and 1 July 2007 respectively. I can find no evidence in any of the bank statements produced of a regular withdrawal of HK$10,000 per month. There are occasional withdrawals of that amount – but they are not regular or consistent. In addition there is no evidence of a regular withdrawal of HK$2,500 per week. The husband at one point said that he was paying the wife weekly in cash. However there is no evidence to support his contention in this respect. This tends to support the wife’s version of events that the husband did not pay her the maintenance as he claims.

19.  Therefore on the balance of probabilities I am inclined to accept that the parties had some form of an understanding whereby the husband paid for the mortgage on the property but in return he did not pay the wife the full maintenance payment. However it also seems to me to be quite clear from the papers that the husband would not have been in a position to pay the wife HK$10,000 per month in any event. He only ever has a minimal balance in his bank accounts, his income is clearly quite low and there is evidence that he borrowed additional sums from time to time. Although it is true that the there are frequent references in his accounts to the Hong Kong Jockey Club, the sums involved in betting are also generally quite small.

20.  The wife should give this some thought to this and should seek appropriate legal advice before embarking on a further round of litigation.

How should the issue of the property be approached?

21.  The property was purchased during the divorce proceedings and was never referred to by the parties in the original litigation before the court. Thus there was no dismissal of capital claims. It is therefore open for either party to make a claim against the property now - as the husband has done. It should also be noted that it was never the matrimonial home and therefore it should be regarded as simply an asset of the parties which is jointly held.

Should the property be sold immediately and the proceeds of sale be split in some way or should an alternative order be made?   

22.  The husband asks that the property be sold and that the net proceeds be split 50:50 given that the parties own the property as joint tenants. He says that the younger son can live with him going forward if need be.

23.  The wife asks that I allow her to remain in the property with the two children of the family – the eldest of whom is working and the youngest who has just started Form 6. She says that it is the youngest son’s intention to study a 2 year higher diploma course in automotive engineering after completing his last year in school. Consequently the younger son will be a full time student for at least the next three years. The wife asks that the monies that the husband has not paid to her in maintenance also be taken into account.

Conclusion

24.  Having considered all of the factors here it seems to me that the most appropriate order here would be for the court to make a mesher style order – ie that there be an order for sale but one that cannot be realized until six months after the younger son has completed his full time education, after which time the net proceeds of sale shall be split 50:50. The husband shall be responsible for repayment of his own loan. Further it is directed that the joint tenancy be severed so that the parties hold the property as tenants in common pending its sale. It is not possible for me to take into account outstanding maintenance that may or may not be due and owing to the wife. It is a matter for the wife should she decide to take this matter further.

Should the maintenance payment for the younger son be varied downwards?

25.  The husband says that he cannot afford to pay the wife HK$3,000 per month for the maintenance of the younger son. Putting to one side for the moment the fact that I do not believe that the husband has ever paid that sum for the son’s maintenance, I nevertheless accept that the husband now has significant debts to pay (ie HK$7,604 per month to UA) and that HK$1,000 per month is a more realistic sum in the circumstances. The maintenance will therefore be varied down to this amount. In so far as the mortgage repayments are concerned, I accept that the parties should be jointly responsible for this until the property is sold.

The section 7 factors

26.  I am also charged with considering the section 7 factors.  I have done so in the body of the judgment – but for the avoidance of doubt I will add as follows:-

The Section 7 factors

a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

27. As indicated above both parties have a limited earning capacity. The only financial resource of any real worth is the property in question. The value of the property is agreed at HK$4.5 million. Once the outstanding mortgage of approximately HK$500,000 is redeemed there will be a balance of approximately HK$4 million.

b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

28. I accept that both parties need somewhere to live. In addition the younger son in particular needs somewhere to live – certainly until he has completed his full time education and is earning his own living.

c) the standard of living enjoyed by the family before the breakdown of the marriage;

29. I accept that the parties enjoyed a basic standard of living prior to the breakdown of the marriage similar to many other grass roots families in Hong Kong.

(d) the age of each party to the marriage;

30. As I have said the wife is 45 and the husband is 50 years of age.

The duration of the marriage

31. The parties have been married for nearly 12 years – but were separated for much of that time.

(e) any physical or mental disability of either of the parties to the marriage;

32. This is not in issue.

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

33. The issue of financial contribution is very much in issue. As indicated above the father contributed towards the mortgage for nearly 10 years – but he also allegedly benefited from the property’s remortgage. The wife appears to have been responsible for the family’s maintenance otherwise.

The conduct of the parties such as it would be inequitable to disregard

34. Although the wife refers to the husband’s misconduct – this is not the sort of conduct that the court should take into account when determining ancillary relief.

The value to either of the parties to the marriage of any benefit (for example, a pension) which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

35. This is not of any relevance here.

Conclusion

36. Given that neither party has been wholly successful in this case I will therefore make an order nisi to be made absolute in 14 days time that there shall be no order as to costs including all costs reserved. The wife’s legal aid certificate was discharged but the legal aid department still has an interest in the outcome of the proceedings. This should be taken into account when drafting the order.

Order

37. I will therefore make an order as follows:-

1) There shall be an order for sale in relation to the property known as Room X, X/F, A Court, X High Street, Sai Ying Pun, Hong Kong which shall take effect from the 1 January 2018. The property shall be placed on the market for sale and sold at the best price obtainable as at that date. The net proceeds of sale shall be split between the parties on a 50:50 basis.

2) Each party’s respective claims against the other for all forms of ancillary relief shall be dismissed upon the sale of the property and the equal division of the net proceeds of sale.

3) Order 2 as contained in the court order dated the 25 November 2003 shall be varied in that the maintenance for the youngest child of the family shall be varied down from HK$3,000 per month to HK$1,000 per month with effect from the 1 November 2014 and thereafter such sum to be paid on the 1^st day of each month until the child attains the age of 18 years or ceases full time education.

4) There shall be an order nisi to be made absolute in 14 days time that there shall be no order as to costs. Account to be taken of the Legal Aid statutory charge as appropriate.