YB v. LX

CAMP 281/2023, [2024] HKCA 238

On Appeal From [2022] HKFC 272

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 281 OF 2023

(ON AN INTENDED APPEAL FROM FCMC NO. 596 OF 2022)

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DECISION

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Hon Cheung JA (giving the Decision of the Court) :

I.  Introduction

1.  This is the renewed application of the respondent husband (‘the husband’) by way of summons dated 11 August 2023 for leave to appeal to the Court of Appeal against the judgment of Deputy District Judge W.Y. Ho dated 9 December 2022 (‘the Injunction Decision’). The Judge ordered, amongst other things, that paragraph 2.2) of the Injunction Order of 12 April 2022 obtained ex partes by the petitioner wife (‘the wife’) be continued. Paragraph 2.2) stated that the husband is restrained from disposing of, dealing with or diminishing the value of a Tai Po flat and car park (‘the Property’) including by sale or completion of a sale and purchase transaction or otherwise. The husband was ordered to pay the wife costs of the husband summons dated 24 May 2022 with certificate for counsel to be taxed if not agreed. By that summons the husband sought to discharge the Injunction Order.

2.  By her Decision dated 28 July 2023 (‘the Leave Decision’), the Judge had dismissed the husband’s application for leave to appeal.

3.  Having considered the documents filed and lodged by the parties, we are of the view that it is appropriate to determine the present application on paper without an oral hearing.

II.  Background

4.  The relevant background is summarized in [1] to [10] of the Injunction Decision.

5.  In a nutshell, the parties are from Mainland China. They were married in Hong Kong in September 2008 and have two children aged about 14 and 11 years old. In 2011 and in 2015, the parties bought the Property: first, the flat and later the carpark. The wife filed for divorce in January 2022. In January 2022, the wife claimed that she found out the husband had unilaterally entered into a sale and purchase agreement to sell the Property to a Ms. W. On 12 April 2022, she obtained the Injunction Order which ordered that :

1)  the deposit money of the Property in the sum of $3,250,000 be paid into Court by the husband;

2.1)  the husband must not deal with his assets whether in Hong Kong or elsewhere in the total sum of $23,500,000;

2.2)  the husband is restrained from disposing of or dealing with or diminishing the value of the Property including by sale or completion of the Property by the sale and purchase transaction or otherwise; and

3.1) and 3.2)  the husband is to inform the wife all his assets which is worth $5,000 or more in writing.

6.  At the substantive hearing subsequent to the making of the Injunction Order, the wife confirmed to the Court that she no longer pursued paragraphs 3.1) and 3.2) of the Injunction Order, but sought to continue paragraphs 1), 2.1) and 2.2) of the Injunction Order.

7.  The husband sought a discharge of the Injunction Order on the following grounds :

1)  There was material non-disclosure by the wife;

2)  There were ‘inherent inconsistencies’ in the Injunction Order; and

3)  The wife’s allegation that there was unjustified dealing or risk of dissipation had no merit.

III.  The Judge’s decision

1)  Paragraph 1 of the Injunction Order

8.  The Judge ordered paragraph 1 of the Injunction Order to be discharged. There was a change in circumstances in that the husband had used the deposit money to repay loans and the wife should apply to join those who received the proceeds and to set aside the transaction instead of applying for an injunction. The sale and purchase of the Property had fallen through and under the terms of sale and purchase agreement, the deposit is liable to be returned to Ms. W. To continue paragraph 1 of the Injunction Order would be preventing the husband from returning the deposit to Ms. W.

2)  Paragraph 2 of the Injunction Order

9.  In respect of paragraph 2 of the Injunction Order, the Judge addressed the issue of material non‑disclosure :

(1)  whether there was non-disclosure;

(2)  whether the non-disclosure was material; and

(3)  if there was material non-disclosure, whether the Court should exercise its discretion to re-grant or continue the injunction.

i)  Non-disclosure

10.  The Judge held that there was non-disclosure by the wife. The Judge held that there was a prior agreement between the parties for the Property to be sold based on the wife’s own message to the husband which wrote ‘ “我們的共識” (translated to: our prior consensus/agreement).’ The Judge held that this information was not disclosed by the wife at the ex parte hearing and on the return date of the Injunction Order on 10 May 2022. However, the Judge held that she would not rule on the issue of whether the Property was intended to be the matrimonial home or an investment property, as this was not an issue which could be decided based on affirmation alone at this stage.

11.  The Judge also held that there was non-disclosure by the wife in relation to her habitual place of residence or her domicile.

ii)  Material non-disclosure

12.  The Judge held that there was material non-disclosure by the wife regarding her prior agreement with the husband to sell the Property. The non-disclosure was material as it directly related to the urgency of the ex parte application. It also related to whether the sale of the Property was as sudden as she claimed to be. The information also had a bearing on the appropriate relief at the ex parte hearing.

13.  The Judge held that the non-disclosure of the wife’s domicile and place of habitual residence was not material. She held that these matters were circumstantial evidence which gave no conclusive indication as to the wife’s intended domicile etc. Even if these matters were raised at the ex parte hearing, the Judge held that she still would have granted the injunction based on the wife’s affirmation.

iii)  Re-granting of the injunction

14.  The Judge held that notwithstanding the material non‑disclosure of the wife’s prior agreement with the husband for the sale of the Property, she would exercise her discretion to continue or re-grant the injunction. The Judge held that even when there was a prior agreement, the wife clearly did not agree to sell the Property at below $40 million. The husband knew well that there would be ancillary relief proceedings following the divorce and should not have unilaterally entered into an agreement to sell the Property. The husband remained silent on the deposit and made no proposal on how such sum could be secured. The clear dissipation of assets by the husband warranted continuation of paragraph 2.2) of the Injunction Order to preserve the matrimonial assets.

15.  The Judge made the following ruling on costs :

‘ 71. I note that although the [wife] now abandons Paragraph 3 of the Injunction Order and has unsuccessful in upholding the continuation of Paragraphs 1 and 2(1) of the Injunction Order, I nevertheless regard the [husband] as largely unsuccessful in his application for discharge. This is because the main area of contention and focus of the submissions were on the [wife]’s material non-disclosure and whether Paragraph 2(2) should continue.’

IV.  Applicable principles

16.  The relevant approach to determine an application for leave to appeal is well established, namely, whether the applicant can show that he has an arguable case with reasonable chances of success on appeal.

17.  As the husband is challenging the Judge’s exercise of discretion, he must show that the decision is plainly wrong in accordance with the well‑established principles before this Court would intervene.

V.  Our view

18.  We will address individually the husband’s draft grounds of appeal which are summarised in his statement lodged in support of the application :

1)(a)  The wife’s application for injunction was on the basis that there was a secret sale of the Property at the price of $32.5 million and not on the basis that the sale was below the prior agreement of the parties that any sale should not be less than $40 million. Hence, the Judge misapprehended the wife’s case for the injunction.

(b)  Our view is that the Judge had not misunderstood the wife’s case. All the Judge was saying when she referred to the sum of $40 million was that the sale was not agreed to by the wife and it was an unauthorised sale which might deplete the value of the matrimonial assets which need to be preserved.

2)(a)  Having taking into account the wife’s confirmation that the preservation of the net proceeds of sale would be sufficient to protect her interest, the Judge misapprehended the wife’s case that it was necessary to preserve the Property in specie.

(b)  We disagreed. The Property is part of the matrimonial assets of the parties and the Judge was clearly entitled to order it to be preserved pending the resolution of the ancillary relief proceedings. The husband’s distribution of the sale deposit without the consent of the wife and without properly accounting for its whereabouts provide sufficient ground for the Judge to order the Property to be subject to the Injunction Order. In any event, as the Judge pointed out in the Leave Decision, the husband had not advanced this argument below and we do not see any justifiable reason for this point to be raised now.

3)(a)  The wife’s claim about her discovery of the secret sale was a lie and there was no basis for the injunction.

(b)  This is a repetition of Ground 1 only in another form.

4)(a)  There was no risk of dissipation. The husband was prepared to undertake to preserve the proceeds of sale so as to keep the matrimonial assets intact and the sale merely converted the Property into another form of the matrimonial assets.

(b)  Our view is that the Judge had adequately addressed this in [60‑65] of the Injunction Decision. She had taken into account the conduct of the husband in granting the injunction afresh. To allow the husband to sell the Property without the parties agreeing on the terms of sale, such as price, will only create further problems in the future.

5)(a)  Absent the need to preserve the Property in specie and with the net sale proceeds adequately protected, that should be the end of the matter. The Judge misapprehended the husband’s case, taking into account irrelevant matters or mistaken premises.

(b)  This is a repetition of the same argument in another form.

6)(a)  The Judge also erred in applying the legal principles incorrectly, in misapprehending the husband’s case on material non‑disclosure, and in ignoring material issues.

(b)  We disagreed. The Judge had correctly dealt with the issues.

7)(a)  The Judge’s conclusion that it was proper and necessary to restrain the husband from selling the Property is plainly wrong and crucially flawed in law and in principle.

(b)  In our view, the husband has failed to show that the Judge is plainly wrong in the exercise of her discretion.

19.  In our view, the Judge’s continuation of paragraph 2.2) of the Injunction Order was a proper exercise of her discretion and she had correctly addressed the essential issues of the case. We do not see any merit in the intended appeal.

VI.  Conclusion

20.  For the reasons set out above, we will dismiss the husband’s summons.

21.  As this application is totally without merit, pursuant to Order 59, rule 2A(8) of the Rules of the High Court, we will make an order that no party may request our determination to be reconsidered at an oral hearing inter partes.

VII.  Costs

22.  We order the husband to pay the wife’s costs of this application to be summarily assessed. The wife is to file within seven days her statement of costs, and the husband is to file his objection within seven days thereafter.