LKW v. CWH

FCMC 4891 /2015

[2026] HKFC 125

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER 4891 OF 2015

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JUDGMENT
( Interest on maintenance pending suit/lump sum payment;
sharing of rental income and property expenses )

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Overview

1.  The parties of this case were already divorced upon the grant of the decree absolute in 2022, but for convenience, I shall continue to address the petitioner as the “wife” and the respondent as the “husband” in this judgment.

2.  On 17 March 2020, Deputy Judge J Chow handed down the judgment (“AR Judgment”)[1] on the final ancillary relief matters of this case, including the husband’s application for varying down the maintenance pending suit (“MPS”)  ordered previously by the family court. Broadly, the deputy judge ordered that:

(1)  the husband shall pay the wife a total sum of 4,437,000 (“AR Sum”)  within 28 days (ie by 14 April 2020);

(2)  the wife shall transfer her interests in the Hunghom property (then held by the parties under joint tenancy)  to the husband within 14 days upon the payment of the AR Sum (ie by 28 April 2020);

(3)  Should the husband fail to pay the AR Sum by the aforesaid specified time, the parties shall sell the Hunghom property at not less than $18 million within 28 days thereafter (ie by 12 May 2020), and the AR Sum shall be paid out of the sale proceeds to the wife.

3.  Pausing here, it is convenient to point out at this stage that the AR Sum consists of two sums[2] :

(1)  arrears of MPS, which was ordered by the deputy judge to be varied down to $5,000 per month, from August 2014 to the date of the AR Judgment, in the total sum of $322,000; and

(2)  a lump sum of $4,115,000, being the wife’s share of 35% of the identifiable family assets.

4.  After the AR Judgment, however, the husband rented out the Hunghom property for a certain period of time and pocketed the rental income, without the knowledge or consent of the wife.

5.  Finally on 30 August 2024, ie more than 4 years after the AR Judgment, a preliminary sale and purchase agreement to sell the Hunghom property at a lower consideration of $13,980,000 was signed. The completion of sale took place on 29 November 2024. On 9 April 2025, the husband’s solicitors informed the wife that the AR Sum in the form of a cheque was available for her collection. The wife confirmed receipt of the cheque on 15 April 2025.

6.  Pursuant to my order made on 5 January 2023 (“5/1/2023 Order”), the husband paid the final net balance of the sale proceeds (after paying the AR Sum to the wife)  in the sum of $7,236,605.60 into court on 4 December 2024. By my further orders made on 25 August 2025 and 3 November 2025 respectively, two partial sums of $2.9 million and $2 million were released and paid out to him. As at this trial, there is a remaining sum of $2,336,605.60 kept in the family court, pending the determination of the issues in this trial that are essentially these:

(1)  whether the husband should pay any interest on the AR Sum to the wife; and if yes, what should be the period and the rate;

(2)  having conceded that he should share the rental income of the Hunghom property with the wife, what was the rent-out period and rental income that was received by him; whether the wife should share the gross or net rental income.

7.  There are 4 witnesses in this trial, namely the parties themselves, and two other witnesses (Wong and Cheung)  called by the wife.

8.  On my directions, the parties have jointly prepared an agreed chronology, and a joint table of interest payable under different scenarios (dated 17 November 2025)  (“Joint Interest Table”). 

Background

9.  This case has a long and convoluted history which has sprung over a decade. It is thus necessary to put the background and case history into proper perspective.

10.  Some of the background of the case and of the parties are already set out in the AR Judgment. For the purpose of this judgment, I shall highlight the following background facts.

11.  The parties were married in 2009 after merely a 5-month’s courtship. In 2010, their only daughter was born.

12.  During their marriage, the wife was a housewife. She started to have depressive symptoms shortly after the birth of the daughter, and was diagnosed to have bipolar II disorder in 2011. The husband, the bread winner of the family, firstly worked in the shoes business of his father and later set up his own shoes company (XX Xxxxx Xxxxxxxxxxxxx )  in 2011. He was the sole shareholder of the shoes company.

13.  In 2011, the parties purchased the Hunghom property (the subject property involved in this trial)  in their joint names. The Hunghom property was not their matrimonial home. They lived in other properties allegedly owned by the husband’s sister.

14.  In 2014, the wife filed her petition for divorce (FCMC 6005/2014).  In 2015, a new petition on separation (ie this case)  was filed.

15.  In the course of these proceedings, custody of the daughter was granted to the husband, and the wife had defined access including staying access.

16.  At the financial front, the wife took out her summons for MPS and litigation funding in July 2014. In the hearing of 4 August 2014, the husband undertook to HH Judge Bruno Chan that he would pay MPS to the wife in the sum of $15,000 per month starting from August 2014.  In the subsequent hearing of 9 February 2015, the learnt judge ordered that the husband should pay MPS of $25,000 per month to the wife commencing from 1 March 2015.

17.  Despite his aforesaid undertaking and the order of the learnt judge, the husband had not paid a single penny to the wife, save and except $13,000[3].  Even more, on 27 November 2015, he filed a summons to reduce the MPS from $25,000 to $5,000.[4] 

18.  To chase for the arrears of interim payments, the wife filed two judgment summonses in 2015 and 2018 respectively, as well as two other summonses seeking leave to enforce the arrears of maintenance outstanding for more than 12 months.[5] It seems that these judgment summonses were adjourned sine die pending the AR Judgment.[6]

19.  The final ancillary relief trial, together with the husband’s application for variation of the MPS, took place in 2019. As said, Deputy Judge J Chow handed down the AR Judgment on 17 March 2020. 

Applications after the AR Judgment

20.  I first seized of this case in June 2020 in respect of the husband’s application for leave to apply for decree absolute[7]. Decree absolute was finally granted on 21 January 2022.

21.  About five months later on 14 June 2022, the wife filed a summons, seeking an order to sell the Hunghom property by way of an auction at the lowest selling price, and to share half of the rental income of the Hunghom property received by the husband (“14/6/2022 Summons”).  In the hearing of 21 October 2022, I directed that a valuation report shall be prepared by a single joint expert on the open market value and the reserve price by way of public auction of the Hunghom property.[8]

22.  In the follow up hearing of 5 January 2023, the husband, for unknown reason, was absent. In his absence, I made an order which essentially included the following directions (“5/1/2023 Order”):

(1)  The husband shall deliver vacant possession of the Hunghom property to the wife within 28 days;

(2)  Within 14 days of being served with this order, the husband shall file and serve an affirmation providing the name of the mortgagee bank of the Hunghom property, the mortgage account number and the latest mortgage repayment statement;

(3)  The time for selling the Hunghom property is further extended to within 3 months from the wife’s obtaining vacant possession of the Hunghom property, or her successful execution of an Order for Possession (whichever is the later), to be sold for not less than $17.1 million;

(4)  The wife shall be granted the conduct of sale;

(5)  The husband shall sign all conveyancing documents on the request of the wife for transferring the Hunghom property to the purchaser, failing which the court will appoint a person suggested by the wife to sign all conveyancing documents on behalf of the husband, pursuant to section 38A of the District Court Ordinance, Cap 336. The wife shall nominate and provide details of such a person to the court within 7 days after obtaining vacant possession of the Hunghom property, or successful execution of an Order for Possession (whichever is the later);

(6)  The sale proceeds of the Hunghom property shall be applied to settle/reimburse the expenses in the following sequence:

(a)  the outstanding mortgage;

(b)  the management fees, government rates and rent from the date of the wife’s obtaining vacant possession of the Hunghom property, or successful execution of an Order for Possession (whichever is the later)  until the completion date of its sale;

(c)  the estate agency’s fee, which shall not be more than 1% of the sale price;

(d)  the legal fees, which shall not be more than $12,000 (excluding disbursements);

(e)  the valuation report fee of $9,000 which was paid by the husband initially;

(f)  the AR Sum to the wife;

(g)  the balance shall be paid into court within 7 days of the completion of the sale, pending further directions from this court, including direction for further mention hearing(s);

(7)  Within 28 days upon the aforesaid payment into court, both parties shall file and serve an affirmation setting out his/her calculation of the interest accrued on the AR Sum from 13 May 2020 according to the judgment rate;

(8)  Time for the husband to comply with the order of 8 December 2022 be extended to 28 February 2023, ie to file and serve an affirmation setting out in a chronological order the rental arrangements of the Hunghom property since the AR Judgment, including providing the relevant tenancy agreements, or details of the oral tenancy (if no written tenancy agreement was signed), monthly/quarterly/yearly expenses of the property during the relevant period; setting out in a table form the rental income and expenses on a monthly or yearly basis; providing the net rental income each month; providing all supporting documents.

23.  At this juncture, two points should be mentioned. First, Ms Angel Daley, counsel for the husband, argues that the 5/1/2023 Order is a “new” order not provided in the AR Judgment. I hope counsel is not trying to suggest that this court does not have the power to make the 5/1/2023 Order. It is very obvious that the 5/1/2023 Order is a case management order to ensure that the AR Judgment will be complied with. Neither party has lodged an appeal of the 5/1/2023 Order. Second, it is clear that the 14/6/2022 Summons has not been fully disposed of, as I have directed in the 5/1/2023 Order that upon the sale of the Hunghom property, the net sale proceeds shall be paid into the court pending “further directions”.

24.  According to the Joint Interest Table, the parties take 1 February 2023 (“Vacant Possession Date”)  as the date when the wife successfully obtained vacant possession of the Hunghom property.

25.  Regrettably, the sale of the Hunghom property did not go smoothly as directed in the 5/1/2023 Order. The parties came once again before me on 31 May 2023, as a result of a summons this time taken out by the husband, asking the wife to give vacant possession of the property back to him and for him to take up the conduct of sale.  Upon hearing from the parties, I refused to reverse the arrangements of vacant possession and conduct of sale. Instead, I ordered that neither party shall “live in” (居於)  or “occupy” (佔用)  the Hunghom property, and extended the time limit for selling the Hunghom property to 31 August 2023.

26.  On 5 April 2024, the wife took out another summons for directions to reduce the selling price to $11 million. The summons came before Master Lam on 17 June 2024. By then, the husband became legally represented, while the wife remained unrepresented. Upon hearing from the parties, the Master ordered that the selling price of the Hunghom property shall be reduced to $13.9 million, and the time for its sale was extended by one month. The Master also directed that both parties might bring estate agent(s)  or potential purchaser(s)  to view the Hunghom property.

27.  On 24 June 2024, the husband was able to secure a purchaser to buy the Hunghom property at $13.98 million. However, he said that the wife did not respond to the signing of the preliminary sale and purchase agreement. Upon his application by summons that came before Master Lam on 12 August 2024, the Master gave the conduct of sale of the Hunghom property to the husband, extended the time for selling it to a further three months, and directed that a solicitor from Messrs Paul W Tse may sign the conveyancing documents on behalf of the wife.

28.  However, the litigation did not end there. The husband thereafter took out two further summonses:

(1)  The first summons filed on 24 September 2024 to “vary” paragraph 7 of the 5/1/2023 Order to the extent that “no interest” shall be paid to the wife;

(2)  The second summons filed on 21 October 2024 to “extend” the time for payment of the AR Sum “to the time after the completion of sale” of the Hunghom property, and to order that “no interest" shall be accrued on the AR Sum.

29.  Both summonses came before Master Lam on 18 November 2024 (“18/11/2024 Hearing”). Upon hearing from the parties, the Master granted leave for the husband to withdraw both summonses. More will be said about this Hearing later in this judgment.

30.  In the meantime, the Hunghom property was sold and the completion of sale took place on 29 November 2024. The husband then paid the net sale proceeds into court pursuant to the 5/1/2023 Order.

31.  On 5 February 2025, the husband filed another summons, seeking that the whole amount paid into court (but after deducting $60,000 which he offered to pay the wife as her sharing of the rental income)  should be paid out and released to him (“5/2/2025 Summons”). Master Lam then transferred this summons to my court for disposal.

32.  Hence, there are technically two outstanding matters as at this trial, namely the wife’s 14/6/2022 Summons and the husband’s 5/2/2025 Summons.

Legislations on interest on arrears of maintenance

33.  Before I start to deal with the issues of this case, it is helpful to briefly explain the relevant legislations in relation to interest on arrears of maintenance in matrimonial cases.

34.  First of all, there are Section 28AA of the Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”)  and section 53A of the Matrimonial Causes Ordinance, Cap 179 (“MCO”), introduced in 2003 under the Interest and Surcharge on Arrears of Maintenance Ordinance 2003.[9]

35.  Both sections contain very similar, but not totally identical, provisions.

36.  Briefly, the identical parts of both sections provide that:

(1)  when a “maintenance order” has been made against a judgment debtor, and the judgment debtor fails to make full and punctual payment in compliance with the maintenance order, the judgment creditor “is entitled” to interest and the judgment debtor “is liable” to pay the interest in respect of arrears of maintenance: section 28AA(2)  and (4)  of the MPPO; section 53A(2)  and (4)  of the MCO;

(2)  interest shall start to run from the date on which payment is due as specified by the maintenance order: section 28AA(3)(c)  of the MPPO; section 53A(3)(c)  of the MCO;

(3)  but if the judgment debtor considers that he has reasonable grounds not to pay interest, he may “apply by summons” not to pay interest: section 28AA(7)  of the MPPO; section 53A(6)  of the MCO;

(4)  when such a summons is taken out by the judgment debtor, the court shall then decide (i)  whether interest should be paid by the judgment debtor, and (ii)  if so, the amount, upon taking into account “all the circumstances of the case” and a list of non-exhaustive factors: Section 28AA(8)  of the MPPO; section 53A(7)  of the MCO;

(5)  if payment under a maintenance order is not paid and interest is incurred, any payments made subsequently by the judgment debtor will be “deemed” to be made in the order in or towards the discharge of the items set out in section 28AA(6)  of the MPPO or section 53A(5)  of the MCO (as the case may be).

37.  At first brush, there is one difference between the two sections.

38.  A “maintenance order” in section 28AA of the MPPO is defined at section 2 to mean an order for periodical payments, secured periodical payments or lump sum payments made under certain sub-section of sections 4, 5, 8 and 15.  In a word, a “maintenance order” to which section 28AA applies does not include a MPS order made pursuant to section 3 of the MPPO.

39.  However, a “maintenance order” within section 53A of the MCO is defined to mean,

“an order made in the matrimonial cause for the payment of money.”

40.  This brings into dispute whether a “maintenance order’ in section 53A of the MCO includes a MPS order made under section 3 of the MPPO. I will come to this issue later in the judgment.

41.  Apart from the above two sections, there is rule 87(5)  of the Matrimonial Causes Rules, Cap 179A (“MCR”)  which provides that where a judgment summons is issued by the judgment creditor in respect of arrears of MPS, periodical payments, lump sum payments or costs, the court may make an order for interest:

“On the hearing of the judgment summons the judge may –

(a)  where the order is for –

(i)  the payment of a lump sum or costs; or

(ii)  maintenance pending suit or other periodical payments and it appears to him that the order would have been varied or suspended if the judgment debtor had made an application for that purpose,

make a new order for payment of the amount due under the original order, together with the costs of the judgment summons, the interest and surcharge payable, either at a specified time or by instalments.”

No summons on interest

42.  Originally, Ms Daley, counsel for the husband, agreed on the first day of this trial that the court could, without a formal summons from the wife, hear the issue of interest in this trial. Yet, in her closing submission in reply, she submitted again that the wife “has never taken out any summons to apply for interest.” [10]

43.  For avoidance of any doubt, I make the following comments and/or rulings.

44.  First, section 28AA of the MPPO, as well as section 53A of the MCO, expressly provides that a judgment creditor (such as the wife in this case)  “is entitled to interest” on any arrears of maintenance, and a judgment debtor (such as the husband in this case)  “is liable to pay the interest”. Plainly, such wordings suggest a regime for interest to be calculated automatically in case of default in payment of a maintenance order, and it is not obligatory of the judgment creditor (like the wife of this case)  to take out a summons to apply for interest.  

45.  Also, there is little doubt the legislative intention of introducing section 28AA of the MPPO and section 53A of the MCO is to allow interest to run automatically upon default of maintenance payment. It is recorded in the papers of the Legislative Council that during the deliberations of the Bills Committee on Interest on Arrears of Maintenance Bill 2001 (“Bill”), the members of the Legislative Council considered that “arrears of maintenance should be deemed judgment debts” so that interest would arise “automatically” upon default of maintenance payments.[11]

46.  I will go further to say that if the legislature desires that the judgment creditor needs to apply by a summons for interest, it would have expressly said so in the sections.  Comparison may be drawn with section 28AB of the MPPO and section 53B(3)  of the MCO which expressly provide that an application for a surcharge on arrears of maintenance “shall be made by a summons” by the judgment creditor.

47.  Second, although it is not obligatory for a judgment creditor to apply by a summons for interest, the wife did make it known to the husband that she intended to claim for interest on the arrears of the AR Sum as early as 21 October 2022 when she filed and served her affirmation in relation to the 14/6/2022 Summons[12]. This was followed by the directions of this court that each party shall prepare an affirmation on interest in the 5/1/2023 Order.

48.  It is thus clear and obvious that the question of interest on the AR Sum is a live issue between the parties, at least as early as 21 October 2022 or if not by the time when the 5/1/2023 Order was made. No prejudice is caused to the husband in this trial even if the wife has not filed a formal summons.

49.  Third, the husband had originally taken out the two summonses mentioned at [28], but withdrew them in the 18/11/2024 Hearing. Instead, he took out the 5/2/2025 Summons. Yet, it is abundantly clear to me that his de facto request in the 5/2/2025 Summons is that he should not pay any interest on the AR Sum.  Hence, in all fairness to him, and in order to dispose of the matters fairly and costs-effectively, I would treat the 5/2/2025 Summons as effectually an application under section 28AA(7)  of the MPPO or section 53A(6)  of the MCO (as the case may be), and the relevant factors under section 28AA(8)  of the MPPO or section 53A(7)  of the MCO will be considered accordingly.

Interest on arrears of MPS

50.  As said, the AR Sum consists of the arrears of the wife’s MPS and her share of the family assets (See: [3] above).

51.  Ms Chelsea Lau, counsel for the wife, submitted that the sum of $322,000 is “a lump sum order to pay arrears of MPS” and is thus a “maintenance order” which is made upon conclusion of the “matrimonial cause”, such that interest would automatically accrue on the unpaid lump sum as a judgment debt from 12 May 2020, pursuant to either section 28AA of the MPPO or section 53A of the MCO.

52.  Although Ms Lau has made a tempting argument, I must not overlook that throughout the AR Judgment, the deputy judge treated and calculated the wife’s MPS and its arrears, separately and distinctly from her entitlement to the sharing of the family assets in the form of a lump sum payment[13]. There is no appeal of the AR Judgment and I am bound by it. I am thus unable to accept that the sum of $322,000 is a lump sum payment; it is a payment of MPS.

53.  Ms Daley argued that the court has no power to order interest on MPS and relied heavily on the judgment of KJ v KMLM and KCK, HCMC 4/2010, date of judgment 21 May 2014.

54.  In KJ, To J made various orders of the ancillary relief claims of the wife, including but not limited to (i)  an order for lump sum payment of $130 million to be paid by the husband within 90 days (ie by 6 February 2013); (ii)  an order that the husband shall continue to pay the wife MPS according to an existing order until the said lump sum was paid; and (iii)  liberty to apply. The parties then took out a number of subsequent applications. One of the matters that needed His Lordship’s determination was the wife’s application for interest on the MPS which was eventually paid but was outstanding from January 2009 to October 2013.

55.  In refusing the wife’s application, His Lordship held at [88] to [95] therein that a MPS order made under section 3 of the MPPO is not a “maintenance order” within the meaning of section 28AA of the MPPO or section 53A of the MCO.

56.  I totally agree with His Lordship that a MPS order does not fall within the definition of a “maintenance order” in section 28AA of the MPPO. I reiterate what I have said at [38] of this judgment, and conclude that the wife is not entitled to have interest on the arrears of the MPS by relying on section 28AA of the MPPO.

57.  Will interest arise on arrears of MPS under section 53A of the MCO?

58.  To recap, a “maintenance order” is defined in section 53A of the MCO as “an order made in the matrimonial cause for the payment of money”. And “matrimonial cause” is defined in section 2 of the MCO to mean,

“any proceedings for (a)  divorce; (b)  nullity; (c)  judicial separation; (d)  presumption of death and dissolution of marriage.” (the underlined is my emphasis)

59.  In KJ, To J analysed section 53A of the MCO and concluded, as a matter of statutory interpretation, that an order for payment of MPS made under section 3 of the MPPO is not a maintenance order within the meaning of section 53A and thus the court has no jurisdiction to order interest on arrears of MPS pursuant to that section,

“93.  Miss Remedios also sought to rely on the court’s power to award interest on arrears of maintenance under section 53A of the Matrimonial Causes Ordinance (“MCO”). For the purpose of that section, “maintenance order” is defined to mean an order made in the matrimonial cause for payment of money.  However, “matrimonial cause” is defined in section 2 to mean divorce, nullity, judicial separation, and presumption of death and dissolution of marriage.  It does not cover maintenance pending suit awarded under MPPO.  Prior to 1972, MCO contained provisions for financial relief in sections 27 to 44 which included maintenance pending suit.  Those sections were repealed by Ordinance No 39 of 1972 with the enactment of the MPPO which contains more comprehensive provisions for distribution of the family pool on divorce, including maintenance pending suit.  Section 53A was introduced into the MCO along with the introduction section 28AA into MPPO under the Interest and Surcharge on Arrears of Maintenance Ordinance 2003 (Ordinance 18 of 2003).  At the same time, similar amendments were introduced into the Guardianship of Minors Ordinance and Separation and Maintenance Orders Ordinance.  With the repeal of the ancillary relief provisions in the MCO and the enactment of similar and more comprehensive provisions in the MPPO, it is difficult to see what purpose is left to be served by section 53A of the MCO. I conclude, as a matter of statutory interpretation, that an order for payment of maintenance pending suit made under section 3 of the MPPO is not a maintenance order within the meaning of section 53A of the MCO… This court has no jurisdiction to order interest on arrears of maintenance pending suit.” (the underlined is my emphasis)

60.  I pause here to mention two upfront observations. Firstly, without any disrespect to His Lordship, it is trite that KJ is not a binding, but a persuasive, authority on the family court. Secondly, reading closely [93] of his judgment, I express concern if His Lordship was ever drawn to the fact by the parties before him that section 2 of the MCO does not confine “matrimonial cause” to merely mean the divorce or nullity etc, but cover “any proceedings” for divorce and nullity, etc.

61.  In deciding if a MPS order is, or is not, a “maintenance order” within the meaning of section 53A of the MCO, I must, first of all, pay regard to section 19 of the Interpretation of General Clauses Ordinance, Cap 1 which provides that an ordinance shall be deemed to be “remedial” and shall receive such “fair, large and liberal construction and interpretation” as will best ensure the attainment of the objective(s)  of the ordinance “according to its true intent, meaning and spirit”.

62.  Then, in HKSAR v Chen Keen (alias Jack Chen) (2023)  26 HKCFAR 157, Chief Justice Cheung explained at [11] to [12] that the task of the court in the exercise is to “give effect to the legislative intent within the permissible bounds of interpretation”, and that the legislative’s intention is to be gleaned from the text, context and purpose of the statute.  In this regard,

“(1)  The context of the relevant statutory provision should be taken in its widest sense and will obviously include the other provisions of the statute. All relevant provisions within a statute must be read together as a purposive unity. It is necessary to identify the interpretative considerations involved and then, if they conflict, to weigh and balance them. So far as possible, a statute should be construed as a consistent whole.

(2)  It may be relevant and necessary, depending on the case, to consider the recommendation of a report such as that published by the Law Reform Commission, the explanatory memorandum to the relevant bill or a statement by the responsible official of the government in relation to that bill in the Legislative Council. It may also be relevant in any given case to look at the history of the provision concerned, and read it in the historical context of the situation which led to its enactment. The existing state of the law may also be relevant.

(3)  Regard must also be had to the practical consequences of opposing constructions. Construction is an exercise in common sense and sound reason. The courts will presume that the legislature did not intend a statute to have consequences which are inconsistent with fundamental rights, or are objectionable or undesirable; or absurd; or unworkable or impracticable; or merely inconvenient; or anomalous or illogical; or futile or pointless.”  

63.  Further, in Francis Bennion: Statutory Interpretation (4^th ed)  at p477, the learnt author made the following statement:

“It is also a rule of law that the legislator intends the interpreter of an enactment to observe the maxim ut res magis valeat quam pereat (it is better for a thing to have effect than to be made void), so that he must construe the enactment in such a way as to implement, rather than defeat, the legislative purpose.”

64.  At the risk of repeating myself, it must be remembered that section 53A of the MCO was introduced together with section 28AA of the MPPO in 2003, albeit that the ancillary relief provisions in the MCO were repealed, and similar and more comprehensive ancillary relief provisions were made in the MPPO. And it must be correct that section 53A of the MCO was introduced for such legislative purpose(s)  that the legislature desired.

65.  The background leading to the introduction of the Bill (which brought about the new section 53A of the MCO, alongside with section 28AA of the MPPO)  was that there were common complaints received by the legislators and non-governmental organisations about the difficulties faced by the maintenance payees, in that the maintenance payers withheld payments until shortly before the court hearings scheduled for the judgment summons but default again after paying for a few months. As a result, the maintenance payees suffered financially, in addition to the inconvenience of having to take repeated legal actions. To address the problem, an inter-departmental working group was formed and recommended that the court be empowered to impose a surcharge on late payments. The legal professions were consulted. The Bar Association opined that a surcharge might amount to a punitive measure which was against the philosophy of family law. Instead, the Bar Association proposed that interest at judgment rate be introduced, which was finally adopted by the legislators. The purposes of introducing an “interest” regime were to (and thus this must be the legislative intent)[14]:

(1)  compensate maintenance payees for the loss in interest on their savings or for the interest payable by them in respect of the loans they have to obtain owing to the maintenance payer’s default or delay in making maintenance payments;

(2)  correct the present wrong signal, caused by the fact that no interest could be levied on any maintenance arrears, that late payments were permitted by the law; and

(3)  achieve (1)  and (2)  above without penalising any maintenance payer who had a reasonable excuse for late payment or who could not afford to pay the interest.

66.  In my view, it will not fulfil the intention of the legislation if interest will automatically accrue only on arrears of periodical payments or lump sum payments, but not for MPS payments. Once a court order (even if it is an interim order)  is disobeyed, the imposition of some kind of sanction is almost always inevitable if court orders are to continue to enjoy the respect which they ought to have.

67.  In addition, the MCO and the MCR should be considered as a consistent whole. Rule 87(5)  of the MCR provides that on hearing of a judgment summons, the court may award interest on the arrears of MPS (See: [41] above). It will create absurdity and undesirable consequences, such as mentioned at [65] above, if interest on arrears of MPS may arise under the MCR, but not under its empowering ordinance (ie the MCO).

68.  Bearing in mind the aforesaid purposes of the Bill (which brought about the new section 53A of the MCO), and the definition of a “maintenance order” and “a matrimonial cause” set out more particularly at [58] above, it can readily be argued (and this is also my view)  that an order for MPS, though made under section 3 of the MPPO, is an order for payment of money made within “any proceedings” for divorce.

69.  I draw support of this view from what the headnote of the MPPO says: To consolidate and amend the law relating to ancillary and other relief in “matrimonial cause” and other matrimonial proceedings.

70.  In conclusion, it is my view that a MPS order is a “maintenance order” within the meaning of section 53A of the MCO, and thus interest should automatically be accrued on the arrears of the MPS of $322,000 pursuant to the section.  For avoidance of doubt, I reject all the arguments of Ms Daley that interest does not arise on arrears of MPS under section 53A of the MCO.

Due date of the AR Sum

71.  In her written closing submission, Ms Daley submitted on behalf of the husband broadly these:

(1)  It is clear from [112] of the AR Judgment that the only asset the family had was the Hunghom property, and that the AR Sum should only be paid after its sale. Where a lump sum can only be paid out of the proceeds of the sale of property, the order should ordinarily “link [the] payment to the completion of the sale and the receipt of the proceeds”, and interest can be awarded “from the date when such proceeds are received” because there are “no funds from which to pay the lump sum” (See: [61] of KJ);

(2)  The sale of the Hunghom property was extended repeatedly by the orders made by this court and by Master Lam. By such time extensions, the due date of payment of the AR Sum were also repeatedly extended;

(3)  Master Lam has opined and commented in the 18/11/2024 Hearing that (i)  there was no direction/order in the 5/1/2023 Order that interest should be paid by the husband to the wife, and thus there was nothing in the 5/1/2023 Order to be varied; and (ii)  the AR Sum was not due until the Hunghom property was sold. It is thus clear that the Master had made a ruling on the husband’s summonses set out at [28] of this judgment, which was a ruling that there was no failure on the part of the husband to comply with the payment of the AR Sum. Hence, section 28AA of the MPPO simply does not engage;

(4)  Master Lam’s ruling is valid until and unless it is appealed (See: Order 32 rule 16 of the Rules of the District Court, Cap 336H).

72.  To begin with, I do not accept that it is the findings of the AR Judgment that the only family asset was the Hunghom property. The deputy judge found that the family assets consisted of, at least, the Hunghom property, the Fujian property (solely owned by the husband), the Mercedez Benz, and the jewelleries (taken away by the wife)[15].

73.  The analysis by the deputy judge of the financial resources and means of the husband did not end there. She was vigilant to the fact that roughly 2 weeks after an order was made for the valuation of his shoes company[16], the husband suddenly and allegedly sold all 10,000 shares of his shoes company to a third party at a low price of $10,000. Importantly, the deputy judge pointed out that the shoes company earned about $30 million in 2013 and $15 million in 2014, and thus commented that this alleged sale of shares was the husband’s attempt to keep his assets out of the wife’s reach.

74.  To conclude, the deputy judge ruled that the husband had a much higher earning capacity and owned other financial assets that were not yet disclosed in these proceedings[17].

75.  It was with such findings as the backdrop that the deputy judge ordered that the husband shall pay the AR Sum to the wife within 28 days of the AR Judgment. Had the deputy judge viewed that the husband did not have the financial means to pay the wife and could have done so only by selling the Hunghom property (which is not the case here), the deputy judge would have simply and directly ordered the sale of the Hunghom property, without first ordering the husband to pay the AR Sum within 28 days of the AR Judgment.

76.  Pertinently, according to the AR Judgment, the sale of the Hunghom property would only be triggered if the AR Sum was not paid within the time imposed by the deputy judge.

77.  I thus cannot embrace Ms Daley’s argument that according to the AR Judgment, the AR Sum was only payable after the sale of the Hunghom property. That said, I do not regard that Moher v Moher [2020] Fam 160, an authority cited by Ms Lau for the wife, is a relevant authority, because in Hong Kong, there is no corresponding section 23(6)  of the Matrimonial Causes Act 1973.

78.  On the other hand, the nature of the various orders given in the AR Judgment should be correctly understood.

79.  When correctly understood, the “primary” orders made by the deputy judge in the AR Judgment are a (reduced)  MPS order and a lump sum payment order made pursuant to section 3 and section 5 of the MPPO, upon which there will be a property transfer order in respect of the Hunghom property from the wife to the husband under section 6 of the MPPO.

80.  In my further view, the property sale order of the Hunghom property is an “ancillary” and consequential order made pursuant to section 6A of the MPPO on the own motion of the deputy judge, who must have taken into account the husband’s continued failure to pay MPS pursuant to his own undertaking and the order made by HH Judge Bruno Chan (See: [16] and [17] above).

81.  Section 6A of the MPPO provides that,

“ 6A. Orders for sale of property

(1)  Where the court makes an order under section 4, 5 or 6 then, on making that order or at any time after the making of that order, the court may make a further order for the sale of such property as may be specified in the order, being property in which or in the proceeds of sale of which either or both of the parties to the marriage has or have a beneficial interest, either in possession or reversion.

(2)  Any order made under subsection (1)  may contain such consequential or supplementary provisions as the court thinks fit and, without affecting the generality of the preceding words of this provision, may include-

(a)  provision requiring the making of a payment out of the proceeds of sale of the property to which the order relates; and

(b)  provision requiring any such property to be offered for sale to a person, or class of persons, specified in the order.

(3)  Where an order is made under subsection (1), the court may direct that the order, or such provision of the order as the court may specify, shall not take effect until the occurrence of an event specified by the court or the expiration of a period so specified.

(4)  …

(5)  …

(6)    …. ”

82.  I have already explained the difference and the interplay between a “primary” order and an “ancillary” order made under sections 4, 5, 6 and 6A of the MPPO in my judgment of LYL formerly known as LLY v CPL [2016] 4 HKLRD 283 at [16] to [28] therein.

83.  Since the property sale order made by the deputy judge is an “ancillary” order, it follows that all subsequent orders of time extension to sell the Hunghom property given by this court or by Master Lam (as outlined in the earlier part of this judgment)  are also and merely “ancillary” orders by their nature, and thus do not and cannot be taken as varying the primary order and its due date of payment, namely 14 April 2020.

84.  I do not accept Ms Daley’s submission that Order 32 rule 16 of the Rules of the District Court is engaged here, let alone that according to rule 3 of the MCR, it is the Rules of the High Court, Cap 4A that should apply to matrimonial proceedings. Further, it must be telling that the order made by the Master in the 18/11/2024 Hearing is not to endorse the husband’s applications but to allow him to withdraw his applications. After all, the transcript of the 18/11/2024 Hearing is not made available by the husband in this trial.

85.  To sum up, I reject the submission of Ms Daley that according to the AR Judgment, the AR Sum was and could only be payable upon the sale of the Hunghom property. 

86.  However, before leaving this topic, there is an important point that warrant discussion. I have already invited the parties to make further legal written submission and referred them to the judgment of the Court of Appeal (Lam VP, Kwan and Barma JJA)  in TCWF v LKKS [2014] 2 HKLRD 1046.

87.  At the time when the deputy judge made the lump sum order of $4,115,000, decree absolute has not been granted. Section 25(1)  of the MPPO provides that no order under sections 4, 6 or 6A shall be made unless a decree nisi has been granted, but no such order “shall take effect unless the decree has been made absolute”.

88.  It needs no explanation that section 25 does not affect the due date of payment of the MPS ordered in the AR Judgment, which is 14 April 2020.

89.  The issue concerns the due date of the lump sum payment of $4,115,000. Should this lump sum be due on the date specified in the AR Judgment, namely 14 April 2020, or on the day when the lump sum order took effect pursuant to section 25 of the MPPO, which is the date of the decree absolute (21 January 2022)?

90.  Ms Daley for the husband submitted that TCWF would apply only when two conditions were satisfied: (i)  the liability arose from a final lump sum order; and (ii)  the payer had the financial capacity to pay but unreasonably delayed the payment. Ms Daley said that condition (ii)  was not met in this case, as the husband lacked liquidity before the sale of the Hunghom property but he paid promptly upon receipt of the sale proceeds.

91.  For obvious reasons that need not expand, Ms Lau for the wife advanced that TCWF was directly relevant and applicable.

92.  I have already explained at length the views and findings of the deputy judge on the husband’s financial ability and resources, including undisclosed financial assets, in the earlier parts of this judgment, and thus will not repeat myself. I reject Ms Daley’s submission that TCWF should be distinguished. 

93.  In my judgment, TCWF is the authority squarely on this issue, which is binding on the family court. There, the Court of Appeal was tasked to determine if interest of a lump sum payment should run from the date specified by the trial judge in the judgment (ie 1 December 2011), or from the date of the decree absolute (ie 5 April 2013). It was argued that the Court of Appeal could not stipulate a date of payment which the trial judge did not have the power to order. Lam PJ (then Lam VP)  went through a number of English authorities but concluded that there was “no direct authority on this particular point”. His Lordship then went on to say this:

“23. We agree with Mr Howard that Section 25 should not be considered in isolation. It should be read together with Section 28AA of the MPPO, in particular Section 28AA(2)  which reads:

“(2)  Where a maintenance order has been made against a judgment debtor, and the judgment debtor fails to make full and punctual payment in compliance with the maintenance order, the judgment creditor is entitled to interest in respect of arrears of maintenance which accrue on or after the commencement date.”

24.  In our judgment, on proper construction of Section 28AA interest starts to accrue from the date specified for payment in the maintenance order, not from the date on which the order becomes enforceable, see Section 28AA(3)(c).” (the underlined is my emphasis)

94.  Following TCWF, I find that the lump sum of $4,115,000 ordered in the AR Judgment became due on 14 April 2020, and when defaulted, interest automatically incurred from that date onwards.

Leave to enforce arrears outstanding for more than 12 months

95.  Ms Daley argued that if the AR Sum was due from 12 May 2020 (which the husband did not agree), then the wife had failed to seek leave of the court to enforce maintenance payments which were due for more than 12 months (See: CCH v CCL FCMC 3480/2016, [2022] HKFC 282).

96.  As mentioned above at [18] of this judgment, the wife had already applied for leave to enforce outstanding MPS.  

97.  As to the lump sum payment, though I have ruled that the due date of payment is 14 April 2020, the lump sum payment order would not take effect until 21 January 2022, ie the date of the grant of the decree absolute, by virtue of section 25 of the MPPO. Before that date, the wife simply could not enforce the lump sum payment order.

98.  Within 12 months of the grant of the decree absolute, the wife took out the 14/6/2022 Summons to enforce the AR Judgment. It is very obvious that the requirement to seek leave to enforce the lump sum payment does not emerge.

Factors under section 28AA(8)  of the MPPO or section 53A(7)  of the MCO

99.  The relevant factors set out in section 28AA(8)  of the MPPO or section 53A(7)  of the MCO are considered under the following sub-headings. 

(i)  Any reasonable excuse for failure to pay the AR Sum

100.  I shall start off by reiterating what I have analysed and ruled at [72] to [75] in this judgment. Simply put, by the findings of the AR Judgment, the husband had the financial ability to pay the AR Sum to the wife within 28 days of the AR Judgment. His excuse that he had no ability to pay the wife unless and until the Hunghom property was sold cannot stand and is rejected by this court.

101.  Since the husband has erroneously claimed that the AR Sum was payable only upon the sale of the Hunghom property, his proffered explanations centre on why the Hunghom property was not able to be sold according to the timeline ordered in the AR Judgment. In particularly, he argued that:

(1)  due to the Covid-19 pandemic and bad economy, the Hunghom property could not be sold at the price ordered in the AR Judgment;

(2)  the AR Judgment provides that both the husband and the wife had the obligation to sell the Hunghom property, but the wife tried to delay the sale because she thought that the longer she delayed the sale, the more interest she could get.

102.  For completeness, I shall briefly deal with his alleged explanations in the sequence appearing in the preceding paragraph as follows.

103.  It is the husband’s mere say-so that the Hunghom property could not be sold and/or sold at the price ordered by the AR Judgment due to the Covid-19 pandemic.  Importantly, the sale price ordered in the AR Judgment came from the suggestion of the husband himself.[18] And the plain fact is that the husband is not able to provide any documentary evidence to show that he had put the Hunghom property on market to sell immediately after the AR Judgment. He only produced during the trial some estate agency agreements with two estate agencies (Exhibit R1). However, these agreements cannot come to his assistance. They were dated 4 December 2021, which were about 20 months after the due date of the AR Sum. Albeit that he claimed the economy was bad, he listed the Hunghom property for $19.8 million in these agreements (but the AR Judgment stipulated the selling price at $18 million). He did not take out any or any timely application to seek directions from the court to reduce the sale price.

104.  Although the AR Judgment provides that both parties shall sell the Hunghom property within the time stipulated if the AR Sum was not paid by the deadline, the indisputable fact remains that the Hunghom property was all along used and/or in control by the husband (or his family), because its purchase and mortgage were all funded by the husband (or his family).  Even more, according to his own affirmation, the husband also took it that the deputy judge “gave [him] the right to sell” the Hunghom property.[19]

105.  Hence, before the 5/1/2023 Order, the wife was merely a legal owner of the Hunghom property without the enjoyment, use and/or control of the property. I do not accept that she could, without armed with a court order, take the lead in selling the Hunghom property.

(ii)  Evasion of service of court documents

106.  This factor does not engage under the facts of this case.

(iii)  Past records and conduct in making maintenance payments

107.  There is no doubt that the husband does not hold good records in making MPS to the wife, whether pursuant to his own undertaking to the court, or as a result of a court order, which are already set out at [16] to [17] of this judgment.

(iv)  Any explanation given to the wife for failure to pay the AR Sum

108.  It does not occur to me that the husband has taken any initiative to explain to the wife why the AR Sum was not paid.

109.  In fact, during the hearing of 24 March 2021 in relation to the husband’s application for the grant of decree absolute, the wife objected to his application because she was not able to see the daughter according to the access order made by the deputy judge. The husband, in response, claimed that both parties had not been in contact for a long time. This prompted me to invite them to give an undertaking (which they did)  that they shall exchange their updated mobile number and shall not block each other’s telephone calls or messages. Such an undertaking has clearly stated in the order made on 24 March 2021.

(v)  Ability to pay

110.  I am not to repeat my observations made at [72] to [77] of this judgment in respect of the deputy judge’s analysis of the husband’s financial means and resources in the AR Judgment. Plainly, according to the AR Judgment, the husband had the ability to pay the AR Sum within 28 days of the judgment. It is reiterated that there was no appeal in respect of the findings and orders made in the AR Judgment.

Interest period

111.  Due to the above analysis and TCWF (supra), I rule that the husband is liable to pay interest on the AR Sum to the wife, which shall be accrued “from the date specified for payment in the maintenance order, not from the date on which the order becomes enforceable”, ie from 14 April 2020.

112.  The next issue to determine is: the interest is payable up to when? Ms Lau for the wife submitted that interest should be accrued until the date when the wife acknowledged receipt of the cheque of the AR Sum (15 April 2024). The husband’s stance is not easy to summarize, as the general tone of his submission is that he should not be held to pay any interest to the wife.

113.  There is an important milestone date which bears weight in my deliberation. Pursuant to the 5/1/2023 Order, the wife was given vacant possession of the Hunghom property of which she obtained by 1 February 2023[20]. She was also given the conduct of sale. Although there is some proof (such as estate agency agreements)  to show that she did put the Hunghom property into the market for sale, I accept, on balance, that:

(1)  after she obtained vacant possession of the Hunghom property, she moved in and/or occupied the property, as a result of which I made an order on 31 May 2023 to ban both parties from living in or occupying the property;

(2)  the wife could have taken out, but did not take out, follow-up application(s)  for further directions from the court to address to her allegations that despite she took vacant possession of the Hunghom property, the husband told the security guard(s)  of the property to ban her from entering the property, so that she could not arrange potential buyers to view the property. The evidence of her witnesses, Wong and Cheung, has been duly considered by me but I conclude that their evidence is of no assistance to her case;  

(3)  the wife was not co-operative in signing the conveyancing documents of a potential purchaser sourced by the husband, as a result of which Master Lam had to make an order on 12 August 2024 to give the conduct of sale to the husband, and to appoint his solicitors to sign the conveyancing documents.

114.  After considering the matters in the round, I conclude that interest on the arrears of the AR Sum should be calculated up to 1 February 2023, ie the Vacant Possession Date.

Interest rate

115.  Ms Daley relied on MKKWH v RKSH [2018] HKCA 932, CACV 271/2015 and submitted that even if interest was to be awarded to the wife, the rate would only be the prime interest rate plus 1%.  Ms Lau, on the other hand, argued that section 28AA of the MPPO and section 53A of the MCO should be followed, which provide that any arrears of or unpaid maintenance “shall be treated as a judgment debt” for the purposes of section 50 of the District Court Ordinance, Cap 336.

116.  It is clearly the legislative intent that simple interest as provided in section 50 of the District Court Ordinance should be adopted in calculating interest on maintenance arrears.[21]

117.  Besides, the rate of interest was also argued before the Court of Appeal in TCWF (supra). Lam PJ (then Lam VP)  ruled that “the general practice is to award interest on judgment rate” in respect of arrears of maintenance. There is no good justification to depart from the practice of awarding interest at judgment rate in this case.

118.  I thus conclude that the judgment rate should be adopted in this case.

Conclusion on interest

119.  For all the matters set out above, I find that the husband shall pay interest on the AR Sum from 14 April 2020 until 1 February 2023 at judgment rate.

Sharing of rental income

120.  The husband does not dispute that the wife is entitled to share the rental income for the period that he rented out the Hunghom property. The issues of dispute relate to the computation of such rental income, including the length of the rent-out period; whether the gross or net rental income should be shared, and in what ratio.

(i)  Rent-out period

121.  By his 29^th affirmation, the husband expressly deposed that he lived in the Hunghom property with the daughter, and only rented it out since 1 November 2021[22].  He also explained in his oral evidence that the tenancy ended on 31 October 2022 because the wife went to make trouble with the tenant(s).

122.  It is clearly not the truth that the husband rented out the Hunghom property as late as 1 November 2021, because:

(1)  according to the social investigation report dated 11 August 2021 (“SIR”), he told the social investigation officer that he moved out of and rented out the Hunghom property since February 2021. He was invited by his counsel to clarify this point in the trial. He did not expressly deny this point;

(2)  In his ex-parte application made on 11 June 2021 for an order not to disclose his true address to the wife, he was required by practice and procedure to give his correspondence address for the purpose of service, whereas his true address would be sealed in an envelope not to be seen by the wife.  The true address so given at that time was not the Hunghom property, showing more likely than not that he was not living there, at least as at June 2021.  

123.  Although the husband finally conceded in his closing submission that he rented out the Hunghom property since 1 February 2021, the aforesaid inconsistency of his evidence and the untruthful information provided in his affirmation reflect badly on him in my overall assessment of the credibility of his evidence.

124.  It is the wife’s submission that due to the evasive approach of the husband in disclosing the rental income of the Hunghom property, I should draw adverse inference that the tenancy ended not on 31 October 2022, but on 31 January 2023, ie the date immediately before the Vacant Possession Date.  I cannot accept this submission. It is obvious from the information deposed by the court bailiff in an affirmation of service that the husband and/or his tenant (Ms Sun)  was not occupying the Hunghom property as at 27 January 2023[23]. Upon due consideration, I accept, on the balance of probabilities, that the tenancy ended on 31 October 2022.

125.  I thus conclude that the husband rented out the Hunghom property without the consent of the wife from 1 February 2021 to 31 October 2022 for 21 months.

(ii)  Monthly rental income

126.  The husband deposed in his 29^th affirmation that the monthly rental income he received from the tenant was $25,650 per month, and produced a few rental receipts to support his case[24]. This was not agreed by the wife. She relied on what the husband had told this court in the hearing of 21 October 2022 that the rental income was $28,000 per month. She also relied on the SIR.

127.  In response, Ms Daley for the husband submitted that what was said by the husband in the hearing of 21 October 2022 was unsworn evidence, and thus should not be considered by the court. I take on broad counsel’s submission on this point. In all fairness to the husband, I will not regard that as part of his evidence in this trial.

128.  First of all, in assessing his allegation that the monthly rent was only $25,650, I reiterate my observation set out at [123] above as to the overall credibility of his evidence.

129.  Secondly, I shall refer to [15] of the SIR, in which the husband told the social investigation officer that he had moved out of the Hunghom property with the daughter and his girl-friend since February 2021, and thereafter rented out the Hunghom property, so that he no longer needed to borrow from his family to pay the mortgage repayment of $20,000 per month. He had “net” rental income of $8,000 per month.[25]

130.  During cross-examination by Ms Lau, the husband did not expressly or seriously dispute that the aforesaid information was provided by him to the social investigation officer. He merely said that this was the first time he saw or read the SIR. This is a blatant lie. The SIR was sent to him by the court, after which its content and recommendation were discussed with both parties by me in the hearing of 25 August 2021.

131.  At this juncture, it needs no further elaboration to see that an alleged monthly rent of $25,650, with a monthly mortgage repayment of $20,000, cannot lead to a “net” monthly rental income of $8,000. But a rental income of $28,000 per month would fit squarely well into the aforesaid calculation told by the husband to the social investigation officer.

132.  Thirdly, the husband gave another version of the “net” rental income in his 29^th affirmation, contrary to what he told the social investigation officer. In his affirmation, he claimed that the mortgage repayment was $11,591, the government rates and rent was $2,000 and the management fee was $2,100, leading to $15,691 per month. He also claimed that the “net” rental income was $139,297.30 between 1 November 2021 and 31 October 2022. But, if the monthly rent was merely $25,650 per month, the “net” rental income would be about $9,959 per month. The mathematics simply do not sit well together.

133.  Fourthly, since the Hunghom property was rented out unilaterally by the husband without the prior knowledge of the wife, it logically follows that the wife would not be in any position to tell how much the rental income was received by him. This will have to be solved by the husband’s full and frank disclosure of the tenancy agreement, with particulars and proof. For such purpose, this court had, as early as 8 December 2022, made an order that the husband shall file and serve an affirmation by 30 December 2022 on the following:

(1)  to enclose a copy of all tenancy agreements since the date of the AR Judgment;

(2)  if there was no written tenancy agreement, to provide the particulars of the oral tenancy agreement(s), including the date(s)  of the agreement(s), the duration of each tenancy, the full name of the tenant(s), the payment mode of the rents, the proof of receipt of rents such as bank statements;

(3)  the expenses incurred in relation to the Hunghom property during the relevant rental period;

(4)  to set out in a tabulated format either monthly or yearly the rental income and expenses, showing the net rental income.

134.  However, the husband did not comply with the order. Indulgence was given by this court to extend the time to 28 February 2023[26], which was further extended to 30 June 2023[27].

135.  Despite the very clear directions and the repeated indulgence of 6 months given by this court, the husband merely provided three rental receipts as supporting documentary proof on the monthly rent. He failed to frankly and wholly disclose the ordered information[28]. For example, he did not state if the tenancy was a written or oral one; if it was a written tenancy, he did not provide a copy of the relevant tenancy agreement(s); if it was an oral tenancy, he did not give all the particulars of the oral tenancy.

136.  In a word, the disclosure of the husband on the monthly rental income has not been full and frank. The law is trite that I am not bound to accept his mere say-so that the rental income was $25,650 per month, and that I can draw adverse inference against him.

137.  Upon due consideration, I rule, on the balance of probabilities, that the monthly rent of the Hunghom property at the material times was $28,000 per month. The total rental income during 1 February 2021 to 31 October 2022 was thus $588,000.

(iii)  Sharing ratio

138.  The wife seeks to share half of the rental income received by the husband. However, the husband is adamant that she should be entitled to 35% of the net rental income, as she was awarded only 35% of the family assets in the AR Judgment[29].

139.  I think it is very important to point out that despite the husband’s claim that the Hunghom property was purchased by the financial contributions from him and/or his family, it remained a property bought during marriage and jointly owned by the parties under a joint tenancy.

140.  The law on the nature of joint tenancy is well-settled. As explained in the textbook of Megarry and Wade, The Law of Real Property (10^th ed), at §12-004, the nature of joint tenancy is the “four unities” of possession, interest, title and time. On the unity of interest, the learnt authors explained at §12-006 that,

“Unity of interest

The interest of each joint tenant is the same in extent, nature and duration, for in theory of law they hold just one estate. This has important consequences:

(i)  Although in theory each joint tenant has the whole of the property, the rents and profits of the land are to be divided equally between them.

(ii)  …

(iii)  …

(iv)  ….”

141.  In my view, unless and until the husband paid the AR Sum to the wife, after which she was required to transfer her interest in the Hunghom property to the husband, it is plain that she held her interest in the Hunghom property under a joint tenancy. She should thus be able to enjoy, as much as the husband, an equal portion of the rents and profits of the property. The husband’s submission on 35% of the rental income be shared by the wife is thus rejected by me.

(iv)  Gross or net rental income

142.  Ms Lau, counsel for the wife, points out that the outstanding mortgage of the Hunghom property (then standing at $2.4 million)[30] has already been deducted from the family assets by the deputy judge in the AR Judgment, which means that the wife’s obligation to repay the mortgage has already been reflected in the reduction of the AR Sum to be paid to her. Further, it was the unilateral decision of the husband to rent out the Hunghom property. Hence, the wife should not be made to share the mortgage repayments or other expenses of the Hunghom property.

143.  The latest position and argument adopted by the husband in the closing submission of his counsel, Ms Daley, are:

(1)  The husband incurred expenses in the sale of the Hunghom property, including redemption money ($2,164,665.40), agency fee ($120,000), valuation fee ($9,000)  and legal costs of the sale ($12,729). The husband also paid mortgage repayments from March 2020 to January 2023[31] ($346,637). The total amount that the husband had paid for the Hunghom property was thus $2,653,031;

(2)  This means that the husband paid $253,031 more than the outstanding mortgage of $2.4 million that was accepted by the deputy judge in the AR Judgment;

(3)  This extra sum of $253,031 paid by the husband, the government rates and rent ($42,000 in total), and the management fees ($44,898 in total)  should all be deducted from the rental income of $538,650 received by him, making the final net balance to $198,721;

(4)  The wife should be entitled to $69,552, which is 35% of the above final net balance.

144.  I am not able to embrace the calculations and submission of Ms Daley. First, it is not provided in the AR Judgment, and thus it cannot be the intention of the deputy judge, that the wife had to share the expenses of the sale of the Hunghom property. Second, before the husband rented out the Hunghom property, he was in control and possession of it, to the exclusion of the wife. Third, the mathematics proposed by Ms Daley will effectually lead to the unfair outcome that the wife, as one of the co-owners under joint tenancy who was derived from her right of enjoyment and/or possession of the Hunghom property, would be made to share equally all the items and expenses set out in the preceding paragraph, but would receive, instead of equally, only 35% of the net rental income.

145.  As to the wife’s argument, I opine that whereas the wife is entitled to share half of the rental income unless and until she received the AR Sum and then transferred her interest in the Hunghom property to the husband, fairness dictates that she, as the co-owners under joint tenancy, should equally share the expenses relating to the Hunghom property, including mortgage repayments, government rates and rent and management fees during the period when the Hunghom property was rented out.

(v)  Final calculation

146.  The final net rental income for the rent-out period of 1 February 2021 to 31 October 2022 is thus $293,120 as follows:

Item	Total
Rental income at $28,000 per month	$588,000
LESS
Mortgage repayments	$207,982
Rates and government rent	$42,000
Management fees	$44,898
Net rental income:	$293,120

147.  I rule that the wife is entitled to and should share $146,560, representing half of the net rental income.

Costs

148.  The findings made in this judgment show that the wife is the overall winner of the trial. Costs should follow the event. Save and except any costs orders previously made by the court, the husband should bear the wife’s costs of the 14/6/2022 Summons and the 5/2/2025 Summons, including costs reserved and this trial, to be taxed if not agreed.

149.  Attendance of counsel is certified.

Conclusion

150.  There is a deeming provision that payments by the maintenance payers are deemed to be made in the sequence set out in section 28AA(6)  of the MPPO or section 53A(5)  of the MCO. But Ms Lau for the wife has not put forward any argument or calculations in accordance with such a sequence of payment. I shall take it that she is satisfied that such a sequence of payment can be dispensed with.

151.  According to court records, the judgment summonses set out at [18] of this judgment are still pending. With the handing down of the AR Judgment and this judgment, there is no more necessity for the court to determine the judgment summonses. For completeness and better case management, I shall make an order nisi that no further order including costs order shall be made in respect of these judgment summonses, save that the husband shall pay the filing fees of these judgment summonses to the wife. The nisi order shall be made absolute within 14 days from the date hereof.

152.  I now summarize the order as follows:

(1)  The husband shall pay interest at judgment rate on the AR Sum from 14 April 2020 to 1 February 2023 (both dates inclusive);

(2)  The husband shall pay the wife’s share of the rental income in the sum of $146,560;

(3)  There shall be a payment out of the court to the wife of the sums in the above paragraphs (1)  and (2)  within 28 days from the date hereof;

(4)  Save and except any costs orders previously made by the court, the husband shall bear the wife’s costs of the 14/6/2022 Summons and the 5/2/2025 Summons, including all costs reserved and this trial, to be taxed if not agreed. Certificate for counsel is granted;

(5)  An order nisi that no further order including costs order shall be made in respect of the judgment summonses mentioned at [18], save that the husband shall pay the filing fees of these judgment summonses, if any, to the wife. The nisi order shall be made absolute within 14 days from the date hereof, upon which the said filing fees shall be paid to the wife out of the payment into court within 14 days thereafter;

(6)  The wife’s costs mentioned in paragraph (4)  above shall be paid out from the payment into court, within 14 days upon the agreement of the wife’s costs by the parties (if any), or upon conclusion of the taxation, whichever is the earlier;

(7)  After the payments out of court to the wife pursuant to paragraphs (1)  to (6)  above, any remaining amount kept in court shall be paid out and released to the husband.

153.  The wife’s legal team shall draw up this order for approval. They shall also proceed to liaise with the husband’s legal team on their costs or commence taxation proceedings without delay.