ZYM also known as ZYM v. LYK AND OTHERS

HCMP 1828/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 1828OF 2014

(ON AN INTENDED APPEAL FROM FCMC NO. 14539 of 2007)

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BETWEEN

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  This is an application for leave to appeal against the judgment of Judge KW Wong [“the Judge”] in FCMC 14539 of 2007. By his judgment of 23 May 2014, the Judge granted ancillary relief in divorce proceedings to the Petitioner (wife) by way of periodical payments:

(a) In the sum of $8,000 for her own maintenance;

(b) In the sum of $16,000 each for the maintenance of the two children of the family.

2.  The Judge made no order as to costs.  One of the parties is the 3^rd Respondent, to whom certain business interest of the 1^st Respondent (husband) was transferred.  The 3^rd Respondent sought costs unsuccessfully before the Judge.

3.  The important findings of the Judge were as follows (as summarized by him at para 3 of his decision on leave to appeal dated 14 July 2014):

“i) The arrangement between the Husband and 3^rd Respondent in respect of Old/New Sun Yick was a sham arrangement with a view to put the family assets beyond the Wife’s reach;

ii) The Husband and/or the 2^nd Respondent were beneficially interested in another vehicle spare parts trading business called Shing Fat or somehow have control of or interest in it. The Husband and the 3^rd Respondent were working for Shing Fat at the time of the trial and the 2^nd Respondent frequently visited Shing Fat;

iii) Both the Husband and the Wife had failed their duties to make full and frank disclosure of their assets and liabilities. The whereabouts of the assets of the Old/New Sun Yick had not been disclosed. The Donghai Apartment and the securities trading accounts were found not trust properties as alleged by the Wife. The debts allegedly incurred by the parties were not believable and therefore not genuine debts as said by them. As such the assets and liabilities of the parties for the purpose of the ancillary relief trial cannot be ascertained; and

iv) The Court therefore proceeded on the basis the Husband was still in control of a business with size and earning power similar to Old Sun Yick while the marriage was intact. The earnings from such business might well exceed $70,000 a month, but it was reasonable to pitch the Husband’s total earning per month at $70,000. It is a good and reasonable yardstick of the Husband’s earning capacity for the purpose of the Wife’s ancillary relief claim.”

4.  The 1^st Respondent (husband) and the 3^rd Respondent applied for leave to appeal before the Judge.  Leave was refused by the Judge on 14 July 2014.

5.  They now apply to this court for leave to appeal.

6.  Pursuant to s 63A(2) of the District Court Ordinance Cap 336, leave to appeal should not be granted unless this court is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.

7.  Having read the grounds of appeal in the draft Notice of Appeal submitted by the 1^st and 3^rd Respondents and the written submissions advanced by counsel for the Petitioner, we are not satisfied that the appeal has any reasonable prospect of success.  Nor do we see any other reasons in the interests of justice to have the appeal heard.

8.  Counsel for the 1^st and 3^rd Respondents summarized the proposed grounds of appeal as follows at paras 5 and 6 of the statement filed in support of the application for leave:

“5. In relation to R1, it is submitted that the Judge had erred in the following respects:-

(a) The Judge erred in concluding that R1 and/or R2 are beneficially interested in Shing Fat or somehow have control of or interest in it (para.67 of the Judgment).

(i) It was never P’s case that R1 and/or R2 have beneficial interest in or somehow have control of Shing Fat – this was not raised in P’s Petition, affirmations or closing submissions.

(ii) The Judge misapprehended the evidence and erroneously thought that it was the evidence of R3 that R2 kept the keys to the desk of Shing Fat’s “boss seat” (para.62 (xiii)) of the Judgment), and on that misapprehension concluded that R1 and/or R2 have beneficial interest in or control of Shing Fat.

(b) Having correctly found that P had substantial hidden assets, the Judge had failed to order P to bear some of the responsibility for the maintenance of the children.

(c) In ordering R1 to make periodic payments to P of $40,000 per month, the Judge had exercised his discretion erroneously in that:-

(i) He had failed to have regard to the respective financial resources of the parties.

(ii) He had erred in over estimating R1’s earning capacity.

(iii) He had erred in failing to consider R1’s inability to meet the obligation to make periodic payments.

(iv) He had failed to take into account R1’s own reasonable financial needs.

6.   In relation to R3, it is submitted that the Judge had erred in the following respect in making no order as to R3’s costs:-

(a) No relief was claimed against R3 at all.  The only reason why R3 was kept a party was that “… If the 3^rd Respondent ceased to be a party, in the event evidence revealed at trial showed that family assets or part thereof remained with him, the Wife would not be able to seek any order against him.” (para.46 of the Decision).

(b) It is wrong in principle to deprive R3 of his costs in circumstances when he was kept by P as a respondent for no reason other than to enable P to fish for evidence which may support a relief against R3.”

9.  On the question as to beneficial interest in Shing Fat, we do not see any merit in the argument that it was not the Petitioner’s case that the 1^st Respondent had such a beneficial interest.  It was not a ground raised before the judge when application for leave to appeal was made before him and when the matter was handled by counsel who acted for the 1^st Respondent and solicitor who acted for the 3^rd Respondent at the trial.  There is no explanation by these respondents (through their current counsel) why this ground was no canvassed before the judge at that application.  In the closing submissions advanced on behalf of the Petitioner at the trial, there was an allegation that the 1^st Respondent brought the goodwill of old Yick Sun to Shing Fat (see pp.115 and 135 of the bundle of documents before us).  We do not have the transcript of the trial.  However, in such circumstances, bearing in mind what had been said in Singh Arjun v Secretary for Justice [2014] 2 HKLRD 678 as to the relevance and importance of the first tier decision on a leave application, and the closing submissions of the Petitioner at the trial, and the proactive duty of a family judge to consider relevant matters under s 7 of the MPPO, we cannot accept Mr Ko’s bald assertion that the question of Shing Fat had not been raised below.

10.  In respect of the contention as to misapprehension of evidence, the judge had adequately dealt with it in his decision of 14 July 2014 at paras 13 to 21.  Since the judge only awarded relief by way of periodical payments and in light of the unassailable findings by the judge as to the concealment of assets, we cannot find fault with the judge’s overall approach in the matter.    

11.  As regard the submission of Mr Ko that the judge should draw the adverse inference against the wife that she had sufficient means to support herself and the children, we do not think the judge can be criticized for not adopting such approach when he also found that the 1^st Respondent had hidden assets.  After a very full and careful review of the relevant evidence, the judge reached the conclusion that it was within the 1^st Respondent’s means and earning capacity to pay the periodical payment to support the wife and the children as he did before the breakdown of the marriage (see paras 108 to 117 of the judgment of 23 May 2014).

12.  On the appeal by the 3^rd Respondent against the costs order, it must be emphatically stated that costs is a matter of discretion and this court will not lightly interfere with such a decision. In light of what the judge said at paras 39 to 55 of the decision of 14 July 2014, the intended appeal against the costs order in respect of the 3^rd Respondent is doomed to fail. 

13.  For these reasons, we refuse to grant leave to appeal.  We are also of the view that the application is totally without merit.  Pursuant to Order 59 Rule 2A(8), we make an order that no party may request this determination to be reconsidered at an oral hearing inter partes.     

14.  We also order the 1^st and 3^rd Respondents to pay the costs of the Petitioner in this application.  Regrettably, solicitor for the Petitioner did not lodge a statement of costs in accordance with the directions of the Chief Judge notwithstanding the reminder in the letter of 29 July 2014.  Having regard to the complexity of the matter and the contents of the submissions advanced before us, we would provisionally fix the costs of the Petitioner at $40,000.  Any party who wishes to have that provisional assessment revised may lodge written submissions (not more than 5 pages) within 7 days from the handing down of this judgment.  The other party shall have another 7 days to lodge a reply.  Parties should however note that this court will bear in mind the default of the solicitor for the Petitioner as mentioned above in the consideration of an application for such revision.  We may also make a separate costs order for the round of submissions on the quantum of costs, depending on the outcome in an application to revise our provisional assessment.