WAN WAI HEI WESLEY AND ANOTHER v. GOLDEN LAKE DEVELOPMENT LTD AND OTHERS

CACV 247/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 247 OF 2008

(ON APPEAL FROM HCA NO. 22 OF 2007)

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J U D G M E N T

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Hon Rogers VP:

1.  This is an appeal from a judgment of Deputy High Court Judge Gill given on 5 August and a subsequent order made on 19 August, whereby it was ordered that the order of Master Hui made on 30 May 2008 be set aside and the 4th Defendant’s application for interim payment on the counterclaim be dismissed, and that the costs of the hearing with certificate for one senior counsel, and the costs of the hearing before Master Hui with certificate for one counsel on the first day and certificate for one counsel on the second day, be to the 1st Plaintiff in any event, seeking an order that the order of Master Hui made on 30 May 2008 be restored and that there be an interim payment be granted to the 4th Defendant in terms of its summons dated 19 November 2007, and for an order that the 1st Plaintiff pay the 4th Defendant’s costs of this appeal and at the hearings before Deputy High Court Judge Gill and Master Hui with certificate for one counsel.

2.  These, I have to say, are very strange proceedings.  The 1st Plaintiff sues on his own behalf and is seeking as a shareholder of the 1st Defendant to bring a derivative action.

3.  The long and short of the case is that the 1st Defendant was the owner of a house which was the matrimonial home of the 1st Plaintiff and the 2nd Defendant.  The 3rd Defendant is the 2nd Defendant’s mother and, by some means, the matrimonial home has now been transferred from the 1st Defendant to the 4th Defendant.  It is true to say that the 1st Plaintiff appears to have changed his version of events as to how he understood that that came about.  At first he was saying in the original statement of claim that it was all by smoke and mirrors and he really did not know what was going on at all.  Now he has rather changed that.

4.  Be that as it may, the simple point about this case is that the parties were divorced in August of 2006 and since that date the Plaintiff has lived in the house - and at the weekends apparently the children come to live with him.  The wife has moved out.  The wife is now in control of the 4th Defendant, which company essentially has the house.  It is quite clear that banking facilities of a very substantial amount have been obtained on that house.  How much of those banking facilities of $26 million has actually been drawn down, this court is in the dark about at the moment.  Some of it - probably $13 million or so - has been used to pay off a pre-existing mortgage.  Some of it, we are told this morning, is being used to pay ongoing day to day expenses.

5.  That is a rather strange situation, because really, one should not be using capital to pay ongoing expenses.  It is perhaps a little explained by the fact that the husband is living in what was to be the matrimonial home without paying any rent.  Whatever way one puts it, the application or the appeal today was really to force the husband to pay for his occupation of the house; whether one calls it mesne profits or rental really does not matter.

6.  At the end of the day, this case does not appear to me to be a company case.  It is a case about the matrimonial home.  How that matrimonial home should be dealt with is a matter which really should be dealt with by the Family Court.  The wife says in one of her affirmations that the reason for not including the property in the order of the court was that she considered that the house was not a matrimonial asset, and “Neither the 1st Plaintiff nor I had any beneficial interest in it”.

7.  That is rather taking company law to the extreme.  On the other hand, the Plaintiff has himself brought these proceedings on the basis it is all to do with company law and, indeed, we are told that there is another action.  We have no idea how far it has gone.  It was started in 2006 on the instructions of the Plaintiff’s parents, who own another company, who say, essentially that they are entitled to this house, having provided the finance for it.

8.  All these matters really have to be sorted out as quickly as possible.  It seems to me that the best way of doing that is to ensure that this matter is brought before the Family Court without any undue delay.

9.  Whilst it had been my initial reaction that the wife having moved out of the house and the husband remaining there, he should at least pay something for his occupation and, if he was not prepared to do that, should move out and find his own accommodation just the same as the wife has done, since this court has been informed that the wife may be using some of the facilities to pay day to day expenses, it would seem to me to be wrong to make any order at the moment even on a very provisional basis.  That matter should be looked at by the Family Court.  The Family Court is the right place not only to sort out exactly who has paid for this house and when and on what basis, but how, at the end of the day, whatever is left out of this house should be divided up between these two parties and possibly the mother-in-law or indeed the husband’s parents, if they indeed have loaned money, and this is something which, on the papers which are before this court, this court has absolutely no possibility of coming even to a provisional view.

10.  So the order that I propose that should be made is that there should be no order on this appeal, and to put the onus on the Plaintiff to make an application to the District Court within seven days and, failing that, the 2nd Defendant should also make an application within seven days thereafter if the Plaintiff does not, to the District Court under the Matrimonial Proceedings and Property Ordinance.

11.  By making that order, it seems to me that this court would be bypassing any requirement that leave should be obtained and any objection that this matter has taken a great deal longer after the divorce has been effected than otherwise should be the case.  Once the matter is before the Family Court, the Family Court can make any order that it sees fit with regard to the occupation and devolvement of the property.

12.  It would seem that the sensible thing would be to have the property sold.  Whether or not it is sensible at this stage, given the present financial climate, is quite another matter.  Whether it would be better to have the property rented out for the next few years until the property market recovers might be something that the parties have to consider.  But I would hope that sooner or later the parties can actually get down and stop what appears to me to be really shadow-boxing on both sides as to what is going on.

13.  I would therefore propose that no order be made on this appeal, but the orders as I have outlined above should be made.

Hon Le Pichon JA:

14.  I agree.