LI KAI CHUNG v. LI TSANG LAI HING

CACV 4110/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 4110 OF 2001

(ON APPEAL FROM FCMC 8932 OF 1996)

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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 decision of Deputy Judge Levy given last week on 21 December.

2. Two applications were before the judge on that occasion. The first application was an application that execution of the judgment of the deputy judge dated 30 October, for the petitioner to vacate the matrimonial home be stayed pending determination of an appeal from that judgment. The other application was an application by the respondent, that the petitioner should comply with the order dated 30 October and vacate the property.

Background

3. The matter arises in this way. The petitioner, Mr Li, was formerly married to the respondent. There is a long history of the divorce proceedings. But I can take it shortly from an order made by Deputy Judge Leung on 20 January 1999. He ordered the sale of the former matrimonial home, with vacant possession, the sale to be made by an estate agent and a conveyancing solicitor to be appointed by the respondent ("wife"). He ordered that the petitioner ("husband") should vacate the former matrimonial home within one month of his order and he made provision should that vacation not take place.

4. As regards the proceeds of sale, after the deduction of the various bills and expenses, those should be distributed as follows: the wife to take 70 per cent and the husband to take the remainder 30 per cent.

5. As it transpired, the petitioner ("husband") did not vacate the former matrimonial home, which is a flat in Mei Foo Sun Chuen, and eventually, a writ of possession was obtained in August 2000.

6. I can come swiftly to the order made by Deputy Judge Levy dated 30 October 2001. That follows a written judgment of hers dated 26 October of the same year. The petitioner ("husband") had found himself in difficulties because he was in rented accommodation; with the former matrimonial home unsold, he considered that it was better if he should be able to reside in that former home, at least until it was sold.

7. The petitioner was prepared to give an undertaking, however, that he would vacate the matrimonial home on or before the signing of an agreement for the sale of that home. He was to pay a sum of $1,500 per month, pending that, which would represent rent. At the end of her judgment, the deputy judge stressed the undertaking which the petitioner husband had given, and she said this: "Mr Li, let me warn you again, that despite my allowing you to move back to the matrimonial home, I do have my concerns, and I wish you to understand all the undertakings that you have given, and you will strictly comply with those undertakings. Do you understand?" And the petitioner is recorded as saying: "I understand, your Honour."

8. The petitioner husband gained access to the premises. There is no need to record any disagreement as to the manner in which that was obtained, but the wife was able to find a purchaser. Apparently the flat had been on the market at $1.5 million, but the wife had not been able to secure a purchaser at that price. She was, however, able to secure a purchaser at the price of $1,305,000, and that, in the circumstances, was considered acceptable in view of the state of the property market and, indeed, the state of the flat. In this court we have been shown various advertisements for flats in Mei Foo Sun Chuen. It would appear that the asking price for different flats are very different. No doubt, the state of the accommodation, its outlook, and so forth, would make a material difference to the asking price. For my part, I am unable to discern any proper basis, from looking at those advertisements, as to a valuation of the property, save that the price of $1,305,000 does appear to not be outside the limits of the asking prices of the various flats.

9. The petitioner husband, however, was unwilling to sign the provisional sale and purchase agreement. It was eventually signed by the Registrar of the court on his behalf. The provisional sale and purchase agreement, as all other such agreements, provides for the entering by the parties into a formal sale and purchase agreement. That has not been done in this case, simply for the reason that the Registrar has been unwilling to proceed further in view of complaints which have been made in respect of his signing the provisional sale and purchase agreement, and the petitioner husband has been unwilling to sign the sale and purchase agreement at the price of $1,305,000.

10. In an affirmation of the petitioner husband, dated 19 November of this year, he puts the bottom-line figure, which he considered the former matrimonial home to be worth, as $1.6 million, and I quote: "In fact, I have instructed all the estate agencies appointed by the respondent, that the sale price must not be below $1.6 million because I have checked, to the best of my ability, that $1.6 million is at present the market value of the former matrimonial home."

11. We have been shown a copy of the fourth affirmation of the petitioner husband, which exhibits thereto a fax, directed from the Commissioner of Rating and Valuation to the Director of Legal Aid. That fax is dated 3 December of this year, and it states: "My valuation of the above property on vacant possession basis, as at 3 December 2001, is $1.7 million." How that valuation was arrived at, we are not informed; whether the Commissioner of Rating and Valuation, in fact, inspected the property or merely made his valuation from his own records, is unknown. Suffice it to say that even the best valuations can be at variance, and what the true market value of any property is is what a willing buyer is prepared to pay for it.

12. When the matter came before the deputy judge last week, on 21 December, the petitioner husband had applied for legal aid, we are told, on 19 December. As such, there was a memorandum from the Legal Aid Department. In normal circumstances, that would mean that all proceedings are stayed pending the outcome of the application for legal aid. It, however, appears that this is by no means the first application for legal aid made by the petitioner husband; a number have been listed in previous years. Indeed, in an affirmation dated 12 November, the petitioner himself says that he had applied for legal aid, presumably, some time in - probably October or very early November, because on 2 November he had been sent a letter by the Legal Aid Department asking him to attend an interview on 14 November. It appears that that application for legal aid was unsuccessful. The petitioner husband has sought to explain the lack of success; his explanation does not seem to accord with what I would have expected and I can only remain dubious as to the reasons for the refusal of that application. Suffice it to say, however, that the application for legal aid has been recently renewed.

13. The deputy judge refused to proceed further with the two applications before her on 21 December. She did so on the basis that the application had been made and that, therefore, there was an automatic stay. We have no record of the reasons for her decision in that regard and, therefore, this court has to do the best it can in approaching this matter.

14. The provisional sale and purchase agreement provided for completion on 24 December, and we are told that completion has been delayed till 5 o'clock this evening, 28 December. There is, therefore, this urgency in the matter, that unless something is done, both to obtain vacant possession immediately and to provide for execution of the assignment, the sale will not proceed. That may have two effects. In the first place, it will render the parties liable to pay compensation to the purchaser for failing to complete, but it may also mean that the sale is never completed. In present circumstances, it is an unknown factor as to whether a sale will ever be completed at this price. It may be that the price of properties will rise, it may be that it will stay the same, it may be that it will fall. It is not for this court to predict what would happen. Suffice it to say, however, that the order for sale of the property was made a very long time ago. The basis upon which the petitioner husband was allowed to return to the premises was specifically on his undertaking to vacate the premises when a sale and purchase agreement was entered.

15. In those circumstances, and Deputy Judge Leung's order now having been in existence for nearly three years and not having been appealed, it seems that either it is put into effect or it must be varied in some way or another.

16. Given the present situation, it appears to me that the correct course in the court below would have been for the court to exercise its discretion under section 15 of the Legal Aid Ordinance to lift the stay of the proceedings and to grant the orders which were sought by the respondent ("wife").

17. On this appeal, what is sought are a number of orders which will permit the sale to take place this evening and I will refer to these now.

18. In the first place, an order for possession of the former matrimonial home is sought. In the second place, the stay of the proceedings should be lifted, under section 15 of the Legal Aid Ordinance. In the third place, the petitioner husband should be ordered to vacate the former matrimonial home and to deliver the keys thereof prior to completion. Although the time of 5 o'clock is put, in my view it would probably be too late to complete the transaction and the petitioner husband should, at least, vacate the property by 4.30 at the latest, otherwise there is a danger that vacant possession may not be given.

19. In view of the disputes which have arisen between the parties, it is clearly appropriate that the Registrar should be specifically empowered to execute the formal sale and purchase agreement and any necessary assignment on behalf of the petitioner husband.

20. These orders, in my view, should be made conditional upon this: that in view of the dispute between the parties as to the correct price for the former matrimonial home, the respondent ("wife") should pay into court, out of the proceeds of sale, the balance of the difference of the husband's entitlement to the proceeds of sale, between the price at which the property has in fact been sold and the price put by the husband in his affidavit of 19 November, to which I have referred. I take that price in preference to the $1.7 million because that was a current price which the petitioner husband had obtained from, as he says, local estate agents. In my view, given the fluctuations in the property market over recent months, they are far more likely to be attuned to what the property can be sold for than the Rating and Valuation Department. The Department would, no doubt, proceed upon their own records, which may be anything up to six months or more out of date and would, in any event, probably be based upon averages and not on specific properties.

21. In those circumstances I would be prepared to make the order sought, subject to the undertaking in respect of the amount, which comes, on my calculation, to $88,500 being paid into court. There would be liberty to the respondent wife to apply to uplift that amount after the expiration of two months should no application or claim be made by the husband for that amount.

Hon. Hartmann J:

I agree with the judgment of my learned brother.

Hon. Suffiad J:

I agree with the judgment too, and have nothing to add.