LPKP v. PTPR

FCMC 11056 / 2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NUMBER FCMC 11056 OF 2005

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J U D G M E N T

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Introduction 

1. This is an application by a Petitioner Wife for leave to amend an order dated the 6 June 2006. She seeks an amendment in the following terms:

2.  The Respondent do pay the Petitioner payments for her maintenance at the rate of HK$35,000.00 per month, the first payment to be made upon signing the Consent Summons dated 14th December 2005 and subsequent payments on or before 3rd day of each succeeding month during the joint lives of the parties until the Respondent Petitioner shall marry, whichever is the shorter.

2. The wife says that the periodical payment should be paid to her during the joint lives of the parties or until her remarriage. Whereas the husband maintains that the original wording should stand and that the maintenance payments should be paid during the joint lives of the parties or until his remarriage. The wife’s argument is simple. She says that there was a mistake in the original draft consent summons and that now that the mistake has been discovered, it should be rectified. The husband for his part says that the original wording is a true reflection of the agreement entered into by him and the wife.  

Background

3. The parties married on the 4 March 1995 and had three children, who are now aged 13, 12 and 9 respectively. The parties separated in June 2002 and on the 4 October 2005 the wife filed for divorce based on two years separation. The husband is a Dr by profession. The wife previously worked in the insurance business. The parties entered into a consent summons in or around 24 November 2005. They agreed inter alia to have joint custody of the children with care and control to the husband and reasonable access to the wife. In addition to the agreement on periodical payments it was also agreed that the husband would pay the wife HK$4 million in two tranches, the first tranche in the sum of HK$3 million to be paid on or before February 2006 and the balance of HK$1 million to be paid on or before the end of December 2010. The decree absolute was pronounced on the 25 August 2006. In October 2007 the husband remarried. It does not appear to be disputed that the husband did not initially pay all of the HK$3 million as agreed. By the time of the hearing the husband had settled all outstanding sums. The remaining tranche of HK$1 million is due to be paid by the end of this year.

The wife’s case 

4. It is the wife’s case that it was always the intention of the parties that the maintenance should continue until her remarriage. She says that the order was mistakenly drafted and that it should now be corrected.

5. It seems that the parties negotiated the terms of their agreement directly and without the assistance of lawyers. By all accounts the negotiations were protracted and took place mainly over the phone.

6. In support of her case the wife has produced a floppy disc, which contains two term sheets setting out various terms of agreement. It is her case that, as set out in the draft, one of the terms of proposed settlement included a maintenance payment during the parties’ joint lives or until her remarriage. Eventually the wife instructed Messrs Huen & Partners to prepare a consent summons in accordance with the parties’ agreement. She sent Huen & Partners a fax setting out the agreed terms. The consent summons was prepared. It was signed by the parties and sent to court. Deputy Judge Remedios, as she then was, raised a query, which was not taken up by the clerk at Huen & Partners and an order was eventually made in terms, after some revision.

7. In October 2007 the husband remarried. He continued to pay the wife maintenance of HK$35,000 per month.  

The husband’s case

8. The husband maintains that it was always his understanding that the maintenance for the wife would be paid until his remarriage. He denies that the term sheets, on the floppy disc, represent negotiations entered into by the parties during their period of negotiation. Although he accepts that he continued to pay the wife after his remarriage, he says that this was in part payment of the outstanding lump sum payment due and owing to her at that time.

The issues to be determined

9. Should the consent order be amended, and if so on what grounds?

The law

10. Counsel for the wife helpfully summarized the law in his opening as follows:

Summary of the Law

20.    The Court may at any time upon application order that a clerical mistake or that an error arising from accidental slip or omission in an order be corrected: see RDC O.20 r.11; Hong Kong Civil Procedure 2010 (Vol. 1) at §20/11/4.

21.    The Court’s power to amend its order under the “slip rule” also applies to consent order or judgment: see The Law and Practice of Compromise (6th ed.), §§4-30 – 4-36.

22.    The power to amend consent order under the “slip rule” will arise where the mistake of the consent order has occurred as a result of mutual mistake.  Such power will equally arise where the mistake of one party which was known to the other who did not draw attention to the mistake: see Thomas Bate Ltd v. Wyndham’s Ltd [1981] 1 WLR 505 (CA), at 515E-516B, 520H-521B; Islam v. Askar (CA), 13 October 1994 (lexis transcript).

23.    Further, the power to amend under the “slip rule” can also be exercised where the mistake was made by solicitors: see Man Ping Nam & Anor v. Man Fong Hang (2007) 10 HKCFAR 140 (CFA), at §§19-20.

24.    As far as the timing of the application is concerned, undue delay is not itself a ground for refusing to correct a judgment under the “slip rule”, at any rate where the delay has not caused the opposite party to omit to take or to take any step which he otherwise would have taken or refrained from taking: see Tak Ming Co v. Yee Sang Metal Suppliers Co [1973] 1 WLR 300 (PC) per Lord Pearson, at 306G-H; Hong Kong Civil Procedure 2010 (Vol. 1) at §20/11/4.

Discussion

Should the consent order be amended, and if so on what grounds?

11. The husband says that the original order should not be amended. He says that the order accurately reflects the agreement reached. In his closing he put it thus:  

25.    The Respondent’s evidence in that all along, it was the mutual agreement between the Petitioner and himself that PP should cease upon his remarriage.  He says this is because:-

(a)    he would not have otherwise agreed to pay a lump sum of $4 million which represented nearly all of the combined assets between the Petitioner and himself, as he still had to shoulder the maintenance of the 3 children all by himself;

(b)   together with PP of $35,000/month as he knew it would be a finite sum ending with his imminent remarriage which at the time of the consent summons he calculated to be in about a year’s time;

(c)    the Respondent said there would be no reason for him to pay PP till the Petitioner’s remarriage, as in so doing, he would in essence be supporting the Petitioner and her boyfriend, whose affair, in his mind, contributed to the breakdown of the marriage;

(d)   the Respondent said upon selling the Fortress Hill matrimonial home (which was envisaged at the time of the consent summons), he would be left with about $3.3 million (clear of all debts and expenses), which would be sufficient to pay the 1st instalment of the lump sum, if he had rented a place to live thereafter.  It was by chance that the Grande Promenade premises became available, which suited his needs and was very close to the children’s schools that he decided to buy it by putting 5% as down payment (as it was uncompleted at the time of purchase) that he was unable to pay the first $3 million as 1st instalment as per the court order, as he had to pay hefty interest to the developer, the mortgagee plus having to save up for the 2nd instalment, as well as shouldering the expenses for the family.

12. The difficulty with the husband’s arguments in this respect is that they seem to be largely circumstantial. There is no evidence to show that he actually conveyed any of these concerns to the wife, either during the period of the negotiation or afterwards. He was not legally represented at the time.

13. In any event the husband’s arguments do not adequately counter the evidence of the clerk from Huen & Partners – Mr Wong. The husband suggests that Mr Wong’s evidence is not to be believed and that he was not truthful. With respect I do not agree. I found Mr Wong to be a wholly credible and believable witness. He explained that he had not represented the wife during the divorce negotiations and that his firm had been asked to simply draw up a consent summons and to process the divorce, which they did. He was clear that it was standard practice that maintenance payments would continue until the person who was receiving the payment remarried. He said that this case was no exception. Unfortunately he used a precedent for drafting the consent summons and he mistakenly included a clause that the payments were to be made until the husband remarried as opposed to the wife. He apologised for his mistake. When asked what his understanding was of the comment made by the Judge, in relation to the paragraph on periodical payments i.e. “is that the agreement of the parties – as not the usual wording”, he said that he did not read the document “word by word”, “that different Judges used different wordings”, that it “was only an issue of words” and that he glanced at the document and made the simple amendments. He confirmed the amendments with the wife. He did not go through the complete document with her. He accepted that he had made a mistake.

14. The husband points out that there were 7 different occasions when the error should have been obvious to Mr Wong:

(a) when drafting the consent summons;

(b) when he read it to the Petitioner;

(c) when he received the judge’s queries;

(d) when he told the Petitioner of the proposed amendments;

(e) when he wrote the letter to the judge (C-10);

(f)   when he drafted the order (C-5);

(g) when he received the perfected order.

15. In those circumstances the husband argued that Mr Wong has not been truthful. I do not accept that to be the case.  

16. I do accept that as far as the wife is concerned the agreement between her and the husband was that the maintenance payment should continue to be paid until her remarriage. The wife produced the floppy disc as evidence of the negotiations between the parties. I accept this as evidence generally that the parties were in the process of trying to negotiate an agreement. I do not accept it as evidence of the particular agreement entered into.

17. It also seems to me unlikely that the husband would have continued to pay the wife maintenance after his remarriage if he genuinely believed that his obligation to pay periodical payments came to an end at that time. I do not accept that he continued to pay simply in order to ease her financial burden or to reduce the outstanding sum due and owing to her at that time. Again, even if this was in his mind, it is not something that appears to have been communicated to the wife, until they argued about money in or around August 2008.

18. Generally I also accept that it is illogical for the wife to have agreed to her maintenance stopping upon the husband’s remarriage – an event over which she had no control and which was in no way representative of her own financial situation.

19. Do I though have the power to rectify this mistake under the rules? I accept that the mistake was made by Mr Wong and therefore it seems to me that just as the power to amend under the slip rule applies to solicitors, it must surely also apply to employees in solicitors firm, who are undertaking legal work. I can also amend clerical mistakes. It seems to me that this was a clerical mistake made by Mr Wong. The wife gave instructions to Mr Wong. Although the evidence as contained in her fax simply states “monthly maintenance fee by R to P: HK$35,000”, I accept that it was her intention that maintenance payments should be paid as one would normally expect in the circumstances – i.e. during the joint lives of the parties or until her remarriage. Certainly there is nothing in the fax to support the notion that the maintenance payments would stop upon the husband’s remarriage. I accept that she gave instructions to Mr Wong and that Mr Wong subsequently made a mistake. It seems to me that that is where the matter might have properly ended.

20. But there are also other issues. The wife says that the central issue is what was the “true bargain” between the parties. If the true bargain was that the husband was to pay maintenance to the wife until her remarriage then it follows that the amendment should be made. This is of course where a lot of the dispute lies. In the wife’s closing submission, she argues as follows:

2.    It appears that there is no dispute that this Court has power to amend a consent order under the “slip rule”.

3.    It also appears to be not in dispute that the “slip rule” applies where:-

(1)   The mistake has occurred as a result of mutual mistake; or

(2)   The mistake of one party which was known to the other and the latter did not draw attention to the mistake.

See: The Law and Practice of Compromise (6th ed.), §§4-30 – 4-36 Thomas Bate Ltd v. Wyndham’s Ltd [1981] 1 WLR 505 (CA) at 515E-516B and 520H-521B

4.    It follows that the central issues involved in this application is what was the true bargain between the parties down to the time when the Consent Summons was signed.

5.    If this Court is satisfied that the true bargain was for H to pay monthly maintenance until W’s remarriage, it follows that:-

(1)   This Court should exercise its power to amend the Consent Order; and

(2)   This Court should do so irrespective of whether or not H was aware of the mistake in the Consent Summons at the time when he signed it because:-

(a)    If he was not aware of the mistake, the mistake would be a mutual one;

(b)   Even if he was aware of that mistake, the principles laid down in Thomas Bate would still apply such that H is precluded from resisting this amendment application.

21. I accept that on the balance of probabilities that the true bargain here is more likely than not to have been that the periodical payments should have been made to the wife until her remarriage. If the husband signed the consent summons and later found out that a mistake had been made, then the mistake may be said to have been a mutual one.

22. Even if that were not the case I may nevertheless rely on the test developed in Thomas Bates Ltd v Wyndham Ltd [1981] 1 WLR 505. At p 515 A Buckley LJ said as follows:

 I think it must be shown first, that one party A erroneously believed that the document sought to be rectified contained a particular term or provision, or possibly did not contain a particular term or previous which, mistakenly, it did contain; secondly, that the other party B was aware of the omission or the inclusion and that it was due to a mistake on the part of A; thirdly, that B has omitted to draw the mistake to the notice of A.  And I think there must be a fourth element involved, namely, that the mistake must be one calculated to benefit B.  If these requirements are satisfied, the court may regard it as inequitable to allow B to resist rectification to give effect to A’s intention on the ground that the mistake was not, at the time of execution of the document, a mutual mistake.

23. I agree. In this case the wife erroneously believed that the order contained a clause stating that periodical payments were to be paid until her remarriage. The husband was aware that this was not the case. Although this was not the wife’s fault it was certainly the fault of her legal advisers. The fault lay at her door and not at the door of the husband. The husband did not draw this to the attention of the wife until very late in the day. Once the true situation was known the wife took steps to rectify the situation. The mistake was calculated to benefit the husband. Thus it seems to me that all elements are satisfied. I accept that it would therefore be inequitable to allow the husband to resist amending the consent summons on the basis the “mistake” was not a “mutual mistake”. 

24. Therefore I will make an order in terms of paragraphs 1 and 2 of the inter partes summons dated the 10 November 2008. The Respondent shall pay the Petitioner’s costs, to be taxed if not agreed, including costs reserved on the 14 May 2009. There shall be certificate for counsel.