IP KU MEA WAH v. IP KING CHO

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JUDGMENT

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Bokhary J.:

1. This is the judgment of the Court.

2. The appeal before us is from an Order made by His Honour Judge Pang on July 2 this year. It is brought pursuant to his leave.

3. Essentially, although not exclusively, the case concerns the parties' former matrimonial home.

4. The parties were married here in 1972. They separated in 1987. The wife obtained a decree nisi in January this year. It was pronounced in this suit. An earlier divorce petition presented by her had been dismissed.

5. It is a "family" of four. The husband is in his early forties. The wife is in her late thirties. They have two children, both girls. The elder is in her late teens. She is in secondary school in the United States. The younger is in her mid teens. She is in secondary school here. Custody of both daughters has been given to the wife.

6. The application to the judge was the wife's. The appeal before us is the husband's.

7. The former matrimonial home to which we have referred is a flat in Mei Foo Sun Chuen. Its full address is Flat 91C, 8th Floor, Broadway, Phase 4, Mei Foo Sun Chuen, Kowloon. We will refer to it as 'the Mei Foo flat'.

8. It is in the wife's name. But it is the husband who resides in it. It is common ground that he had put up the purchase price for it. The judge was not prepared to find that it was a gift by the husband to the wife. His refusal to so find has not been challenged on appeal.

9. Upon the wife's application, the Judge made the following orders :-

10. The husband appeals against all but the fifth and seventh of those orders, seeking the setting-aside of the first to fourth and the sixth. Actually, his notice of appeal seeks the setting-aside of all but the seventh. But at the hearing before us, Miss Leong, who appears for the husband, indicated that she would not pursue the appeal against the fifth. So there is no question of setting aside the monthly periodical payments by the husband of $3,000, being $1,500 for each daughter.

11. What is the financial background against which the judge made the orders now challenged on appeal?

12. Here the judge's findings are sadly deficient.

13. In the result, we do not know much more than this about the parties : The wife was a clerk before the marriage, which was in 1972. From then until 1983 she was a housewife. In 1983 she became a film actress. She remains one today. The husband is now in the garment industry on, it would appear, a salary and commission basis. He has been in that field for various employers over the years. He has also undergone periods of unemployment. And he has also been in business on his own account.

14. Of the wife, the judge says - in the second paragraph of his judgment - that "... her average monthly income is about $9,000 for the past year.". And of the husband, the judge says - in the third paragraph of his judgment - that he "... receives a monthly salary of $8,000."

15. But in the fourth paragraph of his judgment, the judge says this :

16. So it would seem that, while what he said as to the wife's income may have been said by way of making a finding of fact, the judge made no finding as to the husband's income except perhaps that it exceeded the $8,000 per month which the husband said he made each month. We could step into the breach by saying that the husband must have been making at least $10,000 per month since that is the estimate he made on affirmation of his monthly expenditure. Beyond that, however, we have no basis to go.

17. What about the wife? According to the judge, as we have seen, she too had undisclosed financial resources. This is where there comes into the picture another property, namely Flat C on the 5th Floor of Block 1, and Car Parking Space No. G195 on the Ground Floor, of Balwin Court, 154-164 Argyle Street, Kowloon. We will refer to this property as "the Balwin Court property".

18. $1.3 million is the value which the wife puts on the Balwin Court property.

19. It is in her name. According to her, she holds it on trust for Mr Yim Ho who, she say, had put up all the money for it. It was what the judge had in mind when he referred to her having undisclosed financial resources. What he said about it appears in the fifth paragraph of his judgment which says :-

20. So the judge found that the wife had a beneficial interest in the Balwin Court property. But he has made no finding whatsoever as to the extent of her beneficial interest therein.

21. Before setting out the orders which he made, the judge said this in the penultimate paragraph of his judgment :

22. Naturally, we sympathise with the judge in his difficulties. But the first question which arises is this broad question : On such facts as the judge found, is it justifiable that any lump sum order should be made against the husband, let alone one so Draconian as to require him to vacate his residence and pay the wife $600,000 or 60% of the net proceeds of the sale of such residence whichever is the greater? In our judgment, the answer is "No".

23. This is not a case of a wife seeking financial relief having made full and frank disclosure of her means while the husband resisting such relief has failed to make full and frank disclosure of his means. In a situation such as that, the Court could properly infer that the husband withheld the truth because he realised that the truth, if known, would have supported the grant to the honest wife of what she was seeking. Here the judge found that neither party made full or frank financial disclosure.

24. Apart from the Mei Foo flat and the Balwin Court property, no substantial assets available for distribution has been identified. In regard to other assets all that has emerged in evidence may be summarised thus : The wife has jewellery and furs worth about $10,000 and 33,000 odd dollars in the bank. The husband had 56,000 odd dollars in the bank. He had lost something in the region of $500,000 of the family's savings in what the judge termed "apparently reckless speculation in Taiwan". There was about $200,000 which the wife once had but for which she gave no consistent account - and on which the judgment is silent.

25. On the wife's behalf, a value of $1.1 million was suggested for the Mei Foo flat. A value of $900,000 was suggested for it on behalf of the husband. It is reasonable, therefore, to think - as Miss Leong did - in terms of net proceeds of say $1 million. That would mean $600,000 for the wife and $400,000 for the husband.

26. The combined costs below of both sides of the suit are estimated at $400,000. The husband was, as we have seen, ordered to pay the wife's costs. Although he is on legal aid on the appeal, he was not on legal aid below. So the whole of his $400,000 share of the proceeds of the Mei Foo flat would - as things stand under the judge's Order - be swallowed up in costs. And - as things stand under the Order - he would have lost his home.

27. How does Mr Pilbrow for the wife seek to justify that scenario?

28. First of all, he argues that the wife too is left with virtually nothing even if she is the sole beneficial owner of the Balwin Court property. That is so because - his argument runs - the Balwin Court property is mortgaged to secure unlimited banking facilities for companies controlled by Mr Yim. So it is; but there is no evidence that any of those companies are unable to service or repay the loans to them secured on the collateral security of the Balwin Court property. What is more, there is the following evidence from the wife under cross-examination about her relationship with Mr Yim : He had expressed a wish to make some contribution towards the support of her daughters, although she felt ashamed to accept any such contribution from him. And although her explanation as to why the Balwin Court property was not in Mr Yim's name was essentially that it was to avoid something about his finances coming to the notice of the Revenue, she did at one stage say that she did not know why he wished her to hold the Balwin Court property for her, and added : "Perhaps he wanted to give the property to me as a gift and did not want me to feel embarrassed.". No evidence from Mr Yim was adduced.

29. Next, Mr Pilbrow argues that the lump sum for the wife was in effect for the children. The judge did not say that. And there are better ways to secure the children's position than to give the money to the mother and put it within the reach of her creditors if anything should go wrong. That consideration is not purely theoretical by any means. She admits having signed a personal guarantee for $1 million.

30. Mr Pilbrow has also suggested that the husband has a very considerable earning capacity which he is deliberately choosing not to exercise and which, if exercised, would justify the course taken by the judge. That is speculation.

31. This case has given us a great deal of anxiety. Theoretically, the making of an order the effect of which would be a fresh hearing before another judge (resulting one would hope in far fuller findings of fact) would be the best course for us to adopt. But in practical terms that would compound - and possibly complete - the near ruin which the expense of protracted litigation has brought upon this unfortunate family. There has already been : the costs of the first petition; the 400,000 odd dollars costs incurred below in this suit; and the costs of this appeal.

32. In the result, the best practical justice which we can do in this case is to adopt the following course : First, we set aside the first three orders made by the judge. So the husband will not have to move out of the Mei Foo flat; it will not be sold; and there will be no lump sum. Secondly, we leave the fourth to seventh orders undistrubed. As to the fourth order, our view is that once the lump sum goes, the wife should have at least the protection of a nominal maintenance order. As to the fifth order, the challenge to the periodical payments for the children was properly abandoned. As to the sixth order, it must be remembered that the husband had been contributing nothing to his children's upkeep. And if he did not have such heavy costs to bear, consideration would have to be given to adjusting the periodical payments for them upwards. As to the seventh order, the husband has never challenged the correctness of there being no order in respect of the costs of the earlier suit, namely Suit No.5087 of 1988.

33. The appeal is allowed to the extent which we have indicated.

34. The husband having succeeded substantially but not entirely in this Court, we are of the view - subject to hearing any argument to the contrary - that the appropriate course for us to take in regard to the costs here is to leave the parties to bear their own costs of the appeal. We make an order nisi to that effect. And we order legal aid taxation of the husband's costs.

35. Before parting with this case, we wish to say this : Litigation has already bitten very deeply indeed into the funds available to this family, which includes two wholly innocent children. For a good many years to come, these two parents are - between them and in one proportion or another - going to have to provide for these two children. Disagreements between the parties in that regard, or in respect of some other matter or matters, may arise in future. We hope and trust that if they do, the parties and their advisers will view litigation as a means of resolving such disagreements as a course of last resort.