LYT v. CCS

FCMC 2050 / 2021

[2024] HKFC 38

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MATRIMONIAL CAUSES

NO. 2050 OF 2021

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JUDGMENT

( Ancillary Relief )

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A.  Introduction

1.  This is the trial on the Petitioner wife’s (“W”) claims for ancillary relief.

2.  The parties got married on 2 November 2012. This is a childless marriage. W is 45 years old. The Respondent husband (“H”) is aged 50.  H contended that their date of separation was 6 January 2020[1] but W said it was 12 January 2020[2].

3.  In March 2021, W presented a petition on the ground of one year separation with consent of the parties.  Their marriage lasts about 8 years[3].

4.  W is legally aided. H acts in person.

5.  The decree nisi was pronounced on 26 October 2021.

B.  H has notice of these proceedings

6.  On 12 April 2021, an acknowledgment of service of the petition (Form 4) (“Acknowledgment”) signed by H was filed with the Family Court Registry. H stated in the Acknowledgment that he did not intend to defend the petition. On the question of whether he wishes to be heard on the claims in the petition, he left it unanswered.

7.  H attended the first appointment hearing on 2 July 2021. At that hearing, the court granted leave to W to amend the petition by consent of both parties. Since then, H has been absent on all court hearings. 

8.  H filed a Form E dated 3 May 2021 (“H-Form E”) and an Answer to the Petitioner’s Questionnaire on 10 August 2021 (“H-Answer”). He has not filed any further document in the present proceedings despite there were court orders directing the parties to do so.

9.  H is absent at the trial.

10.  Under Rules 110 and 111 of the Matrimonial Causes Rules, documents required to be served on H shall be sent by post to the address for service given by him or if he has not given one, to his last known address.

11.  Rules 110 and 111 of the Matrimonial Causes Rules provides that:

“110. Where a document is required by these rules to be sent to any person, it shall, unless otherwise directed, be sent by post to –

…

(b)  if he is acting in person, the address for service given by him or, if he has not given an address for service, his last known address, but if in the opinion of the court the document would be unlikely to reach him if sent to that address, the court may dispense with sending the document to him.”

“111 (1) Where any document is required to be served on a party in any matrimonial proceeding –

…

(b) … services shall be effected –

…

(ii) if the person to be served is acting in person, …  by delivering the document to him or by leaving it at, or sending it by post to, the address for service given by him, or if he has not given an address for service, his last known address.”

12.  It was deposed in the Affirmations for Service filed for W that W’s Solicitors has served on H by post to the Hong Kong Property (being his last known address) the papers of these proceedings, including the orders that set down the trial of ancillary relief disputes stating the trial dates and case managment directions for the preparation of the trial, W’s opening submission and open proposal for the ancillary relief dispute.  These documents have not been returned by the Post Office through the Dead Letter Service.

13.  I am satisfied on a balance of probability that H has notice of these proceedings and the dates of the ancillary relief trial but chose not to participate in the proceedings. Hence I allow W’s application to proceed with the trial in the absence of H. W has the burden of proving her claims for ancillary relief.

C.  Evidence adduced by W

14.  W filed and confirmed at trial the following:

(1)  Form E dated 3 May 2021 (“W-Form E1”)

(2)  Updated Form E dated 7 October 2022 (“W-Form E2”)

(3)  An affirmation dated 11 May 2023 on matters listed in section 7 of the Matrimonial Proceedings and Property Ordinance;

(4)  A second affirmation dated 22 September 2023.

15.  W adduced two valuation reports, one on the HK Property and the other on the two PRC Properties.

D.  W’s Open Proposal

16.  W asked for a clean break by a lump sum payment of $1,768,000 by H (on the basis of a 50% sharing of the total asset), to be settled from the sale proceeds of the Hong Kong Property. In this connection, she also asked for an order for sale of the Hong Kong Property.

E.  Applicable Legal Principles

17.  The legal principles applicable to the claims for ancillary relief are well established.  The court shall consider the matters listed in section 7 of the Matrimonial Proceedings and Property Ordinance. The principles and approaches laid down by the Court of Final Appeal in LKW v DD[4] are authoritative guidelines binding on this court.

F.  Issues

18.  There are the following issues in this case:

(1)  Whether H owns the 2 PRC Properties?

(2)  What are the parties’ financial resources?

(3)  What are the parties’ earning capacity and needs?

(4)  Is there any surplus assets available for distribution? If so, how shall the assets be distributed? In this connection, whether the Hong Kong Property is a matrimonial asset?

G.  Identification of Assets

G1.  Two PRC Properties

19.  It is W’s case that the 2 PRC Properties are H’s ancestral properties given to him by his father.  No documentary evidence on ownership is adduced. 

20.  W testified that she had accompanied H and his family members to attend the procedures for the transfer of the 2 PRC Properties to H before their marriage.  She went to the Mainland with H to collect rents of one of the PRC Properties about twice a year during their marriage. The rental amount received by H before their separation was RMB4,300 per month. W produced photos of the 2 PRC Properties. There were plates marked with the number of the properties shown on the photos. One of the photos shows W and H’s father stood in front of one of the PRC Properties.

21.  In H-Answer, he admitted that his family has ancestral properties in the Mainland at the village identified by W but the exact address could not be confirmed until after their return to the Mainland when the then travel restriction was lifted.  He could not confirm whether he owns any property in the Mainland.

22.  According to the expert valuation report produced by W, the market value of the 2 PRC Properties are RMB 80,000 and RMB1,200,000 respectively.

23.  On a balance of probability, I accept W’s evidence in regard to the 2 PRC Properties.

G2.  W’s 3 Insurance Policies

24.  In W-Form E1, she disclosed a transfer of her 3 insurance policies to her mother on 26 April 2020 because she would like to provide more security to her parents after her father’s heart surgery on 3 September 2019. The value of these 3 policies in about March 2021 were HK$39,739.53, US$9,966.64 and US$12,959.59, making a total of about HK$218,100[5]. W has not included the value of these 3 policies as part of her assets.

25.  The above policies were W’s most valuable asset. After the transfer to her mother, she remained to be the insured (受保人) of these policies and her mother was the policy holder (保單持有人).  I pointed this out to W when she was at the witness box and asked if this suggested that she has an interest in the policies. She maintained that she does not have any interest. I do not accept this bare assertion.

26.  Further, it is of note that the policies were obtained during marriage but were only transferred to her mother a few months after separation. I do not see any reason for excluding the value of these policies.

27.  At the closing submission, Solicitors for W accepted that these policies should be included as part of W’s assets for the purpose of this ancillary relief claim.

G3.  The Assets identified

28.  The assets of the family, without distinguishing matrimonial and non-matrimonial assets, are therefore as follows:

Assets	H (HK$)	W (HK$)
HK Property	$2,000,000[6]
2 PRC Properties	$1,404,800[7]
Bank deposit	$19,000[8]	$175
Insurance Policies		$218,100
MPF	$249,855[9]	$50,313[10]
Total:	$3,673,655	$268,588
Grand total:	$3,942,243

29.  Both parties confirmed in their Form Es that they did not have any liability.

H.  Earning Capacity and Needs of the Parties

30.  In 2021, H worked in a 5-star hotel in Causeway. His monthly income was HK$32,420[11].

31.  To W’s knowledge, H recently joined another 5-star hotel as a banquet manager and is earning a higher income. Further, H is receiving rental income from the PRC Properties which he has failed to disclose in his Form E.

32.  W achieved the education level up to secondary 5. She started to work in the year of 2000. She has worked as receptionist or operator in airline company, hotel or clubhouse in residential complex.

33.  In June 2020 to March 2023, she was not able to work due to her mental illness and the spread of Covid-19 pandemic. She had no income during this period and had relied on public assistance of about HK$5,000 to HK$5,500 per month.

34.  From April 2023, she started to pick up full time or part time employment.  She is currently working as an operator in a hotel earning a monthly salary of about HK$18,000 to HK$19,000. She hopes to be able to continue with the work although she feels pressure from the employment and the working environment. She is relying on medication to treat her mental health problem.

35.  According to the medical report provided by W, she was dignosed to have adjustment disorder in around February 2007. In December 2010, she was diagnosed to suffer from Paranoid Pchizophrenia, which was subsequently revised to become Bipolar Affective Disorder.  She had three previous admissions to the public hospital for treatment of her mental health problem.  In July 2023, her mood was stable, motivation maintained well. Her sleep and appetite were maintained. She was not psychotic.

36.  W is residing rent free in the property owned by her maternal uncle.  She reported a monthly expenses of about HK$5,500.

37.  During marriage, H paid her a monthly sum of HK$8,000 as her living expenses.  After separation, H had paid her once in January 2020 a sum of HK$3,000 for medical expenses.  During February to June 2020, H paid W a monthly sum of HK$4,000 for her expenses. Subsequently, this was reduced to HK$1,000 for the period from September 2020 to May 2021. H stopped making any payment to W since June 2021.

38.  H claimed a monthly expenses of HK$29,064 including mortgage payment of HK$13,852 and HK$3,000 payment to parents[12].

39.  On the basis of the current evidence, I am satisfied that the parties have the earning capacity to meet their own needs save and except if W’s mental health condition deteriorates. 

I.  Is this a sharing case

40.  There is surplus of assets after considering the parties’ needs and their earning capacity.  It is fair to apply the sharing principle to this marriage of about 8 years.

J.  Any reason to depart from equal divison

J1.  Hong Kong Property

41.  The Hong Kong Property was purchased from the Hong Kong Housing Authority at the consideration of HK$2,908,900 a few days after the parties’ separation.  The Sale and Purchase Agreement was dated 14 January 2020 and the Assignment was dated 13 November 2020[13].

42.  H disclosed in H-Form E that the original mortgage loan was HK$2,613,900 and the then outstanding mortgage loan was about HK$2.57 million as at May 2021. Due to the absence of H and his failure to comply with the court orders for disclosure, there is no further information about the mortgage loan of the Hong Kong Property.

43.  According to the valuation report, the market value of the Hong Kong Property in the secondary market (before premium) is in the region of HK$4,500,000.

44.  W submitted that for the purpose of these proceedings, the net value of the Hong Kong Property was HK$2,000,000.

45.  W’s case is that although the Hong Kong Property was purchased after the date of separation, the parties had planned to jointly purchase a property under the home ownership scheme during their marriage.  They have been successfully allotted the right to purchase a property under the scheme in August 2019, and finally the Hong Kong Property was chosen.  She was told by H that a sum of HK$500,000 was required for the initial downpayment.  As they did not have the sufficient funds, her parents transferred HK$200,000 to H as W’s contribution to the downpayment.  The procedures for the purchase took place on 12 January 2020. W only discovered on this date that H has arranged himself to be the sole owner of the Hong Kong Property. H has subsequently returned the sum of HK$200,000 to W’s parents.

46.  I have not lost sight of H’s evidence that the initial downpayment was HK$295,000, but not HK$500,000 as contended by W. Having considered the documentary evidence, it is more likely that the amount of downpayment disclosed by H is correct. W explained that the figure of HK$500,000 was told to her by H.  She had not checked the actual figure.  There may be other expenses. 

47.  Having considered the evidence as a whole, I accept, on the balance of probability, W’s evidence on the background for the purchase of the Hong Kong Property. Although the actual purchase was made on or around the date of separation, the application for the purchase was done during marriage. Given the proximity of the purchase date and the separation date, the initial downpayment ought to be sourced from the parties’ assets during marriage. The Hong Kong Property should be included as part of the assets to be distributed between the parties.

J2.  W’s mental health condition

48.  I have also considered W’s mental health condition.  Although she is working hard to maintain a full time employment, it is necessary for her to have funds to meet her needs in case her mental health condition gets worse.

J3.  50:50 equal division

49.  With a view to achieve fairness, the principle of equal division shall apply. After deducting W’s asset of HK$268,588 from 50% of the assets (HK$1,971,121), W is entitled to a lump sum payment of HK$1,702,533.

K.  Order

50.  I make the following order:

(1)  W is entitled to a lump sum payment of HK$1,702,533.

(2)  The Hong Kong Property be sold within 12 months from the date of Decree Absolute subject to the approval of the Hong Kong Housing Authority.

(3)  The sale proceeds of the Hong Kong Property shall be paid in the following order:

a.  Settlement of all the necessary expenses for the sale of the Hong Kong Property.

b.  A lump sum of $1,702,533 be paid to W.

c.  The balance be paid to H.

(4)  The payment to be made to W is subject to Legal Aid First Charge.

51.  Following the starting point of costs follows the event, I make an order nisi to become absolute within 14 days that H do pay W’s costs in the ancillary relief proceedings, to be taxed if not agreed. W’s own costs to be taxed in accordance with the Legal Aid Regulations.