CMJF nee T v. MGF

CAMP 134/2018

[2018] HKCA 809

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 134 OF 2018

(ON AN INTENDED APPEAL FROM FCMC NO 7409 OF 2013)

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J U D G M E N T

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Hon Poon JA (giving the Judgment of the Court) :

INTRODUCTION

1.  By a judgment dated 31 August 2018, His Honour Judge G. Own (“the Judge”) dismissed the Respondent’s appeal against his order dated 13 February 2018 made in FCMC 7409/2013, refusing to make the purported settlement agreement on ancillary relief an order of the court.  The Respondent's application for leave to appeal against the decision was refused by the Judge on 31 August 2018 (“the Leave Decision”).  The Respondent now renews the leave application to this Court by way of a summons dated 14 September 2018. Having considered the parties’ submissions, we take the view that the renewed application can be disposed of on paper without an oral hearing.  We now hand down our judgment.

2.  The background may be briefly stated thus.  The Petitioner is the wife and the Respondent is the husband. The parties married in 1998 and separated around October 2012.  They do not have any children.  Decree Nisi was granted on 6 August 2013 which was made absolute on 30 September 2013.  The only outstanding issue was the wife’s application for ancillary relief.

3.  The trial of the wife’s application for ancillary relief was initially scheduled for 6 days commencing on 17 January 2018.  On the first day of trial, the parties’ legal representatives attempted last minute settlement negotiation.  The trial did not proceed as originally scheduled.  The Judge was updated intermittently by counsel during the first two days on the progress of negotiation.

4.  On 19 January 2018, the parties handed up an unsigned Heads of Agreement (“HA”) and informed the Judge that the HA contained the principal parts of the agreement reached between the parties save as to chattels which was a “stand alone” item.  

5.  On 22 January 2018 (4^th day of the original trial), the Judge received a letter from the wife’s lawyers attached with a signed HA dated 19 January 2018.  The contents of the HA were reproduced as follows :

“                                         HEADS OF AGREEMENT

1. The Former Matrimonial Home (“the FMH”) shall be sold and the proceeds divided 55% / 45% as between the Wife (55%) and Husband.

2. The Husband do pay the Wife a lump sum of HK$11,500,000 from his share of the proceeds of sale of the FMH at the same time as paragraph 1 above.

3. The FMH be forthwith placed on the market for sale with Knight Frank estate agents for a period of no more than 3 months from 1 February 2018; in the event the FMH is not sold within such 3 months’ period, the FMH be auctioned ‘as is’ for sale on appropriate and customary terms.

4. The Husband’s undertaking contained in the order of 22 January 2016 do stand discharged on the receipt by the Wife of her 55% of the proceeds of sale of the FMH and the HK$11,500,000 referred to in paragraphs 1 and 2 above.

5. There be division of chattels on terms acceptable to the parties. In the event of dispute, the matter be heard by the Court on 10:30 a.m. Tuesday, 23 January 2018.

6. No order as to costs, including all costs reserved.

7. These Heads of Agreement will be reflected in a consent summons satisfactory to each of the parties.”

6.  On 23 January 2018, the parties placed before the Judge an unsigned consent summons annexed with the signed HA dated 19 January 2018 which reflected the parties’ position and in accordance with paragraph 7 of the signed HA.  There was another consent summons with markings in red which were proposed by the husband but was unsigned for the fact that the contents and markings in the consent summons had yet to be agreed by the wife.

7.  It transpired that there were two previously undisclosed underpinning changes, from the wife’s perspective, to the platform upon which the HA was signed, namely, the husband’s intended remarriage and the chances of the husband being a potential buyer of the former matrimonial home at the auction. 

8.  On 13 February 2018 (6^th day of the original trial), it turned out that the wife had gone back to Italy and there was an un-affirmed 5^th affirmation of the wife attached as an exhibit to her lawyers’ affirmation filed on 12 February 2018.   In gist, the wife’s affirmation set out her position about the signed HA and her opposition to the husband’s intended application to have the HA made an order of the court.  Further, it was common ground that the parties could not agree on the consent summons because of the disagreement on the division of chattels and the wife’s request to have additional terms to impose a minimum price of the matrimonial home and exclude the husband from being a potential buyer.

9.  However, the husband argued that although the concluded agreement was not reflected in a consent summons, it would not vitiate its existence.  He therefore urged the Judge to make an order in terms of the HA to dispose of the wife’s application for ancillary relief.  The Judge was not persuaded.  Having considered the parties’ submissions, he refused to grant an order in terms of the HA and directed the application for ancillary relief be re-fixed for trial with 6 days reserved.  He reasoned :

(1)  The parties could not reach agreement on the issue of chattels and the court would not grant orders on the partial agreement on ancillary relief with the remainder to be further litigated.

(2)  In the absence of evidence of a full and complete agreement having been reached, the court had to discharge its statutory duty under section 7 of Matrimonial Proceedings and Property Ordinance, Cap 192 (“MPPO”) in determining the issues of ancillary relief.

(3)  In the absence of full evidence as to how the HA was arrived at, the court was unable to find out whether it encompassed the parties’ consensus on all aspects of the ancillary relief such as would prevent either party from seeking further relief or reneging from what had been agreed.

10.  In refusing to grant the husband leave to appeal against the decision, the Judge held :

(1)  The central issue was whether there was a concluded agreement on all aspects of the wife’s ancillary reliefs, including how the chattels were to be divided.  The mere fact that there was a mechanism of division could not be equated with a concluded agreement over all aspects of ancillary reliefs. Thus the court must exercise its independent discretionary power under section 7 of MPPO to investigate and ascertain the circumstances of the case and the terms of the alleged concluded agreement when determining ancillary reliefs. 

(2)  Further, by contending the signed HA contained terms agreed by both parties, the husband must be bound by paragraph 7 of the HA in its entirety.  Under paragraph 7, the content of the consent summons reflecting the terms of the HA had to be agreed by both the husband and the wife.  The husband could not bypass paragraph 7 when he realized the parties were unable to agree on the consent summons. 

(3)  There were no other grounds for which leave should be granted in the interest of justice.  

DISCUSSION

11.  Leave to appeal shall not be granted under section 63A of the District Court Ordinance, Cap 336, unless the Court of Appeal is satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interest of justice that the appeal should be heard.  The applicant bears the burden of satisfying this Court that his appeal has a reasonable prospect of success which means an appeal with prospects that are more than fanciful but which do not need to be shown to be probable: SMSE v KL [2009] 4 HKLRD 125 at [17].

12.  The husband sought to raise four grounds of appeal, namely:

(1)  The Judge erred in finding that the parties had not reached agreement on the issue of chattels. 

(2)  The Judge erred in finding that in the absence of evidence of a full and complete agreement having been reached, the court must discharge its statutory duty under section 7 of MPPO.

(3)  The Judge erred in finding that in the absence of evidence on how the HA was arrived at, the court could not assess whether the HA encompassed all aspects of ancillary relief.

(4)  The Judge’s approach was adverse to the relevant practice and procedure set out in the Practice Directions and the underlying objectives of the rules of Court which are designed to encourage settlement and ensure procedural economy so that the resources of the court are distributed fairly.

13.  On Ground 1, the husband contended that reserving any dispute on division of chattels to the court did not mean that there was no complete agreement.  Similar arguments had been raised before the Judge.   The Judge rejected them at [24] to [26] of the Leave Decision :

“ 24. …… it is undisputed that the list of chattels consists of a sizeable quantity and are of valuable sum in the region approximately around 3 million Hong Kong dollars. Having said, it is not uncommon for parties to further agree as to how the chattels are going to be divided, whether by quantity, brand names, value or otherwise, leaving aside any sentimental value any of those chattels may have.

25. ….. Reason being that the central issue is whether there was a concluded agreement on all aspects of W’s ancillary reliefs, including how the chattels are to be divided so that the time and expense required of from the Court to discharge its statutory duty under the relevant provisions could be reduced by simply making an order in terms of the signed HA (see Xydhias v. Xydhias [1999] 2 All ER 386). The mere fact that there was a mechanism of division as Mr Surman so submitted, namely, by resolving through process of trial in case of dispute, could not be equated with the situation of a concluded agreement over all aspects of ancillary reliefs as in the Xydhias case which the Court could readily endorse on it to become an order.

26. As Mr Edgerton in his reply so submitted, which I agree, any dispute as to whether there was a concluded settlement would have to be scrutinized by the Court upon further evidence.  In any case, the court must exercise its independent discretionary review applying the section 7 of Cap. 192 factors to the circumstances of the case and to the terms of the alleged concluded agreement.”

14.  Section 7 of MPPO imposes on the court a duty to decide whether to exercise its power to make orders for financial provisions, transfer or sale of property etc. in relation to a party to a marriage and, in making such orders, to have regard to the conduct of the parties and all the circumstances of the case.  The court is required to carefully scrutinize an intended settlement before sanctioning it and making it an order of the court. This in Xydhias v. Xydhias [1999] 2 All ER 386, Thorpe LJ held that the court has an overriding and discretionary power when scrutinizing an agreement for the compromise of an ancillary relief application.  It was said that (at 394f, 395g to 396b and 396d) :

“ My cardinal conclusion is that ordinary contractual principles do not determine the issues in this appeal. This is because of the fundamental distinction that an agreement for the compromise of an ancillary relief application does not give rise to a contract enforceable in law.

…

In consequence, it is clear that the award to an applicant for ancillary relief is always fixed by the court. The payer’s liability cannot be ultimately fixed by compromise, as can be done in the settlement of claims in other divisions. Therefore, the purpose of negotiation is not to finally determine the liability (that can only be done by the court) but to reduce the length and expense of the process by which the court carries out its function. If there is a dispute as to whether negotiations led to an accord that the process should be abbreviated, the court has a discretion in determining whether an accord was reached. In exercising that discretion, the court should be astute to discern the antics of a litigant who, having consistently pressed for abbreviation, is seeking to resile and to justify his shift by reliance on some point of detail that was open for determination by the court at its abbreviated hearing. If the court concludes that the parties agreed to settle on terms, then it may have to consider whether the terms were vitiated by a factor, such as material non- disclosure, or tainted by a factor within the parameters set out in Edgar v Edgar [1980] 3 All ER 887, [1980] 1 WLR 1410. Finally, in every case, the court must exercise its independent discretionary review applying the s.25 criteria to the circumstances of the case and to the terms of the accord.

…

In my opinion there are sound policy reasons supporting the conclusion that the judge is entitled to exercise a broad discretion to determine whether the parties have agreed to settle.”

15.  It is therefore clear that in case of dispute as to whether the negotiations had resulted in an accord in ancillary relief application, the court has to determine whether an accord has been reached.  Even in the case where a compromise had been reached between the parties, the court will not automatically grant an order in terms of the compromise, but will conduct an independent assessment to enable it to discharge its statutory duty under section 7 of MPPO.   With these principles in mind, the Judge is perfectly entitled to come to the conclusion at [34] of the Leave Decision that :

“ 34. Given careful consideration; in particular, my decision that only a mechanism over division of chattels being in place but without the value of the divided chattels actually worked out or otherwise agreed, it would not be sufficient to ground a concluded agreement having been reached on ancillary reliefs, I find there are no other grounds of which interest of justice calls for leave to appeal be given to H (husband).”

16.  We find no errors in law or reasoning in the Judge’s decision and we see no basis to interfere with it.  Ground 1 is not reasonably arguable.

17.  Grounds 2 and 3 can be dealt with together.  The husband contended that the court should not permit either party to renege from the agreement save in exceptional circumstances and it was wrong for the court to conclude that there was no full and complete agreement between the parties when the outstanding issues were either the mechanics of an agreement or other trivial matters.  The argument, however, begs the question if the parties had in fact reached the full and complete agreement as contended.

18.  In this regard, the Judge set out his reason for rejecting the HA as a full and complete agreement at [31] and [32] of the Leave Decision : (i) a mere agreement on a mechanism of division of chattels was not a concluded agreement and (ii) it was expressly and clearly provided under clause 7 of the HA that “These Heads of Agreement will be reflected in a consent summons satisfactory to each of the parties”, thus the husband could not simply bypass it and short-circuit the dispute by seeking an order to be made on the HA.  We agree with the Judge’s views.  Grounds 2 and 3 are not reasonably arguable.

19.  The contentions in Ground 4 that the Judge failed to promote settlement and procedural economy lacks substance and proper basis.  The Judge allowed most of the scheduled hearing days for the parties to negotiate settlement.  And it was common ground that through no fault of the Judge and despite all the efforts of the parties’ legal representatives, the parties were unable to agree on the terms of the consent summons and the settlement just did not come into play.  This ground has no merit.

DISPOSITION

20.  For the reasons set out above, we are not satisfied that the intended appeal has any reasonable prospect of success.   Nor is there any other reason in the interest of justice why the appeal should be heard.  Accordingly, we dismiss the Respondent’s summons dated 14 September 2018.

21.  As the application is without merit, we make an order pursuant to Order 59 rule 2A (8) of the Rules of the High Court, Cap 4A, that no party may under rule 2A (7) request the determination of this Court to be reconsidered at an oral hearing inter partes.

22.  Costs should follow event.  We order the Respondent to pay the costs of the Petitioner, to be assessed summarily.  We further direct the Petitioner to file and serve a skeleton bill of costs (not more than 2 pages) within 14 days from the date of this judgment and the Respondent to file and serve a statement of objection (not more than 2 pages with no exhibits) within 14 days thereafter.  We will then assess the Petitioner’s costs on paper.