L v. W

FCMP 178 / 2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MICELLANEOUS PROCEEDINGS

NUMBER 178 OF 2013

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J U D G M E N T

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1.  By an Order dated 8 October 2013 and pursuant to section 29AC of the Matrimonial Proceedings and Property Ordinance, Cap 192 (MPPO), the Applicant was granted leave to make an application for financial relief under [A/21]. On 29 July 2014, the Respondents took out a summons to set aside the leave that was granted [A/49]. This is the hearing of the Respondents’ Summons.

Language of Hearing

2.  All the documents filed in this hearing are in Chinese. Because the relevant authorities are in English, the Court acceded to a request from the parties to conduct this hearing in English.

Issues

3.  The subject of the Applicant’s (Wife) claim is a property in Ma On Shan (the HK Property). The 1^st Respondent (Husband) and the 2^nd Respondent are the registered owners of the HK Property. The 2^nd Respondent is the 1^st Respondent’s mother (Mother).

4.  The property is held by the Respondents as tenants in common in equal shares. The Wife says that the Husband is at least the owner of half of the interest in the HK Property and that interest should be considered as part of the matrimonial pot.

5.  The Respondents originally raised a host of different issues, including material non-disclosure and unfairness. Those issues were abandoned by the time of this hearing. The Respondents are now only relying on their substantive defence.  Their position is that the HK Property was purchased and paid for by the 2^nd Respondent and that the 1^st Respondent has no beneficial interest in the same. They argued that they have put forward a “knock out” blow and the leave that was granted to the Wife should be set aside. In other words, the only issue is whether the Wife’s case is bound to fail. 

Background

6.  The Wife was born on 5 February 1979 and is now 36 years old. The Husband was born on 30 September 1970 and is now aged 44.

7.  The Husband and Wife met in about December 1996. They began cohabitation in Shenzhen 1997. They were married on 30 September 1999 in Guangxi. The child of the family (the Child) was born on 28 May 2002.

8.  The Husband and the Mother are the registered owners of the HK Property. They originally purchased the HK Property as joint tenants on 28 April 1997. The purchase price was HK$1,298,900. Part of the purchase price was paid for with the assistance of a mortgage in the sum of HK$1,160,000 [B/56, 63-66]. By a Deed of Severance dated 29 April 1998, the Respondents’ interest in the Hong Kong Property was severed and they became Tenants in Common in equal shares [B/68-72].

9.  On 1 March 2004, a property in Shenzhen was purchased in the joint names of the Husband and Wife as their matrimonial home (the Shenzhen Property).

10.  The marriage broke down in about October 2007. The Wife and the Husband separated. On 20 February 2008, the Husband petitioned for divorce in Guangxi [B/56, 74-75]. On 25 August 2008, the Court in Guangxi ordered that the marriage between the Husband and the Wife be dissolved. The Husband was granted custody, care and control of the Child. The Husband was ordered to pay a sum of RMB 215,000 to the Wife, whereupon the Wife was to transfer her interest in the Shenzhen Property to the Husband. In addition, the Husband was ordered to pay a lump sum of RMB 30,000 to the Wife [B/77-81].

11.  During the trial, the Wife argued that the HK Property was a matrimonial asset and should be considered by the Court in her claim for ancillary relief. The Husband’s case was that the Hong Kong Property was purchased by the Mother and should not form any part of the matrimonial pot [B/78]. The Court held that the Wife’s claim on the HK Property lacked specific direction or target and refused to deal with the HK Property [B/79].

The Guangxi Court’s judgment was as follows:

“被告主張香港房的部份中屬夫妻共同財產，從被告的舉証，目前還没有具體訴訟標的。對此，本院不予審理”.

12.  On about 26 September 2008, the Wife lodged an appeal against that order. On 17 December 2008, the Guangxi Middle Court ordered that the lump sum payable for the transfer of the Shenzhen Property be increased from RMB 215, 000 to RMB365, 000. Apart from that, the other orders of the Guangxi Court were upheld. The Guangxi Middle Court also refused to deal with the HK Property. On this occasion, the reason was that a third party interest was involved [B/90]. The Guangxi Middle Court stated as follows:

“經本院確定並經雙方同意，對予香港的住房，由於涉及到第三人的利益，所以在本案中不予審查”.

13.  The Wife obtained a permanent Hong Kong Identity Card on about 29 February 2012. She only made the application for leave in July 2013, almost 5 years after the conclusion of the proceedings in the Mainland. It is noted however, that Part IIA of the MPPO only came into force in March 2011. In other words, the Wife’s application was made just over 2 years after the provisions came into force.

14.  After leave was granted, the Respondents sought to set aside the leave. They filed Affirmations alleging that the Husband has no beneficial interest in the HK Property. Although the Husband admits that he pays the Mother on a monthly basis, he denied that those payments are his contribution towards the mortgage. He says that those payments are allowances to the Mother. The Respondents assert that the Mother had paid the deposit and mortgage payments for that property.

The Law

15.  Part IIA of the MPPO came into force in March 2011. It enables a spouse to apply for financial relief after the marriage had been dissolved or annulled in a foreign jurisdiction. Section 29AB of the MPPO provides as follows:-

“If-

(a) A marriage has been dissolved or annulled, or the parties to a marriage have been legally separated, by means of judicial or other proceedings in a place outside Hong Kong; and

(b) The divorce, annulment or legal separation is recognized as valid by the law of Hong Kong,

Either of the parties to the marriage may apply to the court in accordance with rules of the court for an order for financial relief…”

16.  Procedurally, the first step that the spouse must take is to obtain, ex parte, leave from the court for making the substantive application.

17.  Section 29AC of the MPPO provides:

“(1) No application for an order for financial relief may be made unless the leave of the court has been obtained in accordance with rules of the court.

(2) The court must not grant leave unless it considers that there is substantial ground for the making of an application for an order for financial relief.

(3) The court may grant leave under this section despite the fact that an order has been made by a competent authority outside Hong Kong requiring the other party to the marriage to make any payment or transfer any property to, or for the benefit of, the applicant or the child of the family…”

18.  Rule 103A of the Matrimonial Causes Rules (MRC) lays down the procedure for the leave application. It must be made ex parte in the prescribed form.

19.  The proper approach for both the leave and substantive application was laid down in the English case of Agbaje v Agbaje [2010] 1 AC 628. That approach was adopted by the Court of First Instance in Hong Kong in the case of C v H HCMC 3/2011.

20.  In C v H, the Court held that to obtain leave under section 29AC(2), the applicant must pass the threshold of satisfying the court that there is substantial ground for the making of the substantive application. The court referred to the explanation of that threshold from Lord Colllins in Agbaje v Agbaje (supra):

“33. In the present context the principal object of the filter mechanism [that is, section 13 of Part III of the 1984 Act] is to prevent wholly unmeritorious claims being pursued to oppress or blackmail a former spouse. The threshold is not high, but is higher than ‘serious matter to be tried’ or ‘good arguable case’ found in other contexts. It is perhaps best expressed by saying that in this context ‘substantial means solid’…”

21.  The MCR does not expressly make any rules for a subsequent application to set aside the leave granted. In C v H (supra), it was held that the court no doubt has jurisdiction to set aside the leave granted as a fundamental rule of procedure.

22.  In Agbaje v Agbaje (supra), the court laid down the test an application to set aside the leave:

“Once a judge has given reasons for deciding at the ex parte stage that the threshold has been crossed, the approach to setting aside leave should be the same as the approach to setting aside permission to appeal in the Civil Procedure Rules, where (by contrast with the Family Proceedings Rules) there is an express power to set aside, but which may only be exercised where there is a compelling reason to do so…In practice in the Court of Appeal, the power is only exercised where some decisive authority has been overlooked so that the appeal is bound to fail, or where the court has been misled…In an application under section 13, unless it is clear that the respondent can deliver a knockout blow, the court should use its case management powers to adjourn an application to set aside to be heard with the substantive application.

Whether Leave Should be set aside

23.  There is no dispute that the Respondents are the registered owners of the HK Property. That is prima facie evidence of ownership. It is then for the Respondents to prove that the Husband has no beneficial interest in that property. The Respondents assert that the deposit and mortgage payments are paid by the Mother. It is however, clear from the bank statements produced by the Respondents that there were insufficient funds in the Mother’s accounts to make the mortgage payments. A sum of money would be deposited into the Mother’s account shortly before the mortgage payments are due and that sum was used to pay the mortgage. The Wife says that prior to the breakdown of the mortgage, she had assisted the Husband in the payment of the mortgage by depositing funds into the Mother’s account. That was not specifically denied by the Husband. He explained that those payments were allowances paid to the Mother.

24.  There is only a bare assertion from the Respondents that the payments made to the Mother were allowances (and not contributions towards the mortgage). The Court is not obliged to accept that bare assertion. It is ultimately a question of evidence and credibility, which can only be determined at trial.

25.  The Respondents say that the Wife will not be able to rebut their assertions. With respect to the Respondents’ counsel, the Court cannot agree. There will be contemporaneous documents which could assist the Court in its determination of the beneficial interest in the HK Property. For example, in the Deed of Severance produced by the Mother, there was an admission by both Respondents that they were both the beneficial owners of the HK property. The HK Property is a Home Ownership Scheme property. As far as the Court is aware, the purchasers of these properties are required to make statutory declarations in respect of the beneficial interest in the property and the source of funds. These are again matters for trial.

26.  In other words, the Respondents have not presented the Court with a “knock out” defence. There are no complaints that the original leave granted was in any way wrong in law or principle. This application is wholly misconceived. There are no compelling reasons to set aside that leave and the Respondents’ application is dismissed.

27.  Accordingly, I make the following orders:

(1) The Respondents application for setting aside is dismissed;

(2) Costs to the Applicant, to be taxed if not agreed. The Applicant’s own costs to be taxed according to Legal Aid Regulations.

28.  Since there is a preliminary issue of a third party interest in the HK Property, the parties are reminded to comply with the procedure set out in TL v ML and others (Ancillary Relief against Assets of Extended Family) [2006] 1 FLR 1263.